N-CSRS 1 d341531dncsrs.htm N-CSRS N-CSRS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number        811-03826
AIM Sector Funds (Invesco Sector Funds)
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 1000    Houston, Texas 77046
(Address of principal executive offices)  (Zip code)
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:       10/31/22

ITEM 1.

REPORTS TO STOCKHOLDERS.

(a) The Registrant’s semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:

(b) Not Applicable.

LOGO

 

   
Semiannual Report to Shareholders   October 31, 2022

Invesco American Value Fund

Nasdaq:

A: MSAVX ∎ C: MSVCX ∎ R: MSARX ∎ Y: MSAIX ∎ R5: MSAJX ∎ R6: MSAFX

 

    

   
2   Fund Performance
4   Schedule of Investments
7   Financial Statements
10   Financial Highlights
11   Notes to Financial Statements
18   Fund Expenses
19   Approval of Investment Advisory and Sub-Advisory Contracts

 

 

 

For the most current month-end Fund performance and commentary, please visit invesco.com/performance.

Unless otherwise noted, all data is provided by Invesco.

This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.

 

NOT FDIC INSURED   |   MAY LOSE VALUE   |   NO BANK GUARANTEE

 

Fund Performance

 

 

Performance summary

 

 

Fund vs. Indexes

                

Cumulative total returns, 4/30/22 to 10/31/22, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

 

Class A Shares

 

     0.77 % 

Class C Shares

 

     0.40  

Class R Shares

 

     0.64  

Class Y Shares

 

     0.87  

Class R5 Shares

 

     0.93  

Class R6 Shares

 

     0.98  

S&P 500 Index▼ (Broad Market Index)

 

     -5.50  

Russell Midcap Value Index▼ (Style-Specific Index)

 

     -5.61  

Lipper Mid-Cap Value Funds Index∎ (Peer Group Index)

 

     -3.47  

Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc.

 

  

 

The S&P 500® Index is an unmanaged index considered representative of the US stock market.

  The Russell Midcap® Value Index is an unmanaged index considered representative of mid-cap value stocks. The Russell Midcap Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.

  The Lipper Mid-Cap Value Funds Index is an unmanaged index considered representative of mid-cap value funds tracked by Lipper.

  The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es).

  A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.

 

 

 

 

 

 

 

 

For more information about your Fund

 

Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.

  Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.

            

 

 

2   Invesco American Value Fund

    

    

    

 

Average Annual Total Returns

 

As of 10/31/22, including maximum applicable sales charges

 

Class A Shares

        

Inception (10/18/93)

     8.67 % 

10 Years

     7.87  

  5 Years

     5.30  

  1 Year

     -9.35  

Class C Shares

        

Inception (10/18/93)

     8.65 % 

10 Years

     7.85  

  5 Years

     5.73  

  1 Year

     -5.58  

Class R Shares

        

Inception (3/20/07)

     6.41 % 

10 Years

     8.21  

  5 Years

     6.23  

  1 Year

     -4.34  

Class Y Shares

        

Inception (2/7/06)

     7.63 % 

10 Years

     8.75  

  5 Years

     6.75  

  1 Year

     -3.86  

Class R5 Shares

        

Inception (6/1/10)

     9.84 % 

10 Years

     8.86  

  5 Years

     6.85  

  1 Year

     -3.79  

Class R6 Shares

        

Inception (9/24/12)

     8.80 % 

10 Years

     8.94  

  5 Years

     6.92  

  1 Year

     -3.70  

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 those for Class A, Class C, Class R and Class I of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.

    The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.

    Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.

    The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.

    Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.

                

 

 

3   Invesco American Value Fund

Schedule of Investments(a)

October 31, 2022

(Unaudited)

 

     Shares              Value          

 

  

Common Stocks & Other Equity Interests–94.62%

 

Aerospace & Defense–2.72%

      

BWX Technologies, Inc.(b)

     412,500      $      23,504,250  

 

  

Huntington Ingalls Industries, Inc.

      93,200        23,958,924  

 

  
        47,463,174  

 

  

Auto Parts & Equipment–1.77%

      

Dana, Inc.

      1,942,300        30,999,108  

 

  

Biotechnology–1.99%

      

Horizon Therapeutics PLC(c)

     558,200        34,787,024  

 

  

Construction & Engineering–5.64%

 

AECOM

      744,900        56,076,072  

 

  

HOCHTIEF AG (Germany)

      196,200        10,433,939  

 

  

MasTec, Inc.(b)(c)

     414,400        31,941,952  

 

  
        98,451,963  

 

  

Construction Machinery & Heavy Trucks–0.75%

 

Oshkosh Corp.

      148,646        13,080,848  

 

  

Distributors–1.58%

      

LKQ Corp.(b)

     495,929        27,593,490  

 

  

Diversified Chemicals–1.77%

      

Huntsman Corp.(b)

     1,157,000        30,961,320  

 

  

Diversified Metals & Mining–0.87%

 

Teck Resources Ltd., Class B (Canada)

      496,600        15,116,504  

 

  

Electric Utilities–0.89%

      

NRG Energy, Inc.

      351,800        15,619,920  

 

  

Electrical Components & Equipment–1.94%

 

   

nVent Electric PLC

      700        25,550  

 

  

Vertiv Holdings Co.

      2,364,114        33,830,471  

 

  
        33,856,021  

 

  

Electronic Manufacturing Services–5.44%

 

   

Flex Ltd.(c)

     2,926,723        57,305,236  

 

  

Jabil, Inc.(b)

     588,700        37,823,975  

 

  
        95,129,211  

 

  

Food Distributors–2.80%

      

Performance Food Group Co.(c)

     375,554        19,543,830  

 

  

US Foods Holding Corp.(c)

     986,842        29,368,418  

 

  
        48,912,248  

 

  

Forest Products–0.00%

      

Louisiana-Pacific Corp.

      900        50,985  

 

  

Gold–1.29%

      

Agnico Eagle Mines Ltd. (Canada)

      199,400        8,765,624  

 

  

Yamana Gold, Inc. (Canada)

      3,148,700        13,791,306  

 

  
        22,556,930  

 

  

Health Care Distributors–0.96%

      

Henry Schein, Inc.(c)

     245,700        16,820,622  

 

  

Health Care Facilities–4.64%

      

Encompass Health Corp.

      703,288        38,286,999  

 

  
     Shares              Value          

 

  

Health Care Facilities–(continued)

 

Universal Health Services, Inc., Class B

      369,410      $      42,803,536  

 

  
        81,090,535  

 

  

Health Care Services–2.16%

      

Cigna Corp.

      98,600        31,853,716  

 

  

Fresenius Medical Care AG & Co. KGaA (Germany)

      210,500        5,822,516  

 

  
        37,676,232  

 

  

Hotels, Resorts & Cruise Lines–0.60%

 

   

Hilton Grand Vacations, Inc.(c)

     4,117        161,551  

 

  

Travel + Leisure Co.

      272,533        10,350,803  

 

  
        10,512,354  

 

  

Household Products–1.11%

      

Spectrum Brands Holdings, Inc.(b)

     418,900        19,328,046  

 

  

Human Resource & Employment Services–1.16%

 

ManpowerGroup, Inc.

      258,026        20,213,757  

 

  

Independent Power Producers & Energy Traders–1.60%

 

Vistra Corp.(b)

     1,214,400        27,894,768  

 

  

Industrial Machinery–2.02%

      

Crane Holdings Co.

      42,773        4,291,843  

 

  

Timken Co. (The)

      435,200        31,025,408  

 

  
        35,317,251  

 

  

Integrated Oil & Gas–3.67%

      

Cenovus Energy, Inc. (Canada)(b)

     1,533,300        30,972,660  

 

  

Shell PLC, ADR (Netherlands)

      594,700        33,083,161  

 

  
        64,055,821  

 

  

Investment Banking & Brokerage–1.87%

 

   

Goldman Sachs Group, Inc. (The)(b)

     94,700        32,625,097  

 

  

Managed Health Care–3.49%

      

Centene Corp.(c)

     542,521        46,184,813  

 

  

Molina Healthcare, Inc.(c)

     41,100        14,749,146  

 

  
        60,933,959  

 

  

Oil & Gas Exploration & Production–12.47%

 

   

APA Corp.

      1,070,600        48,669,476  

 

  

ARC Resources Ltd. (Canada)

      2,643,900        37,222,448  

 

  

Diamondback Energy, Inc.

      215,387        33,839,451  

 

  

EQT Corp.

      560,800        23,463,872  

 

  

Ovintiv, Inc.

      723,400        36,640,210  

 

  

Pioneer Natural Resources Co.

      70,958        18,194,341  

 

  

Southwestern Energy Co.(c)

     2,853,900        19,777,527  

 

  
        217,807,325  

 

  

Oil & Gas Refining & Marketing–1.88%

 

   

Phillips 66

      314,700        32,820,063  

 

  

Oil & Gas Storage & Transportation–2.18%

 

   

New Fortress Energy, Inc.(b)

     693,087        38,168,301  

 

  

Other Diversified Financial Services–1.24%

 

   

Apollo Global Management, Inc.

      392,089        21,706,047  

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

4   Invesco American Value Fund

     Shares              Value          

 

  

Paper Packaging–0.36%

      

Sealed Air Corp.

      132,200      $        6,295,364  

 

  

Regional Banks–7.20%

      

Huntington Bancshares, Inc.

      3,029,270        45,984,319  

 

  

PacWest Bancorp

      449,953        11,185,831  

 

  

SVB Financial Group(c)

     72,400        16,721,504  

 

  

Webster Financial Corp.

      816,400        44,297,864  

 

  

Western Alliance Bancorporation

      112,500        7,556,625  

 

  
        125,746,143  

 

  

Research & Consulting Services–6.45%

 

   

CACI International, Inc., Class A(c)

     119,762        36,411,241  

 

  

Jacobs Solutions, Inc.

      243,000        27,998,460  

 

  

KBR, Inc.

      966,900        48,122,613  

 

  

Science Applications International Corp.

      900        97,506  

 

  
        112,629,820  

 

  

Restaurants–1.66%

      

Restaurant Brands International, Inc. (Canada)

      488,900        29,030,882  

 

  

Semiconductor Equipment–1.18%

 

Applied Materials, Inc.

      82,600        7,292,754  

 

  

Lam Research Corp.

      17,500        7,083,650  

 

  

MKS Instruments, Inc.

      76,300        6,268,045  

 

  
        20,644,449  

 

  

Semiconductors–0.65%

      

Skyworks Solutions, Inc.

      132,100        11,361,921  

 

  

Specialty Chemicals–1.18%

      

Axalta Coating Systems Ltd.(b)(c)

     886,300        20,668,516  

 

  

Element Solutions, Inc.

      900        15,480  

 

  
        20,683,996  

 

  

Thrifts & Mortgage Finance–0.00%

 

   

MGIC Investment Corp.

      900        12,285  

 

  

Radian Group, Inc.

      900        18,783  

 

  
        31,068  

 

  
     Shares              Value          

 

  

Trading Companies & Distributors–5.44%

 

   

AerCap Holdings N.V. (Ireland)(c)

     2,500      $ 133,525  

 

  

Air Lease Corp.

      984,900        34,757,121  

 

  

Univar Solutions, Inc.(c)

     1,564,100        39,853,268  

 

  

WESCO International, Inc.(c)

     147,700        20,348,629  

 

  
        95,092,543  

 

  

Total Common Stocks & Other Equity Interests
(Cost $1,624,054,736)

 

      1,653,065,110  

 

  

Money Market Funds–4.81%

 

Invesco Government & Agency Portfolio, Institutional Class, 3.07%(d)(e)

     27,540,149        27,540,149  

 

  

Invesco Liquid Assets Portfolio, Institutional Class, 3.03%(d)(e)

     24,992,290        24,997,289  

 

  

Invesco Treasury Portfolio, Institutional Class, 3.08%(d)(e)

     31,474,455        31,474,455  

 

  

Total Money Market Funds
(Cost $84,004,209)

 

      84,011,893  

 

  

TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)–99.43%
(Cost $1,708,058,945)

 

      1,737,077,003  

 

  

Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds–6.75%

 

   

Invesco Private Government Fund, 3.18%(d)(e)(f)

     32,954,542        32,954,542  

 

  

Invesco Private Prime Fund, 3.28%(d)(e)(f)

     84,979,077        84,979,077  

 

  

Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $117,930,718)

 

      117,933,619  

 

  

TOTAL INVESTMENTS IN SECURITIES–106.18%
(Cost $1,825,989,663)

 

      1,855,010,622  

 

  

OTHER ASSETS LESS LIABILITIES–(6.18)%

 

      (107,958,001 ) 

 

  

NET ASSETS–100.00%

 

    $ 1,747,052,621  

 

  
 

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) 

All or a portion of this security was out on loan at October 31, 2022.

(c)

Non-income producing security.

(d) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended October 31, 2022.

 

     

Value

April 30, 2022

     

Purchases

at Cost

     

Proceeds

from Sales

    

Change in

Unrealized

Appreciation

     

Realized

Gain

     

Value

October 31, 2022

     

Dividend Income

  
Investments in Affiliated Money Market Funds:                                                              

Invesco Government & Agency Portfolio, Institutional Class

      $  27,522,084        $  96,096,834        $  (96,078,769 )      $        -        $        -        $  27,540,149          $  226,849    

Invesco Liquid Assets Portfolio, Institutional Class

      24,976,463        68,640,596        (68,627,691 )      5,445        2,476        24,997,289          181,223    

Invesco Treasury Portfolio, Institutional Class

      31,453,810        109,824,953          (109,804,307 )      -        -        31,474,455          203,652    

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

5   Invesco American Value Fund

     

Value

April 30, 2022

     

Purchases

at Cost

     

Proceeds

from Sales

    

Change in

Unrealized

Appreciation

     

Realized

Gain

     

Value

October 31, 2022

     

Dividend Income

  
Investments Purchased with Cash Collateral from Securities on Loan:                                                              

Invesco Private Government Fund

    $ 35,753,915      $ 212,327,469      $ (215,126,842 )      $        -            $        -        $  32,954,542          $   271,796 * 

Invesco Private Prime Fund

      81,914,979        517,064,527        (514,001,993 )      283            1,281        84,979,077          754,519 * 

Total

    $ 201,621,251      $ 1,003,954,379      $ (1,003,639,602 )      $5,728            $3,757        $201,945,512          $1,638,039  

 

  *

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(e) 

The rate shown is the 7-day SEC standardized yield as of October 31, 2022.

(f) 

The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I.

 

Open Forward Foreign Currency Contracts

Settlement

Date

         Contract to     

Unrealized

Appreciation
(Depreciation)

   Counterparty              Deliver                      Receive        

Currency Risk

                            

11/23/2022

    J.P. Morgan Chase Bank, N.A.      EUR    1,567,685        USD    1,582,631      $     31,071

Currency Risk

                            

11/23/2022

    Bank of America, N.A.      USD  12,356,426        EUR  12,419,933      (64,239)

11/23/2022

    Royal Bank of Canada      EUR  27,474,809        USD  27,154,700      (37,516)

Subtotal–Depreciation

                      (101,755)

Total Forward Foreign Currency Contracts

                      $  (70,684)

Abbreviations:

EUR - Euro

USD - U.S. Dollar

Portfolio Composition

By sector, based on Net Assets

as of October 31, 2022

 

Industrials

      26.11 % 

Energy

      20.20  

Health Care

      13.24  

Financials

      10.31  

Information Technology

      7.28  

Consumer Discretionary

      5.62  

Materials

      5.47  

Consumer Staples

      3.90  

Utilities

      2.49  

Money Market Funds Plus Other Assets Less Liabilities

      5.38  

 

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, 2022

(Unaudited)

 

Assets:

   

Investments in unaffiliated securities, at value
(Cost $1,624,054,736)*

    $ 1,653,065,110  

 

  

Investments in affiliated money market funds, at value (Cost $201,934,927)

      201,945,512  

 

  

Other investments:

   

Unrealized appreciation on forward foreign currency contracts outstanding

      31,071  

 

  

Cash

      78,962  

 

  

Foreign currencies, at value (Cost $194,803)

      198,500  

 

  

Receivable for:

   

Investments sold

      11,782,208  

 

  

Fund shares sold

      390,070  

 

  

Dividends

      834,773  

 

  

Investment for trustee deferred compensation and retirement plans

      253,304  

 

  

Other assets

      81,186  

 

  

Total assets

      1,868,660,696  

 

  

Liabilities:

   

Other investments:

   

Unrealized depreciation on forward foreign currency contracts outstanding

      101,755  

 

  

Payable for:

   

Fund shares reacquired

      1,683,863  

 

  

Collateral upon return of securities loaned

      117,930,718  

 

  

Accrued fees to affiliates

      997,245  

 

  

Accrued other operating expenses

      528,639  

 

  

Trustee deferred compensation and retirement plans

      365,855  

 

  

Total liabilities

      121,608,075  

 

  

Net assets applicable to shares outstanding

    $ 1,747,052,621  

 

  

Net assets consist of:

   

Shares of beneficial interest

    $ 1,378,894,721  

 

  

Distributable earnings

      368,157,900  

 

  
   $ 1,747,052,621  

 

  

Net Assets:

   

Class A

    $ 1,438,100,616  

 

  

Class C

    $ 48,509,211  

 

  

Class R

    $ 58,364,435  

 

  

Class Y

    $ 134,382,973  

 

  

Class R5

    $ 9,818,402  

 

  

Class R6

    $ 57,876,984  

 

  

Shares outstanding, no par value, with an unlimited number of shares authorized:

 

Class A

      39,221,333  

 

  

Class C

      1,770,228  

 

  

Class R

      1,610,848  

 

  

Class Y

      3,621,812  

 

  

Class R5

      264,282  

 

  

Class R6

      1,557,254  

 

  

Class A:

   

Net asset value per share

    $ 36.67  

 

  

Maximum offering price per share
(Net asset value of $36.67 ÷ 94.50%)

    $ 38.80  

 

  

Class C:

   

Net asset value and offering price per share

    $ 27.40  

 

  

Class R:

   

Net asset value and offering price per share

    $ 36.23  

 

  

Class Y:

   

Net asset value and offering price per share

    $ 37.10  

 

  

Class R5:

   

Net asset value and offering price per share

    $ 37.15  

 

  

Class R6:

   

Net asset value and offering price per share

    $ 37.17  

 

  

 

*

At October 31, 2022, securities with an aggregate value of $116,124,570 were on loan to brokers.

 

 

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, 2022

(Unaudited)

 

Investment income:

   

Dividends (net of foreign withholding taxes of $385,843)

    $ 18,473,068  

 

  

Dividends from affiliated money market funds (includes net securities lending income of $52,393)

      664,117  

 

  

Total investment income

      19,137,185  

 

  

Expenses:

   

Advisory fees

      5,730,515  

 

  

Administrative services fees

      133,383  

 

  

Custodian fees

      5,801  

 

  

Distribution fees:

   

Class A

      1,773,288  

 

  

Class C

      235,999  

 

  

Class R

      144,106  

 

  

Transfer agent fees – A, C, R and Y

      1,429,470  

 

  

Transfer agent fees – R5

      4,975  

 

  

Transfer agent fees – R6

      8,682  

 

  

Trustees’ and officers’ fees and benefits

      13,623  

 

  

Registration and filing fees

      60,091  

 

  

Reports to shareholders

      81,873  

 

  

Professional services fees

      31,360  

 

  

Other

      267,132  

 

  

Total expenses

      9,920,298  

 

  

Less: Fees waived and/or expense offset arrangement(s)

      (42,867 ) 

 

  

Net expenses

      9,877,431  

 

  

Net investment income

      9,259,754  

 

  

Realized and unrealized gain (loss) from:

   

Net realized gain (loss) from:

   

Unaffiliated investment securities (includes net gains from securities sold to affiliates of $2,641,895)

      57,447,656  

 

  

Affiliated investment securities

      3,757  

 

  

Foreign currencies

      (71,197 ) 

 

  

Forward foreign currency contracts

      (655,396 ) 

 

  
     56,724,820  

 

  

Change in net unrealized appreciation (depreciation) of:

   

Unaffiliated investment securities

      (55,053,847 ) 

 

  

Affiliated investment securities

      5,728  

 

  

Foreign currencies

      (45,135 ) 

 

  

Forward foreign currency contracts

      (70,684 ) 

 

  
     (55,163,938 ) 

 

  

Net realized and unrealized gain

      1,560,882  

 

  

Net increase in net assets resulting from operations

    $ 10,820,636  

 

  

 

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, 2022 and the year ended April 30, 2022

(Unaudited)

 

    

October 31,

2022

    

April 30,

2022

  

 

  

Operations:

     

Net investment income

    $ 9,259,754     $ 9,045,416  

 

  

Net realized gain

      56,724,820       483,923,069  

 

  

Change in net unrealized appreciation (depreciation)

      (55,163,938 )      (529,643,262 ) 

 

  

Net increase (decrease) in net assets resulting from operations

      10,820,636       (36,674,777 ) 

 

  

Distributions to shareholders from distributable earnings:

     

Class A

      –       (181,193,783 ) 

 

  

Class C

      –       (8,466,121 ) 

 

  

Class R

      –       (7,231,983 ) 

 

  

Class Y

      –       (16,738,651 ) 

 

  

Class R5

      –       (1,393,261 ) 

 

  

Class R6

      –       (7,165,458 ) 

 

  

Total distributions from distributable earnings

      –       (222,189,257 ) 

 

  

Share transactions–net:

     

Class A

      (46,379,943 )      55,579,491  

 

  

Class C

      (3,862,527 )      (2,000,747 ) 

 

  

Class R

      (1,315,344 )      1,130,268  

 

  

Class Y

      (11,395,551 )      16,186,725  

 

  

Class R5

      (720,473 )      (323,638 ) 

 

  

Class R6

      (3,165,991 )      4,931,376  

 

  

Net increase (decrease) in net assets resulting from share transactions

      (66,839,829 )      75,503,475  

 

  

Net increase (decrease) in net assets

      (56,019,193 )      (183,360,559 ) 

 

  

Net assets:

     

Beginning of period

      1,803,071,814       1,986,432,373  

 

  

End of period

    $ 1,747,052,621     $ 1,803,071,814  

 

  

 

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

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 10/31/22                     

 $ 36.39 $ 0.19 $ 0.09 $ 0.28 $ – $ – $ – $ 36.67   0.77 % $ 1,438,101   1.15 %(d)   1.15 %(d)   1.06 %(d)   29 %

Year ended 04/30/22

   41.96   0.19   (0.84 )   (0.65 )   (0.09 )   (4.83 )   (4.92 )   36.39   (2.07 )   1,475,253   1.11   1.11   0.45   117

Year ended 04/30/21

   25.84   0.08   16.14   16.22   (0.10 )   –   (0.10 )   41.96   62.87   1,630,250   1.16   1.18   0.24   58

Year ended 04/30/20

   34.02   0.17   (7.29 )   (7.12 )   –   (1.06 )   (1.06 )   25.84   (21.65 )   1,167,164   1.21   1.21   0.53   38

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

Class C

Six months ended 10/31/22

   27.29   0.05   0.06   0.11   –   –   –   27.40   0.40 (e)    48,509   1.86 (d)(e)    1.86 (d)(e)    0.35 (d)(e)    29

Year ended 04/30/22

   32.81   (0.09 )   (0.60 )   (0.69 )   –   (4.83 )   (4.83 )   27.29   (2.77 )(e)   52,304   1.84 (e)    1.84 (e)    (0.28 )(e)   117

Year ended 04/30/21

   20.31   (0.11 )   12.65   12.54   (0.04 )   –   (0.04 )   32.81   61.76 (e)    64,246   1.86 (e)    1.89 (e)    (0.46 )(e)   58

Year ended 04/30/20

   27.15   (0.05 )   (5.73 )   (5.78 )   –   (1.06 )   (1.06 )   20.31   (22.20 )(e)   67,089   1.93 (e)    1.93 (e)    (0.19 )(e)   38

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

Class R

Six months ended 10/31/22

   36.00   0.14   0.09   0.23   –   –   –   36.23   0.64   58,364   1.40 (d)    1.40 (d)    0.81 (d)    29

Year ended 04/30/22

   41.58   0.09   (0.84 )   (0.75 )   –   (4.83 )   (4.83 )   36.00   (2.32 )   59,416   1.36   1.36   0.20   117

Year ended 04/30/21

   25.65   0.00   16.01   16.01   (0.08 )   –   (0.08 )   41.58   62.48   66,822   1.40   1.43   0.00   58

Year ended 04/30/20

   33.86   0.09   (7.24 )   (7.15 )   –   (1.06 )   (1.06 )   25.65   (21.84 )   51,330   1.46   1.46   0.28   38

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

Class Y

Six months ended 10/31/22

   36.78   0.24   0.08   0.32   –   –   –   37.10   0.87   134,383   0.90 (d)    0.90 (d)    1.31 (d)    29

Year ended 04/30/22

   42.34   0.29   (0.84 )   (0.55 )   (0.18 )   (4.83 )   (5.01 )   36.78   (1.81 )   145,106   0.86   0.86   0.70   117

Year ended 04/30/21

   26.04   0.16   16.29   16.45   (0.15 )   –   (0.15 )   42.34   63.28   148,861   0.91   0.93   0.49   58

Year ended 04/30/20

   34.28   0.25   (7.34 )   (7.09 )   (0.09 )   (1.06 )   (1.15 )   26.04   (21.46 )   154,826   0.96   0.96   0.78   38

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

Class R5

Six months ended 10/31/22

   36.81   0.25   0.09   0.34   –   –   –   37.15   0.93   9,818   0.83 (d)    0.83 (d)    1.38 (d)    29

Year ended 04/30/22

   42.39   0.32   (0.85 )   (0.53 )   (0.22 )   (4.83 )   (5.05 )   36.81   (1.75 )   10,443   0.79   0.79   0.77   117

Year ended 04/30/21

   26.06   0.20   16.30   16.50   (0.17 )   –   (0.17 )   42.39   63.44   12,304   0.79   0.79   0.61   58

Year ended 04/30/20

   34.30   0.28   (7.33 )   (7.05 )   (0.13 )   (1.06 )   (1.19 )   26.06   (21.36 )   10,999   0.86   0.86   0.88   38

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

Class R6

Six months ended 10/31/22

   36.81   0.26   0.10   0.36   –   –   –   37.17   0.98   57,877   0.76 (d)    0.76 (d)    1.45 (d)    29

Year ended 04/30/22

   42.38   0.35   (0.85 )   (0.50 )   (0.24 )   (4.83 )   (5.07 )   36.81   (1.69 )   60,549   0.72   0.72   0.84   117

Year ended 04/30/21

   26.05   0.21   16.30   16.51   (0.18 )   –   (0.18 )   42.38   63.53   63,949   0.75   0.75   0.65   58

Year ended 04/30/20

   34.31   0.30   (7.34 )   (7.04 )   (0.16 )   (1.06 )   (1.22 )   26.05   (21.32 )   51,007   0.79   0.79   0.95   38

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

 

(a) 

Calculated using average shares outstanding.

(b) 

Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.

(c) 

Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended April 30, 2020, the portfolio turnover calculation excludes the value of securities purchased of $846,125,268 in connection with the acquisition of Invesco Oppenheimer Mid Cap Value Fund into the Fund.

(d) 

Annualized.

(e) 

The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.96%, 0.98%, 0.96%, 0.97%, 0.97% and 0.97% for the six months ended October 31, 2022 and the years ended April 30, 2022, 2021, 2020, 2019 and 2018 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, 2022

(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 an open-end series management investment company authorized to issue an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.

The Fund’s investment objective is long-term 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 a front-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 eight 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 eighth 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.

Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.

Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.

Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.

Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.

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 may be used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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 market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism, significant governmental actions or adverse investor sentiment generally 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.

The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used.

 

11   Invesco American Value Fund

  Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.
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 an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.

The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.

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, the country that has the primary market for the issuer’s securities and its “country of risk” as determined by a third party service provider, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

D.

Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.

E.

Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F.

Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated based on relative net assets of Class R5 and Class R6. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.

G.

Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.

H.

Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.

I.

Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “affiliated money market funds”) and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are

 

12   Invesco American Value Fund

  net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities.

The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon also serves as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the six months ended October 31, 2022, the Fund paid the Adviser $3,170 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.

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 exchange of the two currencies on the settlement date, 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).

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 for hedging 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.

COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance.

NOTE 2–Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with the Adviser. 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 $500 million

      0.715%  

 

  
Next $1 billion    0.585%  

 

  

Next $4 billion

      0.563%  

 

  

Over $6 billion

      0.543%  

 

  

For the six months ended October 31, 2022, the effective advisory fee rate incurred by the Fund was 0.66%.

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, 2023, 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 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 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, 2023. 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, 2024, 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.

 

13   Invesco American Value Fund

For the six months ended October 31, 2022, the Adviser waived advisory fees of $33,264.

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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Administrative 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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc.(“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively the “Plans”). The Fund, pursuant to the Plans, reimburses IDI for its allocated share of expenses incurred for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Class A shares, up to 1.00% of the average daily net assets of Class C shares, and up to 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. For the six months ended October 31, 2022, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.

Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2022, IDI advised the Fund that IDI retained $70,810 in front-end sales commissions from the sale of Class A shares and $2,079 and $739 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.

For the six months ended October 31, 2022, the Fund incurred $12,141 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. 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 Adviser’s 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, 2022. 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

    $ 1,636,808,655      $ 16,256,455     $–    $ 1,653,065,110  

 

  

Money Market Funds

      84,011,893        117,933,619       –      201,945,512  

 

  

Total Investments in Securities

      1,720,820,548        134,190,074       –      1,855,010,622  

 

  

Other Investments - Assets*

           

 

  

Forward Foreign Currency Contracts

      –        31,071       –      31,071  

 

  

Other Investments - Liabilities*

           

 

  

Forward Foreign Currency Contracts

      –        (101,755 )      –      (101,755 ) 

 

  

Total Other Investments

      –        (70,684 )      –      (70,684 ) 

 

  

    Total Investments

    $ 1,720,820,548      $ 134,119,390     $–    $ 1,854,939,938  

 

  

 

*

Unrealized appreciation (depreciation).

 

14   Invesco American Value Fund

NOTE 4–Derivative Investments

Value of Derivative Investments at Period-End

The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of October 31, 2022:

 

     Value  
       Currency    
Derivative Assets    Risk  

 

  

Unrealized appreciation on forward foreign currency contracts outstanding

    $ 31,071  

 

  

Derivatives not subject to master netting agreements

      –  

 

  

Total Derivative Assets subject to master netting agreements

    $ 31,071  

 

  

 

     Value  
       Currency    
Derivative Liabilities    Risk  

 

  

Unrealized depreciation on forward foreign currency contracts outstanding

    $ (101,755 ) 

 

  

Derivatives not subject to master netting agreements

      –  

 

  

Total Derivative Liabilities subject to master netting agreements

    $ (101,755 ) 

 

  

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, 2022.

 

     Financial      Financial                          
     Derivative      Derivative             Collateral       
     Assets      Liabilities             (Received)/Pledged       
     Forward Foreign      Forward Foreign      Net Value of                Net  
Counterparty    Currency Contracts      Currency Contracts      Derivatives      Non-Cash    Cash    Amount  

 

  

Bank of America, N.A.

      $         –                $  (64,239)            $(64,239)          $–    $–      $(64,239 ) 

 

  

J.P. Morgan Chase Bank, N.A.

      31,071                –             31,071             –      –      31,071  

 

  

Royal Bank of Canada

                –                (37,516)            (37,516)            –      –      (37,516 ) 

 

  

Total

      $31,071                $(101,755)            $(70,684)          $–    $–      $(70,684 ) 

 

  

Effect of Derivative Investments for the six months ended October 31, 2022

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 (Loss):

   

Forward foreign currency contracts

      $(655,396)          

 

  

Change in Net Unrealized Appreciation (Depreciation):

   

Forward foreign currency contracts

      (70,684)          

 

  

Total

      $(726,080)          

 

  

The table below summarizes the average notional value of derivatives held during the period.

 

     Forward  
     Foreign Currency  
     Contracts  

 

  

Average notional value

      $34,682,052   

 

  

NOTE 5–Security Transactions with Affiliated Funds

The Fund is permitted to purchase securities from or sell securities to certain other affiliated 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 that is or could be considered an “affiliated person” by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers is made in reliance on Rule 17a-7 of the 1940 Act and, to the extent applicable, related SEC staff positions. Each such transaction is effected at the security’s “current market price”, as provided for in these procedures and Rule 17a-7. Pursuant to these procedures, for the six months ended October 31, 2022, the Fund engaged in securities purchases of $4,552,353 and securities sales of $9,375,488, which resulted in net realized gains of $2,641,895.

NOTE 6–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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $9,603.

 

15   Invesco American Value Fund

NOTE 7–Trustees’ and Officers’ Fees and Benefits

Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees 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 8–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 at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.

NOTE 9–Tax Information

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund had a capital loss carryforward as of April 30, 2022, as follows:

 

Capital Loss Carryforward*

  
Expiration    Short-Term             Long-Term             Total  

 

  

Not subject to expiration

    $ 80,684,491         $ 24,996,327         $ 105,680,818  

 

  

 

*

Capital loss carryforward 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 10–Investment Transactions

The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2022 was $486,930,877 and $578,711,480, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investments on a Tax Basis

  

Aggregate unrealized appreciation of investments

      $  156,875,547  

 

  

Aggregate unrealized (depreciation) of investments

      (139,245,571 ) 

 

  

Net unrealized appreciation of investments

      $    17,629,976  

 

  

Cost of investments for tax purposes is $1,837,309,962.

NOTE 11–Share Information

 

     Summary of Share Activity  

 

  
     Six months ended      Year ended  
     October 31, 2022(a)      April 30, 2022  
     Shares      Amount      Shares      Amount  

 

  

Sold:

            

Class A

      1,059,564      $ 37,458,571        2,506,883      $ 101,983,627  

 

  

Class C

      121,340        3,178,776        320,077        10,094,048  

 

  

Class R

      120,108        4,158,129        251,204        10,133,421  

 

  

Class Y

      189,941        6,772,156        861,822        34,938,522  

 

  

Class R5

      22,591        803,335        39,231        1,626,581  

 

  

Class R6

      120,883        4,295,506        386,073        15,851,962  

 

  

Issued as reinvestment of dividends:

            

Class A

      -        -        4,489,149        170,856,852  

 

  

Class C

      -        -        289,108        8,271,367  

 

  

Class R

      -        -        191,434        7,215,168  

 

  

Class Y

      -        -        359,696        13,823,134  

 

  

Class R5

      -        -        36,123        1,389,281  

 

  

Class R6

      -        -        177,502        6,824,948  

 

  

 

16   Invesco American Value Fund

     Summary of Share Activity  

 

  
     Six months ended     Year ended  
     October 31, 2022(a)     April 30, 2022  
     Shares     Amount     Shares     Amount  

 

  

Automatic conversion of Class C shares to Class A shares:

         

Class A

      80,337     $ 2,800,136       198,914     $ 8,020,020  

 

  

Class C

      (107,327 )      (2,800,136 )      (259,857 )      (8,020,020 ) 

 

  

Reacquired:

         

Class A

      (2,460,491 )      (86,638,650 )      (5,505,513 )      (225,281,008 ) 

 

  

Class C

      (160,537 )      (4,241,167 )      (390,903 )      (12,346,142 ) 

 

  

Class R

      (159,637 )      (5,473,473 )      (399,338 )      (16,218,321 ) 

 

  

Class Y

      (513,804 )      (18,167,707 )      (791,393 )      (32,574,931 ) 

 

  

Class R5

      (42,014 )      (1,523,808 )      (81,883 )      (3,339,500 ) 

 

  

Class R6

      (208,452 )      (7,461,497 )      (427,612 )      (17,745,534 ) 

 

  

Net increase (decrease) in share activity

      (1,937,498 )    $ (66,839,829 )      2,250,717     $ 75,503,475  

 

  

 

(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 12–Significant 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 Value Opportunities Fund (the “Acquiring Fund”).

The reorganization is expected to be consummated at the close of business on or about February 10, 2023. 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 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, 2022 through October 31, 2022.

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.

 

            ACTUAL   

HYPOTHETICAL
(5% annual return before

expenses)

      
      Beginning
    Account Value    
(05/01/22)		    Ending
    Account Value    
(10/31/22)1 		   Expenses
      Paid During      
Period2 		   Ending
    Account Value    
(10/31/22)		    Expenses
      Paid During      
Period2 		  

      Annualized      
Expense

Ratio

Class A

    $1,000.00    $1,007.70    $5.82    $1,019.41    $5.85    1.15%

Class C

      1,000.00      1,004.00      9.40      1,015.83      9.45    1.86    

Class R

      1,000.00      1,006.40      7.08      1,018.15      7.12    1.40    

Class Y

      1,000.00      1,008.70      4.56      1,020.67      4.58    0.90    

Class R5

      1,000.00      1,009.30      4.20      1,021.02      4.23    0.83    

Class R6

      1,000.00      1,009.80      3.85      1,021.37      3.87    0.76    

 

1 

The actual ending account value is based on the actual total return of the Fund for the period May 1, 2022 through October 31, 2022, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.

2 

Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year.

 

18   Invesco American Value Fund

Approval of Investment Advisory and Sub-Advisory Contracts

    

 

At meetings held on June 13, 2022, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco American Value Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2022. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

The Board’s Evaluation Process

The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

    As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer. 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 accordance with certain negotiated regulatory requirements. In

addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

    The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

A.

Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board

reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

    The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

B.

Fund Investment Performance

The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

    The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2021 to the performance of funds in the Broadridge performance universe and against the Russell Midcap® Value Index (Index). The Board noted that performance of Class A shares of the Fund was in the fourth quintile of its performance universe for the one, three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was reasonably comparable to the performance of the Index for the one year period and below the performance of the Index for the three and five year periods. The Board noted that the Fund’s stock selection in and allocation to certain sectors detracted from Fund performance. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its conclusions.

 

 

19   Invesco American Value Fund

C.

Advisory and Sub-Advisory Fees and Fund Expenses

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.

    The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.

    The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.

    The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

D.

Economies of Scale and Breakpoints

The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

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 in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and the periodic review and enhancement of such methodology. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

F.

Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

    The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives from Invesco Advisers periodic reports that include a representation to the effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated

money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

    The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.

    The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

    At meetings held on June 13, 2022, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco American Value Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2022. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

    The Board’s Evaluation Process

    The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about

 

 

20   Invesco American Value Fund

investment performance and portfolio attributes of these funds. The Board has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

    As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer. 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 accordance with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

    The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.

    Factors and Conclusions and Summary of Independent Written Fee Evaluation

    A. Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

    The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered

information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

    The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

    B. Fund Investment Performance

    The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

    The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2021 to the performance of funds in the Broadridge performance universe and against the Russell Midcap® Value Index (Index). The Board noted that performance of Class A shares of the Fund was in the fourth quintile of its performance universe for the one, three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was reasonably comparable to the performance of the Index for the one year period and below the performance of the Index for the three and five year periods. The Board noted that the Fund’s stock selection in and allocation to certain sectors detracted from Fund performance. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its conclusions.

    C. Advisory and Sub-Advisory Fees and Fund Expenses

    The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.

    The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.

    The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.

    The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

    D. Economies of Scale and Breakpoints

    The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally

 

 

21   Invesco American Value Fund

operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

    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 in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and the periodic review and enhancement of such methodology. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

    F. Collateral Benefits to Invesco Advisers and its Affiliates

    The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

    The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives from Invesco Advisers periodic reports that include a representation to the effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

    The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.

    The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

            

 

 

22   Invesco American Value Fund

(This page intentionally left blank)

 

 

 

 

 

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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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-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/corporate/about-us/esg. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. 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 number(s): 811-03826 and 002-85905                    Invesco Distributors, Inc.    VK-AMVA-SAR-1                                         

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Semiannual Report to Shareholders      October 31, 2022  

Invesco Comstock Fund

Nasdaq:

A: ACSTX ∎ C: ACSYX ∎ R: ACSRX ∎ Y: ACSDX ∎ R5: ACSHX ∎ R6: ICSFX

 

    

   
2   Fund Performance
4   Schedule of Investments
8   Financial Statements
11   Financial Highlights
12   Notes to Financial Statements
19   Fund Expenses
20   Approval of Investment Advisory and Sub-Advisory Contracts

 

 

For the most current month-end Fund performance and commentary, please visit invesco.com/performance.

Unless otherwise noted, all data is provided by Invesco.

This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.

 

 

 

NOT FDIC INSURED  |  MAY LOSE VALUE  |  NO BANK GUARANTEE

 

Fund Performance

 

 

Performance summary

 

 

 

Fund vs. Indexes

 

Cumulative total returns, 4/30/22 to 10/31/22, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

  

Class A Shares

     0.36 % 

Class C Shares

     -0.01  

Class R Shares

     0.26  

Class Y Shares

     0.50  

Class R5 Shares

     0.53  

Class R6 Shares

     0.56  

S&P 500 Index▼ (Broad Market Index)

     -5.50  

Russell 1000 Value Index▼ (Style-Specific Index)

     -3.19  

Lipper Large-Cap Value Funds Index◾ (Peer Group Index)

     -2.73  

Source(s): ▼RIMES Technologies Corp.; ◾Lipper Inc.

  

    The S&P 500® Index is an unmanaged index considered representative of the US stock market.

    The Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.

    The Lipper Large-Cap Value Funds Index is an unmanaged index considered representative of large-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 visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.

    Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.

 

 

 

2   Invesco Comstock Fund

    

    

    

 

 

Average Annual Total Returns

 

As of 10/31/22, including maximum applicable sales charges

 

Class A Shares

        

Inception (10/7/68)

     10.64 % 

10 Years

     10.38  

  5 Years

     7.49  

  1 Year

     -4.21  

Class C Shares

        

Inception (10/26/93)

     9.63 % 

10 Years

     10.36  

  5 Years

     7.92  

  1 Year

     -0.33  

Class R Shares

        

Inception (10/1/02)

     9.19 % 

10 Years

     10.74  

  5 Years

     8.44  

  1 Year

     1.10  

Class Y Shares

        

Inception (10/29/04)

     8.26 % 

  10 Years

     11.29  

  5 Years

     8.99  

  1 Year

     1.62  

Class R5 Shares

        

Inception (6/1/10)

     11.87 % 

10 Years

     11.38  

  5 Years

     9.06  

  1 Year

     1.65  

Class R6 Shares

        

Inception (9/24/12)

     11.22 % 

10 Years

     11.47  

  5 Years

     9.15  

  1 Year

     1.76  

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 those of Class A, Class C, Class R and Class I shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.

    The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.

    Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.

    The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.

    Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.

 

 

3   Invesco Comstock Fund

Schedule of Investments(a)

October 31, 2022

(Unaudited)

 

     Shares      Value  

 

  

Common Stocks & Other Equity Interests–96.22%

 

Aerospace & Defense–0.94%

 

Textron, Inc.

      1,350,267      $      92,412,273  

 

  

Air Freight & Logistics–1.53%

 

FedEx Corp.

      936,397        150,085,711  

 

  

Apparel Retail–0.60%

 

Ross Stores, Inc.

      618,161        59,151,826  

 

  

Apparel, Accessories & Luxury Goods–0.77%

 

Ralph Lauren Corp.(b)

      813,276        75,382,552  

 

  

Asset Management & Custody Banks–1.88%

 

State Street Corp.

      2,486,321        183,987,754  

 

  

Automobile Manufacturers–1.68%

 

General Motors Co.

      4,186,274        164,311,255  

 

  

Building Products–2.02%

 

Johnson Controls International PLC

      3,422,682        197,967,927  

 

  

Cable & Satellite–1.10%

 

Comcast Corp., Class A

      3,408,435        108,183,727  

 

  

Casinos & Gaming–1.29%

 

Las Vegas Sands Corp.(b)(c)

      3,315,295        126,014,363  

 

  

Communications Equipment–2.76%

 

Cisco Systems, Inc.

      4,260,735        193,565,191  

 

  

F5, Inc.(c)

      537,064        76,751,816  

 

  
     270,317,007  

 

  

Construction Machinery & Heavy Trucks–3.44%

 

Caterpillar, Inc.

      814,432        176,291,951  

 

  

Wabtec Corp.

      1,728,179        161,204,537  

 

  
     337,496,488  

 

  

Diversified Banks–8.13%

 

Bank of America Corp.

      7,807,423        281,379,525  

 

  

Citigroup, Inc.

      3,137,991        143,908,267  

 

  

JPMorgan Chase & Co.

      936,083        117,834,128  

 

  

Wells Fargo & Co.

      5,537,779        254,682,456  

 

  
     797,804,376  

 

  

Diversified Chemicals–0.40%

 

BASF SE (Germany)

      865,627        38,858,414  

 

  

Electric Utilities–1.14%

 

PPL Corp.

      4,237,464        112,250,421  

 

  

Electrical Components & Equipment–3.24%

 

Eaton Corp. PLC

      1,132,567        169,964,330  

 

  

Emerson Electric Co.

      1,706,543        147,786,624  

 

  
     317,750,954  

 

  

Fertilizers & Agricultural Chemicals–1.79%

 

CF Industries Holdings, Inc.

      995,958        105,830,497  

 

  

Corteva, Inc.

      1,065,426        69,614,935  

 

  
     175,445,432  

 

  
     Shares      Value  

 

  

Health Care Distributors–2.49%

 

Henry Schein, Inc.(b)(c)

      1,470,252      $    100,653,452  

McKesson Corp.

      369,483        143,865,596  

 

  
     244,519,048  

 

  

Health Care Equipment–2.28%

 

Becton, Dickinson and Co.

      460,114        108,573,101  

 

  

Medtronic PLC

      1,321,351        115,406,796  

 

  
     223,979,897  

 

  

Health Care Facilities–2.01%

 

HCA Healthcare, Inc.

      499,430        108,611,042  

 

  

Universal Health Services, Inc., Class B

      763,865        88,509,038  

 

  
     197,120,080  

 

  

Health Care Services–1.96%

 

CVS Health Corp.

      2,031,147        192,349,621  

 

  

Health Care Supplies–0.37%

 

DENTSPLY SIRONA, Inc.

      1,188,135        36,618,321  

 

  

Hotel & Resort REITs–0.64%

 

Host Hotels & Resorts, Inc.(b)

      3,330,162        62,873,459  

 

  

Hotels, Resorts & Cruise Lines–1.70%

 

Booking Holdings, Inc.(c)

      89,413        167,155,815  

 

  

Household Products–1.59%

 

Kimberly-Clark Corp.

      1,251,302        155,737,047  

 

  

Industrial Conglomerates–1.04%

 

General Electric Co.(b)

      1,314,917        102,313,692  

 

  

Integrated Oil & Gas–5.74%

 

Chevron Corp.

      1,564,528        283,023,115  

 

  

Exxon Mobil Corp.

      798,786        88,513,477  

 

  

Suncor Energy, Inc. (Canada)

      5,558,797        191,167,029  

 

  
     562,703,621  

 

  

Interactive Media & Services–0.78%

 

Meta Platforms, Inc., Class A(c)

      823,188        76,688,194  

 

  

Internet & Direct Marketing Retail–0.32%

 

eBay, Inc.

      783,711        31,223,046  

 

  

Investment Banking & Brokerage–2.58%

 

Goldman Sachs Group, Inc. (The)

      432,771        149,093,937  

 

  

Morgan Stanley

      1,263,499        103,821,713  

 

  
     252,915,650  

 

  

IT Consulting & Other Services–2.83%

 

Cognizant Technology Solutions Corp., Class A

      2,320,246        144,435,314  

 

  

DXC Technology Co.(c)

      4,643,271        133,494,041  

 

  
     277,929,355  

 

  

Life & Health Insurance–1.14%

 

MetLife, Inc.

      1,528,675        111,914,297  

 

  

Managed Health Care–3.88%

 

Elevance Health, Inc.

      508,474        278,018,329  

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

4   Invesco Comstock Fund

     Shares      Value  

 

  

Managed Health Care–(continued)

 

Humana, Inc.

      184,231      $    102,815,636  

 

  
     380,833,965  

 

  

Multi-line Insurance–2.20%

 

American International Group, Inc.

      3,792,071        216,148,047  

 

  

Oil & Gas Exploration & Production–6.77%

 

ConocoPhillips

      1,363,989        171,985,373  

 

  

Devon Energy Corp.(b)

      1,283,802        99,302,085  

 

  

Hess Corp.(b)

      1,167,118        164,657,008  

 

  

Marathon Oil Corp.

      4,243,072        129,201,542  

 

  

Pioneer Natural Resources Co.(b)

      387,047        99,242,721  

 

  
     664,388,729  

 

  

Packaged Foods & Meats–0.72%

 

Kraft Heinz Co. (The)

      1,833,480        70,533,976  

 

  

Paper Packaging–1.36%

 

International Paper Co.

      3,955,623        132,948,489  

 

  

Personal Products–0.76%

 

Haleon PLC (United Kingdom)(c)

      24,361,163        74,821,976  

 

  

Pharmaceuticals–5.76%

 

Bristol-Myers Squibb Co.

      1,527,921        118,368,040  

 

  

Johnson & Johnson

      975,451        169,699,211  

 

  

Merck & Co., Inc.

      1,514,126        153,229,551  

 

  

Sanofi, ADR (France)

      2,874,367        124,258,885  

 

  
     565,555,687  

 

  

Property & Casualty Insurance–0.95%

 

Allstate Corp. (The)(b)

      739,081        93,308,976  

 

  

Regional Banks–4.73%

 

Citizens Financial Group, Inc.

      3,053,762        124,898,866  

 

  

Fifth Third Bancorp(b)

      3,269,646        116,693,666  

 

  

Huntington Bancshares, Inc.(b)

      7,741,580        117,517,184  

 

  

M&T Bank Corp.(b)

      625,155        105,257,347  

 

  
     464,367,063  

 

  

Semiconductors–2.89%

 

Intel Corp.

      1,649,975        46,908,789  

 

  

NXP Semiconductors N.V. (China)

      941,494        137,533,444  

 

  

QUALCOMM, Inc.

      845,478        99,478,941  

 

  
     283,921,174  

 

  
     Shares      Value  

 

  

Soft Drinks–1.08%

 

Coca-Cola Co. (The)

      1,772,457      $ 106,081,551  

 

  

Systems Software–1.26%

 

Microsoft Corp.

      531,933        123,477,607  

 

  

Tobacco–2.45%

 

Philip Morris International, Inc.

      2,619,393        240,591,247  

 

  

Wireless Telecommunication Services–1.23%

 

T-Mobile US, Inc.(c)

      797,246        120,830,604  

 

  

Total Common Stocks & Other Equity Interests
(Cost $6,342,641,155)

 

      9,441,270,714  

 

  

Money Market Funds–4.03%

 

Invesco Government & Agency Portfolio, Institutional Class, 3.07%(d)(e)

      138,682,826        138,682,826  

 

  

Invesco Liquid Assets Portfolio, Institutional Class, 3.03%(d)(e)

      98,681,163        98,700,899  

 

  

Invesco Treasury Portfolio, Institutional Class, 3.08%(d)(e)

      158,494,658        158,494,658  

 

  

Total Money Market Funds
(Cost $395,835,822)

 

      395,878,383  

 

  

TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.25%
(Cost $6,738,476,977)

 

      9,837,149,097  

 

  

Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds–1.98%

 

Invesco Private Government Fund, 3.18%(d)(e)(f)

      53,877,919        53,877,919  

 

  

Invesco Private Prime Fund, 3.28%(d)(e)(f)

      139,981,169        139,981,169  

 

  

Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $193,857,459)

 

      193,859,088  

 

  

TOTAL INVESTMENTS IN SECURITIES–102.23%
(Cost $6,932,334,436)

 

      10,031,008,185  

 

  

OTHER ASSETS LESS LIABILITIES–(2.23)%

 

      (218,423,888 ) 

 

  

NET ASSETS–100.00%

 

    $ 9,812,584,297  

 

  
 

 

Investment Abbreviations:

ADR – American Depositary Receipt

REIT – Real Estate Investment Trust

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

5   Invesco Comstock 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) 

All or a portion of this security was out on loan at October 31, 2022.

(c) 

Non-income producing security.

(d) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended October 31, 2022.

 

     Value
April 30, 2022		    

Purchases

at Cost

    

Proceeds

from Sales

    

Change in

Unrealized

Appreciation

    

Realized

Gain

(Loss)

     Value
October 31, 2022		     Dividend Income  
Investments in Affiliated Money Market Funds:                                                        

Invesco Government & Agency Portfolio, Institutional Class

     $185,898,585       $   192,530,055       $   (239,745,814 )      $           -       $          -       $138,682,826       $1,364,909  

Invesco Liquid Assets Portfolio, Institutional Class

     132,378,481       137,521,468       (171,247,010 )      35,717       12,243       98,700,899       970,447  

Invesco Treasury Portfolio, Institutional Class

     212,455,525       220,034,349       (273,995,216 )      -       -       158,494,658       1,480,260  
Investments Purchased with Cash Collateral from Securities on Loan:                                                        

Invesco Private Government Fund

     18,385,302       430,696,206       (395,203,589 )      -       -       53,877,919       377,014 * 

Invesco Private Prime Fund

     42,899,037       1,061,869,951       (964,788,425 )      1,209       (603 )      139,981,169       1,045,840 * 

Total

     $592,016,930       $2,042,652,029       $(2,044,980,054 )      $36,926       $11,640       $589,737,471       $5,238,470  

 

  *

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

(e) 

The rate shown is the 7-day SEC standardized yield as of October 31, 2022.

(f) 

The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I.

 

Open Forward Foreign Currency Contracts  

 

  
          Contract to      Unrealized
Appreciation
(Depreciation)		  

Settlement

Date

    Counterparty    Deliver      Receive  

 

  

Currency Risk

                  

11/18/2022

    Canadian Imperial Bank of Commerce      USD        2,817,774        CAD        3,869,676        $      22,876  

11/18/2022

    Deutsche Bank AG      EUR        1,608,677        USD        1,604,195        12,635  

11/18/2022

    Royal Bank of Canada      EUR        2,037,958        USD        2,026,934        10,661  

 

  

Subtotal–Appreciation

                  46,172  

 

  

Currency Risk

                  

11/18/2022

    Canadian Imperial Bank of Commerce      CAD        131,024,264        USD        95,154,037        (1,028,194 ) 

11/18/2022

    Canadian Imperial Bank of Commerce      EUR        2,656,219        USD        2,627,509        (447 ) 

11/18/2022

    Deutsche Bank AG      EUR        9,514,144        USD        9,270,574        (142,337 ) 

11/18/2022

    Royal Bank of Canada      EUR        66,699,893        USD        65,018,789        (971,396 ) 

11/18/2022

    Royal Bank of Canada      GBP        33,027,647        USD        36,698,339        (1,194,096 ) 

 

  

Subtotal–Depreciation

                  (3,336,470 ) 

 

  

Total Forward Foreign Currency Contracts

                  $(3,290,298 ) 

 

  

Abbreviations:

CAD – Canadian Dollar

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.

 

6   Invesco Comstock Fund

Portfolio Composition

By sector, based on Net Assets

as of October 31, 2022

 

  

Financials

    21.61%

Health Care

    18.76   

Energy

    12.51   

Industrials

    12.21   

Information Technology

    9.74  

Consumer Staples

    6.60  

Consumer Discretionary

    6.35  

Materials

    3.54  

Communication Services

    3.12  

Other Sectors, Each Less than 2% of Net Assets

    1.78  

Money Market Funds Plus Other Assets Less Liabilities

    3.78  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

7   Invesco Comstock Fund

Statement of Assets and Liabilities

October 31, 2022

(Unaudited)

 

Assets:

 

Investments in unaffiliated securities, at value
(Cost $6,342,641,155)*

    $ 9,441,270,714  

 

  

Investments in affiliated money market funds, at value (Cost $589,693,281)

      589,737,471  

 

  

Other investments:

   

Unrealized appreciation on forward foreign currency contracts outstanding

      46,172  

 

  

Foreign currencies, at value (Cost $423)

      411  

 

  

Receivable for:

   

Investments sold

      4,797,899  

 

  

Fund shares sold

      7,919,514  

 

  

Dividends

      4,847,715  

 

  

Investment for trustee deferred compensation and retirement plans

      689,508  

 

  

Other assets

      208,491  

 

  

Total assets

      10,049,517,895  

 

  

Liabilities:

 

Other investments:

   

Unrealized depreciation on forward foreign currency contracts outstanding

      3,336,470  

 

  

Payable for:

   

Investments purchased

      8,847,620  

 

  

Fund shares reacquired

      25,106,260  

 

  

Amount due custodian

      58,640  

 

  

Collateral upon return of securities loaned

      193,857,459  

 

  

Accrued fees to affiliates

      4,541,543  

 

  

Accrued other operating expenses

      396,805  

 

  

Trustee deferred compensation and retirement plans

      788,801  

 

  

Total liabilities

      236,933,598  

 

  

Net assets applicable to shares outstanding

    $ 9,812,584,297  

 

  

Net assets consist of:

 

Shares of beneficial interest

    $ 5,783,612,223  

 

  

Distributable earnings

      4,028,972,074  

 

  
   $ 9,812,584,297  

 

  

Net Assets:

   

Class A

    $   6,029,076,351  

 

  

Class C

    $ 98,086,322  

 

  

Class R

    $ 131,131,060  

 

  

Class Y

    $ 1,665,777,225  

 

  

Class R5

    $ 391,358,396  

 

  

Class R6

    $ 1,497,154,943  

 

  

Shares outstanding, no par value, with an unlimited number of shares authorized:

 

Class A

      207,942,555  

 

  

Class C

      3,380,584  

 

  

Class R

      4,521,451  

 

  

Class Y

      57,457,337  

 

  

Class R5

      13,512,588  

 

  

Class R6

      51,716,575  

 

  

Class A:

   

Net asset value per share

    $ 28.99  

 

  

Maximum offering price per share
(Net asset value of $28.99 ÷ 94.50%)

    $ 30.68  

 

  

Class C:

   

Net asset value and offering price per share

    $ 29.01  

 

  

Class R:

   

Net asset value and offering price per share

    $ 29.00  

 

  

Class Y:

   

Net asset value and offering price per share

    $ 28.99  

 

  

Class R5:

   

Net asset value and offering price per share

    $ 28.96  

 

  

Class R6:

   

Net asset value and offering price per share

    $ 28.95  

 

  

 

*

At October 31, 2022, securities with an aggregate value of $190,313,344 were on loan to brokers.

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

8   Invesco Comstock Fund

Statement of Operations

For the six months ended October 31, 2022

(Unaudited)

 

Investment income:

   

Dividends (net of foreign withholding taxes of $1,629,463)

    $ 120,153,394  

 

  

Dividends from affiliated money market funds (includes net securities lending income of $77,215)

      3,892,831  

 

  

Total investment income

      124,046,225  

 

  

Expenses:

   

Advisory fees

      18,329,164  

 

  

Administrative services fees

      723,280  

 

  

Custodian fees

      59,131  

 

  

Distribution fees:

   

Class A

      7,410,784  

 

  

Class C

      476,472  

 

  

Class R

      324,471  

 

  

Transfer agent fees – A, C, R and Y

      5,900,866  

 

  

Transfer agent fees – R5

      195,090  

 

  

Transfer agent fees – R6

      215,413  

 

  

Trustees’ and officers’ fees and benefits

      36,272  

 

  

Registration and filing fees

      151,847  

 

  

Reports to shareholders

      219,169  

 

  

Professional services fees

      57,356  

 

  

Other

      37,426  

 

  

Total expenses

      34,136,741  

 

  

Less: Fees waived and/or expense offset arrangement(s)

      (247,141 ) 

 

  

Net expenses

      33,889,600  

 

  

Net investment income

      90,156,625  

 

  

Realized and unrealized gain (loss) from:

   

Net realized gain (loss) from:

   

Unaffiliated investment securities

      361,479,812  

 

  

Affiliated investment securities

      11,640  

 

  

Foreign currencies

      (245,312 ) 

 

  

Forward foreign currency contracts

      19,022,293  

 

  
     380,268,433  

 

  

Change in net unrealized appreciation (depreciation) of:

   

Unaffiliated investment securities

      (425,826,535 ) 

 

  

Affiliated investment securities

      36,926  

 

  

Foreign currencies

      13,217  

 

  

Forward foreign currency contracts

      (6,481,829 ) 

 

  
     (432,258,221 ) 

 

  

Net realized and unrealized gain (loss)

      (51,989,788 ) 

 

  

Net increase in net assets resulting from operations

    $ 38,166,837  

 

  

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

9   Invesco Comstock Fund

Statement of Changes in Net Assets

For the six months ended October 31, 2022 and the year ended April 30, 2022

(Unaudited)

 

    

October 31,

2022

    

April 30,

2022

  

 

  

Operations:

     

Net investment income

    $ 90,156,625     $ 162,200,853  

 

  

Net realized gain

      380,268,433       1,295,596,714  

 

  

Change in net unrealized appreciation (depreciation)

      (432,258,221 )      (562,099,796 ) 

 

  

Net increase in net assets resulting from operations

      38,166,837       895,697,771  

 

  

Distributions to shareholders from distributable earnings:

     

Class A

      (55,052,600 )      (503,622,835 ) 

 

  

Class C

      (520,917 )      (6,744,320 ) 

 

  

Class R

      (1,030,907 )      (10,723,125 ) 

 

  

Class Y

      (16,643,106 )      (125,976,912 ) 

 

  

Class R5

      (4,211,227 )      (36,975,919 ) 

 

  

Class R6

      (16,497,243 )      (143,157,969 ) 

 

  

Total distributions from distributable earnings

      (93,956,000 )      (827,201,080 ) 

 

  

Share transactions–net:

     

Class A

      (13,506,483 )      144,326,364  

 

  

Class C

      4,801,927       1,972,852  

 

  

Class R

      (1,716,597 )      (6,912,302 ) 

 

  

Class Y

      85,013,903       72,326,174  

 

  

Class R5

      (14,640,690 )      (130,036,799 ) 

 

  

Class R6

      67,047,776       (119,889,944 ) 

 

  

Net increase (decrease) in net assets resulting from share transactions

      126,999,836       (38,213,655 ) 

 

  

Net increase in net assets

      71,210,673       30,283,036  

 

  

Net assets:

     

Beginning of period

      9,741,373,624       9,711,090,588  

 

  

End of period

    $ 9,812,584,297     $ 9,741,373,624  

 

  

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

10   Invesco Comstock 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(a)

  

Net gains

(losses)

on securities

(both

realized and

unrealized)

  

Total from

investment

operations

  

Dividends

from net

investment

income

  

Distributions

from net

realized

gains

  

Total

distributions

  

Net asset

value, end

of period

  

Total

return(b)

  

Net assets,

end of period

(000’s omitted)

  

Ratio of

expenses

to average

net assets

with fee waivers

and/or

expenses

absorbed

  

Ratio of

expenses

to average net

assets without

fee waivers

and/or

expenses

absorbed

  

Ratio of net

investment

income

to average

net assets

  

Portfolio

turnover(c)

Class A

                            

Six months ended 10/31/22

     $29.17       $0.25       $(0.16 )      $0.09       $(0.27 )      $  –       $(0.27 )      $28.99       0.36 %      $6,029,076       0.81 %(d)      0.81 %(d)      1.77 %(d)      10 % 

Year ended 04/30/22

     29.09       0.46       2.19       2.65       (0.42 )      (2.15 )      (2.57 )      29.17       9.29       6,077,682       0.80       0.80       1.52       20  

Year ended 04/30/21

     18.95       0.40       10.24       10.64       (0.50 )      –       (0.50 )      29.09       56.89       5,900,704       0.82       0.82       1.74       19  

Year ended 04/30/20

     25.18       0.51       (4.88 )      (4.37 )      (0.52 )      (1.34 )      (1.86 )      18.95       (18.76 )      4,512,553       0.82       0.83       2.16       30  

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  

Class C

                            

Six months ended 10/31/22

     29.18       0.15       (0.17 )      (0.02 )      (0.15 )      –       (0.15 )      29.01       (0.01 )      98,086       1.56 (d)      1.56 (d)      1.02 (d)      10  

Year ended 04/30/22

     29.10       0.23       2.19       2.42       (0.19 )      (2.15 )      (2.34 )      29.18       8.46       93,877       1.55       1.55       0.77       20  

Year ended 04/30/21

     18.95       0.23       10.25       10.48       (0.33 )      –       (0.33 )      29.10       55.82 (e)      91,597       1.56 (e)      1.56 (e)      1.00 (e)      19  

Year ended 04/30/20

     25.16       0.35       (4.87 )      (4.52 )      (0.35 )      (1.34 )      (1.69 )      18.95       (19.32 )(e)      96,492       1.49 (e)      1.50 (e)      1.49 (e)      30  

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  

Class R

                            

Six months ended 10/31/22

     29.17       0.22       (0.16 )      0.06       (0.23 )      –       (0.23 )      29.00       0.26       131,131       1.06 (d)      1.06 (d)      1.52 (d)      10  

Year ended 04/30/22

     29.09       0.39       2.18       2.57       (0.34 )      (2.15 )      (2.49 )      29.17       9.01       133,669       1.05       1.05       1.27       20  

Year ended 04/30/21

     18.95       0.34       10.24       10.58       (0.44 )      –       (0.44 )      29.09       56.50       139,451       1.07       1.07       1.49       19  

Year ended 04/30/20

     25.17       0.45       (4.87 )      (4.42 )      (0.46 )      (1.34 )      (1.80 )      18.95       (18.95 )      133,186       1.07       1.08       1.91       30  

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  

Class Y

                            

Six months ended 10/31/22

     29.17       0.29       (0.17 )      0.12       (0.30 )      –       (0.30 )      28.99       0.50       1,665,777       0.56 (d)      0.56 (d)      2.02 (d)      10  

Year ended 04/30/22

     29.09       0.54       2.19       2.73       (0.50 )      (2.15 )      (2.65 )      29.17       9.57       1,589,325       0.55       0.55       1.77       20  

Year ended 04/30/21

     18.95       0.45       10.25       10.70       (0.56 )      –       (0.56 )      29.09       57.28       1,511,312       0.57       0.57       1.99       19  

Year ended 04/30/20

     25.18       0.57       (4.88 )      (4.31 )      (0.58 )      (1.34 )      (1.92 )      18.95       (18.54 )      1,179,055       0.57       0.58       2.41       30  

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  

Class R5

                            

Six months ended 10/31/22

     29.14       0.30       (0.17 )      0.13       (0.31 )      –       (0.31 )      28.96       0.53       391,358       0.51 (d)      0.51 (d)      2.07 (d)      10  

Year ended 04/30/22

     29.06       0.55       2.19       2.74       (0.51 )      (2.15 )      (2.66 )      29.14       9.63       408,406       0.50       0.50       1.82       20  

Year ended 04/30/21

     18.93       0.47       10.23       10.70       (0.57 )      –       (0.57 )      29.06       57.39       529,916       0.50       0.50       2.06       19  

Year ended 04/30/20

     25.16       0.58       (4.87 )      (4.29 )      (0.60 )      (1.34 )      (1.94 )      18.93       (18.50 )      440,298       0.50       0.51       2.48       30  

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  

Class R6

                            

Six months ended 10/31/22

     29.13       0.31       (0.17 )      0.14       (0.32 )      –       (0.32 )      28.95       0.56       1,497,155       0.44 (d)      0.44 (d)      2.14 (d)      10  

Year ended 04/30/22

     29.05       0.57       2.19       2.76       (0.53 )      (2.15 )      (2.68 )      29.13       9.72       1,438,415       0.43       0.43       1.89       20  

Year ended 04/30/21

     18.92       0.48       10.24       10.72       (0.59 )      –       (0.59 )      29.05       57.56       1,538,111       0.42       0.42       2.14       19  

Year ended 04/30/20

     25.16       0.60       (4.88 )      (4.28 )      (0.62 )      (1.34 )      (1.96 )      18.92       (18.46 )      2,268,887       0.41       0.42       2.57       30  

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  

 

(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)

Annualized.

(e) 

The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.99%, 0.92%, 0.99% and 0.99% for the years ended April 30, 2021, 2020, 2019 and 2018, respectively.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

11   Invesco Comstock Fund

Notes to Financial Statements

October 31, 2022

(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 an open-end series management investment company authorized to issue an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.

The Fund’s investment objective is 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 a front-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 eight 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 eighth 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.

Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.

Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.

Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.

Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.

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 may be used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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 market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism, significant governmental actions or adverse investor sentiment generally 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.

The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used.

 

12   Invesco Comstock Fund

Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.

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 an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.

The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.

C.

Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues, the country that has the primary market for the issuer’s securities and its “country of risk” as determined by a third party service provider, 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 the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.

E.

Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F.

Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated based on relative net assets of Class R5 and Class R6. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.

G.

Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.

H.

Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.

I.

Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “affiliated money market funds”) and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan.

When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities.

The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon also serves as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner

 

13   Invesco Comstock Fund

  consistent with the federal securities laws. For the six months ended October 31, 2022, the Fund paid the Adviser $3,080 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.
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 exchange of the two currencies on the settlement date, 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).

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 for hedging 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.

COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance.

NOTE 2–Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2022, the effective advisory fee rate incurred by the Fund was 0.38%.

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, 2023, 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 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 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, 2023. 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, 2024, 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, 2022, the Adviser waived advisory fees of $239,062.

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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Administrative 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.

 

14   Invesco Comstock Fund

The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting 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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc.(“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively the “Plans”). The Fund, pursuant to the Plans, reimburses IDI for its allocated share of expenses incurred for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Class A shares, up to 1.00% of the average daily net assets of Class C shares, and up to 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. For the six months ended October 31, 2022, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.

Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2022, IDI advised the Fund that IDI retained $300,021 in front-end sales commissions from the sale of Class A shares and $8,599 and $16,464 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.

For the six months ended October 31, 2022, the Fund incurred $13,521 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. 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 Adviser’s 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, 2022. 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

    $ 9,327,590,324      $ 113,680,390     $–    $ 9,441,270,714  

 

  

Money Market Funds

      395,878,383        193,859,088       –      589,737,471  

 

  

Total Investments in Securities

      9,723,468,707        307,539,478       –      10,031,008,185  

 

  

Other Investments - Assets*

 

 

  

Forward Foreign Currency Contracts

      –        46,172       –      46,172  

 

  

Other Investments - Liabilities*

 

 

  

Forward Foreign Currency Contracts

      –        (3,336,470 )      –      (3,336,470 ) 

 

  

Total Other Investments

      –        (3,290,298 )      –      (3,290,298 ) 

 

  

Total Investments

    $ 9,723,468,707      $ 304,249,180     $–    $ 10,027,717,887  

 

  

 

*

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 and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.

For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.

 

15   Invesco Comstock Fund

Value of Derivative Investments at Period-End

The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of October 31, 2022:

 

     Value  
Derivative Assets      Currency  
Risk		  

 

  

Unrealized appreciation on forward foreign currency contracts outstanding

      $  46,172  

 

  

Derivatives not subject to master netting agreements

      -  

 

  

Total Derivative Assets subject to master netting agreements

      $  46,172  

 

  
     Value  
Derivative Liabilities    Currency
Risk		  

 

  

Unrealized depreciation on forward foreign currency contracts outstanding

    $ (3,336,470 ) 

 

  

Derivatives not subject to master netting agreements

      -  

 

  

Total Derivative Liabilities subject to master netting agreements

    $ (3,336,470 ) 

 

  

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, 2022.

 

     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

  

 

  

Canadian Imperial Bank of Commerce

      $22,876       $(1,028,641 )    $ (1,005,765 )    $–    $–      $(1,005,765 ) 

 

  

Deutsche Bank AG

      12,635          (142,337 )       (129,702 )      –      –      (129,702 ) 

 

  

Royal Bank of Canada

      10,661       (2,165,492 )      (2,154,831 )      –      –      (2,154,831 ) 

 

  

Total

      $46,172       $(3,336,470 )    $ (3,290,298 )    $–    $–      $(3,290,298 ) 

 

  

Effect of Derivative Investments for the six months ended October 31, 2022

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

    $19,022,293

 

Change in Net Unrealized Appreciation (Depreciation):

Forward foreign currency contracts

        (3,290,298)

 

Total

    $15,731,995

 

The table below summarizes the average notional value of derivatives held during the period.

 

     Forward
Foreign Currency
Contracts		  

 

  

Average notional value

      $206,240,699  

 

  

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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $8,381.

NOTE 6–Trustees’ and Officers’ Fees and Benefits

Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.

 

16   Invesco Comstock 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 at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.

NOTE 8–Tax Information

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP.

Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund did not have a capital loss carryforward as of April 30, 2022.

NOTE 9–Investment Transactions

The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2022 was $1,186,233,368 and $883,409,573, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investments on a Tax Basis  

 

  

Aggregate unrealized appreciation of investments

      $3,225,188,608  

 

  

Aggregate unrealized (depreciation) of investments

      (224,891,750 ) 

 

  

Net unrealized appreciation of investments

      $3,000,296,858  

 

  

Cost of investments for tax purposes is $7,027,421,029.

NOTE 10–Share Information

 

     Summary of Share Activity  

 

  
     Six months ended
October 31, 2022(a)		     Year ended
April 30, 2022		  
     Shares     Amount     Shares     Amount  

 

  

Sold:

         

Class A

      8,399,707     $ 238,142,501       14,724,385     $ 445,624,445  

 

  

Class C

      641,335       18,228,757       980,910       29,760,075  

 

  

Class R

      578,083       16,351,724       1,072,501       32,527,460  

 

  

Class Y

      10,545,768       299,612,153       14,511,877       439,572,560  

 

  

Class R5

      884,222       25,225,516       2,060,677       62,436,337  

 

  

Class R6

      9,516,882       269,168,279       14,507,758       438,193,074  

 

  

Issued as reinvestment of dividends:

         

Class A

      1,837,348       49,543,999       16,009,887       461,451,798  

 

  

Class C

      17,627       475,995       218,242       6,278,592  

 

  

Class R

      38,209       1,030,678       372,270       10,727,536  

 

  

Class Y

      489,853       13,203,427       3,673,337       105,950,211  

 

  

Class R5

      156,065       4,202,136       1,282,190       36,965,100  

 

  

Class R6

      585,628       15,761,997       4,869,786       140,308,053  

 

  

Automatic conversion of Class C shares to Class A shares:

         

Class A

      181,226       5,112,551       487,373       14,667,550  

 

  

Class C

      (181,135 )      (5,112,551 )      (487,190 )      (14,667,550 ) 

 

  

 

17   Invesco Comstock Fund

     Summary of Share Activity  

 

  
     Six months ended
October 31, 2022(a)		     Year ended
April 30, 2022		  
     Shares     Amount     Shares     Amount  

 

  

Reacquired:

         

Class A

      (10,842,213 )    $ (306,305,534 )      (25,722,064 )    $ (777,417,429 ) 

 

  

Class C

      (314,380 )      (8,790,274 )      (643,006 )      (19,398,265 ) 

 

  

Class R

      (676,703 )      (19,098,999 )      (1,656,582 )      (50,167,298 ) 

 

  

Class Y

      (8,065,353 )      (227,801,677 )      (15,654,017 )      (473,196,597 ) 

 

  

Class R5

      (1,542,740 )      (44,068,342 )      (7,562,051 )      (229,438,236 ) 

 

  

Class R6

      (7,768,453 )      (217,882,500 )      (22,941,161 )      (698,391,071 ) 

 

  

Net increase (decrease) in share activity

      4,480,976     $ 126,999,836       105,122     $ (38,213,655 ) 

 

  

 

(a) 

There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 43% 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.

 

18   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, 2022 through October 31, 2022.

Actual expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes

The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.

The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

 

     Beginning
    Account Value    
(05/01/22)		   ACTUAL  

HYPOTHETICAL

(5% annual return before
expenses)

  

    Annualized    
Expense

Ratio

  Ending
    Account Value    
(10/31/22)1		   Expenses
    Paid During    
Period2		   Ending
    Account Value    
(10/31/22)		  

Expenses

    Paid During    

 Period2

Class A

   $1,000.00   $1,003.60   $4.09   $1,021.12   $4.13   0.81%

Class C

     1,000.00        999.90     7.86     1,017.34     7.93   1.56   

Class R

     1,000.00     1,002.60     5.35     1,019.86     5.40   1.06   

Class Y

     1,000.00     1,005.00     2.83     1,022.38     2.85   0.56   

Class R5

     1,000.00     1,005.30     2.58     1,022.63     2.60   0.51   

Class R6

     1,000.00     1,005.60     2.22     1,022.99     2.24   0.44   

 

1 

The actual ending account value is based on the actual total return of the Fund for the period May 1, 2022 through October 31, 2022, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.

2 

Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year.

 

19   Invesco Comstock Fund

Approval of Investment Advisory and Sub-Advisory Contracts

 

At meetings held on June 13, 2022, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Comstock Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2022. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

The Board’s Evaluation Process

The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer. 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 accordance with certain negotiated regulatory requirements. In

addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel. Also, as part of the contract renewal process, the independent Trustees reviewed and considered information provided in response to detailed follow-up requests for information submitted by the independent Trustees to management. The independent Trustees met and discussed those follow-up responses with legal counsel to the independent Trustees and the Senior Officer.

The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

A.

Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the

Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

B.

Fund Investment Performance

The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2021 to the performance of funds in the Broadridge performance universe and against the Russell 1000® Value Index (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 third quintile for the three year period, and the fourth 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 year period and reasonably comparable to the performance of the Index for the three and five year periods. The Board noted that the Fund underwent an investment process change in September 2020. The Board recognized that the performance data reflects a snapshot in time as of a

 

 

20   Invesco Comstock Fund

particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its conclusions.

C.

Advisory and Sub-Advisory Fees and Fund Expenses

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.

The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement 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 its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.

The Board also compared the Fund’s effective advisory fee rate (defined for this purpose as the advisory fee rate after advisory fee waivers and before other expense limitations/waivers) to the effective advisory fee rates of other similarly managed third-party mutual funds advised or sub-advised by Invesco Advisers and its affiliates, based on asset balances as of December 31, 2021.

The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

D.

Economies of Scale and Breakpoints

The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared

with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board considered information from Invesco Advisers regarding the levels of the Fund’s breakpoints in light of current assets. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

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 in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and the periodic review and enhancement of such methodology. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

F.

Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board

also considered that it receives from Invesco Advisers periodic reports that include a representation to the effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.

The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

 

 

21   Invesco Comstock Fund

 

 

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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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-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/corporate/about-us/esg. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. 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 number(s): 811-03826 and 002-85905                    Invesco Distributors, Inc.    VK-COM-SAR-1                                         

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Semiannual Report to Shareholders   October 31, 2022

 

Invesco Comstock Select Fund

Nasdaq:

A: CGRWX ∎ C: CGRCX ∎ R: CGRNX ∎ Y: CGRYX ∎ R5: IOVVX ∎ R6: OGRIX

 

 

   
2   Fund Performance
4   Schedule of Investments
6   Financial Statements
9   Financial Highlights
10   Notes to Financial Statements
16   Fund Expenses
17   Approval of Investment Advisory and Sub-Advisory Contracts

 

For the most current month-end Fund performance and commentary, please visit invesco.com/performance.

Unless otherwise noted, all data is provided by Invesco.

This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.

 

NOT FDIC INSURED  |  MAY LOSE VALUE  |  NO BANK GUARANTEE

 

Fund Performance

 

 

Performance summary

 

 

Fund vs. Indexes

 

Cumulative total returns, 4/30/22 to 10/31/22, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

 

Class A Shares

     0.78 % 

Class C Shares

     0.40  

Class R Shares

     0.64  

Class Y Shares

     0.91  

Class R5 Shares

     0.98  

Class R6 Shares

     0.95  

Russell 1000 Value Index▼

     -3.19  

Source(s): ▼RIMES Technologies Corp.

  

The Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.

 

   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 visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.

   Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.

 

 

 

 

2   Invesco Comstock Select Fund

    

    

    

 

 

Average Annual Total Returns

 

As of 10/31/22, including maximum applicable sales charges

 

Class A Shares

        

Inception (9/16/85)

     9.45 % 

10 Years

     9.82  

  5 Years

     7.63  

  1 Year

     -4.82  

Class C Shares

        

Inception (5/1/96)

     7.07 % 

10 Years

     9.78  

  5 Years

     8.03  

  1 Year

     -0.99  

Class R Shares

        

Inception (3/1/01)

     6.73 % 

10 Years

     10.16  

  5 Years

     8.58  

  1 Year

     0.45  

Class Y Shares

        

Inception (12/16/96)

     7.47 % 

10 Years

     10.72  

  5 Years

     9.12  

  1 Year

     0.98  

Class R5 Shares

        

10 Years

     10.57 % 

  5 Years

     9.12  

  1 Year

     1.10  

Class R6 Shares

        

Inception (2/28/12)

     10.52 % 

10 Years

     10.89  

  5 Years

     9.27  

  1 Year

     1.09  

Effective May 24, 2019, Class A, Class C, Class R, Class Y and Class I shares of the Oppenheimer Value Fund, (the predecessor fund), were reorganized into Class A, Class C, Class R, Class Y and Class R6 shares, respectively, of the Invesco Oppenheimer Value Fund. Note: The Fund was subsequently renamed the Invesco Comstock Select Fund (the Fund). Returns shown above, for periods ending on or prior to May 24, 2019, for Class A, Class C, Class R, Class Y and Class R6 shares are those for Class A, Class C, Class R, Class Y and Class I shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.

    Class R5 shares incepted on May 24, 2019. Performance shown on and prior to that date is that of the predecessor fund’s Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.

    The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated.

Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.

    Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.

    The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.

    Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.

 

 

 

3   Invesco Comstock Select Fund

Schedule of Investments(a)

October 31, 2022

(Unaudited)

 

     Shares      Value  

 

  

Common Stocks & Other Equity Interests–94.39%

 

Air Freight & Logistics–2.48%

      

FedEx Corp.

      102,535      $  16,434,310  

 

  

Asset Management & Custody Banks–3.13%

 

   

State Street Corp.

      279,909        20,713,266  

 

  

Automobile Manufacturers–1.58%

      

General Motors Co.

      266,054        10,442,620  

 

  

Building Products–2.92%

      

Johnson Controls International PLC

      334,192        19,329,665  

 

  

Casinos & Gaming–3.18%

      

Las Vegas Sands Corp.(b)

     553,449        21,036,596  

 

  

Construction Machinery & Heavy Trucks–3.33%

 

Wabtec Corp.

      235,834        21,998,596  

 

  

Diversified Banks–9.09%

      

Bank of America Corp.

      716,486        25,822,155  

 

  

Wells Fargo & Co.

      746,706        34,341,009  

 

  
        60,163,164  

 

  

Electrical Components & Equipment–4.27%

 

   

Eaton Corp. PLC

      90,049        13,513,653  

 

  

Emerson Electric Co.

      170,450        14,760,970  

 

  
        28,274,623  

 

  

Health Care Distributors–2.99%

      

Henry Schein, Inc.(b)

     288,645        19,760,637  

 

  

Health Care Equipment–3.07%

      

Becton, Dickinson and Co.

      86,013        20,296,488  

 

  

Health Care Facilities–2.61%

      

Universal Health Services, Inc., Class B

      149,232        17,291,512  

 

  

Hotels, Resorts & Cruise Lines–2.99%

 

   

Booking Holdings, Inc.(b)

     10,587        19,792,185  

 

  

Household Products–2.93%

      

Kimberly-Clark Corp.

      155,576        19,362,989  

 

  

Integrated Oil & Gas–4.73%

      

Exxon Mobil Corp.

      282,357        31,287,979  

 

  

IT Consulting & Other Services–6.00%

 

   

Cognizant Technology Solutions Corp., Class A

      272,390        16,956,277  

 

  

DXC Technology Co.(b)

     791,885        22,766,694  

 

  
        39,722,971  

 

  
     Shares      Value  

 

  

Multi-line Insurance–3.53%

      

American International Group, Inc.

      409,414      $ 23,336,598  

 

  

Oil & Gas Exploration & Production–9.27%

 

   

ConocoPhillips

      199,935        25,209,804  

 

  

Marathon Oil Corp.

      1,185,900        36,110,655  

 

  
        61,320,459  

 

  

Packaged Foods & Meats–4.24%

      

Kraft Heinz Co. (The)

      729,771        28,074,290  

 

  

Pharmaceuticals–10.48%

      

Johnson & Johnson

      149,356        25,983,463  

 

  

Merck & Co., Inc.

      306,408        31,008,490  

 

  

Sanofi, ADR (France)

      285,846        12,357,123  

 

  
        69,349,076  

 

  

Regional Banks–5.40%

      

Citizens Financial Group, Inc.

      356,522        14,581,750  

 

  

M&T Bank Corp.

      125,563        21,141,042  

 

  
        35,722,792  

 

  

Semiconductors–2.04%

      

NXP Semiconductors N.V. (China)

      92,268        13,478,509  

 

  

Systems Software–1.26%

      

Microsoft Corp.

      36,000        8,356,680  

 

  

Tobacco–2.87%

      

Philip Morris International, Inc.

      206,633        18,979,241  

 

  

Total Common Stocks & Other Equity Interests (Cost $558,162,401)

 

      624,525,246  

 

  

Money Market Funds–5.53%

      

Invesco Government & Agency Portfolio, Institutional
Class, 3.07%(c)(d)

     12,799,470        12,799,470  

 

  

Invesco Liquid Assets Portfolio, Institutional Class, 3.03%(c)(d)

     9,155,473        9,157,304  

 

  

Invesco Treasury Portfolio, Institutional Class, 3.08%(c)(d)

     14,627,965        14,627,965  

 

  

Total Money Market Funds (Cost $36,581,734)

 

      36,584,739  

 

  

TOTAL INVESTMENTS IN SECURITIES–99.92%
(Cost $594,744,135)

 

      661,109,985  

 

  

OTHER ASSETS LESS LIABILITIES–0.08%

 

      526,221  

 

  

NET ASSETS–100.00%

 

    $ 661,636,206  

 

  
 

 

Investment Abbreviations:

ADR – American Depositary Receipt

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

4   Invesco Comstock Select Fund

Notes to Schedule of Investments:

 

(a) 

Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.

(b) 

Non-income producing security.

(c) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended October 31, 2022.

 

     

Value

April 30, 2022

     

Purchases

at Cost

     

Proceeds

from Sales

      Change in
Unrealized
Appreciation		      Realized
Gain		      Value
October 31, 2022		      Dividend Income  
Investments in Affiliated Money Market Funds:                                                               

Invesco Government & Agency Portfolio, Institutional Class

    $ 9,241,192      $ 16,748,691      $  (13,190,413)        $        -        $        -          $12,799,470        $  79,059  

Invesco Liquid Assets Portfolio, Institutional Class

      6,612,347        11,963,351        (9,421,724)        2,956        374        9,157,304        78,672  

Invesco Treasury Portfolio, Institutional Class

      10,561,363        19,141,361        (15,074,759)        -        -        14,627,965        121,227  
Investments Purchased with Cash Collateral from Securities on Loan:                                                               

Invesco Private Government Fund

      -        47,818,859        (47,818,859)        -        -        -        77,467*  

Invesco Private Prime Fund

      -        57,861,303        (57,862,029)        -        726        -        85,522*  

Total

    $ 26,414,902      $ 153,533,565      $ (143,367,784)        $2,956        $1,100          $36,584,739        $441,947  

 

  *

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(d) 

The rate shown is the 7-day SEC standardized yield as of October 31, 2022.

Portfolio Composition

By sector, based on Net Assets

as of October 31, 2022

 

Financials

      21.15 % 

Health Care

      19.15  

Energy

      14.00  

Industrials

      13.00  

Consumer Staples

      10.04  

Information Technology

      9.30  

Consumer Discretionary

      7.75  

Money Market Funds Plus Other Assets Less Liabilities

      5.61  

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

5   Invesco Comstock Select Fund

Statement of Assets and Liabilities

October 31, 2022

(Unaudited)

 

Assets:

   

Investments in unaffiliated securities, at value
(Cost $558,162,401)

    $ 624,525,246  

 

  

Investments in affiliated money market funds, at value
(Cost $36,581,734)

      36,584,739  

 

  

Cash

      1,034,847  

 

  

Foreign currencies, at value (Cost $245)

      217  

 

  

Receivable for:

   

Fund shares sold

      497,272  

 

  

Dividends

      59,814  

 

  

Investment for trustee deferred compensation and retirement plans

      106,381  

 

  

Other assets

      62,991  

 

  

Total assets

      662,871,507  

 

  

Liabilities:

   

Payable for:

   

Fund shares reacquired

      514,281  

 

  

Accrued fees to affiliates

      319,019  

 

  

Accrued trustees’ and officers’ fees and benefits

      67,558  

 

  

Accrued other operating expenses

      228,062  

 

  

Trustee deferred compensation and retirement plans

      106,381  

 

  

Total liabilities

      1,235,301  

 

  

Net assets applicable to shares outstanding

    $ 661,636,206  

 

  

Net assets consist of:

   

Shares of beneficial interest

    $ 502,278,972  

 

  

Distributable earnings

      159,357,234  

 

  
   $ 661,636,206  

 

  

Net Assets:

   

Class A

    $ 521,902,641  

 

  

Class C

    $ 29,870,862  

 

  

Class R

    $ 39,449,462  

 

  

Class Y

    $ 57,363,140  

 

  

Class R5

    $ 10,659  

 

  

Class R6

    $ 13,039,442  

 

  

Shares outstanding, no par value, with an unlimited number of shares authorized:

 

Class A

      15,307,813  

 

  

Class C

      940,724  

 

  

Class R

      1,192,393  

 

  

Class Y

      1,627,989  

 

  

Class R5

      313  

 

  

Class R6

      371,169  

 

  

Class A:

   

Net asset value per share

    $ 34.09  

 

  

Maximum offering price per share
(Net asset value of $34.09 ÷ 94.50%)

    $ 36.07  

 

  

Class C:

   

Net asset value and offering price per share

    $ 31.75  

 

  

Class R:

   

Net asset value and offering price per share

    $ 33.08  

 

  

Class Y:

   

Net asset value and offering price per share

    $ 35.24  

 

  

Class R5:

   

Net asset value and offering price per share

    $ 34.05  

 

  

Class R6:

   

Net asset value and offering price per share

    $ 35.13  

 

  

 

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

6   Invesco Comstock Select Fund

Statement of Operations

For the six months ended October 31, 2022

(Unaudited)

 

Investment income:

   

Dividends (net of foreign withholding taxes of $155,349)

    $ 7,354,885  

 

  

Dividends from affiliated money market funds (includes net securities lending income of $4,377)

      283,335  

 

  

Total investment income

      7,638,220  

 

  

Expenses:

   

Advisory fees

      1,697,245  

 

  

Administrative services fees

      46,859  

 

  

Custodian fees

      2,574  

 

  

Distribution fees:

   

Class A

      618,982  

 

  

Class C

      149,372  

 

  

Class R

      96,957  

 

  

Transfer agent fees – A, C, R and Y

      440,968  

 

  

Transfer agent fees – R5

      2  

 

  

Transfer agent fees – R6

      1,593  

 

  

Trustees’ and officers’ fees and benefits

      10,397  

 

  

Registration and filing fees

      44,055  

 

  

Reports to shareholders

      176,513  

 

  

Professional services fees

      51,350  

 

  

Other

      10,429  

 

  

Total expenses

      3,347,296  

 

  

Less: Fees waived and/or expense offset arrangement(s)

      (22,439 ) 

 

  

Net expenses

      3,324,857  

 

  

Net investment income

      4,313,363  

 

  

Realized and unrealized gain (loss) from:

   

Net realized gain from:

   

Unaffiliated investment securities

      48,885,429  

 

  

Affiliated investment securities

      1,100  

 

  
     48,886,529  

 

  

Change in net unrealized appreciation (depreciation) of:

   

Unaffiliated investment securities

      (48,263,456 ) 

 

  

Affiliated investment securities

      2,956  

 

  

Foreign currencies

      (21 ) 

 

  
     (48,260,521 ) 

 

  

Net realized and unrealized gain

      626,008  

 

  

Net increase in net assets resulting from operations

    $ 4,939,371  

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

7   Invesco Comstock Select Fund

Statement of Changes in Net Assets

For the six months ended October 31, 2022 and the year ended April 30, 2022

(Unaudited)

 

     October 31,
2022		    

April 30,

2022

  

 

  

Operations:

     

Net investment income

    $ 4,313,363     $ 7,633,004  

 

  

Net realized gain

      48,886,529       96,393,239  

 

  

Change in net unrealized appreciation (depreciation)

      (48,260,521 )      (59,032,747 ) 

 

  

Net increase in net assets resulting from operations

      4,939,371       44,993,496  

 

  

Distributions to shareholders from distributable earnings:

     

Class A

      (4,095,949 )      (27,906,326 ) 

 

  

Class C

      (120,899 )      (1,444,535 ) 

 

  

Class R

      (255,148 )      (2,003,955 ) 

 

  

Class Y

      (465,379 )      (2,915,550 ) 

 

  

Class R5

      (102 )      (607 ) 

 

  

Class R6

      (102,481 )      (460,670 ) 

 

  

Total distributions from distributable earnings

      (5,039,958 )      (34,731,643 ) 

 

  

Share transactions–net:

     

Class A

      (7,677,309 )      (24,896,217 ) 

 

  

Class C

      (1,176,169 )      320,455  

 

  

Class R

      (6,264 )      (637,629 ) 

 

  

Class Y

      6,073,036       4,150,254  

 

  

Class R6

      3,144,620       3,136,968  

 

  

Net increase (decrease) in net assets resulting from share transactions

      357,914       (17,926,169 ) 

 

  

Net increase (decrease) in net assets

      257,327       (7,664,316 ) 

 

  

Net assets:

     

Beginning of period

      661,378,879       669,043,195  

 

  

End of period

    $ 661,636,206     $ 661,378,879  

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

8   Invesco Comstock Select 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(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(c)

   Ratio of net
investment
income
to average
net assets		   Portfolio
turnover (d)

Class A

                                                        

Six months ended 10/31/22

     $ 34.11     $ 0.23     $ 0.02     $ 0.25     $ (0.27 )     $ –     $ (0.27 )     $ 34.09       0.78 %(e)     $ 521,903       1.00 %(e)(f)       1.01 %(e)(f)       1.36 %(e)(f)       18 %

Year ended 04/30/22

       33.66       0.40       1.87       2.27       (0.38 )       (1.44 )       (1.82 )       34.11       6.88 (e)        530,151       0.91 (e)        0.92 (e)        1.15 (e)        54

Year ended 04/30/21

       21.50       0.46       12.39       12.85       (0.69 )       –       (0.69 )       33.66       60.66 (e)        546,503       0.93 (e)        1.04 (e)        1.75 (e)        46

Six months ended 04/30/20

       33.81       0.29       (5.00 )       (4.71 )       (0.29 )       (7.31 )       (7.60 )       21.50       (19.00 )       388,558       0.93 (f)        0.97 (f)        2.17 (f)        11

Year ended 10/31/19

       35.63       0.58       2.00       2.58       (0.56 )       (3.84 )       (4.40 )       33.81       8.66       524,705       0.93       0.95       1.79       129

Year ended 10/31/18

       37.62       0.51       (0.32 )       0.19       (0.52 )       (1.66 )       (2.18 )       35.63       0.35       500,866       0.93       0.93       1.37       45

Year ended 10/31/17

       31.66       0.34       6.09       6.43       (0.47 )       –       (0.47 )       37.62       20.41       548,012       0.94       0.95       0.97       53

Class C

                                                                                                                                            

Six months ended 10/31/22

       31.76       0.09       0.03       0.12       (0.13 )       –       (0.13 )       31.75       0.40       29,871       1.76 (f)        1.77 (f)        0.60 (f)        18

Year ended 04/30/22

       31.44       0.13       1.74       1.87       (0.11 )       (1.44 )       (1.55 )       31.76       6.05       31,095       1.67       1.68       0.39       54

Year ended 04/30/21

       20.08       0.24       11.58       11.82       (0.46 )       –       (0.46 )       31.44       59.49       30,455       1.68       1.80       1.00       46

Six months ended 04/30/20

       32.01       0.18       (4.64 )       (4.46 )       (0.16 )       (7.31 )       (7.47 )       20.08       (19.29 )       27,325       1.68 (f)        1.73 (f)        1.41 (f)        11

Year ended 10/31/19

       33.95       0.32       1.89       2.21       (0.31 )       (3.84 )       (4.15 )       32.01       7.86       40,759       1.68       1.69       1.03       129

Year ended 10/31/18

       35.96       0.22       (0.31 )       (0.09 )       (0.26 )       (1.66 )       (1.92 )       33.95       (0.44 )       96,108       1.69       1.69       0.62       45

Year ended 10/31/17

       30.32       0.07       5.83       5.90       (0.26 )       –       (0.26 )       35.96       19.51       113,203       1.69       1.70       0.22       53

Class R

                                                                                                                                            

Six months ended 10/31/22

       33.10       0.18       0.01       0.19       (0.21 )       –       (0.21 )       33.08       0.64       39,449       1.26 (f)        1.27 (f)        1.10 (f)        18

Year ended 04/30/22

       32.70       0.30       1.82       2.12       (0.28 )       (1.44 )       (1.72 )       33.10       6.62       39,500       1.17       1.18       0.89       54

Year ended 04/30/21

       20.89       0.38       12.04       12.42       (0.61 )       –       (0.61 )       32.70       60.24       39,590       1.18       1.30       1.50       46

Six months ended 04/30/20

       33.04       0.25       (4.85 )       (4.60 )       (0.24 )       (7.31 )       (7.55 )       20.89       (19.11 )       27,340       1.18 (f)        1.23 (f)        1.92 (f)        11

Year ended 10/31/19

       34.91       0.49       1.96       2.45       (0.48 )       (3.84 )       (4.32 )       33.04       8.41       36,469       1.18       1.20       1.54       129

Year ended 10/31/18

       36.91       0.41       (0.32 )       0.09       (0.43 )       (1.66 )       (2.09 )       34.91       0.08       38,411       1.18       1.18       1.12       45

Year ended 10/31/17

       31.08       0.25       5.97       6.22       (0.39 )       –       (0.39 )       36.91       20.10       42,358       1.18       1.19       0.73       53

Class Y

                                                                                                                                            

Six months ended 10/31/22

       35.26       0.28       0.02       0.30       (0.32 )       –       (0.32 )       35.24       0.91       57,363       0.76 (f)        0.77 (f)        1.60 (f)        18

Year ended 04/30/22

       34.75       0.50       1.93       2.43       (0.48 )       (1.44 )       (1.92 )       35.26       7.13       50,894       0.67       0.68       1.39       54

Year ended 04/30/21

       22.19       0.54       12.80       13.34       (0.78 )       –       (0.78 )       34.75       61.10       45,879       0.68       0.80       2.00       46

Six months ended 04/30/20

       34.70       0.34       (5.21 )       (4.87 )       (0.33 )       (7.31 )       (7.64 )       22.19       (18.95 )       29,843       0.68 (f)        0.73 (f)        2.41 (f)        11

Year ended 10/31/19

       36.44       0.68       2.07       2.75       (0.65 )       (3.84 )       (4.49 )       34.70       8.97       70,677       0.68       0.71       2.03       129

Year ended 10/31/18

       38.43       0.62       (0.34 )       0.28       (0.61 )       (1.66 )       (2.27 )       36.44       0.55       72,317       0.68       0.68       1.61       45

Year ended 10/31/17

       32.33       0.44       6.22       6.66       (0.56 )       –       (0.56 )       38.43       20.71       142,547       0.69       0.71       1.20       53

Class R5

                                                                                                                                            

Six months ended 10/31/22

       34.07       0.29       0.02       0.31       (0.33 )       –       (0.33 )       34.05       0.98       11       0.65 (f)        0.66 (f)        1.71 (f)        18

Year ended 04/30/22

       33.62       0.52       1.87       2.39       (0.50 )       (1.44 )       (1.94 )       34.07       7.24       11       0.57       0.58       1.49       54

Year ended 04/30/21

       21.47       0.55       12.38       12.93       (0.78 )       –       (0.78 )       33.62       61.27       11       0.57       0.60       2.11       46

Six months ended 04/30/20

       33.80       0.34       (5.02 )       (4.68 )       (0.34 )       (7.31 )       (7.65 )       21.47       (18.88 )       7       0.57 (f)        0.57 (f)        2.52 (f)        11

Period ended 10/31/19(g)

       31.94       0.31       1.93       2.24       (0.38 )       –       (0.38 )       33.80       7.03       11       0.57 (f)        0.57 (f)        2.15 (f)        129

Class R6

                                                                                                                                            

Six months ended 10/31/22

       35.16       0.29       0.02       0.31       (0.34 )       –       (0.34 )       35.13       0.95       13,039       0.65 (f)        0.66 (f)        1.71 (f)        18

Year ended 04/30/22

       34.65       0.54       1.93       2.47       (0.52 )       (1.44 )       (1.96 )       35.16       7.26       9,729       0.55       0.58       1.51       54

Year ended 04/30/21

       22.13       0.51       12.83       13.34       (0.82 )       –       (0.82 )       34.65       61.33       6,606       0.52       0.58       2.16       46

Six months ended 04/30/20

       34.63       0.36       (5.19 )       (4.83 )       (0.36 )       (7.31 )       (7.67 )       22.13       (18.88 )       444,138       0.52 (f)        0.54 (f)        2.58 (f)        11

Year ended 10/31/19

       36.38       0.73       2.06       2.79       (0.70 )       (3.84 )       (4.54 )       34.63       9.13       656,678       0.52       0.52       2.20       129

Year ended 10/31/18

       38.37       0.68       (0.33 )       0.35       (0.68 )       (1.66 )       (2.34 )       36.38       0.75       1,039,697       0.52       0.52       1.78       45

Year ended 10/31/17

       32.28       0.50       6.21       6.71       (0.62 )       –       (0.62 )       38.37       20.92       1,336,915       0.51       0.52       1.39       53

 

(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) 

Does not include indirect expenses from affiliated fund fees and expenses of 0.00% for the six months ended April 30, 2020 and for the years ended October 31, 2019, 2018 and 2017, respectively.

(d) 

Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.

(e) 

The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.24% for the six months ended October 31, 2022 and the years ended April 30, 2022 and 2021.

(f) 

Annualized.

(g) 

Commencement date after the close of business on May 24, 2019.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

9   Invesco Comstock Select Fund

Notes to Financial Statements

October 31, 2022

(Unaudited)

NOTE 1–Significant Accounting Policies

Invesco Comstock Select Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company 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 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 a front-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 eight 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 eighth 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.

Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.

Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.

Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.

Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.

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 may be used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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 market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism, significant governmental actions or adverse investor sentiment generally 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.

The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used.

 

10   Invesco Comstock Select Fund

Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.

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 an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.

The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.

C.

Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues, the country that has the primary market for the issuer’s securities and its “country of risk” as determined by a third party service provider, 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 the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.

E.

Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F.

Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated based on relative net assets of Class R5 and Class R6. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.

G.

Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.

H.

Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.

I.

Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “affiliated money market funds”) and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities.

The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon also serves as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner

 

11   Invesco Comstock Select Fund

consistent with the federal securities laws. For the six months ended October 31, 2022, fees paid to the Adviser were less than $500 Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.

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 exchange of the two currencies on the settlement date, 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).

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 for hedging 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.

COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance.

 

12   Invesco Comstock Select Fund

NOTE 2–Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with the Adviser. 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 $ 300 million

      0.625%  

 

  

Next $100 million

      0.500%  

 

  

Next $4.6 billion

      0.450%  

 

  

Over $5 billion

      0.430%  

 

  

 

*

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 six months ended October 31, 2022, the effective advisory fee rate incurred by the Fund was 0.53%.

Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Fund.

Effective September 1, 2022, the Adviser has contractually agreed, through June 30, 2023, 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 the Fund’s average daily net assets (the “expense limits”). Prior to September 1, 2022, the Adviser had contractually agreed to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 0.96%, 1.71%, 1.21%, 0.71%, 0.71% and 0.71%, respectively, of the Fund’s average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2023. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. To the extent that the annualized expense ratio does not exceed the expense limits, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.

Further, the Adviser has contractually agreed, through at least June 30, 2024, 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, 2022, the Adviser waived advisory fees of $17,304 and reimbursed class level expenses of $0, $91, $169, $258, $0 and $0 of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.

The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Administrative 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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A, Class 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, 2022, 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, 2022, IDI advised the Fund that IDI retained $22,177 in front-end sales commissions from the sale of Class A shares and $13 and $1,375 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.

For the six months ended October 31, 2022, the Fund incurred $4,578 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. 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:

 

13   Invesco Comstock Select Fund

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 Adviser’s 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, 2022, 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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $4,617.

NOTE 5–Trustees’ and Officers’ Fees and Benefits

Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.

NOTE 6–Cash Balances

The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.

NOTE 7–Tax Information

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund did not have a capital loss carryforward as of April 30, 2022.

NOTE 8–Investment Transactions

The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2022 was $107,151,281 and $117,359,253, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investments on a Tax Basis

  

Aggregate unrealized appreciation of investments

      $ 89,866,228  

 

  

Aggregate unrealized (depreciation) of investments

      (23,728,093 ) 

 

  

Net unrealized appreciation of investments

      $ 66,138,135  

 

  

Cost of investments for tax purposes is $594,971,850.

NOTE 9–Share Information

 

     Summary of Share Activity  

 

  
     Six months ended      Year ended  
     October 31, 2022(a)      April 30, 2022  
     Shares      Amount      Shares      Amount  

 

  

Sold:

            

Class A

      694,790      $  23,088,012        1,082,331      $  37,753,214  

 

  

Class C

      85,912        2,661,074        214,561        6,998,728  

 

  

Class R

      108,266        3,488,644        161,090        5,460,264  

 

  

Class Y

      385,564        12,948,005        608,577        21,838,340  

 

  

Class R6

      156,550        5,270,787        170,135        6,133,170  

 

  

 

14   Invesco Comstock Select Fund

     Summary of Share Activity  

 

  
     Six months ended     Year ended  
     October 31, 2022(a)     April 30, 2022  
     Shares     Amount     Shares     Amount  

 

  

Issued as reinvestment of dividends:

         

Class A

      122,766     $ 3,882,317       795,324     $ 26,728,393  

 

  

Class C

      4,022       118,512       45,652       1,424,506  

 

  

Class R

      8,283       254,210       61,355       1,999,184  

 

  

Class Y

      8,687       283,787       53,894       1,871,371  

 

  

Class R6

      3,024       98,461       12,937       448,672  

 

  

Automatic conversion of Class C shares to Class A shares:

         

Class A

      35,866       1,190,124       82,312       2,863,917  

 

  

Class C

      (38,514 )      (1,190,124 )      (88,252 )      (2,863,917 ) 

 

  

Reacquired:

         

Class A

      (1,086,385 )      (35,837,762 )      (2,653,825 )      (92,241,741 ) 

 

  

Class C

      (89,675 )      (2,765,631 )      (161,562 )      (5,238,862 ) 

 

  

Class R

      (117,483 )      (3,749,118 )      (239,675 )      (8,097,077 ) 

 

  

Class Y

      (209,717 )      (7,158,756 )      (539,340 )      (19,559,457 ) 

 

  

Class R6

      (65,146 )      (2,224,628 )      (96,995 )      (3,444,874 ) 

 

  

Net increase (decrease) in share activity

      6,810     $ 357,914       (491,481 )    $ (17,926,169 ) 

 

  

 

(a) 

There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 5% 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

Effective November 15, 2022, the Fund’s sub-classification under the Investment Company Act of 1940 changed from “diversified” to “non-diversified” and a related fundamental investment restriction regarding issuer diversification was eliminated.

 

15   Invesco Comstock Select 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, 2022 through October 31, 2022.

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.

 

          ACTUAL  

HYPOTHETICAL

(5% annual return before
expenses)

     
     Beginning
    Account Value    
(05/01/22)		   Ending
    Account Value    
(10/31/22)1 		  Expenses
    Paid During    
Period2 		  Ending
    Account Value    
(10/31/22)		   Expenses
    Paid During    
Period2 		 

    Annualized    
Expense

Ratio

Class A

   $1,000.00   $1,007.80   $5.06   $1,020.16   $5.09   1.00%

Class C

     1,000.00     1,004.00     8.89     1,016.33     8.94   1.76   

Class R

     1,000.00     1,006.40     6.37     1,018.85     6.41   1.26   

Class Y

     1,000.00     1,009.10     3.85     1,021.37     3.87   0.76   

Class R5

     1,000.00     1,009.80     3.29     1,021.93     3.31   0.65   

Class R6

     1,000.00     1,009.50     3.29     1,021.93     3.31   0.65   

 

1 

The actual ending account value is based on the actual total return of the Fund for the period May 1, 2022 through October 31, 2022, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.

2 

Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year.

 

16   Invesco Comstock Select Fund

Approval of Investment Advisory and Sub-Advisory Contracts

    

 

At meetings held on June 13, 2022, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Comstock Select Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory contracts with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited and OppenheimerFunds, Inc. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2022. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

The Board’s Evaluation Process

The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

    As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer. 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 accordance with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

    The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

A.

Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers’ systems preparedness and ongoing investment enabled

Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

    The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

B.

Fund Investment Performance

The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

    The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2021 to the performance of funds in the Broadridge performance universe and against the Russell 1000® Value Index (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 third quintile for the three year period and the fourth 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 year period and reasonably comparable to the performance of the Index for the three and five year periods. The Board considered that the Fund was created in connection with Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the “Transaction”) and that the Fund’s performance prior to the closing of the Transaction on May 24, 2019 is that of its predecessor fund. The Board further noted that the Fund underwent an investment process change in February 2020. The Board recognized that the performance data reflects a snapshot in time as

 

 

17   Invesco Comstock Select Fund

    

 

of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its conclusions.

C.

Advisory and Sub-Advisory Fees and Fund Expenses

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.

    The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement 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 its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.

    The Board also compared the Fund’s effective advisory fee rate (defined for this purpose as the advisory fee rate after advisory fee waivers and before other expense limitations/waivers) to the effective advisory fee rates of other similarly managed third-party mutual funds advised or sub-advised by Invesco Advisers and its affiliates, based on asset balances as of December 31, 2021.

    The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

D.

Economies of Scale and Breakpoints

The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared

with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

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 in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and the periodic review and enhancement of such methodology. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

F.

Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

    The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives from Invesco Advisers periodic reports that include a representation to the

effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

    The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.

    The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

 

 

18   Invesco Comstock Select Fund

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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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-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/corporate/about-us/esg. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. 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 number(s): 811-03826 and 002-85905                    Invesco Distributors, Inc.    O-VAL-SAR-1                                         

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Semiannual Report to Shareholders   October 31, 2022

Invesco Dividend Income Fund

Nasdaq:

A: IAUTX ∎ C: IUTCX ∎ R: IRTCX ∎ Y: IAUYX ∎ Investor: FSTUX ∎ R5: FSIUX ∎ R6: IFUTX

 

    
   
2   Fund Performance
4   Schedule of Investments
7   Financial Statements
10   Financial Highlights
11   Notes to Financial Statements
17   Fund Expenses
18   Approval of Investment Advisory and Sub-Advisory Contracts

For the most current month-end Fund performance and commentary, please visit invesco.com/performance.

Unless otherwise noted, all data is provided by Invesco.

This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.

 

 

NOT FDIC INSURED  |  MAY LOSE VALUE  |  NO BANK GUARANTEE

 

Fund Performance

 

 

Performance summary

 

Fund vs. Indexes

 

Cumulative total returns, 4/30/22 to 10/31/22, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

 

Class A Shares

     -1.03 % 

Class C Shares

     -1.38  

Class R Shares

     -1.16  

Class Y Shares

     -0.93  

Investor Class Shares

     -1.02  

Class R5 Shares

     -0.89  

Class R6 Shares

     -0.86  

S&P 500 Index▼ (Broad Market Index)

     -5.50  

Dow Jones U.S. Select Dividend Index▼ (Style-Specific Index)

     -2.34  

Russell 1000 Value Index▼ (Style-Specific Index)

     -3.19  

Lipper Equity Income Funds Index∎ (Peer Group Index)

     -2.18  

Source(s): ▼RIMES Technologies Corp.; ∎ Lipper Inc.

  

The S&P 500® Index is an unmanaged index considered representative of the US stock market.

  

    The Dow Jones U.S. Select Dividend Index represent the country’s leading stocks by dividend yield.

  

    The Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.

 

    The Lipper Equity Income Funds Index is an unmanaged index considered representative of equity income funds tracked by Lipper.

 

    The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es).

 

    A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.

 

 

 

 

For more information about your Fund

 

Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.

    Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.

 

    

 

 

2   Invesco Dividend Income Fund

    

    

    

 

 

Average Annual Total Returns

 

As of 10/31/22, including maximum applicable sales charges

  

Class A Shares

        

Inception (3/28/02)

     7.80 % 

10 Years

     8.10  

  5 Years

     4.76  

  1 Year

     -4.10  

Class C Shares

        

Inception (2/14/00)

     4.48 % 

10 Years

     8.07  

  5 Years

     5.15  

  1 Year

     -0.24  

Class R Shares

        

10 Years

     8.45 % 

  5 Years

     5.69  

  1 Year

     1.23  

Class Y Shares

        

Inception (10/3/08)

     8.77 % 

10 Years

     8.99  

  5 Years

     6.21  

  1 Year

     1.74  

Investor Class Shares

        

Inception (6/2/86)

     8.30 % 

10 Years

     8.72  

  5 Years

     5.95  

  1 Year

     1.51  

Class R5 Shares

        

Inception (10/25/05)

     8.14 % 

10 Years

     9.03  

  5 Years

     6.25  

  1 Year

     1.76  

Class R6 Shares

        

Inception (9/24/12)

     9.13 % 

10 Years

     9.11  

  5 Years

     6.34  

  1 Year

     1.83  

Class R shares incepted on April 17, 2020. Performance shown prior to that date is that of Investor Class shares restated to reflect the higher 12b-1 fees applicable to Class R shares.

    The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.

    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, Investor Class,

Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.

    The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.

    Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.

    

 

 

3   Invesco Dividend Income Fund

Schedule of Investments(a)

October 31, 2022

(Unaudited)

 

     Shares      Value  

 

  

Common Stocks & Other Equity Interests–97.22%

 

Aerospace & Defense–3.34%

 

Lockheed Martin Corp.

      86,188      $ 41,945,976  

 

  

Raytheon Technologies Corp.

      869,128        82,410,717  

 

  
        124,356,693  

 

  

Air Freight & Logistics–1.24%

 

United Parcel Service, Inc., Class B

      276,532        46,393,774  

 

  

Asset Management & Custody Banks–1.41%

 

   

State Street Corp.(b)

     710,992        52,613,408  

 

  

Automobile Manufacturers–0.59%

 

Bayerische Motoren Werke AG (Germany)

      278,094        21,854,167  

 

  

Biotechnology–1.33%

 

AbbVie, Inc.

      337,682        49,436,645  

 

  

Building Products–0.99%

 

Trane Technologies PLC

      230,697        36,826,162  

 

  

Cable & Satellite–1.74%

 

Comcast Corp., Class A

      2,046,059        64,941,913  

 

  

Construction Machinery & Heavy Trucks–1.11%

 

Caterpillar, Inc.

      190,831        41,307,278  

 

  

Diversified Banks–4.63%

 

Bank of America Corp.

      2,611,337        94,112,586  

 

  

JPMorgan Chase & Co.

      623,229        78,452,066  

 

  
        172,564,652  

 

  

Electric Utilities–1.61%

      

Entergy Corp.

      335,914        35,989,826  

 

  

Exelon Corp.

      618,189        23,855,913  

 

  
        59,845,739  

 

  

Electrical Components & Equipment–1.70%

 

ABB Ltd. (Switzerland)

      989,488        27,468,749  

 

  

Emerson Electric Co.

      413,137        35,777,664  

 

  
        63,246,413  

 

  

Electronic Manufacturing Services–0.79%

 

TE Connectivity Ltd. (Switzerland)

      242,367        29,624,518  

 

  

Food Distributors–0.59%

 

Sysco Corp.

      253,511        21,943,912  

 

  

Gas Utilities–1.19%

 

National Fuel Gas Co.

      656,904        44,334,451  

 

  

General Merchandise Stores–1.75%

 

Target Corp.

      396,587        65,139,415  

 

  

Gold–0.62%

 

Newmont Corp.

      541,643        22,922,332  

 

  

Health Care Equipment–3.12%

 

Becton, Dickinson and Co.

      220,787        52,099,108  

 

  
     Shares      Value  

 

  

Health Care Equipment–(continued)

 

Medtronic PLC

      733,238      $ 64,041,007  

 

  
        116,140,115  

 

  

Health Care Services–2.46%

 

CVS Health Corp.

      969,113        91,775,001  

 

  

Heavy Electrical Equipment–0.00%

 

Accelleron Industries AG
(Switzerland)(c)

     1        17  

 

  

Home Improvement Retail–1.10%

 

Lowe’s Cos., Inc.

      210,368        41,011,242  

 

  

Hypermarkets & Super Centers–2.32%

 

Walmart, Inc.

      606,101        86,266,355  

 

  

Industrial Machinery–1.91%

 

Parker-Hannifin Corp.

      141,660        41,169,229  

 

  

Snap-on, Inc.(b)

     135,877        30,171,488  

 

  
        71,340,717  

 

  

Integrated Oil & Gas–7.17%

 

Chevron Corp.

      582,420        105,359,778  

 

  

Exxon Mobil Corp.

      1,461,418        161,939,729  

 

  
        267,299,507  

 

  

Integrated Telecommunication Services–2.49%

 

Deutsche Telekom AG (Germany)

      2,539,844        48,108,615  

 

  

Verizon Communications, Inc.

      1,194,022        44,620,602  

 

  
        92,729,217  

 

  

Investment Banking & Brokerage–1.22%

 

Morgan Stanley

      554,290        45,546,009  

 

  

IT Consulting & Other Services–2.27%

 

Cognizant Technology Solutions Corp., Class A

      698,118        43,457,846  

 

  

International Business Machines Corp.

      297,984        41,208,207  

 

  
        84,666,053  

 

  

Managed Health Care–3.27%

 

UnitedHealth Group, Inc.

      219,187        121,681,663  

 

  

Multi-line Insurance–1.99%

 

Hartford Financial Services Group, Inc. (The)(b)

     1,024,327        74,171,518  

 

  

Multi-Utilities–2.65%

 

Dominion Energy, Inc.

      690,798        48,335,136  

 

  

Public Service Enterprise Group, Inc.

      901,720        50,559,440  

 

  
        98,894,576  

 

  

Oil & Gas Exploration & Production–2.26%

 

   

ConocoPhillips

      668,473        84,287,761  

 

  

Oil & Gas Storage & Transportation–1.37%

 

   

Enbridge, Inc. (Canada)

      1,309,497        51,020,737  

 

  

Packaged Foods & Meats–3.45%

 

Kraft Heinz Co. (The)

      1,996,504        76,805,509  

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

4   Invesco Dividend Income Fund

     Shares      Value  

 

  

Packaged Foods & Meats–(continued)

 

   

Nestle S.A.

      474,158      $ 51,608,011  

 

  
        128,413,520  

 

  

Paper Packaging–0.68%

 

Sonoco Products Co.

      410,222        25,466,582  

 

  

Pharmaceuticals–10.48%

 

AstraZeneca PLC (United Kingdom)

      249,868        29,314,633  

 

  

Bristol-Myers Squibb Co.

      387,353        30,008,237  

 

  

Eli Lilly and Co.

      138,923        50,302,629  

 

  

Johnson & Johnson

      801,940        139,513,502  

 

  

Merck & Co., Inc.

      1,397,934        141,470,920  

 

  
        390,609,921  

 

  

Property & Casualty Insurance–4.22%

 

Chubb Ltd.

      374,968        80,576,873  

 

  

Travelers Cos., Inc. (The)

      415,306        76,607,345  

 

  
        157,184,218  

 

  

Regional Banks–5.92%

 

Cullen/Frost Bankers, Inc.(b)

     394,740        61,204,437  

 

  

Fifth Third Bancorp

      1,456,349        51,977,096  

 

  

M&T Bank Corp.(b)

     395,280        66,553,293  

 

  

Regions Financial Corp.(b)

     1,866,283        40,964,912  

 

  
        220,699,738  

 

  

Restaurants–3.49%

 

McDonald’s Corp.

      340,450        92,827,097  

 

  

Starbucks Corp.

      431,725        37,383,068  

 

  
        130,210,165  

 

  

Semiconductor Equipment–0.60%

 

Lam Research Corp.

      55,356        22,407,002  

 

  

Semiconductors–2.51%

 

Analog Devices, Inc.

      297,218        42,389,231  

 

  

Broadcom, Inc.

      40,915        19,234,959  

 

  

Microchip Technology, Inc.(b)

     518,968        32,041,084  

 

  
        93,665,274  

 

  

Soft Drinks–1.92%

 

Coca-Cola Co. (The)

      1,193,569        71,435,105  

 

  
     Shares      Value  

 

  

Specialized REITs–2.06%

 

Crown Castle, Inc.

      288,889      $ 38,497,348  

 

  

Weyerhaeuser Co.

      1,233,317        38,146,495  

 

  
        76,643,843  

 

  

Specialty Chemicals–0.77%

      

DuPont de Nemours, Inc.

      498,745        28,528,214  

 

  

Systems Software–0.89%

 

Microsoft Corp.

      143,010        33,196,911  

 

  

Total Common Stocks & Other Equity Interests
(Cost $2,847,333,532)

 

      3,622,642,453  

 

  

Money Market Funds–2.69%

 

Invesco Government & Agency Portfolio, Institutional Class, 3.07%(d)(e)

     27,258,542        27,258,542  

 

  

Invesco Liquid Assets Portfolio, Institutional Class, 3.03%(d)(e)

     42,006,813        42,015,215  

 

  

Invesco Treasury Portfolio, Institutional Class, 3.08%(d)(e)

     31,152,619        31,152,619  

 

  

Total Money Market Funds
(Cost $100,411,410)

 

      100,426,376  

 

  

TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.91%
(Cost $2,947,744,942)

         3,723,068,829  

 

  

Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds–1.29%

 

Invesco Private Government Fund, 3.18%(d)(e)(f)

     13,435,421        13,435,421  

 

  

Invesco Private Prime Fund,
3.28%(d)(e)(f)

     34,544,651        34,544,651  

 

  

Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $47,979,466)

 

      47,980,072  

 

  

TOTAL INVESTMENTS IN SECURITIES–101.20%
(Cost $2,995,724,408)

 

      3,771,048,901  

 

  

OTHER ASSETS LESS LIABILITIES–(1.20)%

 

      (44,859,099 ) 

 

  

NET ASSETS–100.00%

 

    $ 3,726,189,802  

 

  
 

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) 

All or a portion of this security was out on loan at October 31, 2022.

(c) 

Non-income producing security.

(d) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended October 31, 2022.

 

      Value
April 30, 2022		   

Purchases

at Cost

   

Proceeds

from Sales

    

Change in

Unrealized

Appreciation

   

Realized

Gain

   

Value

October 31, 2022

    Dividend Income
Investments in Affiliated Money Market Funds:                                      

Invesco Government & Agency Portfolio, Institutional Class

    $31,903,201        $47,709,638        $ (52,354,297 )    $       -          $    -         $27,258,542        $316,888    

Invesco Liquid Assets Portfolio, Institutional Class

    45,313,620        34,078,313          (37,395,926 )    18,433        775        42,015,215        432,240    

Invesco Treasury Portfolio, Institutional Class

    36,460,801        54,525,300          (59,833,482 )    -         -         31,152,619        344,086    

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

5   Invesco Dividend Income Fund

     

Value

April 30, 2022

   

Purchases

at Cost

   

Proceeds

from Sales

     Change in
Unrealized
Appreciation		    Realized
Gain		    Value
October 31, 2022		    Dividend Income
Investments Purchased with Cash Collateral from Securities on Loan:                                      

Invesco Private Government Fund

    $  10,993,699        $177,139,744        $ (174,698,022 )    $        -          $        -        $  13,435,421        $  153,341*    

Invesco Private Prime Fund

    25,651,965        411,976,176          (403,086,829 )    606        2,733        34,544,651        441,909*    

Total

    $150,323,286        $725,429,171        $ (727,368,556 )    $19,039        $3,508        $148,406,448        $1,688,464    

 

  *

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(e) 

The rate shown is the 7-day SEC standardized yield as of October 31, 2022.

(f) 

The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1J.

Portfolio Composition

By sector, based on Net Assets

as of October 31, 2022

 

Health Care

      20.66%  

 

  

Financials

      19.40     

 

  

Energy

      10.80     

 

  

Industrials

      10.29     

 

  

Consumer Staples

      8.27     

 

  

Information Technology

      7.07     

 

  

Consumer Discretionary

      6.93     

 

  

Utilities

      5.45     

 

  

Communication Services

      4.23     

 

  

Materials

      2.06     

 

  

Real Estate

      2.06     

 

  

Money Market Funds Plus Other Assets Less Liabilities

      2.78     

 

  

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

6   Invesco Dividend Income Fund

Statement of Assets and Liabilities

October 31, 2022

(Unaudited)

 

Assets:

   

Investments in unaffiliated securities, at value
(Cost $2,847,333,532)*

    $ 3,622,642,453  

 

  

Investments in affiliated money market funds, at value (Cost $148,390,876)

      148,406,448  

 

  

Foreign currencies, at value (Cost $9,271)

      8,634  

 

  

Receivable for:

   

Fund shares sold

      2,414,121  

 

  

Dividends

      5,318,634  

 

  

Investment for trustee deferred compensation and retirement plans

      250,917  

 

  

Other assets

      116,296  

 

  

Total assets

      3,779,157,503  

 

  

Liabilities:

   

Payable for:

   

Fund shares reacquired

      2,325,012  

 

  

Collateral upon return of securities loaned

      47,979,466  

 

  

Accrued fees to affiliates

      1,713,327  

 

  

Accrued trustees’ and officers’ fees and benefits

      50,749  

 

  

Accrued other operating expenses

      574,870  

 

  

Trustee deferred compensation and retirement plans

      324,277  

 

  

Total liabilities

      52,967,701  

 

  

Net assets applicable to shares outstanding

    $ 3,726,189,802  

 

  

Net assets consist of:

   

Shares of beneficial interest

    $ 2,818,534,996  

 

  

Distributable earnings

      907,654,806  

 

  
   $ 3,726,189,802  

 

  

Net Assets:

   

Class A

    $ 2,798,552,528  

 

  

Class C

    $ 202,071,384  

 

  

Class R

    $ 107,769,494  

 

  

Class Y

    $ 327,631,706  

 

  

Investor Class

    $ 69,452,751  

 

  

Class R5

    $ 1,448,806  

 

  

Class R6

    $ 219,263,133  

 

  

Shares outstanding, no par value, with an unlimited number of shares authorized:

 

Class A

      112,204,167  

 

  

Class C

      7,988,183  

 

  

Class R

      4,321,270  

 

  

Class Y

      12,989,994  

 

  

Investor Class

      2,753,117  

 

  

Class R5

      58,061  

 

  

Class R6

      8,779,489  

 

  

Class A:

   

Net asset value per share

    $ 24.94  

 

  

Maximum offering price per share
(Net asset value of $24.94 ÷ 94.50%)

    $ 26.39  

 

  

Class C:

   

Net asset value and offering price per share

    $ 25.30  

 

  

Class R:

   

Net asset value and offering price per share

    $ 24.94  

 

  

Class Y:

   

Net asset value and offering price per share

    $ 25.22  

 

  

Investor Class:

   

Net asset value and offering price per share

    $ 25.23  

 

  

Class R5:

   

Net asset value and offering price per share

    $ 24.95  

 

  

Class R6:

   

Net asset value and offering price per share

    $ 24.97  

 

  

 

*

At October 31, 2022, securities with an aggregate value of $46,915,003 were on loan to brokers.

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

7   Invesco Dividend Income Fund

Statement of Operations

For the six months ended October 31, 2022

(Unaudited)

 

Investment income:

   

Dividends (net of foreign withholding taxes of $946,281)

    $ 49,276,328  

 

  

Dividends from affiliated money market funds (includes net securities lending income of $28,967)

      1,122,181  

 

  

Total investment income

      50,398,509  

 

  

Expenses:

   

Advisory fees

      9,857,533  

 

  

Administrative services fees

      282,317  

 

  

Custodian fees

      17,137  

 

  

Distribution fees:

   

Class A

      3,330,274  

 

  

Class C

      1,058,080  

 

  

Class R

      267,428  

 

  

Investor Class

      86,649  

 

  

Transfer agent fees – A, C, R, Y and Investor Class

      2,228,713  

 

  

Transfer agent fees – R5

      749  

 

  

Transfer agent fees – R6

      33,048  

 

  

Trustees’ and officers’ fees and benefits

      19,012  

 

  

Registration and filing fees

      81,822  

 

  

Reports to shareholders

      118,264  

 

  

Professional services fees

      39,925  

 

  

Other

      24,857  

 

  

Total expenses

      17,445,808  

 

  

Less: Fees waived and/or expense offset arrangement(s)

      (84,026 ) 

 

  

Net expenses

      17,361,782  

 

  

Net investment income

      33,036,727  

 

  

Realized and unrealized gain (loss) from:

   

Net realized gain from:

   

Unaffiliated investment securities

      33,168,027  

 

  

Affiliated investment securities

      3,508  

 

  

Foreign currencies

      9,808  

 

  
     33,181,343  

 

  

Change in net unrealized appreciation (depreciation) of:

   

Unaffiliated investment securities

      (109,117,736 ) 

 

  

Affiliated investment securities

      19,039  

 

  

Foreign currencies

      (17,024 ) 

 

  
     (109,115,721 ) 

 

  

Net realized and unrealized gain (loss)

      (75,934,378 ) 

 

  

Net increase (decrease) in net assets resulting from operations

    $ (42,897,651 ) 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

8   Invesco Dividend Income Fund

Statement of Changes in Net Assets

For the six months ended October 31, 2022 and the year ended April 30, 2022

(Unaudited)

 

    

October 31,

2022

    

April 30,

2022

  

 

  

Operations:

     

Net investment income

    $ 33,036,727     $ 71,956,694  

 

  

Net realized gain

      33,181,343       280,920,595  

 

  

Change in net unrealized appreciation (depreciation)

      (109,115,721 )      (127,436,968 ) 

 

  

Net increase (decrease) in net assets resulting from operations

      (42,897,651 )      225,440,321  

 

  

Distributions to shareholders from distributable earnings:

     

Class A

      (23,809,787 )      (184,985,266 ) 

 

  

Class C

      (1,005,262 )      (14,163,762 ) 

 

  

Class R

      (774,949 )      (6,846,245 ) 

 

  

Class Y

      (3,147,129 )      (21,845,924 ) 

 

  

Investor Class

      (581,622 )      (4,657,827 ) 

 

  

Class R5

      (14,837 )      (103,464 ) 

 

  

Class R6

      (2,227,919 )      (15,657,644 ) 

 

  

Total distributions from distributable earnings

      (31,561,505 )      (248,260,132 ) 

 

  

Share transactions–net:

     

Class A

      (33,846,135 )      (16,481,577 ) 

 

  

Class C

      (22,654,964 )      (54,843,590 ) 

 

  

Class R

      (1,828,159 )      1,706,647  

 

  

Class Y

      (1,504,317 )      (6,948,273 ) 

 

  

Investor Class

      (1,387,087 )      (995,449 ) 

 

  

Class R5

      39,823       (926,423 ) 

 

  

Class R6

      772,561       (18,109,638 ) 

 

  

Net increase (decrease) in net assets resulting from share transactions

      (60,408,278 )      (96,598,303 ) 

 

  

Net increase (decrease) in net assets

      (134,867,434 )      (119,418,114 ) 

 

  

Net assets:

     

Beginning of period

      3,861,057,236       3,980,475,350  

 

  

End of period

    $ 3,726,189,802     $ 3,861,057,236  

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

9   Invesco Dividend Income 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(a)		 Net gains
(losses)
on securities
(both
realized and
unrealized)		 Total from
investment
operations		 Dividends
from net
investment
income		 Distributions
from net
realized
gains		 Total
distributions		 Net asset
value, end
of period		 Total
return (b)		 Net assets,
end of period
(000’s omitted)

Ratio of

expenses

to average

net assets

with fee waivers

and/or

expenses

absorbed

 Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed

Ratio of net

investment

income

to average
net assets

 Portfolio
turnover (c)

Class A

Six months ended 10/31/22

   $25.42   $0.22   $(0.49 )   $(0.27 )   $(0.21 )   $       -   $(0.21 )   $24.94   (1.03 )%(d)   $2,798,553   0.93 %(d)(e)   0.93 %(d)(e)   1.78 %(d)(e)   9 %

Year ended 04/30/22

   25.62   0.48   1.00   1.48   (0.47 )   (1.21 )   (1.68 )   25.42   5.95 (d)    2,887,737   0.93 (d)    0.93 (d)    1.84 (d)    38

Year ended 04/30/21

   20.11   0.47   5.53   6.00   (0.49 )   -   (0.49 )   25.62   30.23 (d)    2,921,798   0.97 (d)    0.97 (d)    2.10 (d)    4

Year ended 04/30/20

   22.70   0.51   (2.33 )   (1.82 )   (0.52 )   (0.25 )   (0.77 )   20.11   (8.30 )   2,506,397   1.05   1.06   2.31   47

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

Class C

Six months ended 10/31/22

   25.78   0.13   (0.49 )   (0.36 )   (0.12 )   -   (0.12 )   25.30   (1.38 )   202,071   1.69 (e)    1.69 (e)    1.02 (e)    9

Year ended 04/30/22

   25.97   0.29   1.01   1.30   (0.28 )   (1.21 )   (1.49 )   25.78   5.13   229,596   1.69   1.69   1.08   38

Year ended 04/30/21

   20.38   0.30   5.61   5.91   (0.32 )   -   (0.32 )   25.97   29.29   285,321   1.73   1.73   1.34   4

Year ended 04/30/20

   23.01   0.35   (2.37 )   (2.02 )   (0.36 )   (0.25 )   (0.61 )   20.38   (9.02 )   385,968   1.80   1.81   1.56   47

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

Class R

Six months ended 10/31/22

   25.42   0.19   (0.49 )   (0.30 )   (0.18 )   -   (0.18 )   24.94   (1.16 )   107,769   1.19 (e)    1.19 (e)    1.52 (e)    9

Year ended 04/30/22

   25.62   0.42   1.00   1.42   (0.41 )   (1.21 )   (1.62 )   25.42   5.68   111,671   1.19   1.19   1.58   38

Year ended 04/30/21

   20.11   0.41   5.53   5.94   (0.43 )   -   (0.43 )   25.62   29.89   110,667   1.23   1.23   1.84   4

Period ended 04/30/20(f)

  20.18   0.01   (0.08 )   (0.07 )   -   -   -   20.11   (0.35 )   97,560   1.20 (e)    1.21 (e)    2.16 (e)    47

Class Y

Six months ended 10/31/22

   25.71   0.25   (0.50 )   (0.25 )   (0.24 )   -   (0.24 )   25.22   (0.93 )   327,632   0.69 (e)    0.69 (e)    2.02 (e)    9

Year ended 04/30/22

   25.89   0.55   1.02   1.57   (0.54 )   (1.21 )   (1.75 )   25.71   6.24   335,608   0.69   0.69   2.08   38

Year ended 04/30/21

   20.32   0.52   5.59   6.11   (0.54 )   -   (0.54 )   25.89   30.55   344,755   0.73   0.73   2.34   4

Year ended 04/30/20

   22.94   0.57   (2.36 )   (1.79 )   (0.58 )   (0.25 )   (0.83 )   20.32   (8.09 )   330,421   0.81   0.82   2.55   47

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

Investor Class

Six months ended 10/31/22

   25.71   0.22   (0.49 )   (0.27 )   (0.21 )   -   (0.21 )   25.23   (1.02 )   69,453   0.94 (e)    0.94 (e)    1.77 (e)    9

Year ended 04/30/22

   25.89   0.48   1.02   1.50   (0.47 )   (1.21 )   (1.68 )   25.71   5.96   72,230   0.94   0.94   1.83   38

Year ended 04/30/21

   20.31   0.47   5.59   6.06   (0.48 )   -   (0.48 )   25.89   30.25   73,628   0.98   0.98   2.09   4

Year ended 04/30/20

   22.93   0.52   (2.37 )   (1.85 )   (0.52 )   (0.25 )   (0.77 )   20.31   (8.32 )   62,298   1.06   1.07   2.30   47

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

Class R5

Six months ended 10/31/22

   25.43   0.25   (0.49 )   (0.24 )   (0.24 )   -   (0.24 )   24.95   (0.89 )   1,449   0.66 (e)    0.66 (e)    2.05 (e)    9

Year ended 04/30/22

   25.63   0.55   1.00   1.55   (0.54 )   (1.21 )   (1.75 )   25.43   6.24   1,425   0.66   0.66   2.11   38

Year ended 04/30/21

   20.11   0.53   5.54   6.07   (0.55 )   -   (0.55 )   25.63   30.66   2,337   0.66   0.66   2.41   4

Year ended 04/30/20

   22.71   0.58   (2.34 )   (1.76 )   (0.59 )   (0.25 )   (0.84 )   20.11   (8.05 )   2,159   0.75   0.76   2.61   47

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

Class R6

Six months ended 10/31/22

   25.45   0.26   (0.49 )   (0.23 )   (0.25 )   -   (0.25 )   24.97   (0.86 )   219,263   0.59 (e)    0.59 (e)    2.12 (e)    9

Year ended 04/30/22

   25.65   0.57   1.00   1.57   (0.56 )   (1.21 )   (1.77 )   25.45   6.31   222,790   0.59   0.59   2.18   38

Year ended 04/30/21

   20.13   0.55   5.54   6.09   (0.57 )   -   (0.57 )   25.65   30.75   241,970   0.58   0.58   2.49   4

Year ended 04/30/20

   22.73   0.60   (2.34 )   (1.74 )   (0.61 )   (0.25 )   (0.86 )   20.13   (7.97 )   245,526   0.66   0.67   2.70   47

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

 

(a) 

Calculated using average shares outstanding.

(b) 

Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.

(c) 

Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended April 30, 2020, the portfolio turnover calculation excludes the value of securities purchased of $2,372,954,426 in connection with the acquisitions of Invesco Oppenheimer Dividend Opportunity Fund and Invesco Oppenheimer Equity Income Fund into the Fund.

(d) 

The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.24% for the six months ended October 31, 2022 and the years ended April 30, 2022 and 2021.

(e) 

Annualized.

(f) 

Commencement date of April 17, 2020.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

10   Invesco Dividend Income Fund

Notes to Financial Statements

October 31, 2022

(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 an open-end series management investment company authorized to issue an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.

The Fund’s investment objective is current income and long-term growth of capital.

The Fund currently consists of seven different classes of shares: Class A, Class C, Class R, 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 a front-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, Investor Class, Class R5 and Class R6 shares are sold at net asset value. Class C shares held for eight 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 eighth 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.

Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.

Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.

Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.

Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.

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 may be used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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 market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism, significant governmental actions or adverse investor sentiment generally 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.

The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used.

 

11   Invesco Dividend Income Fund

Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.

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 an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.

The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.

C.

Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues, the country that has the primary market for the issuer’s securities and its “country of risk” as determined by a third party service provider, 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 the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.

E.

Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F.

Foreign Withholding Taxes – The Fund is subject to foreign withholding tax imposed by certain foreign countries in which the Fund may invest. Withholding taxes are incurred on certain foreign dividends and are accrued at the time the dividend is recognized based on applicable foreign tax laws. The Fund may file withholding tax refunds in certain jurisdictions to recover a portion of amounts previously withheld. The Fund will record a receivable for such tax refunds based on several factors including; an assessment of a jurisdiction’s legal obligation to pay reclaims, administrative practices and payment history. Any receivables recorded will be shown under receivables for Tax reclaims on the Statement of Assets and Liabilities.

As a result of recent court rulings in certain countries across the European Union, tax refunds for previously withheld taxes on dividends earned in those countries have been received. These tax refund payments are reflected as Foreign withholding tax claims in the Statement of Operations, and any related interest is included in Interest income. The Fund may incur fees paid to third party providers that assist in the recovery of the tax reclaims. These fees are reflected on the Statement of Operations as Professional fees, if any. In the event tax refunds received by the Fund during the fiscal year exceed the foreign withholding taxes paid by the Fund for the year, and the Fund previously passed foreign tax credits on to its shareholders, the Fund intends to enter into a closing agreement with the Internal Revenue Service in order to pay the associated liability on behalf of the Funds’ shareholders. For the six months ended October 31, 2022, the Fund did not enter into any closing agreements.

G.

Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated based on relative net assets of Class R5 and Class R6. 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.

H.

Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.

I.

Indemnifications – Under the 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.

J.

Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “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

 

12   Invesco Dividend Income Fund

did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities.

The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon also serves as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the six months ended October 31, 2022, the Fund paid the Adviser $1,664 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.

K.

Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at 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.

L.

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 exchange of the two currencies on the settlement date, 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).

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 for hedging 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.

M.

COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance.

NOTE 2–Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with the Adviser. 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

      0.6325%  

 

  

Next $500 million

      0.6125%  

 

  

Next $600 million

      0.6000%  

 

  

Next $400 million

      0.5325%  

 

  

Next $2 billion

      0.4500%  

 

  

Next $2 billion

      0.4000%  

 

  

Next $2 billion

      0.3750%  

 

  

Over $8 billion

      0.3500%  

 

  

For the six months ended October 31, 2022, the effective advisory fee rate incurred by the Fund was 0.53%.

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, 2023, 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, Investor Class, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.25%, 1.75%, 2.00%, 1.75% and 1.75%, respectively, of the Fund’s average daily net

 

13   Invesco Dividend Income Fund

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 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, 2023. 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, 2024, 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, 2022, the Adviser waived advisory fees of $66,327.

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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Administrative 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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C, Class R and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Class A Plan, reimburses IDI for its allocated share of expenses incurred for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Class A shares. The Fund pursuant to the Class C Plan, the Class R Plan and the Investor Class Plan, pays IDI compensation at the annual rate of 1.00% of the average daily net assets of Class C shares, at the annual rate of 0.50% of the average daily net assets of Class R shares and at the annual rate of 0.25% of the average daily net assets of the Investor Class shares, respectively. 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, 2022, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.

Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2022, IDI advised the Fund that IDI retained $139,456 in front-end sales commissions from the sale of Class A shares and $725 and $5,071 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.

For the six months ended October 31, 2022, the Fund incurred $0 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. 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 Adviser’s 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, 2022. 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

    $ 3,444,288,278        $ 178,354,175          $-        $ 3,622,642,453  

 

  

Money Market Funds

      100,426,376          47,980,072            -          148,406,448  

 

  

Total Investments

    $ 3,544,714,654        $ 226,334,247          $-        $ 3,771,048,901  

 

  

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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $17,699.

 

14   Invesco Dividend Income Fund

NOTE 5–Trustees’ and Officers’ Fees and Benefits

Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.

NOTE 6–Cash Balances

The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.

NOTE 7–Tax Information

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund did not have a capital loss carryforward as of April 30, 2022.

NOTE 8–Investment Transactions

The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2022 was $320,078,659 and $363,460,696, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investments on a Tax Basis

  

Aggregate unrealized appreciation of investments

      $   897,220,969  

 

  

Aggregate unrealized (depreciation) of investments

      (135,118,548 ) 

 

  

Net unrealized appreciation of investments

      $762,102,421  

 

  

Cost of investments for tax purposes is $3,008,946,480.

NOTE 9–Share Information

 

     Summary of Share Activity  

 

  
     Six months ended     Year ended  
     October 31, 2022(a)     April 30, 2022  
     Shares     Amount     Shares     Amount  

 

  

Sold:

         

Class A

      4,282,700     $ 104,657,597       6,340,049     $ 164,467,996  

 

  

Class C

      473,126       11,733,782       913,912       24,036,507  

 

  

Class R

      349,998       8,528,965       595,803       15,446,818  

 

  

Class Y

      1,275,547       31,657,587       2,327,366       61,053,165  

 

  

Investor Class

      21,147       528,562       92,799       2,460,980  

 

  

Class R5

      17,355       419,458       3,820       99,896  

 

  

Class R6

      1,129,886       27,686,917       1,273,764       33,037,328  

 

  

Issued as reinvestment of dividends:

         

Class A

      884,164       21,347,130       6,729,190       169,261,961  

 

  

Class C

      38,040       931,667       518,792       13,192,205  

 

  

Class R

      31,902       770,078       270,987       6,809,610  

 

  

Class Y

      94,881       2,316,939       703,247       17,892,341  

 

  

Investor Class

      21,124       515,835       163,622       4,161,601  

 

  

Class R5

      609       14,729       4,070       102,666  

 

  

Class R6

      85,992       2,078,547       598,439       15,090,758  

 

  

Automatic conversion of Class C shares to Class A shares:

         

Class A

      673,485       16,391,862       1,746,500       45,028,256  

 

  

Class C

      (663,977 )      (16,391,862 )      (1,722,604 )      (45,028,256 ) 

 

  

 

15   Invesco Dividend Income Fund

    

    

    

 

     Summary of Share Activity  

 

  
     Six months ended     Year ended  
     October 31, 2022(a)     April 30, 2022  
     Shares     Amount     Shares     Amount  

 

  

Reacquired:

         

Class A

      (7,234,392 )    $ (176,242,724 )      (15,266,993 )    $ (395,239,790 ) 

 

  

Class C

      (764,383 )      (18,928,551 )      (1,792,600 )      (47,044,046 ) 

 

  

Class R

      (454,019 )      (11,127,202 )      (793,548 )      (20,549,781 ) 

 

  

Class Y

      (1,436,011 )      (35,478,843 )      (3,289,638 )      (85,893,779 ) 

 

  

Investor Class

      (98,706 )      (2,431,484 )      (290,741 )      (7,618,030 ) 

 

  

Class R5

      (15,929 )      (394,364 )      (43,054 )      (1,128,985 ) 

 

  

Class R6

      (1,188,897 )      (28,992,903 )      (2,552,837 )      (66,237,724 ) 

 

  

Net increase (decrease) in share activity

      (2,476,358 )    $ (60,408,278 )      (3,469,655 )    $ (96,598,303 ) 

 

  

 

(a) 

There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 22% 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 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, 2022 through October 31, 2022.

Actual expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes

The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.

    The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

    Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.

 

         
    

Beginning

Account Value

(05/01/22)

   ACTUAL  

HYPOTHETICAL

(5% annual return before

expenses)

  

Annualized

Expense

Ratio

 

Ending

Account Value

(10/31/22)1

  

Expenses

Paid During

Period2

  

Ending

Account Value

(10/31/22)

  

Expenses

Paid During

Period2

             

Class A

   $1,000.00   $989.70   $4.66   $1,020.52   $4.74   0.93%
             

Class C

     1,000.00     986.20     8.41     1,016.74     8.54   1.68   
             

Class R

     1,000.00     988.40     5.91     1,019.26     6.01   1.18   
             

Class Y

     1,000.00     990.70     3.41     1,021.78     3.47   0.68   
             

Investor Class   

     1,000.00     989.80     4.66     1,020.52     4.74   0.93   
             

Class R5

     1,000.00     991.10     3.31     1,021.88     3.36   0.66   
             

Class R6

     1,000.00     991.40     2.96     1,022.23     3.01   0.59   

 

1 

The actual ending account value is based on the actual total return of the Fund for the period May 1, 2022 through October 31, 2022, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.

2 

Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year.

 

17   Invesco Dividend Income Fund

Approval of Investment Advisory and Sub-Advisory Contracts

    

 

At meetings held on June 13, 2022, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Dividend Income Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2022. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

The Board’s Evaluation Process

The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer. 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 accordance with certain negotiated regulatory requirements. In

addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

A.

Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board

reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

B.

Fund Investment Performance

The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2021 to the performance of funds in the Broadridge performance universe and against the Dow Jones U.S. Select Dividend Index (Index). The Board noted that performance of Class A shares of the Fund was in the fifth quintile of its performance universe for the one, three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was below the performance of the Index for the one, three and five year periods. The Board noted that the Fund’s stock selection in and underweight exposure to certain sectors, as well as the Fund’s exposure to the dividend/yield factor, detracted from Fund performance. The Board also noted that the Fund underwent a portfolio management team change and investment process change in March 2021. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its conclusions.

 

 

18   Invesco Dividend Income Fund

C.

Advisory and Sub-Advisory Fees and Fund Expenses

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the Fund’s contractual management fee schedule was reduced at certain breakpoint levels effective April 2020. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.

    The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement 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 its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.

    The Board also compared the Fund’s effective advisory fee rate (defined for this purpose as the advisory fee rate after advisory fee waivers and before other expense limitations/waivers) to the effective advisory fee rates of other similarly managed third-party mutual funds advised or sub-advised by Invesco Advisers and its affiliates, based on asset balances as of December 31, 2021.

    The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

D.

Economies of Scale and Breakpoints

The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of

scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

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 in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and the periodic review and enhancement of such methodology. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

F.

Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

    The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives from Invesco Advisers periodic reports that include a representation to the effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

    The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.

    The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

    At meetings held on June 13, 2022, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Dividend Income Fund’s

 

 

19   Invesco Dividend Income Fund

(the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2022. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

    The Board’s Evaluation Process

    The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

    As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer. 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 accordance with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

    The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the

material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.

    Factors and Conclusions and Summary of Independent Written Fee Evaluation

    A. Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

    The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

    The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise

with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

    B. Fund Investment Performance

    The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

    The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2021 to the performance of funds in the Broadridge performance universe and against the Dow Jones U.S. Select Dividend Index (Index). The Board noted that performance of Class A shares of the Fund was in the fifth quintile of its performance universe for the one, three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was below the performance of the Index for the one, three and five year periods. The Board noted that the Fund’s stock selection in and underweight exposure to certain sectors, as well as the Fund’s exposure to the dividend/yield factor, detracted from Fund performance. The Board also noted that the Fund underwent a portfolio management team change and investment process change in March 2021. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its conclusions.

    C. Advisory and Sub-Advisory Fees and Fund Expenses

    The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the Fund’s contractual management fee schedule was reduced at certain breakpoint levels effective April 2020. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s

 

 

20   Invesco Dividend Income Fund

contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.

    The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement 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 its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.

    The Board also compared the Fund’s effective advisory fee rate (defined for this purpose as the advisory fee rate after advisory fee waivers and before other expense limitations/waivers) to the effective advisory fee rates of other similarly managed third-party mutual funds advised or sub-advised by Invesco Advisers and its affiliates, based on asset balances as of December 31, 2021.

    The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

    D. Economies of Scale and Breakpoints

    The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

    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 in the aggregate and on an

individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and the periodic review and enhancement of such methodology. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

    F. Collateral Benefits to Invesco Advisers and its Affiliates

    The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

    The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives from Invesco Advisers periodic reports that include a representation to the effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

    The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.

    The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

 

 

21   Invesco Dividend Income Fund

 

 

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Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.

 

 

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Fund holdings and proxy voting information

The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-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/corporate/about-us/esg. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. 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 number(s): 811-03826 and 002-85905    Invesco Distributors, Inc.    I-DIVI-SAR-1

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Semiannual Report to Shareholders   October 31, 2022

Invesco Energy Fund

Nasdaq:

A: IENAX ∎ C: IEFCX ∎ Y: IENYX ∎ Investor: FSTEX ∎ R5: IENIX ∎ R6: IENSX

 

    

   
2   Fund Performance
4   Schedule of Investments
6   Financial Statements
9   Financial Highlights
10   Notes to Financial Statements
16   Fund Expenses
17   Approval of Investment Advisory and Sub-Advisory Contracts

For the most current month-end Fund performance and commentary, please visit invesco.com/performance.

Unless otherwise noted, all data is provided by Invesco.

This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.

 

 

NOT FDIC INSURED  |  MAY LOSE VALUE  |  NO BANK GUARANTEE

 

Fund Performance

 

 

Performance summary

 

 

 

Fund vs. Indexes

 

Cumulative total returns, 4/30/22 to 10/31/22, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

 

Class A Shares

     16.93 % 

Class C Shares

     16.48  

Class Y Shares

     17.09  

Investor Class Shares

     16.92  

Class R5 Shares

     17.16  

Class R6 Shares

     17.20  

S&P 500 Index▼ (Broad Market Index)

     -5.50  

MSCI World Energy Index▼ (Style-Specific Index)

     13.91  

Lipper Natural Resource Funds Index∎ (Peer Group Index)

     14.59  

 

Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc.

  

The S&P 500® Index is an unmanaged index considered representative of the US stock market.

 

  The MSCI World Energy Index is designed to capture the performance of energy stocks across developed market countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors.

 

  The Lipper Natural Resource Funds Index is 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 index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es).

 

  A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.

 

 

For more information about your Fund

Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.

  Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.

 

 

2   Invesco Energy Fund

    

    

    

 

 

Average Annual Total Returns

 

As of 10/31/22, including maximum applicable sales charges

 

Class A Shares

        

Inception (3/28/02)

     5.39 % 

10 Years

     -0.09  

  5 Years

     5.04  

  1 Year

     45.14  

Class C Shares

        

Inception (2/14/00)

     6.62 % 

10 Years

     -0.11  

  5 Years

     5.44  

  1 Year

     51.43  

Class Y Shares

        

Inception (10/3/08)

     1.91 % 

10 Years

     0.73  

  5 Years

     6.50  

  1 Year

     53.95  

Investor Class Shares

        

Inception (1/19/84)

     7.03 % 

10 Years

     0.48  

  5 Years

     6.24  

  1 Year

     53.55  

Class R5 Shares

        

Inception (1/31/06)

     1.65 % 

10 Years

     0.91  

  5 Years

     6.72  

  1 Year

     54.13  

Class R6 Shares

        

10 Years

     0.76 % 

  5 Years

     6.76  

  1 Year

     54.27  

Class R6 shares incepted on April 4, 2017. Performance shown prior to that date is that of Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.

    The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.

    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 a front-end sales charge or a CDSC; therefore, performance is at net asset value.

    The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.

    Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.

 

 

3   Invesco Energy Fund

Schedule of Investments(a)

October 31, 2022

(Unaudited)

 

     Shares      Value  

 

  

Common Stocks & Other Equity Interests–92.62%

 

Copper–1.51%

 

Southern Copper Corp. (Peru)

      202,078      $ 9,491,604  

 

  

Diversified Metals & Mining–2.59%

 

Glencore PLC (Australia)

      2,845,587        16,264,004  

 

  

Fertilizers & Agricultural Chemicals–3.46%

 

CF Industries Holdings, Inc.

      204,548        21,735,270  

 

  

Heavy Electrical Equipment–1.58%

 

Vestas Wind Systems A/S (Denmark)

      504,966        9,924,753  

 

  

Integrated Oil & Gas–26.50%

 

BP PLC, ADR (United Kingdom)

      304,577        10,136,322  

 

  

Cenovus Energy, Inc. (Canada)

      450,257        9,101,977  

 

  

Chevron Corp.

      198,612        35,928,911  

 

  

Equinor ASA (Norway)

      310,463        11,309,141  

 

  

Exxon Mobil Corp.

      461,785        51,170,396  

 

  

Shell PLC, ADR (Netherlands)

      296,891        16,516,046  

 

  

Suncor Energy, Inc. (Canada)(b)

     634,674        21,830,531  

 

  

TotalEnergies SE (France)

      189,739        10,369,289  

 

  
        166,362,613  

 

  

Oil & Gas Equipment & Services–5.75%

 

Baker Hughes Co., Class A

      470,539        13,015,109  

 

  

NOV, Inc.(b)

     540,948        12,117,235  

 

  

Tenaris S.A., ADR

      348,510        10,950,184  

 

  
        36,082,528  

 

  

Oil & Gas Exploration & Production–38.00%

 

APA Corp.

      511,150        23,236,879  

 

  

Canadian Natural Resources Ltd. (Canada)

      180,599        10,831,831  

 

  

ConocoPhillips

      357,200        45,039,348  

 

  

Coterra Energy, Inc.

      414,749        12,911,136  

 

  

Devon Energy Corp.

      235,023        18,179,029  

 

  

Diamondback Energy, Inc.

      113,971        17,905,984  

 

  

EOG Resources, Inc.

      228,054        31,133,932  

 

  

EQT Corp.

      486,587        20,358,800  

 

  

Hess Corp.

      89,124        12,573,614  

 

  

Marathon Oil Corp.

      1,045,220        31,826,949  

 

  

Pioneer Natural Resources Co.

      56,648        14,525,114  

 

  
        238,522,616  

 

  
     Shares      Value  

 

  

Oil & Gas Refining & Marketing–8.82%

 

   

Marathon Petroleum Corp.

      59,904      $ 6,806,292  

 

  

Phillips 66

      179,919        18,763,753  

 

  

Valero Energy Corp.

      237,288        29,791,508  

 

  
        55,361,553  

 

  

Oil & Gas Storage & Transportation–4.41%

 

   

Cheniere Energy, Inc.

      111,122        19,603,032  

 

  

Plains All American Pipeline L.P.

      674,686        8,075,991  

 

  
        27,679,023  

 

  

Total Common Stocks & Other Equity Interests
(Cost $418,936,799)

 

      581,423,964  

 

  

Exchange-Traded Funds–4.33%

 

Energy Select Sector SPDR Fund (Cost $15,957,037)(b)

     302,100        27,189,000  

 

  

Money Market Funds–2.91%

      

Invesco Government & Agency Portfolio, Institutional Class,
3.07%(c)(d)

     6,402,932        6,402,932  

 

  

Invesco Liquid Assets Portfolio, Institutional Class, 3.03%(c)(d)

     4,562,977        4,563,889  

 

  

Invesco Treasury Portfolio, Institutional Class, 3.08%(c)(d)

     7,317,637        7,317,637  

 

  

Total Money Market Funds
(Cost $18,284,312)

 

      18,284,458  

 

  

TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-99.86%
(Cost $453,178,148)

         626,897,422  

 

  

Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds–5.48%

 

Invesco Private Government Fund, 3.18%(c)(d)(e)

     9,632,809        9,632,809  

 

  

Invesco Private Prime Fund,
3.28%(c)(d)(e)

     24,763,510        24,763,510  

 

  

Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $34,396,307)

 

      34,396,319  

 

  

TOTAL INVESTMENTS IN
SECURITIES–105.34%
(Cost $487,574,455)

 

      661,293,741  

 

  

OTHER ASSETS LESS LIABILITIES–(5.34)%

 

      (33,501,879 ) 

 

  

NET ASSETS–100.00%

 

    $ 627,791,862  

 

  
 

Investment Abbreviations:

ADR    - American Depositary Receipt

SPDR - Standard & Poor’s Depositary Receipt

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

4   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) 

All or a portion of this security was out on loan at October 31, 2022.

(c)

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended October 31, 2022.

 

    

Value

April 30, 2022

    

Purchases

at Cost

    

Proceeds

from Sales

    

Change in

Unrealized

Appreciation

(Depreciation)

    

Realized

Gain

(Loss)

     Value
October 31, 2022		     Dividend Income  
Investments in Affiliated Money Market Funds:                                                        

Invesco Government & Agency Portfolio, Institutional Class

     $ 3,661,588       $ 37,601,071     $ (34,859,727 )        $ -            $ -              $  6,402,932           $ 31,331       

Invesco Liquid Assets Portfolio, Institutional Class

     2,457,469         26,857,908       (24,751,892 )      528          (124)           4,563,889         33,900       

Invesco Treasury Portfolio, Institutional Class

     4,184,672         42,972,653       (39,839,688 )      -          -            7,317,637         52,076       
Investments Purchased with Cash Collateral from Securities on Loan:                                                        

Invesco Private Government Fund

     13,255,983         131,750,253       (135,373,427 )      -          -            9,632,809         138,485*       

Invesco Private Prime Fund

     30,930,628         261,910,106       (268,074,743 )      (452)         (2,029)           24,763,510         385,257*       

Total

     $ 54,490,340       $ 501,091,991     $ (502,899,477 )        $ 76            $ (2,153)             $52,680,777           $ 641,049      

 

  *

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(d) 

The rate shown is the 7-day SEC standardized yield as of October 31, 2022.

(e) 

The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I.

Portfolio Composition

By industry, based on Net Assets

as of October 31, 2022

 

Oil & Gas Exploration & Production

        38.00 %

Integrated Oil & Gas

        26.50

Oil & Gas Refining & Marketing

        8.82

Oil & Gas Equipment & Services

        5.75

Oil & Gas Storage & Transportation

        4.41

Investment Companies - Exchange-Traded Fund

        4.33

Fertilizers & Agricultural Chemicals

        3.46

Diversified Metals & Mining

        2.59

Heavy Electrical Equipment

        1.58

Copper

        1.51

Money Market Funds Plus Other Assets Less Liabilities

        3.05

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

5   Invesco Energy Fund

Statement of Assets and Liabilities

October 31, 2022

(Unaudited)

 

Assets:

   

Investments in unaffiliated securities, at value
(Cost $434,893,836)*

    $ 608,612,964  

 

  

Investments in affiliated money market funds, at value
(Cost $52,680,619)

      52,680,777  

 

  

Foreign currencies, at value (Cost $92,780)

      79,739  

 

  

Receivable for:

   

Fund shares sold

      1,798,001  

 

  

Dividends

      341,998  

 

  

Investment for trustee deferred compensation and retirement plans

      170,425  

 

  

Other assets

      73,113  

 

  

Total assets

      663,757,017  

 

  

Liabilities:

   

Payable for:

   

Fund shares reacquired

      711,587  

 

  

Collateral upon return of securities loaned

      34,396,307  

 

  

Accrued fees to affiliates

      388,261  

 

  

Accrued other operating expenses

      286,600  

 

  

Trustee deferred compensation and retirement plans

      182,400  

 

  

Total liabilities

      35,965,155  

 

  

Net assets applicable to shares outstanding

    $ 627,791,862  

 

  

Net assets consist of:

   

Shares of beneficial interest

    $ 821,125,957  

 

  

Distributable earnings (loss)

      (193,334,095 ) 

 

  
   $ 627,791,862  

 

  

Net Assets:

   

Class A

    $   379,349,190  

 

  

Class C

    $ 33,710,997  

 

  

Class Y

    $ 89,966,982  

 

  

Investor Class

    $ 107,279,829  

 

  

Class R5

    $ 8,959,426  

 

  

Class R6

    $ 8,525,438  

 

  

Shares outstanding, no par value, with an unlimited number of shares authorized:

 

Class A

      12,949,896  

 

  

Class C

      1,374,435  

 

  

Class Y

      3,060,657  

 

  

Investor Class

      3,678,580  

 

  

Class R5

      296,261  

 

  

Class R6

      281,774  

 

  

Class A:

   

Net asset value per share

    $ 29.29  

 

  

Maximum offering price per share
(Net asset value of $29.29 ÷ 94.50%)

    $ 30.99  

 

  

Class C:

   

Net asset value and offering price per share

    $ 24.53  

 

  

Class Y:

   

Net asset value and offering price per share

    $ 29.39  

 

  

Investor Class:

   

Net asset value and offering price per share

    $ 29.16  

 

  

Class R5:

   

Net asset value and offering price per share

    $ 30.24  

 

  

Class R6:

   

Net asset value and offering price per share

    $ 30.26  

 

  

 

*

At October 31, 2022, securities with an aggregate value of $34,022,226 were on loan to brokers.

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

6   Invesco Energy Fund

Statement of Operations

For the six months ended October 31, 2022

(Unaudited)

 

Investment income:

   

Dividends (net of foreign withholding taxes of $245,519)

    $ 11,473,404  

 

  

Dividends from affiliated money market funds (includes net securities lending income of $32,559)

      149,866  

 

  

Total investment income

      11,623,270  

 

  

Expenses:

   

Advisory fees

      1,988,104  

 

  

Administrative services fees

      43,510  

 

  

Custodian fees

      5,106  

 

  

Distribution fees:

   

 

  

Class A

      413,746  

 

  

Class C

      145,822  

 

  

Investor Class

      122,589  

 

  

Transfer agent fees – A, C, Y and Investor Class

      544,859  

 

  

Transfer agent fees – R5

      3,617  

 

  

Transfer agent fees – R6

      1,228  

 

  

Trustees’ and officers’ fees and benefits

      9,110  

 

  

Registration and filing fees

      53,562  

 

  

Reports to shareholders

      195,330  

 

  

Professional services fees

      50,844  

 

  

Other

      75,876  

 

  

Total expenses

      3,653,303  

 

  

Less: Fees waived and/or expense offset arrangement(s)

      (11,547 ) 

 

  

Net expenses

      3,641,756  

 

  

Net investment income

      7,981,514  

 

  

Realized and unrealized gain (loss) from:

   

Net realized gain (loss) from:

   

Unaffiliated investment securities

      27,570,989  

 

  

Affiliated investment securities

      (2,153 ) 

 

  

Foreign currencies

      (1,171 ) 

 

  
     27,567,665  

Change in net unrealized appreciation (depreciation) of:

   

Unaffiliated investment securities

      45,645,819  

 

  

Affiliated investment securities

      76  

 

  

Foreign currencies

      (10,831 ) 

 

  
     45,635,064  

 

  

Net realized and unrealized gain

      73,202,729  

 

  

Net increase in net assets resulting from operations

    $ 81,184,243  

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

7   Invesco Energy Fund

Statement of Changes in Net Assets

For the six months ended October 31, 2022 and the year ended April 30, 2022

(Unaudited)

 

    

October 31,

2022

    

April 30,

2022

  

 

  

Operations:

     

Net investment income

    $ 7,981,514     $ 8,058,087  

 

  

Net realized gain

      27,567,665       16,795,638  

 

  

Change in net unrealized appreciation

      45,635,064       153,449,946  

 

  

Net increase in net assets resulting from operations

      81,184,243       178,303,671  

 

  

Distributions to shareholders from distributable earnings:

     

Class A

      –       (3,510,544 ) 

 

  

Class C

      –       (280,587 ) 

 

  

Class Y

      –       (809,323 ) 

 

  

Investor Class

      –       (1,268,629 ) 

 

  

Class R5

      –       (73,510 ) 

 

  

Class R6

      –       (59,727 ) 

 

  

Total distributions from distributable earnings

      –       (6,002,320 ) 

 

  

Share transactions-net:

     

Class A

      28,067,406       33,863,277  

 

  

Class C

      3,191,532       5,456,993  

 

  

Class Y

      (5,270,510 )      33,455,283  

 

  

Investor Class

      (4,161,805 )      (2,197,713 ) 

 

  

Class R5

      1,257,506       1,966,434  

 

  

Class R6

      (35,074 )      4,956,416  

 

  

Net increase in net assets resulting from share transactions

      23,049,055       77,500,690  

 

  

Net increase in net assets

      104,233,298       249,802,041  

 

  

Net assets:

     

Beginning of period

      523,558,564       273,756,523  

 

  

End of period

    $ 627,791,862     $ 523,558,564  

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

8   Invesco Energy 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(a)

  

Net gains

(losses)

on securities

(both

realized and

unrealized)

  

Total from

investment

operations

  

Dividends

from net

investment

income

  

Net asset

value, end

of period

  

Total

return (b)

  

Net assets,

end of period

(000’s omitted)

  

Ratio of

expenses

to average

net assets

with fee waivers

and/or

expenses

absorbed

  

Ratio of

expenses

to average net

assets without

fee waivers

and/or

expenses

absorbed

  

Ratio of net

investment

income

to average

net assets

  

Portfolio

turnover (c)

Class A

                        

Six months ended 10/31/22

     $25.05       $0.38       $ 3.86       $ 4.24       $      –       $29.29       16.93 %      $379,349         1.32 %(d)        1.32 %(d)        2.85 %(d)      10 % 

Year ended 04/30/22

     15.57       0.43       9.39       9.82       (0.34 )      25.05       63.83       301,546       1.36         1.36         2.22       18  

Year ended 04/30/21

     11.54       0.25       4.05       4.30       (0.27 )      15.57       37.77       166,204       1.56         1.56         2.00       68  

Year ended 04/30/20

     21.05       0.41       (9.64 )      (9.23 )      (0.28 )      11.54       (44.30 )      121,102       1.45         1.45         2.42       16  

Year ended 04/30/19

     25.91       0.29       (4.61 )      (4.32 )      (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 )      25.91       8.08       323,247       1.33         1.33         2.07 (e)      9  

Class C

                                      

Six months ended 10/31/22

     21.06       0.23       3.24       3.47       –       24.53       16.48       33,711       2.07 (d)        2.07 (d)        2.10 (d)      10  

Year ended 04/30/22

     13.18       0.24       7.91       8.15       (0.27 )      21.06       62.54       26,493       2.11         2.11         1.47       18  

Year ended 04/30/21

     9.82       0.13       3.44       3.57       (0.21 )      13.18       36.87       12,763       2.31         2.31         1.25       68  

Year ended 04/30/20

     17.99       0.24       (8.22 )      (7.98 )      (0.19 )      9.82       (44.72 )      13,868       2.20         2.20         1.67       16  

Year ended 04/30/19

     22.17       0.10       (3.93 )      (3.83 )      (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 )      22.17       7.29       92,349       2.08         2.08         1.32 (e)      9  

Class Y

                                      

Six months ended 10/31/22

     25.10       0.41       3.88       4.29       –       29.39       17.09       89,967       1.07 (d)        1.07 (d)        3.10 (d)      10  

Year ended 04/30/22

     15.59       0.49       9.39       9.88       (0.37 )      25.10       64.20       85,631       1.11         1.11         2.47       18  

Year ended 04/30/21

     11.54       0.28       4.06       4.34       (0.29 )      15.59       38.14       29,497       1.31         1.31         2.25       68  

Year ended 04/30/20

     21.04       0.45       (9.64 )      (9.19 )      (0.31 )      11.54       (44.17 )      14,398       1.20         1.20         2.67       16  

Year ended 04/30/19

     25.93       0.35       (4.63 )      (4.28 )      (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 )      25.93       8.34       56,061       1.08         1.08         2.32 (e)      9  

Investor Class

                                      

Six months ended 10/31/22

     24.94       0.37       3.85       4.22       –       29.16       16.92       107,280       1.32 (d)        1.32 (d)        2.85 (d)      10  

Year ended 04/30/22

     15.51       0.43       9.34       9.77       (0.34 )      24.94       63.76       96,027       1.36         1.36         2.22       18  

Year ended 04/30/21

     11.49       0.25       4.04       4.29       (0.27 )      15.51       37.85       61,754       1.56         1.56         2.00       68  

Year ended 04/30/20

     20.96       0.40       (9.59 )      (9.19 )      (0.28 )      11.49       (44.30 )      47,046       1.45         1.45         2.42       16  

Year ended 04/30/19

     25.80       0.29       (4.59 )      (4.30 )      (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 )      25.80       8.07       136,141       1.33         1.33         2.07 (e)      9  

Class R5

                                      

Six months ended 10/31/22

     25.81       0.44       3.99       4.43       –       30.24       17.16       8,959       0.97 (d)        0.97 (d)        3.20 (d)      10  

Year ended 04/30/22

     16.02       0.53       9.65       10.18       (0.39 )      25.81       64.39       6,352       0.97         0.97         2.61       18  

Year ended 04/30/21

     11.83       0.32       4.19       4.51       (0.32 )      16.02       38.69       2,488       0.99         0.99         2.57       68  

Year ended 04/30/20

     21.54       0.50       (9.87 )      (9.37 )      (0.34 )      11.83       (44.03 )      2,371       0.96         0.96         2.91       16  

Year ended 04/30/19

     26.53       0.40       (4.73 )      (4.33 )      (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 )      26.53       8.51       8,092       0.91         0.91         2.49 (e)      9  

Class R6

                                      

Six months ended 10/31/22

     25.82       0.44       4.00       4.44       –       30.26       17.20       8,525       0.90 (d)        0.90 (d)        3.27 (d)      10  

Year ended 04/30/22

     16.02       0.56       9.63       10.19       (0.39 )      25.82       64.51       7,509       0.91         0.91         2.67       18  

Year ended 04/30/21

     11.83       0.34       4.17       4.51       (0.32 )      16.02       38.69       1,050       0.99         0.99         2.57       68  

Year ended 04/30/20

     21.53       0.49       (9.85 )      (9.36 )      (0.34 )      11.83       (44.00 )      357       0.96         0.96         2.91       16  

Year ended 04/30/19

     26.52       0.39       (4.72 )      (4.33 )      (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 )      26.52       8.55       185       0.90         0.90         2.50 (e)      9  

 

(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) 

Annualized.

(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.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

9   Invesco Energy Fund

Notes to Financial Statements

October 31, 2022

(Unaudited)

NOTE 1–Significant Accounting Policies

Invesco Energy Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company 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 a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y, Investor Class, Class R5 and Class R6 shares are sold at net asset value. Class C shares held for eight 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 eighth 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.

Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.

Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.

Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.

Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.

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 may be used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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 market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism, significant governmental actions or adverse investor sentiment generally 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.

The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used.

 

10   Invesco Energy Fund

Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.

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 an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.

The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.

C.

Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues, the country that has the primary market for the issuer’s securities and its “country of risk” as determined by a third party service provider, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

D.

Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.

E.

Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F.

Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated based on relative net assets of Class R5 and Class R6. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.

G.

Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.

H.

Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.

I.

Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “affiliated money market funds”) and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities.

The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon also serves as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner

 

11   Invesco Energy Fund

consistent with the federal securities laws. For the six months ended October 31, 2022, the Fund paid the Adviser $1,215 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.

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 exchange of the two currencies on the settlement date, 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).

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 for hedging 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.

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.

The Fund holds a more limited number of securities than other funds with a similar investment strategy. As a result, each investment has a greater effect on the Fund’s overall performance and any change in the value of these securities could significantly affect the value of your investment in the Fund.

M.

COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance.

NOTE 2–Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2022, the effective advisory fee rate incurred by the Fund was 0.71%.

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, 2023, 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 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 the total annual fund operating expenses after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2023. 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.

 

12   Invesco Energy Fund

Further, the Adviser has contractually agreed, through at least June 30, 2024, 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, 2022, the Adviser waived advisory fees of $8,478.

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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Administrative 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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class Y, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class 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 the six months ended October 31, 2022, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.

Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2022, IDI advised the Fund that IDI retained $59,513 in front-end sales commissions from the sale of Class A shares and $6,212 and $3,389 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.

For the six months ended October 31, 2022, the Fund incurred $6,005 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. 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 Adviser’s 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, 2022. 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

    $ 533,556,777        $ 47,867,187          $–         $ 581,423,964  

 

  

Exchange-Traded Funds

      27,189,000          –            –           27,189,000  

 

  

Money Market Funds

      18,284,458          34,396,319            –           52,680,777  

 

  

Total Investments

    $ 579,030,235        $ 82,263,506          $–         $ 661,293,741  

 

  

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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $3,069.

NOTE 5–Trustees’ and Officers’ Fees and Benefits

Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under

 

13   Invesco Energy Fund

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 at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.

NOTE 7–Tax Information

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP.

Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund had a capital loss carryforward as of April 30, 2022, as follows:

 

Capital Loss Carryforward*

  
Expiration    Short-Term      Long-Term      Total  

 

  

Not subject to expiration

    $ 8,400,407      $ 398,174,571      $ 406,574,978  

 

  

 

*

Capital loss carryforward 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2022 was $76,434,685 and $54,198,264, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investments on a Tax Basis

  

Aggregate unrealized appreciation of investments

      $205,592,327  

 

  

Aggregate unrealized (depreciation) of investments

      (28,711,977 ) 

 

  

Net unrealized appreciation of investments

      $176,880,350  

 

  

Cost of investments for tax purposes is $484,413,391.

NOTE 9–Share Information

 

     Summary of Share Activity  

 

  
     Six months ended     Year ended  
     October 31, 2022(a)     April 30, 2022  
     Shares     Amount     Shares     Amount  

 

  

Sold:

         

Class A

      3,365,614     $ 90,094,071       5,184,535     $ 110,611,271  

 

  

Class C

      488,373       10,990,776       716,149       12,872,339  

 

  

Class Y

      1,491,428       39,869,541       2,940,183       60,693,479  

 

  

Investor Class

      1,146,156       29,890,757       1,620,524       34,729,398  

 

  

Class R5

      138,889       3,688,850       207,421       4,280,244  

 

  

Class R6

      135,245       3,697,210       304,490       6,585,058  

 

  

Issued as reinvestment of dividends:

         

Class A

      -       -       178,561       3,278,383  

 

  

Class C

      -       -       16,817       260,318  

 

  

Class Y

      -       -       37,119       682,623  

 

  

Investor Class

      -       -       64,632       1,181,476  

 

  

Class R5

      -       -       3,885       73,414  

 

  

Class R6

      -       -       2,872       54,282  

 

  

Automatic conversion of Class C shares to Class A shares:

         

Class A

      34,661       894,644       68,840       1,424,906  

 

  

Class C

      (41,320 )      (894,644 )      (81,663 )      (1,424,906 ) 

 

  

 

14   Invesco Energy Fund

     Summary of Share Activity  

 

  
     Six months ended     Year ended  
     October 31, 2022(a)     April 30, 2022  
     Shares     Amount     Shares     Amount  

 

  

Reacquired:

         

Class A

      (2,489,174 )    $ (62,921,309 )      (4,064,851 )    $ (81,451,283 ) 

 

  

Class C

      (330,553 )      (6,904,600 )      (361,868 )      (6,250,758 ) 

 

  

Class Y

      (1,841,682 )      (45,140,051 )      (1,457,984 )      (27,920,819 ) 

 

  

Investor Class

      (1,318,378 )      (34,052,562 )      (1,816,778 )      (38,108,587 ) 

 

  

Class R5

      (88,680 )      (2,431,344 )      (120,578 )      (2,387,224 ) 

 

  

Class R6

      (144,304 )      (3,732,284 )      (82,076 )      (1,682,924 ) 

 

  

Net increase in share activity

      546,275     $ 23,049,055       3,360,230     $ 77,500,690  

 

  

 

(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.

NOTE 10–Subsequent Event

Effective December 7, 2022, the Fund’s sub-classification under the Investment Company Act of 1940 changed from “diversified” to “non-diversified” and a related fundamental investment restriction regarding issuer diversification was eliminated.

 

15   Invesco Energy Fund

Calculating your ongoing Fund expenses

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, 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, 2022 through October 31, 2022.

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.

 

          ACTUAL   HYPOTHETICAL
(5% annual return before expenses)		     
    

Beginning

    Account Value    
(05/01/22)

  

Ending

    Account Value    
(10/31/22)1

 

Expenses

      Paid During      
Period2

 

Ending

    Account Value    
(10/31/22)

  

Expenses

      Paid During      
Period2

 

      Annualized      

Expense

Ratio

Class A

   $1,000.00   $1,169.30   $7.22   $1,018.55   $6.72   1.32%

Class C

     1,000.00     1,164.80   11.29     1,014.77   10.51   2.07    

Class Y

     1,000.00     1,170.90     5.85     1,019.81     5.45   1.07    

Investor Class

     1,000.00     1,169.20     7.22     1,018.55     6.72   1.32    

Class R5

     1,000.00     1,171.60     5.31     1,020.32     4.94   0.97    

Class R6

     1,000.00     1,172.00     4.93     1,020.67     4.58   0.90    

 

1 

The actual ending account value is based on the actual total return of the Fund for the period May 1, 2022 through October 31, 2022, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.

2 

Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year.

 

16   Invesco Energy Fund

Approval of Investment Advisory and Sub-Advisory Contracts

    

 

At meetings held on June 13, 2022, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Energy Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2022. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

The Board’s Evaluation Process

The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

    As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer. 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 accordance with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund

counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

    The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

A.

Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders

of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

    The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

B.

Fund Investment Performance

The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

    The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2021 to the performance of funds in the Broadridge performance universe and against the MSCI World Energy Index (Index). The Board noted that performance of Class A shares of the Fund was in the second quintile of its performance universe for the one year period, the third quintile for the three year period and the fourth 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 Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its conclusions.

C.

Advisory and Sub-Advisory Fees and Fund Expenses

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual

 

 

17   Invesco Energy Fund

management fee rate for Class A shares of the Fund was the same as the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components. The Board noted that the Fund’s total expense ratio was in the fourth quintile of its expense group and discussed with management reasons for such total expenses.

    The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement 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 its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.

    The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

D.

Economies of Scale and Breakpoints

The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

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 in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and the periodic review and enhancement of such methodology. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

F.

Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

    The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives from Invesco Advisers periodic reports that include a representation to the effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the

Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

    The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.

    The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

 

 

18   Invesco Energy Fund

(This page intentionally left blank)

 

 

 

 

 

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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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-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/corporate/about-us/esg. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. 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 number(s): 811-03826 and 002-85905                     Invesco Distributors, Inc.    I-ENE-SAR-1                                         

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Semiannual Report to Shareholders   October 31, 2022

Invesco Gold & Special Minerals Fund

Nasdaq:

A: OPGSX ∎ C: OGMCX ∎ R: OGMNX ∎ Y: OGMYX ∎ R5: IOGYX ∎ R6: OGMIX

 

    

   
2   Fund Performance
4   Consolidated Schedule of Investments
8   Consolidated Financial Statements
11   Consolidated Financial Highlights
12   Notes to Consolidated Financial Statements
19   Fund Expenses
20   Approval of Investment Advisory and Sub-Advisory Contracts

 

For the most current month-end Fund performance and commentary, please visit invesco.com/performance.

Unless otherwise noted, all data is provided by Invesco.

This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.

 

NOT FDIC INSURED  |  MAY LOSE VALUE  |  NO BANK GUARANTEE

 

Fund Performance

 

 

 

Performance summary

 

Fund vs. Indexes

 

Cumulative total returns, 4/30/22 to 10/31/22, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

 

Class A Shares

     -33.16 % 

Class C Shares

     -33.40  

Class R Shares

     -33.21  

Class Y Shares

     -33.06  

Class R5 Shares

     -33.06  

Class R6 Shares

     -33.00  

MSCI World Index▼

    -8.09  

Source(s): ▼RIMES Technologies Corp.

  

The MSCI World Index is an unmanaged index considered representative of stocks of developed countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors.

 

    The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es).

 

    A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.

 

 

 

For more information about your Fund

 

Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.

    Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.

    

 

 

2   Invesco Gold & Special Minerals Fund

    

    

    

 

 

Average Annual Total Returns

 

As of 10/31/22, including maximum applicable sales charges

 

Class A Shares

        

Inception (7/19/83)

     5.16 % 

10 Years

     -5.56  

  5 Years

     2.79  

  1 Year

     -32.41  

Class C Shares

        

Inception (11/1/95)

     4.73 % 

10 Years

     -5.60  

  5 Years

     3.18  

  1 Year

     -29.68  

Class R Shares

        

Inception (3/1/01)

     7.11 % 

10 Years

     -5.26  

  5 Years

     3.70  

  1 Year

     -28.65  

Class Y Shares

        

Inception (9/7/10)

     -4.45 % 

10 Years

     -4.80  

  5 Years

     4.21  

  1 Year

     -28.30  

Class R5 Shares

        

10 Years

     -4.91 % 

  5 Years

     4.21  

  1 Year

     -28.28  

Class R6 Shares

        

Inception (10/26/12)

     -4.44 % 

10 Years

     -4.60  

  5 Years

     4.38  

  1 Year

     -28.18  

Effective May 24, 2019, Class A, Class C, Class R, Class Y and Class I shares of the Oppenheimer Gold & Special Minerals Fund, (the predecessor fund), were reorganized into Class A, Class C, Class R, Class Y and Class R6 shares, respectively, of the Invesco Oppenheimer Gold & Special Minerals Fund. The Fund was subsequently renamed the Invesco Gold & Special Minerals Fund (the Fund). Returns shown above, for periods ending on or prior to May 24, 2019, for Class A, Class C, Class R, Class Y and Class R6 shares are those for Class A, Class C, Class R, Class Y and Class I shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.

    Class R5 shares incepted on May 24, 2019. Performance shown on and prior to that date is that of the predecessor fund’s Class A shares at the net asset value and includes the 12b-1 fees applicable to Class A shares.

    The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated.

Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.

    Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.

    The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.

    Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.

    

 

 

3   Invesco Gold & Special Minerals Fund

Consolidated Schedule of Investments

October 31, 2022

(Unaudited)

 

     Shares      Value  

 

  

Common Stocks & Other Equity Interests–98.54%

 

Australia–23.57%

 

Alkane Resources Ltd.(a)

     11,730,000      $ 5,109,592  

 

  

Allkem Ltd.(a)

     1,148,000        10,502,375  

 

  

Bellevue Gold Ltd.(a)

     28,133,252        13,241,022  

 

  

Chalice Mining Ltd.(a)

     11,781,692        31,952,109  

 

  

De Grey Mining Ltd.(a)

     62,537,305        42,176,574  

 

  

Evolution Mining Ltd.

      31,728,806        41,949,047  

 

  

Firefinch Ltd.(a)

     12,910,104        495,477  

 

  

Gold Road Resources Ltd.

      27,513,275        23,692,579  

 

  

Lake Resources NL(a)

     1,850,000        1,242,881  

 

  

Lynas Rare Earths Ltd.(a)

     2,620,000        13,834,546  

 

  

Mineral Resources Ltd.

      107,000        4,959,116  

 

  

Newcrest Mining Ltd.

      120,000        1,325,208  

 

  

Northern Star Resources Ltd.

      16,548,895        91,921,829  

 

  

OceanaGold Corp.(a)

     14,160,300        20,580,170  

 

  

Perseus Mining Ltd.

      13,670,000        15,872,005  

 

  

Predictive Discovery Ltd.(a)

     27,873,029        2,669,658  

 

  

Ramelius Resources Ltd.

      25,868,612        12,092,989  

 

  

Silver Lake Resources Ltd.(a)

     19,731,900        13,910,229  

 

  

SolGold PLC(a)

     19,800,000        3,634,174  

 

  

Westgold Resources Ltd.(a)

     21,624,853        10,103,692  

 

  
           361,265,272  

 

  

Bosnia Hercegovina–0.29%

 

Adriatic Metals PLC, CDI(a)

     2,890,000        4,460,834  

 

  

Brazil–2.54%

 

ERO Copper Corp.(a)

     120,000        1,366,169  

 

  

Wheaton Precious Metals Corp.

      1,152,035        37,660,024  

 

  
        39,026,193  

 

  

Burkina Faso–1.70%

 

Endeavour Mining PLC

      1,462,966        26,019,500  

 

  

Canada–48.64%

 

Agnico Eagle Mines Ltd.(b)

     1,435,595        63,108,756  

 

  

Agnico Eagle Mines Ltd.(b)

     507,774        22,337,062  

 

  

Alamos Gold, Inc., Class A

      3,341,108        26,361,342  

 

  

Arizona Metals Corp.(a)

     3,795,300        9,750,468  

 

  

Artemis Gold, Inc.(a)

     4,574,889        12,559,243  

 

  

Aya Gold & Silver, Inc.(a)

     2,895,082        16,788,012  

 

  

B2Gold Corp.

      10,122,000        31,074,540  

 

  

Barrick Gold Corp.(c)

     5,691,499        85,543,231  

 

  

Calibre Mining Corp., Class C(a)

     18,203,168        9,219,500  

 

  

Cameco Corp.

      693,000        16,437,960  

 

  

Coppernico Metals, Inc.(d)

     3,028,200        1,438,395  

 

  

Dundee Precious Metals, Inc.

      1,040,000        4,717,730  

 

  

Equinox Gold Corp.(a)

     867,278        2,879,363  

 

  

Filo Mining Corp.(a)

     125,000        1,497,413  

 

  

Franco-Nevada Corp.

      137,302        16,967,781  

 

  

Hudbay Minerals, Inc.

      3,980,000        15,124,000  

 

  

i-80 Gold Corp.(a)

     1,060,000        1,773,994  

 

  

Ivanhoe Mines Ltd., Class A(a)

     9,775,346        67,807,113  

 

  

K92 Mining, Inc.(a)

     7,482,630        33,998,224  

 

  

Karora Resources, Inc.(a)(e)

     10,583,332        22,140,049  

 

  

Kinross Gold Corp.

      6,215,925        22,563,808  

 

  
     Shares      Value  

 

  

Canada–(continued)

 

Lithium Americas Corp.(a)

     350,000      $ 8,708,000  

 

  

Lundin Gold, Inc.

      4,378,815             31,627,364  

 

  

MAG Silver Corp.(a)

     1,318,522        17,523,157  

 

  

Maverix Metals, Inc.

      1,508,100        4,782,172  

 

  

Minera Alamos, Inc.(a)

     13,353,026        3,773,564  

 

  

New Gold, Inc.(a)

     4,991,276        4,463,199  

 

  

Novagold Resources, Inc.(a)

     280,000        1,296,400  

 

  

Orla Mining Ltd.(a)

     5,091,621        16,070,738  

 

  

Osisko Gold Royalties Ltd.

      2,585,339        27,766,541  

 

  

Pan American Silver Corp.

      1,016,682        16,246,578  

 

  

Pan American Silver Corp., Rts., expiring 02/22/2029(a)

     2,300,100        1,380,060  

 

  

Rupert Resources Ltd.(a)

     3,183,812        8,880,600  

 

  

Sandstorm Gold Ltd.

      4,079,055        20,191,322  

 

  

SilverCrest Metals, Inc.(a)

     3,296,667        16,527,497  

 

  

Skeena Resources Ltd.(a)

     2,074,336        9,348,863  

 

  

Solaris Resources, Inc.(a)

     1,291,200        4,596,704  

 

  

SSR Mining, Inc.

      2,085,333        28,777,595  

 

  

Torex Gold Resources, Inc.(a)

     121,000        824,224  

 

  

Triple Flag Precious Metals Corp.

      288,766        3,234,535  

 

  

Victoria Gold Corp.(a)

     1,553,000        7,831,402  

 

  

Wesdome Gold Mines Ltd.(a)

     4,610,000        27,646,126  

 

  
        745,584,625  

 

  

China–3.97%

 

Ganfeng Lithium Group Co. Ltd., H Shares(f)

     5,232,320        35,413,978  

 

  

Zijin Mining Group Co. Ltd., H Shares

      26,830,000        25,541,819  

 

  
        60,955,797  

 

  

Colombia–0.24%

 

Aris Mining Corp.

      1,779,685        3,736,117  

 

  

Finland–0.42%

 

Jervois Global Ltd.(a)

     20,550,000        6,417,505  

 

  

Indonesia–0.91%

 

Nickel Industries Ltd.

      29,231,112        13,577,414  

 

  

PT Merdeka Copper Gold Tbk(a)

     1,500,000        361,702  

 

  
        13,939,116  

 

  

South Africa–3.06%

 

Gold Fields Ltd., ADR

      3,316,241        26,131,979  

 

  

Sibanye Stillwater Ltd., ADR

      2,212,587        20,776,192  

 

  
        46,908,171  

 

  

Turkey–1.13%

 

Eldorado Gold Corp.(a)

     3,091,502        17,281,496  

 

  

United Republic of Tanzania–0.90%

 

AngloGold Ashanti Ltd., ADR

      1,058,100        13,808,205  

 

  

United States–10.45%

 

Aura Minerals, Inc.

      314,907        2,373,909  

 

  

Freeport-McMoRan, Inc.

      654,000        20,725,260  

 

  

Hecla Mining Co.

      2,375,304        10,855,139  

 

  

Ivanhoe Electric, Inc.(a)

     127,381        1,332,405  

 

  

Newmont Corp.(c)

     1,880,914        79,600,281  

 

  
 

 

See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.

 

4   Invesco Gold & Special Minerals Fund

     Shares      Value  

 

  

United States–(continued)

 

Ormat Technologies, Inc.

      20,000      $ 1,809,000  

 

  

Royal Gold, Inc.

      301,600        28,639,936  

 

  

Tronox Holdings PLC, Class A

      1,244,000        14,928,000  

 

  
        160,263,930  

 

  

Zambia–0.72%

 

First Quantum Minerals Ltd.

      623,000        10,988,872  

 

  

Total Common Stocks & Other Equity Interests
(Cost $1,515,681,766)

         1,510,655,633  

 

  

Exchange-Traded Funds–0.60%

 

United States–0.60%

 

SPDR ® Gold Trust–ETF(a)
(Cost $9,812,093)

      61,000        9,266,510  

 

  
     Shares      Value  

 

  

Money Market Funds–1.18%

 

Invesco Government & Agency Portfolio, Institutional Class, 3.07%(e)(g)

     6,306,188      $ 6,306,188  

 

  

Invesco Liquid Assets Portfolio, Institutional Class, 3.03%(e)(g)

     4,503,762        4,504,663  

 

  

Invesco Treasury Portfolio, Institutional Class, 3.08%(e)(g)

     7,207,071        7,207,071  

 

  

Total Money Market Funds
(Cost $18,017,537)

         18,017,922  

 

  

TOTAL INVESTMENTS IN SECURITIES-100.32%
(Cost $1,543,511,396)

 

      1,537,940,065  

 

  

OTHER ASSETS LESS LIABILITIES-(0.32)%

 

      (4,971,868 ) 

 

  

NET ASSETS-100.00%

       $ 1,532,968,197  

 

  
 

Investment Abbreviations:

ADR -  American Depositary Receipt

CDI  -  CREST Depository Interest

Rts.  -  Rights

TBK -  Terbatas (Indonesian Corporation)

Notes to Consolidated Schedule of Investments:

 

(a) 

Non-income producing security.

(b) 

The Fund holds securities which have been issued by the same entity and that trade on separate exchanges.

(c) 

All or a portion of the value pledged and/or designated as collateral to cover margin requirements for open options contracts. See Note 1K and Note 1L.

(d) 

Security valued using significant unobservable inputs (Level 3). See Note 3.

(e) 

Affiliated issuer. The issuer is affiliated by having an investment adviser that is under common control of Invesco Ltd. and/or is an “affiliated person” under the Investment Company Act of 1940, as amended (the “1940 Act”), which defines “affiliated person” to include an issuer of which a fund holds 5% or more of the outstanding voting securities. For the Investments in Other Affiliates below, the Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the 1940 Act) of that issuer. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended October 31, 2022.

 

    

Value

April 30, 2022

    

Purchases

at Cost

    

Proceeds

from Sales

    

Change in

Unrealized

Appreciation

(Depreciation)

    

Realized

Gain

(Loss)

    

Value

October 31, 2022

     Dividend Income  
Investments in Affiliated Money Market Funds:                                                        

Invesco Government & Agency Portfolio, Institutional Class

   $ 18,271,907     $ 39,506,586     $ (51,472,305 )    $ -     $ -       $  6,306,188           $  69,005      

Invesco Liquid Assets Portfolio, Institutional Class

     13,023,355       28,218,990       (36,740,608 )      (615 )      3,541       4,504,663           46,218      

Invesco Treasury Portfolio, Institutional Class

     20,882,179       45,150,384       (58,825,492 )      -       -       7,207,071           70,094      
Investments in Other Affiliates:                                                        

Karora Resources, Inc.

     52,574,624       1,220,987       -       (31,655,562 )      -       22,140,049           -      

Osino Resources Corp.*

     6,835,964       -       (4,403,323 )      (1,424,455 )      (1,008,186 )      -           -      

Westgold Resources Ltd.*

     29,053,879       -       (1,932,446 )      (12,256,592 )      (4,761,149 )      10,103,692           -      

Total

   $ 140,641,908     $ 114,096,947     $ (153,374,174 )    $ (45,337,224 )    $ (5,765,794 )      $50,261,663           $185,317      

 

  *

At October 31, 2022, this security was no longer an affiliate of the Fund.

 

(f) 

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, 2022 represented 2.31% of the Fund’s Net Assets.

(g) 

The rate shown is the 7-day SEC standardized yield as of October 31, 2022.

 

See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.

 

5   Invesco Gold & Special Minerals Fund

Open Exchange-Traded Equity Options Written(a)  

 

  
Description    Type of
Contract		    Expiration
Date		    Number of
Contracts		     

Exercise

Price

     

Notional

Value*

      Value  

 

  

Equity Risk

                      

 

  

Agnico Eagle Mines Ltd.

    Call    11/18/2022      5,000        CAD       64.00        CAD       32,000,000      $ (293,610 ) 

 

  

Agnico Eagle Mines Ltd.

    Call    12/16/2022      4,000        USD       55.00        USD       22,000,000        (130,000 ) 

 

  

Alamos Gold, Inc.

    Call    12/16/2022      2,000        USD       10.00        USD       2,000,000        (20,000 ) 

 

  

AngloGold Ashanti Ltd.

    Call    04/21/2023      2,000        USD       18.00        USD       3,600,000        (110,000 ) 

 

  

Barrick Gold Corp.

    Call    03/17/2023      1,000        USD       18.00        USD       1,800,000        (52,500 ) 

 

  

Cameco Corp.

    Call    12/16/2022      6,800        USD       30.00        USD       20,400,000        (214,200 ) 

 

  

Eldorado Gold Corp.

    Call    04/21/2023      2,000        USD       8.00        USD       1,600,000        (50,000 ) 

 

  

Endeavour Mining PLC

    Call    11/18/2022      6,000        CAD       27.00        CAD       16,200,000        (59,456 ) 

 

  

Equinox Gold Corp.

    Call    01/20/2023      4,000        USD       5.00        USD       2,000,000        (30,000 ) 

 

  

Ero Copper Corp.

    Call    03/17/2023      1,000        CAD       19.00        CAD       1,900,000        (62,392 ) 

 

  

First Quantum Minerals Ltd.

    Call    01/20/2023      3,000        CAD       31.00        CAD       9,300,000        (118,912 ) 

 

  

Franco-Nevada Corp.

    Call    01/20/2023      600        USD       155.00        USD       9,300,000        (72,000 ) 

 

  

Freeport-McMoRan, Inc.

    Call    01/20/2023      5,500        USD       40.00        USD       22,000,000        (420,750 ) 

 

  

Hecla Mining Co.

    Call    03/17/2023      10,000        USD       6.00        USD       6,000,000        (315,000 ) 

 

  

Ivanhoe Mines Ltd.

    Call    03/17/2023      4,000        CAD       12.00        CAD       4,800,000        (127,721 ) 

 

  

K92 Mining, Inc.

    Call    12/16/2022      10,000        CAD       9.00        CAD       9,000,000        (22,021 ) 

 

  

Lithium Americas Corp.

    Call    11/18/2022      3,500        USD       30.00        USD       10,500,000        (96,250 ) 

 

  

MAG Silver Corp.

    Call    11/18/2022      7,000        USD       15.00        USD       10,500,000        (157,500 ) 

 

  

Mineral Resources Ltd.

    Call    11/17/2022      500        AUD       83.00        AUD       4,150,000        (25,906 ) 

 

  

New Gold, Inc.

    Call    11/18/2022      5,000        USD       2.00        USD       1,000,000        (12,500 ) 

 

  

Newcrest Mining Ltd.

    Call    01/19/2023      1,000        AUD       19.00        AUD       1,900,000        (37,739 ) 

 

  

Northern Star Resources Ltd.

    Call    12/15/2022      4,000        AUD       9.50        AUD       3,800,000        (61,407 ) 

 

  

Ormat Technologies, Inc.

    Call    12/16/2022      180        USD       95.00        USD       1,710,000        (49,500 ) 

 

  

Royal Gold, Inc.

    Call    04/21/2023      1,000        USD       130.00        USD       13,000,000        (170,000 ) 

 

  

Sibanye Stillwater Ltd.

    Call    01/20/2023      2,000        USD       12.50        USD       2,500,000        (45,000 ) 

 

  

SPDR Gold Shares

    Call    12/16/2022      600        USD       163.00        USD       9,780,000        (47,100 ) 

 

  

SSR Mining, Inc.

    Call    12/16/2022      4,000        USD       19.00        USD       7,600,000        (20,000 ) 

 

  

Tronox Holdings PLC

    Call    11/18/2022      3,000        USD       19.00        USD       5,700,000        (52,500 ) 

 

  

Wesdome Gold Mines Ltd.

    Call    11/18/2022      7,000        CAD       11.00        CAD       7,700,000        (10,276 ) 

 

  

Subtotal – Equity Call Options Written

                         (2,884,240 ) 

 

  

Equity Risk

                      

 

  

Agnico Eagle Mines Ltd.

    Put    12/16/2022      2,000        USD       35.00        USD       7,000,000        (75,000 ) 

 

  

Agnico Eagle Mines Ltd.

    Put    11/18/2022      1,000        CAD       46.00        CAD       4,600,000        (3,303 ) 

 

  

Allkem Ltd.

    Put    11/17/2022      2,000        AUD       14.00        AUD       2,800,000        (88,272 ) 

 

  

AngloGold Ashanti Ltd.

    Put    04/21/2023      1,000        USD       12.00        USD       1,200,000        (122,500 ) 

 

  

Barrick Gold Corp.

    Put    03/17/2023      1,000        USD       15.00        USD       1,500,000        (151,500 ) 

 

  

Cameco Corp.

    Put    12/16/2022      2,000        USD       23.00        USD       4,600,000        (308,000 ) 

 

  

Endeavour Mining PLC

    Put    11/18/2022      2,000        CAD       23.00        CAD       4,600,000        (67,530 ) 

 

  

Ero Copper Corp.

    Put    12/16/2022      1,000        CAD       12.50        CAD       1,250,000        (16,149 ) 

 

  

First Quantum Minerals Ltd.

    Put    01/20/2023      1,000        CAD       21.50        CAD       2,150,000        (97,992 ) 

 

  

Franco-Nevada Corp.

    Put    01/20/2023      300        USD       100.00        USD       3,000,000        (36,000 ) 

 

  

Freeport-McMoRan, Inc.

    Put    01/20/2023      1,000        USD       22.00        USD       2,200,000        (36,000 ) 

 

  

Gold Fields Ltd.

    Put    04/21/2023      2,000        USD       7.00        USD       1,400,000        (130,000 ) 

 

  

Lithium Americas Corp.

    Put    12/16/2022      1,500        USD       22.50        USD       3,375,000        (228,750 ) 

 

  

MAG Silver Corp.

    Put    11/18/2022      2,000        USD       15.00        USD       3,000,000        (380,000 ) 

Mineral Resources Ltd.

    Put    11/17/2022      1,000        AUD       67.00        AUD       6,700,000        (89,551 ) 

Newcrest Mining Ltd.

    Put    01/19/2023      1,000        AUD       17.00        AUD       1,700,000        (63,325 ) 

 

  

Newmont Corp.

    Put    12/16/2022      1,000        USD       35.00        USD       3,500,000        (48,500 ) 

 

  

Ormat Technologies, Inc.

    Put    12/16/2022      1,000        USD       75.00        USD       7,500,000        (72,500 ) 

 

  

Piedmont Lithium, Inc.

    Put    12/16/2022      1,000        USD       45.00        USD       4,500,000        (117,500 ) 

 

  

 

See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.

 

6   Invesco Gold & Special Minerals Fund

Open Exchange-Traded Equity Options Written(a)–(continued)  

 

  
Description    Type of
Contract		    Expiration
Date		    Number of
Contracts		     

Exercise

Price

     

Notional

Value*

      Value  

 

  

Sibanye Stillwater Ltd.

    Put    01/20/2023      2,000        USD       10.00        USD       2,000,000      $ (250,000 ) 

 

  

SilverCrest Metals, Inc.

    Put    12/16/2022      2,000        CAD       8.75        CAD       1,750,000        (289,940 ) 

 

  

SPDR Gold Shares

    Put    11/18/2022      100        USD       148.00        USD       1,480,000        (8,450 ) 

 

  

SPDR Gold Shares

    Put    12/16/2022      200        USD       147.00        USD       2,940,000        (30,800 ) 

 

  

SSR Mining, Inc.

    Put    12/16/2022      1,000        USD       15.00        USD       1,500,000        (172,500 ) 

 

  

Torex Gold Resources Inc.

    Put    03/17/2023      1,000        CAD       9.50        CAD       950,000        (82,578 ) 

 

  

Tronox Holdings PLC

    Put    01/20/2023      2,000        USD       14.00        USD       2,800,000        (490,000 ) 

 

  

Wesdome Gold Mines Ltd.

    Put    11/18/2022      2,000        CAD       9.00        CAD       1,800,000        (139,465 ) 

 

  

Subtotal – Equity Put Options Written

                         (3,596,105 ) 

 

  

Total Open Exchange-Traded Equity Options Written

                    $ (6,480,345 ) 

 

  

 

(a) 

Open Exchange-Traded Options Written collateralized by $79,714 cash held with Morgan Stanley.

*

Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier.

Abbreviations:

 

AUD

- Australian Dollar

CAD

- Canadian Dollar

SPDR

- Standard & Poor’s Depositary Receipt

USD

- U.S. Dollar

Portfolio Composition

By industry, based on Net Assets

 

Gold

      72.00 % 

Diversified Metals & Mining

      15.36  

Silver

      4.09  

Copper

      2.49  

Precious Metals & Minerals

      2.44  

Other Sectors, Each Less than 2% of Net Assets

      2.76  

Money Market Funds Plus Other Assets Less Liabilities

      0.86  

 

See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.

 

7   Invesco Gold & Special Minerals Fund

Consolidated Statement of Assets and Liabilities

October 31, 2022

(Unaudited)

 

Assets:

   

Investments in unaffiliated securities, at value
(Cost $1,498,801,582)

    $ 1,497,782,094  

 

  

Investments in affiliates, at value
(Cost $44,709,814)

      40,157,971  

 

  

Cash collateral – exchange-traded options contracts

      79,714  

 

  

Cash

      1,101,578  

 

  

Foreign currencies, at value (Cost $789,712)

      792,197  

 

  

Receivable for:

   

Investments sold

      2,699,666  

 

  

Fund shares sold

      1,832,321  

 

  

Dividends

      3,183,074  

 

  

Investment for trustee deferred compensation and retirement plans

      130,900  

 

  

Other assets

      694,787  

 

  

Total assets

      1,548,454,302  

 

  

Liabilities:

   

Other investments:

   

Options written, at value (premiums received $12,526,314)

      6,480,345  

 

  

Payable for:

   

Investments purchased

      5,456,600  

 

  

Fund shares reacquired

      2,077,668  

 

  

Accrued fees to affiliates

      959,785  

 

  

Accrued trustees’ and officers’ fees and benefits

      38,099  

 

  

Accrued other operating expenses

      329,238  

 

  

Trustee deferred compensation and retirement plans

      144,370  

 

  

Total liabilities

      15,486,105  

 

  

Net assets applicable to shares outstanding

    $ 1,532,968,197  

 

  

Net assets consist of:

   

Shares of beneficial interest

    $ 3,167,455,587  

 

  

Distributable earnings (loss)

      (1,634,487,390 ) 

 

  
   $ 1,532,968,197  

 

  

Net Assets:

   

Class A

    $   699,194,597  

 

  

Class C

    $ 72,075,068  

 

  

Class R

    $ 99,794,049  

 

  

Class Y

    $ 430,797,914  

 

  

Class R5

    $ 397,790  

 

  

Class R6

    $ 230,708,779  

 

  

Shares outstanding, no par value, with an unlimited number of shares authorized:

 

Class A

      39,019,229  

 

  

Class C

      4,531,313  

 

  

Class R

      5,896,083  

 

  

Class Y

      23,962,734  

 

  

Class R5

      22,099  

 

  

Class R6

      12,685,339  

 

  

Class A:

   

Net asset value per share

    $ 17.92  

 

  

Maximum offering price per share
(Net asset value of $17.92 ÷ 94.50%)

    $ 18.96  

 

  

Class C:

   

Net asset value and offering price per share

    $ 15.91  

 

  

Class R:

   

Net asset value and offering price per share

    $ 16.93  

 

  

Class Y:

   

Net asset value and offering price per share

    $ 17.98  

 

  

Class R5:

   

Net asset value and offering price per share

    $ 18.00  

 

  

Class R6:

   

Net asset value and offering price per share

    $ 18.19  

 

  
 

 

See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.

 

8   Invesco Gold & Special Minerals Fund

Consolidated Statement of Operations

For the six months ended October 31, 2022

(Unaudited)

 

Investment income:

   

Dividends (net of foreign withholding taxes of $1,425,304)

    $ 14,457,823  

 

  

Dividends from affiliates

      185,317  

 

  

Total investment income

      14,643,140  

 

  

Expenses:

   

Advisory fees

      5,493,455  

 

  

Administrative services fees

      131,704  

 

  

Distribution fees:

   

Class A

      997,124  

 

  

Class C

      441,674  

 

  

Class R

      299,744  

 

  

Transfer agent fees – A, C, R and Y

      1,509,295  

 

  

Transfer agent fees – R5

      420  

 

  

Transfer agent fees – R6

      39,579  

 

  

Trustees’ and officers’ fees and benefits

      14,673  

 

  

Registration and filing fees

      63,676  

 

  

Reports to shareholders

      58,994  

 

  

Professional services fees

      36,336  

 

  

Other

      (18,450 ) 

 

  

Total expenses

      9,068,224  

 

  

Less: Fees waived and/or expense offset arrangement(s)

      (20,494 ) 

 

  

Net expenses

      9,047,730  

 

  

Net investment income

      5,595,410  

 

  

Realized and unrealized gain (loss) from:

   

Net realized gain (loss) from:

   

Unaffiliated investment securities

      (245,260,127 ) 

 

  

Affiliated investment securities

      (5,765,794 ) 

 

  

Foreign currencies

      (147,225 ) 

 

  

Forward foreign currency contracts

      9,029  

 

  

Option contracts written

      13,724,637  

 

  
     (237,439,480 ) 

 

  

Change in net unrealized appreciation (depreciation) of:

   

Unaffiliated investment securities

      (516,684,879 ) 

 

  

Affiliated investment securities

      (45,337,224 ) 

 

  

Foreign currencies

      4,735  

 

  

Forward foreign currency contracts

      19  

 

  

Option contracts written

      8,317,146  

 

  
     (553,700,203 ) 

 

  

Net realized and unrealized gain (loss)

      (791,139,683 ) 

 

  

Net increase (decrease) in net assets resulting from operations

    $ (785,544,273 ) 

 

  

 

See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.

 

9   Invesco Gold & Special Minerals Fund

Consolidated Statement of Changes in Net Assets

For the six months ended October 31, 2022 and the year ended April 30, 2022

(Unaudited)

 

     October 31,
2022		    

April 30,

2022

  

 

  

Operations:

     

Net investment income

    $ 5,595,410     $ 5,905,741  

 

  

Net realized gain (loss)

      (237,439,480 )      195,339,116  

 

  

Change in net unrealized appreciation (depreciation)

      (553,700,203 )      (207,142,399 ) 

 

  

Net increase (decrease) in net assets resulting from operations

      (785,544,273 )      (5,897,542 ) 

 

  

Distributions to shareholders from distributable earnings:

     

Class A

      –       (35,482,130 ) 

 

  

Class C

      –       (4,610,763 ) 

 

  

Class R

      –       (5,243,534 ) 

 

  

Class Y

      –       (21,980,050 ) 

 

  

Class R5

      –       (63,093 ) 

 

  

Class R6

      –       (10,621,185 ) 

 

  

Total distributions from distributable earnings

      –       (78,000,755 ) 

 

  

Share transactions–net:

     

Class A

      (17,891,066 )      10,607,034  

 

  

Class C

      (5,568,541 )      (6,325,420 ) 

 

  

Class R

      (5,602,321 )      10,398,852  

 

  

Class Y

      (20,938,105 )      98,006,379  

 

  

Class R5

      (1,299,181 )      1,978,328  

 

  

Class R6

      (7,300,252 )      72,099,591  

 

  

Net increase (decrease) in net assets resulting from share transactions

      (58,599,466 )      186,764,764  

 

  

Net increase (decrease) in net assets

      (844,143,739 )      102,866,467  

 

  

Net assets:

     

Beginning of period

      2,377,111,936       2,274,245,469  

 

  

End of period

    $ 1,532,968,197     $ 2,377,111,936  

 

  

 

See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.

 

10   Invesco Gold & Special Minerals Fund

Consolidated 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

  

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 10/31/22

     $26.81         $ 0.06         $(8.95 )        $(8.89 )        $       -         $17.92         (33.16 )%(d)      $   699,195         1.06 %(d)(e)      1.06 %(d)(e)      0.55 %(d)(e)      10 % 

Year ended 04/30/22

     27.70       0.05       (0.01 )      0.04       (0.93 )      26.81       0.43 (d)      1,070,962       1.05 (d)      1.05 (d)      0.19 (d)      32  

Year ended 04/30/21

     21.77       0.06       6.30       6.36       (0.43 )      27.70       29.28 (d)      1,098,007       1.05 (d)      1.05 (d)      0.21 (d)      43  

Ten months ended 04/30/20

     17.87       0.02       3.94       3.96       (0.06 )      21.77       22.21       705,341       1.17 (e)      1.20 (e)      0.13 (e)      44  

Year ended 06/30/19

     15.51       0.00       2.36       2.36       -       17.87       15.22       532,925       1.17       1.18       0.00       35  

Year ended 06/30/18

     16.28       (0.06 )      (0.25 )      (0.31 )      (0.46 )      15.51       (1.88 )      490,065       1.16       1.17       (0.39 )      44  

Year ended 06/30/17

     19.82       (0.09 )      (2.40 )      (2.49 )      (1.05 )      16.28       (12.12 )      570,847       1.15       1.16       (0.48 )      65  

Class C

                        

Six months ended 10/31/22

     23.89       (0.02 )      (7.96 )      (7.98 )      -       15.91       (33.40 )      72,075       1.82 (e)      1.82 (e)      (0.21 )(e)      10  

Year ended 04/30/22

     24.98       (0.14 )      (0.02 )      (0.16 )      (0.93 )      23.89       (0.34 )      116,380       1.81       1.81       (0.57 )      32  

Year ended 04/30/21

     19.68       (0.14 )      5.70       5.56       (0.26 )      24.98       28.27       128,089       1.81       1.81       (0.55 )      43  

Ten months ended 04/30/20

     16.20       (0.09 )      3.57       3.48       -       19.68       21.48       99,528       1.92 (e)      1.96 (e)      (0.62 )(e)      44  

Year ended 06/30/19

     14.17       (0.10 )      2.13       2.03       -       16.20       14.33       88,904       1.92       1.93       (0.76 )      35  

Year ended 06/30/18

     14.91       (0.17 )      (0.22 )      (0.39 )      (0.35 )      14.17       (2.62 )      121,350       1.92       1.93       (1.15 )      44  

Year ended 06/30/17

     18.26       (0.20 )      (2.21 )      (2.41 )      (0.94 )      14.91       (12.80 )      138,114       1.91       1.92       (1.22 )      65  

Class R

                        

Six months ended 10/31/22

     25.35       0.03       (8.45 )      (8.42 )      -       16.93       (33.21 )      99,794       1.32 (e)      1.32 (e)      0.29 (e)      10  

Year ended 04/30/22

     26.32       (0.02 )      (0.02 )      (0.04 )      (0.93 )      25.35       0.14       157,476       1.31       1.31       (0.07 )      32  

Year ended 04/30/21

     20.69       (0.01 )      5.98       5.97       (0.34 )      26.32       28.90       153,232       1.31       1.31       (0.05 )      43  

Ten months ended 04/30/20

     16.98       (0.02 )      3.75       3.73       (0.02 )      20.69       21.99       125,316       1.42 (e)      1.46 (e)      (0.12 )(e)      44  

Year ended 06/30/19

     14.77       (0.04 )      2.25       2.21       -       16.98       14.96       113,589       1.42       1.43       (0.25 )      35  

Year ended 06/30/18

     15.54       (0.10 )      (0.25 )      (0.35 )      (0.42 )      14.77       (2.23 )      114,608       1.42       1.43       (0.65 )      44  

Year ended 06/30/17

     18.98       (0.12 )      (2.31 )      (2.43 )      (1.01 )      15.54       (12.34 )      136,979       1.41       1.42       (0.73 )      65  

Class Y

                        

Six months ended 10/31/22

     26.86       0.08       (8.96 )      (8.88 )      -       17.98       (33.06 )      430,798       0.82 (e)      0.82 (e)      0.79 (e)      10  

Year ended 04/30/22

     27.69       0.12       (0.02 )      0.10       (0.93 )      26.86       0.64       675,653       0.81       0.81       0.43       32  

Year ended 04/30/21

     21.78       0.12       6.31       6.43       (0.52 )      27.69       29.57       600,958       0.81       0.81       0.45       43  

Ten months ended 04/30/20

     17.88       0.06       3.93       3.99       (0.09 )      21.78       22.41       349,290       0.92 (e)      0.96 (e)      0.38 (e)      44  

Year ended 06/30/19

     15.48       0.04       2.36       2.40       -       17.88       15.50       229,569       0.92       0.93       0.24       35  

Year ended 06/30/18

     16.26       (0.02 )      (0.25 )      (0.27 )      (0.51 )      15.48       (1.65 )      147,282       0.92       0.93       (0.15 )      44  

Year ended 06/30/17

     19.81       (0.05 )      (2.41 )      (2.46 )      (1.09 )      16.26       (11.91 )      152,334       0.91       0.92       (0.28 )      65  

Class R5

                        

Six months ended 10/31/22

     26.89       0.10       (8.99 )      (8.89 )      -       18.00       (33.06 )      398       0.73 (e)      0.73 (e)      0.88 (e)      10  

Year ended 04/30/22

     27.69       0.14       (0.01 )      0.13       (0.93 )      26.89       0.75       2,164       0.72       0.72       0.52       32  

Year ended 04/30/21

     21.79       0.16       6.31       6.47       (0.57 )      27.69       29.75       141       0.69       0.69       0.57       43  

Ten months ended 04/30/20

     17.87       0.08       3.95       4.03       (0.11 )      21.79       22.65       30       0.77 (e)      0.77 (e)      0.53 (e)      44  

Period ended 06/30/19(f)

     14.75       0.01       3.11       3.12       -       17.87       21.15       12       0.80 (e)      0.80 (e)      0.35 (e)      35  

Class R6

                        

Six months ended 10/31/22

     27.15       0.10       (9.06 )      (8.96 )      -       18.19       (33.00 )      230,709       0.66 (e)      0.66 (e)      0.95 (e)      10  

Year ended 04/30/22

     27.94       0.16       (0.02 )      0.14       (0.93 )      27.15       0.78       354,476       0.65       0.65       0.59       32  

Year ended 04/30/21

     21.98       0.16       6.37       6.53       (0.57 )      27.94       29.79       293,817       0.66       0.66       0.60       43  

Ten months ended 04/30/20

     18.03       0.09       3.98       4.07       (0.12 )      21.98       22.65       197,933       0.74 (e)      0.74 (e)      0.56 (e)      44  

Year ended 06/30/19

     15.58       0.06       2.39       2.45       -       18.03       15.73       133,853       0.75       0.76       0.41       35  

Year ended 06/30/18

     16.37       0.00       (0.26 )      (0.26 )      (0.53 )      15.58       (1.53 )      104,921       0.75       0.75       0.02       44  

Year ended 06/30/17

     19.94       (0.02 )      (2.42 )      (2.44 )      (1.13 )      16.37       (11.75 )      77,158       0.73       0.73       (0.09 )      65  

 

(a) 

Calculated using average shares outstanding.

(b) 

Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.

(c) 

Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended April 30, 2021, the portfolio turnover calculation excludes the value of securities purchased of $210,653,892 and sold of $9,084,044 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Gold & Precious Metals Fund into the Fund.

(d) 

The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.24% for the six months ended October 31, 2022 and the years ended April 30, 2022 and 2021.

(e) 

Annualized.

(f) 

Commencement date after the close of business on May 24, 2019.

 

See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.

 

11   Invesco Gold & Special Minerals Fund

Notes to Consolidated Financial Statements

October 31, 2022

(Unaudited)

NOTE 1–Significant Accounting Policies

Invesco 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 an open-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 and the Invesco 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. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.

The Fund will seek to gain exposure to the commodity market through investments in the Subsidiary. The Subsidiary was organized by the Fund to invest in gold bullion and other precious metals, shares of exchange-traded funds that invest in gold bullion (Gold ETFs), commodity linked derivatives related to gold or other special mineral (including commodity futures, financial futures, options and swap contracts, and certain fixed-income securities and other investments that may serve as margin or collateral for its derivatives positions). 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 a front-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 eight 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 eighth 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.

A security listed or traded on an exchange is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.

Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.

Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.

Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board-approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.

Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.

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 may be used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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 market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism, significant governmental actions or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.

 

12   Invesco Gold & Special Minerals Fund

The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.

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 an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Consolidated 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 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, the country that has the primary market for the issuer’s securities and its “country of risk” as determined by a third party service provider, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

D.

Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.

E.

Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the consolidated 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 Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.

The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F.

Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated based on relative net assets of Class R5 and Class R6. 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. The accompanying financial statements reflect the financial position of the Fund and its Subsidiary and the results of operations on a consolidated basis. All inter-company accounts and transactions have been eliminated in consolidation.

In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the 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 Consolidated 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

 

13   Invesco Gold & Special Minerals 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 Consolidated 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 exchange of the two currencies on the settlement date, 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).

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 for hedging 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 Consolidated 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 Consolidated Statement of Assets and Liabilities.

K.

Call Options Purchased and Written – The Fund may write covered 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. 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 “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 Consolidated 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 Consolidated 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.

When the Fund buys a call option, an amount equal to the premium paid by the Fund is recorded as an investment on the Consolidated 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 Consolidated 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.

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. 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 Consolidated Statement of Assets and Liabilities. Realized and unrealized gains and losses on put options purchased and put options written are included in the Consolidated 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.

M.

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.

N.

Other Risks - The Subsidiary will seek to gain exposure to gold bullion and other precious metals, Gold ETFs, commodity-linked derivatives related to gold or other special minerals (including commodity futures, financial futures, options and swap contracts), and certain fixed income securities and other investments that may serve as margin or collateral for its derivatives positions. The Fund is indirectly exposed to the risks associated with the Subsidiary’s investments.

The Fund is classified as a “non-diversified” fund under the Investment Company Act of 1940. Accordingly, the Fund may invest a greater portion of its assets in the securities of a single issuer or limited number of issuers than a “diversified” fund. To the extent that the Fund invests a higher percentage of its assets in the securities of a single issuer or limited number of issuers, the Fund is more subject to the risks associated with and developments affecting that issuer or limited number of issuers than a fund that invests more widely.

O.

COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance.

 

14   Invesco Gold & Special Minerals Fund

NOTE 2–Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with the Adviser. 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*  

 

  

Up to $200 million

      0.750%  

 

  

Next $150 million

      0.720%  

 

  

Next $350 million

      0.680%  

 

  

Next $1.3 billion

      0.560%  

 

  

Next $2 billion

      0.460%  

 

  

Next $2 billion

      0.410%  

 

  

Next $2 billion

      0.385%  

 

  

Next $8 billion

      0.360%  

 

  

 

*

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 six months ended October 31, 2022, the effective advisory fee rate incurred by the Fund was 0.60%.

Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Fund.

The Adviser has contractually agreed, through at least June 30, 2023, 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 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 the total annual fund operating expenses after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2023. 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, 2024, 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, 2022, the Adviser waived advisory fees of $13,184.

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, 2022, expenses incurred under the agreement are shown in the Consolidated Statement of Operations as Administrative 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, 2022, expenses incurred under the agreement are shown in the Consolidated Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Class A Plan, reimburses IDI for its allocated share of expenses incurred for the period, up to a maximum 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 Plans, 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 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, 2022, expenses incurred under the Plans are shown in the Consolidated 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, 2022, IDI advised the Fund that IDI retained $58,993 in front-end sales commissions from the sale of Class A shares and $11,943 and $6,741 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.

For the six months ended October 31, 2022, the Fund incurred $26,477 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

 

15   Invesco Gold & Special Minerals Fund

market prices are not readily available. 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 Adviser’s 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, 2022. 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 consolidated 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

    $ 20,580,170        $ 340,685,102          $ –         $ 361,265,272  

 

  

Bosnia Hercegovina

      –          4,460,834           –           4,460,834  

 

  

Brazil

      39,026,193          –           –           39,026,193  

 

  

Burkina Faso

      26,019,500          –           –           26,019,500  

 

  

Canada

      744,146,230          –           1,438,395           745,584,625  

 

  

China

      –          60,955,797           –           60,955,797  

 

  

Colombia

      3,736,117          –           –           3,736,117  

 

  

Finland

      –          6,417,505           –           6,417,505  

 

  

Indonesia

      –          13,939,116           –           13,939,116  

 

  

South Africa

      46,908,171          –           –           46,908,171  

 

  

Turkey

      17,281,496          –           –           17,281,496  

 

  

United Republic of Tanzania

      13,808,205          –           –           13,808,205  

 

  

United States

      169,530,440          –           –           169,530,440  

 

  

Zambia

      10,988,872          –           –           10,988,872  

 

  

Money Market Funds

      18,017,922          –           –           18,017,922  

 

  

Total Investments in Securities

      1,110,043,316          426,458,354           1,438,395           1,537,940,065  

 

  

Other Investments - Liabilities*

                    

 

  

Options Written

      (6,480,345 )         –           –           (6,480,345 ) 

 

  

Total Investments

    $ 1,103,562,971        $ 426,458,354           $1,438,395         $ 1,531,459,720  

 

  

 

*

Options written are shown at value.

NOTE 4–Derivative Investments

The Fund may enter into an ISDA Master Agreement under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.

For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Consolidated Statement of Assets and Liabilities.

Value of Derivative Investments at Period-End

The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of October 31, 2022:

 

     Value  
     Equity  
Derivative Liabilities    Risk  

 

  

Options written, at value – Exchange-Traded

    $ (6,480,345 ) 

 

  

Derivatives not subject to master netting agreements

      6,480,345  

 

  

Total Derivative Liabilities subject to master netting agreements

    $ –  

 

  

 

16   Invesco Gold & Special Minerals Fund

Effect of Derivative Investments for the six months ended October 31, 2022

The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:

 

     Location of Gain on  
         Consolidated Statement of Operations      
     Currency
Risk		                

Equity

Risk

                 Total  

 

  

Realized Gain:

                       

Forward foreign currency contracts

      $9,029               $ -             $ 9,029  

 

  

Options written

      -                 13,724,637               13,724,637  

 

  

Change in Net Unrealized Appreciation:

                       

Forward foreign currency contracts

      19                 -               19  

 

  

Options written

      -                 8,317,146               8,317,146  

 

  

Total

      $9,048               $ 22,041,783             $ 22,050,831  

 

  

The table below summarizes the average notional value of derivatives held during the period.

 

       Forward                 Equity  
       Foreign Currency                 Options  
       Contracts                 Written  

 

  

Average notional value

        $1,440,093                 $ 358,485,223  

 

  

Average contracts

        -                   146,370  

 

  

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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $7,310.

NOTE 6–Trustees’ and Officers’ Fees and Benefits

Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.

NOTE 7–Cash Balances

The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Consolidated Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.

NOTE 8–Tax Information

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund had a capital loss carryforward as of April 30, 2022, as follows:

 

Capital Loss Carryforward*  

 

  
Expiration    Short-Term        Long-Term        Total  

 

  

Not subject to expiration

    $ 197,138,065        $ 1,131,951,087        $ 1,329,089,152  

 

  

 

*

Capital loss carryforward 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.

 

17   Invesco Gold & Special Minerals Fund

NOTE 9–Investment Transactions

The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2022 was $177,786,577 and $192,294,581, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investments on a Tax Basis

  

Aggregate unrealized appreciation of investments

      $ 184,774,851  

 

  

Aggregate unrealized (depreciation) of investments

      (268,348,178 ) 

 

  

Net unrealized appreciation (depreciation) of investments

      $  (83,573,327 ) 

 

  

Cost of investments for tax purposes is $1,615,033,047.

NOTE 10–Share Information

 

     Summary of Share Activity  

 

  
     Six months ended            Year ended  
     October 31, 2022(a)            April 30, 2022  
     Shares            Amount            Shares            Amount  

 

  

Sold:

                  

Class A

      3,618,459        $ 75,911,533          9,796,466        $ 272,429,732  

 

  

Class C

      420,725          8,008,600          1,226,255          30,258,484  

 

  

Class R

      803,451          15,732,802          2,088,465          54,833,259  

 

  

Class Y

      5,002,450          104,453,167          11,731,724          323,633,373  

 

  

Class R5

      4,941          110,615          81,288          2,159,887  

 

  

Class R6

      3,188,694          67,553,850          7,090,670          197,507,809  

 

  

Issued as reinvestment of dividends:

                  

Class A

      -          -          1,295,409          32,126,159  

 

  

Class C

      -          -          179,347          3,974,323  

 

  

Class R

      -          -          222,903          5,233,769  

 

  

Class Y

      -          -          723,318          17,959,973  

 

  

Class R5

      -          -          2,525          62,745  

 

  

Class R6

      -          -          411,428          10,322,727  

 

  

Automatic conversion of Class C shares to Class A shares:

                  

Class A

      157,944          3,191,772          397,284          10,644,145  

 

  

Class C

      (177,618 )         (3,191,772 )         (443,191 )         (10,644,145 ) 

 

  

Reacquired:

                  

Class A

      (4,707,958 )         (96,994,371 )         (11,170,547 )         (304,593,002 ) 

 

  

Class C

      (583,935 )         (10,385,369 )         (1,217,541 )         (29,914,082 ) 

 

  

Class R

      (1,118,737 )         (21,335,123 )         (1,921,241 )         (49,668,176 ) 

 

  

Class Y

      (6,192,532 )         (125,391,272 )         (9,003,239 )         (243,586,967 ) 

 

  

Class R5

      (63,329 )         (1,409,796 )         (8,436 )         (244,304 ) 

 

  

Class R6

      (3,559,104 )         (74,854,102 )         (4,963,426 )         (135,730,945 ) 

 

  

Net increase (decrease) in share activity

      (3,206,549 )       $ (58,599,466 )         6,519,461        $ 186,764,764  

 

  

 

(a) 

There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 27% 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.

 

18   Invesco Gold & Special Minerals 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, 2022 through October 31, 2022.

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.

 

          ACTUAL  

HYPOTHETICAL

(5% annual return before
expenses)

     
    

Beginning

    Account Value    

(05/01/22)

  

Ending

    Account Value    

(10/31/22)1

 

Expenses

    Paid During    

Period

  

Ending

    Account Value    

(10/31/22)2

 

Expenses

    Paid During    

Period2

 

    Annualized    

Expense

Ratio

Class A

   $1,000.00   $668.40   $4.46   $1,019.86   $5.40   1.06%

Class C

     1,000.00     666.00     7.64     1,016.03     9.25   1.82   

Class R

     1,000.00     667.90     5.55     1,018.55     6.72   1.32   

Class Y

     1,000.00     669.40     3.45     1,021.07     4.18   0.82   

Class R5

     1,000.00     669.40     3.07     1,021.53     3.72   0.73   

Class R6

     1,000.00     670.00     2.78     1,021.88     3.36   0.66   

 

1 

The actual ending account value is based on the actual total return of the Fund for the period May 1, 2022 through October 31, 2022, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.

2 

Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year.

 

19   Invesco Gold & Special Minerals Fund

Approval of Investment Advisory and Sub-Advisory Contracts

    

 

At meetings held on June 13, 2022, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Gold & Special Minerals Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory contracts with Invesco Capital Management LLC, Invesco Asset Management (India) Private Limited and OppenheimerFunds, Inc. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2022. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

The Board’s Evaluation Process

The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

    As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer. 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 accordance with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

    The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

A.

Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers’ systems preparedness and ongoing investment enabled

Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

    The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

B.

Fund Investment Performance

The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

    The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2021 to the performance of funds in the Broadridge performance universe and against the Philadelphia Gold & Silver Index (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, three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was above the performance of the Index for the one and five year periods and reasonably comparable to the performance of the Index for the three year period. The Board considered that the Fund was created in connection with Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the “Transaction”) and that the Fund’s performance prior to the closing of the Transaction on May 24, 2019 is that of its predecessor fund. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund

 

 

20   Invesco Gold & Special Minerals Fund

    

    

 

performance as well as other performance metrics, which did not change its conclusions.

C.

Advisory and Sub-Advisory Fees and Fund Expenses

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the Fund’s contractual management fee schedule was reduced at certain breakpoint levels effective in 2020. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.

    The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement 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 its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.

    The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

D.

Economies of Scale and Breakpoints

    The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may

also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

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 in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and the periodic review and enhancement of such methodology. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

F.

Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

    The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives from Invesco Advisers periodic reports that include a representation to the effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated

money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

    The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.

    The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

 

 

21   Invesco Gold & Special Minerals Fund

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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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-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/corporate/about-us/esg. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. 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 number(s): 811-03826 and 002-85905                    Invesco Distributors, Inc.    O-GSM-SAR-1                                         

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Semiannual Report to Shareholders    October 31, 2022

Invesco Small Cap Value Fund

Nasdaq:

A: VSCAX ∎ C: VSMCX ∎ R: VSRAX ∎ Y: VSMIX ∎ R6: SMVSX

 

   
2   Fund Performance
4   Schedule of Investments
8   Financial Statements
11   Financial Highlights
12   Notes to Financial Statements
18   Fund Expenses
19   Approval of Investment Advisory and Sub-Advisory Contracts

 

 

 

For the most current month-end Fund performance and commentary, please visit invesco.com/performance.

Unless otherwise noted, all data is provided by Invesco.

This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.

 

NOT FDIC INSURED   |   MAY LOSE VALUE   |   NO BANK GUARANTEE

 

Fund Performance

    

 

 

Performance summary

 

 

Fund vs. Indexes

                

Cumulative total returns, 4/30/22 to 10/31/22, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

 

Class A Shares

 

     1.25 % 

Class C Shares

 

     0.90  

Class R Shares

 

     1.09  

Class Y Shares

 

     1.31  

Class R6 Shares

 

     1.40  

S&P 500 Index▼ (Broad Market Index)

 

     -5.50  

Russell 2000 Value Index▼ (Style-Specific Index)

 

     -1.35  

Lipper Small-Cap Value Funds Index∎ (Peer Group Index)

 

     -0.45  

Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc.

 

The S&P 500® Index is an unmanaged index considered representative of the US stock market.
    The Russell 2000® Value Index is an unmanaged index considered representative of small-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.
    The Lipper Small-Cap Value Funds Index is an unmanaged index considered representative of small-cap value funds tracked by Lipper.
    The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es).
    A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.

 

 

 

 

 

For more information about your Fund

 

Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.

    Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.

 

    

 

 

2   Invesco Small Cap Value Fund

    

    

    

 

Average Annual Total Returns

 

As of 10/31/22, including maximum applicable sales charges

 

Class A Shares

         

Inception (6/21/99)

      10.40 % 

10 Years

      11.82  

  5 Years

      8.39  

  1 Year

      -3.13  

Class C Shares

         

Inception (6/21/99)

      10.38 % 

10 Years

      11.79  

  5 Years

      8.83  

  1 Year

      0.94  

Class R Shares

         

10 Years

      12.16 % 

  5 Years

      9.33  

  1 Year

      2.19  

Class Y Shares

         

Inception (8/12/05)

      10.30 % 

10 Years

      12.73  

  5 Years

      9.89  

  1 Year

      2.69  

Class R6 Shares

         

10 Years

      12.70 % 

  5 Years

      10.05  

  1 Year

      2.87  

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 those for Class A, Class C and Class I shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.

Class R shares incepted on April 17, 2020. Performance shown prior to that date is that of the Fund’s Class A shares at net asset value restated to reflect the higher 12b-1 fees applicable to Class R shares.

Class R6 shares incepted on February 7, 2017. Performance shown prior to that date is that of the Fund’s Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.

The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will

fluctuate so that you may have a gain or loss when you sell shares.

Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class Y and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.

The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.

Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.

 

 

 

3   Invesco Small Cap Value Fund

Schedule of Investments(a)

October 31, 2022

(Unaudited)

 

     Shares      Value  

 

  

Common Stocks & Other Equity Interests–94.20%

 

Aerospace & Defense–6.79%

      

BWX Technologies, Inc.

      624,500      $ 35,584,010  

 

  

Hensoldt AG (Germany)

      1,611,208        37,896,770  

 

  

Huntington Ingalls Industries, Inc.

      127,300        32,725,011  

 

  

Maxar Technologies, Inc.

      610,400        13,636,336  

 

  

Parsons Corp.(b)(c)

     703,000        32,956,640  

 

  

RADA Electronic Industries Ltd. (Israel)(b)

     1,029,200        11,835,800  

 

  
           164,634,567  

 

  

Auto Parts & Equipment–1.56%

 

   

Dana, Inc.

      1,867,796        29,810,024  

 

  

Modine Manufacturing Co.(b)

     448,500        8,037,120  

 

  
        37,847,144  

 

  

Biotechnology–0.91%

      

Horizon Therapeutics PLC(b)

     354,000        22,061,280  

 

  

Commodity Chemicals–2.03%

      

Cabot Corp.(c)

     450,600        33,110,088  

 

  

Orion Engineered Carbons S.A. (Germany)

      1,018,200        16,250,472  

 

  
        49,360,560  

 

  

Construction & Engineering–6.52%

 

   

AECOM(c)

     765,122        57,598,384  

 

  

Balfour Beatty PLC (United Kingdom)

      1,311,900        4,492,396  

 

  

Concrete Pumping Holdings, Inc.(b)

     659,700        4,225,379  

 

  

HOCHTIEF AG (Germany)(c)

     211,000        11,221,004  

 

  

MasTec, Inc.(b)(c)

     536,900        41,384,252  

 

  

Primoris Services Corp.

      1,350,100        27,258,519  

 

  

Sterling Infrastructure, Inc.(b)

     443,600        11,972,764  

 

  
        158,152,698  

 

  

Construction Machinery & Heavy Trucks–2.33%

 

Astec Industries, Inc.(c)

     251,678        10,985,745  

 

  

Manitowoc Co., Inc. (The)(b)(c)

     1,080,900        9,857,808  

 

  

REV Group, Inc.

      765,000        10,511,100  

 

  

Terex Corp.

      618,000        25,053,720  

 

  
        56,408,373  

 

  

Diversified Chemicals–1.32%

      

Huntsman Corp.(c)

     1,200,563        32,127,066  

 

  

Diversified Metals & Mining–0.63%

      

Hudbay Minerals, Inc. (Canada)

      1,295,600        4,923,280  

 

  

Teck Resources Ltd., Class B (Canada)(c)

     339,800        10,343,512  

 

  
        15,266,792  

 

  

Diversified Support Services–0.08%

 

VSE Corp.

      44,199        2,045,972  

 

  

Education Services–3.79%

      

Adtalem Global Education, Inc.(b)(c)

     890,700        37,142,190  

 

  

Grand Canyon Education, Inc.(b)

     543,700        54,712,531  

 

  
        91,854,721  

 

  
     Shares      Value  

 

  

Electric Utilities–0.76%

      

NRG Energy, Inc.

      417,100      $ 18,519,240  

 

  

Electrical Components & Equipment–2.07%

 

EnerSys(c)

     175,200        11,614,008  

 

  

Vertiv Holdings Co.(c)

     2,695,400        38,571,174  

 

  
        50,185,182  

 

  

Electronic Manufacturing Services–4.07%

 

Flex Ltd.(b)

     2,931,300        57,394,854  

 

  

Jabil, Inc.

      642,600        41,287,050  

 

  
        98,681,904  

 

  

Environmental & Facilities Services–0.10%

 

Li-Cycle Holdings Corp. (Canada)(b)

     418,915        2,496,733  

 

  

Food Distributors–1.40%

      

US Foods Holding Corp.(b)

     1,137,171        33,842,209  

 

  

Gold–0.89%

      

Kinross Gold Corp. (Canada)

      1,607,600        5,835,588  

 

  

Yamana Gold, Inc. (Canada)

      3,614,600        15,831,948  

 

  
        21,667,536  

 

  

Health Care Distributors–0.95%

      

Henry Schein, Inc.(b)

     336,000        23,002,560  

 

  

Health Care Equipment–1.12%

      

Integer Holdings Corp.(b)(c)

     434,500        27,082,385  

 

  

Health Care Facilities–5.04%

      

Encompass Health Corp.

      703,700        38,309,428  

 

  

Select Medical Holdings Corp.(c)

     1,262,600        32,423,568  

 

  

Universal Health Services, Inc., Class B

      443,900        51,434,693  

 

  
           122,167,689  

 

  

Health Care Services–0.24%

      

Fresenius Medical Care AG & Co. KGaA (Germany)

      206,626        5,715,359  

 

  

Hotels, Resorts & Cruise Lines–0.60%

 

Travel + Leisure Co.

      382,176        14,515,044  

 

  

Household Products–0.74%

      

Spectrum Brands Holdings, Inc.(c)

     389,259        17,960,410  

 

  

Human Resource & Employment Services–1.30%

 

Kelly Services, Inc., Class A(c)

     394,110        6,439,757  

 

  

ManpowerGroup, Inc.

      320,800        25,131,472  

 

  
        31,571,229  

 

  

Independent Power Producers & Energy Traders–1.37%

 

Vistra Corp.

      1,444,500        33,180,165  

 

  

Industrial Machinery–1.65%

      

Crane Holdings Co.(c)

     53,600        5,378,224  

 

  

Gates Industrial Corp. PLC(b)

     990,200        11,040,730  

 

  

Timken Co. (The)(c)

     332,400        23,696,796  

 

  
        40,115,750  

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

4   Invesco Small Cap Value Fund

     Shares      Value  

 

  

Life & Health Insurance–2.07%

 

American Equity Investment Life Holding Co.

      1,162,947      $ 50,099,757  

 

  

Office Services & Supplies–1.60%

 

Interface, Inc.

      435,320        4,923,469  

 

  

Kimball International, Inc., Class B

      497,900        3,679,481  

 

  

MillerKnoll, Inc.(c)

     956,400        20,256,552  

 

  

Steelcase, Inc., Class A

      1,284,000        9,976,680  

 

  
        38,836,182  

 

  

Oil & Gas Equipment & Services–3.87%

 

Helix Energy Solutions Group, Inc.(b)(c)

     3,561,581        24,931,067  

 

  

NexTier Oilfield Solutions, Inc.(b)

     1,240,011        12,499,311  

 

  

TechnipFMC PLC (United Kingdom)(b)

     5,318,634        56,324,334  

 

  
        93,754,712  

 

  

Oil & Gas Exploration & Production–14.63%

 

APA Corp.

      1,097,200        49,878,712  

 

  

ARC Resources Ltd. (Canada)

      3,306,000        46,543,898  

 

  

Crescent Point Energy Corp. (Canada)

      3,931,800        30,736,353  

 

  

Enerplus Corp. (Canada)

      1,181,200        20,479,278  

 

  

EQT Corp.

      97,700        4,087,768  

 

  

Kosmos Energy Ltd. (Ghana)(b)

     6,189,100        40,167,259  

 

  

Murphy Oil Corp.

      132,900        6,446,979  

 

  

Northern Oil and Gas, Inc.(c)

     2,409,280        82,252,819  

 

  

Ovintiv, Inc.

      848,000        42,951,200  

 

  

Southwestern Energy Co.(b)

     3,577,400        24,791,382  

 

  

Tamarack Valley Energy Ltd. (Canada)

      1,688,500        6,506,863  

 

  
           354,842,511  

 

  

Oil & Gas Storage & Transportation–2.11%

 

New Fortress Energy, Inc.(c)

     927,223        51,062,171  

 

  

Regional Banks–8.20%

      

Five Star Bancorp

      364,454        10,572,811  

 

  

Huntington Bancshares, Inc.

      3,042,458        46,184,513  

 

  

PacWest Bancorp

      764,988        19,017,602  

 

  

Pinnacle Financial Partners, Inc.

      136,300        11,311,537  

 

  

SVB Financial Group(b)

     98,800        22,818,848  

 

  

Texas Capital Bancshares, Inc.(b)

     482,500        28,950,000  

 

  

Webster Financial Corp.

      926,800        50,288,168  

 

  

Western Alliance Bancorporation

      143,700        9,652,329  

 

  
        198,795,808  

 

  

Research & Consulting Services–4.02%

 

CACI International, Inc., Class A(b)

     143,118        43,512,166  

 

  

Huron Consulting Group, Inc.(b)

     76,100        5,603,243  

 

  

KBR, Inc.

      974,300        48,490,911  

 

  
        97,606,320  

 

  

Restaurants–1.55%

      

Cheesecake Factory, Inc. (The)(c)

     948,847        33,978,211  

 

  

Marston’s PLC (United Kingdom)

      9,176,449        3,680,337  

 

  
        37,658,548  

 

  
     Shares      Value  

 

  

Semiconductor Equipment–0.91%

 

Ichor Holdings Ltd.(b)(c)

     145,800      $ 3,709,152  

 

  

MKS Instruments, Inc.

      95,500        7,845,325  

 

  

Ultra Clean Holdings, Inc.(b)(c)

     336,800        10,477,848  

 

  
        22,032,325  

 

  

Specialty Chemicals–0.19%

 

Axalta Coating Systems Ltd.(b)(c)

     202,200        4,715,304  

 

  

Steel–1.50%

      

Carpenter Technology Corp.

      970,230        36,286,602  

 

  

Trading Companies & Distributors–4.95%

 

Air Lease Corp.(c)

     1,016,300        35,865,227  

 

  

Beacon Roofing Supply, Inc.(b)(c)

     229,466        12,930,409  

 

  

DXP Enterprises, Inc.(b)

     249,591        7,140,799  

 

  

Univar Solutions, Inc.(b)

     1,665,026        42,424,862  

 

  

WESCO International, Inc.(b)(c)

     157,100        21,643,667  

 

  
        120,004,964  

 

  

Trucking–0.34%

      

National Express Group PLC (United Kingdom)(b)

     4,303,860        8,334,047  

 

  

Total Common Stocks & Other Equity Interests
(Cost $2,161,164,056)

 

      2,284,491,819  

 

  

Money Market Funds–5.15%

      

Invesco Government & Agency Portfolio, Institutional Class, 3.07%(d)(e)

     43,847,798        43,847,798  

 

  

Invesco Liquid Assets Portfolio, Institutional Class, 3.03%(d)(e)

     30,939,201        30,945,389  

 

  

Invesco Treasury Portfolio, Institutional Class, 3.08%(d)(e)

     50,111,769        50,111,769  

 

  

Total Money Market Funds
(Cost $124,898,340)

 

      124,904,956  

 

  

TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)–99.35%
(Cost $2,286,062,396)

 

      2,409,396,775  

 

  

Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds–9.70%

 

Invesco Private Government Fund, 3.18%(d)(e)(f)

     –        63,294,694  

 

  

Invesco Private Prime Fund, 3.28%(d)(e)(f)

     –        171,882,912  

 

  

Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $235,177,337)

 

      235,177,606  

 

  

TOTAL INVESTMENTS IN SECURITIES–109.05%
(Cost $2,521,239,733)

 

      2,644,574,381  

 

  

OTHER ASSETS LESS LIABILITIES–(9.05)%

 

      (219,411,129 ) 

 

  

NET ASSETS–100.00%

       $ 2,425,163,252  

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

5   Invesco Small Cap Value Fund

Notes to Schedule of Investments:

 

(a) 

Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.

(b) 

Non-income producing security.

(c) 

All or a portion of this security was out on loan at October 31, 2022.

(d) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended October 31, 2022.

 

    

Value

April 30, 2022

     Purchases
at Cost		     Proceeds
from Sales		     Change in
Unrealized
Appreciation
(Depreciation)		   Realized
Gain
(Loss)		    

Value

October 31, 2022

     Dividend Income  
Investments in Affiliated Money Market Funds:                                                        

Invesco Government & Agency Portfolio, Institutional Class

     $  28,128,261       $   154,635,777       $   (138,916,240)       $           -       $          -       $  43,847,798       $    346,649  

Invesco Liquid Assets Portfolio, Institutional Class

     19,708,213       110,454,126       (99,225,885)       5,639         3,296       30,945,389       243,199  

Invesco Treasury Portfolio, Institutional Class

     32,146,584       176,726,603       (158,761,418)       -       -       50,111,769       382,189  
Investments Purchased with Cash Collateral from Securities on Loan:                                                        

Invesco Private Government Fund

     31,889,639       268,629,335       (237,224,280)       -       -       63,294,694       489,070*  

Invesco Private Prime Fund

     74,524,001       595,520,906       (498,155,308)       (3,008)       (3,679)       171,882,912       1,347,361*  

Total

     $186,396,698       $1,305,966,747       $(1,132,283,131)       $   2,631       $   (383)       $360,082,562       $ 2,808,468  

 

  *

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(e) 

The rate shown is the 7-day SEC standardized yield as of October 31, 2022.

(f) 

The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I.

 

Open Forward Foreign Currency Contracts

Settlement

Date

         Contract to     

Unrealized

Appreciation
(Depreciation)

   Counterparty    Deliver      Receive  

Currency Risk

                            

11/23/2022

    Bank of America, N.A.      GBP  14,181,805        USD  15,980,401      $(292,559)

11/23/2022

    Bank of America, N.A.      USD  12,087,353        EUR  12,149,477      (62,840)

11/23/2022

    Royal Bank of Canada      EUR  68,608,740        USD  67,809,380      (93,682)

Total Forward Foreign Currency Contracts

                      $(449,081)

Abbreviations:

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.

 

6   Invesco Small Cap Value Fund

Portfolio Composition

By sector, based on Net Assets

as of October 31, 2022

 

Industrials

      31.77 % 

Energy

      20.60  

Financials

      10.26  

Health Care

      8.25  

Consumer Discretionary

      7.50  

Materials

      6.57  

Information Technology

      4.98  

Consumer Staples

      2.14  

Utilities

      2.13  

Unknown G1

      0.00  

Money Market Funds Plus Other Assets Less Liabilities

      5.80  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

7   Invesco Small Cap Value Fund

Statement of Assets and Liabilities

October 31, 2022

(Unaudited)

 

Assets:

   

Investments in unaffiliated securities, at value (Cost $2,161,164,056)*

    $ 2,284,491,819  

 

  

Investments in affiliated money market funds, at value (Cost $360,075,677)

      360,082,562  

 

  

Foreign currencies, at value (Cost $4,549,305)

      4,549,612  

 

  

Receivable for:

   

Investments sold

      14,275,980  

 

  

Fund shares sold

      5,772,384  

 

  

Dividends

      1,291,336  

 

  

Investment for trustee deferred compensation and retirement plans

      185,687  

 

  

Other assets

      188,807  

 

  

Total assets

      2,670,838,187  

 

  

Liabilities:

   

Other investments:

   

Unrealized depreciation on forward foreign currency contracts outstanding

      449,081  

 

  

Payable for:

   

Investments purchased

      5,670,312  

 

  

Fund shares reacquired

      3,189,956  

 

  

Collateral upon return of securities loaned

      235,177,337  

 

  

Accrued fees to affiliates

      863,256  

 

  

Accrued other operating expenses

      120,167  

 

  

Trustee deferred compensation and retirement plans

      204,826  

 

  

Total liabilities

      245,674,935  

 

  

Net assets applicable to shares outstanding

    $ 2,425,163,252  

 

  

Net assets consist of:

   

Shares of beneficial interest

    $ 2,087,771,219  

 

  

Distributable earnings

      337,392,033  

 

  
   $ 2,425,163,252  

 

  

Net Assets:

   

Class A

    $ 751,566,915  

 

  

Class C

    $ 25,667,957  

 

  

Class R

    $ 12,978,482  

 

  

Class Y

    $ 1,297,568,275  

 

  

Class R6

    $ 337,381,623  

 

  

Shares outstanding, no par value, with an unlimited number of shares authorized:

 

Class A

      40,413,335  

 

  

Class C

      2,544,525  

 

  

Class R

      702,175  

 

  

Class Y

      64,544,684  

 

  

Class R6

      16,626,077  

 

  

Class A:

   

Net asset value per share

    $ 18.60  

 

  

Maximum offering price per share
(Net asset value of $18.60 ÷ 94.50%)

    $ 19.68  

 

  

Class C:

   

Net asset value and offering price per share

    $ 10.09  

 

  

Class R:

   

Net asset value and offering price per share

    $ 18.48  

 

  

Class Y:

   

Net asset value and offering price per share

    $ 20.10  

 

  

Class R6:

   

Net asset value and offering price per share

    $ 20.29  

 

  

 

*

At October 31, 2022, securities with an aggregate value of $230,846,902 were on loan to brokers.

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

8   Invesco Small Cap Value Fund

Statement of Operations

For the six months ended October 31, 2022

(Unaudited)

 

Investment income:

   

Dividends (net of foreign withholding taxes of $394,782)

    $ 16,754,516  

 

  

Dividends from affiliated money market funds (includes net securities lending income of $128,969)

      1,101,006  

 

  

Total investment income

      17,855,522  

 

  

Expenses:

   

Advisory fees

      6,847,015  

 

  

Administrative services fees

      152,051  

 

  

Custodian fees

      10,325  

 

  

Distribution fees:

   

Class A

      895,343  

 

  

Class C

      118,359  

 

  

Class R

      29,890  

 

  

Transfer agent fees – A, C, R and Y

      1,462,076  

 

  

Transfer agent fees – R6

      42,734  

 

  

Trustees’ and officers’ fees and benefits

      11,801  

 

  

Registration and filing fees

      130,799  

 

  

Reports to shareholders

      40,265  

 

  

Professional services fees

      27,701  

 

  

Other

      5,633  

 

  

Total expenses

      9,773,992  

 

  

Less: Fees waived and/or expense offset arrangement(s)

      (47,347 ) 

 

  

Net expenses

      9,726,645  

 

  

Net investment income

      8,128,877  

 

  

Realized and unrealized gain (loss) from:

   

Net realized gain (loss) from:

   

Unaffiliated investment securities

      48,303,797  

 

  

Affiliated investment securities

      (383 ) 

 

  

Foreign currencies

      (134,746 ) 

 

  

Forward foreign currency contracts

      (2,410,298 ) 

 

  
     45,758,370  

 

  

Change in net unrealized appreciation (depreciation) of:

   

Unaffiliated investment securities

      (14,752,001 ) 

 

  

Affiliated investment securities

      2,631  

 

  

Foreign currencies

      (57,851 ) 

 

  

Forward foreign currency contracts

      (449,081 ) 

 

  
     (15,256,302 ) 

 

  

Net realized and unrealized gain

      30,502,068  

 

  

Net increase in net assets resulting from operations

    $ 38,630,945  

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

9   Invesco Small Cap Value Fund

Statement of Changes in Net Assets

For the six months ended October 31, 2022 and the year ended April 30, 2022

(Unaudited)

 

     October 31,     April 30,  
     2022     2022  

 

  

Operations:

     

Net investment income

    $ 8,128,877     $ 4,361,774  

 

  

Net realized gain

      45,758,370       345,808,958  

 

  

Change in net unrealized appreciation (depreciation)

      (15,256,302 )      (316,078,267 ) 

 

  

Net increase in net assets resulting from operations

      38,630,945       34,092,465  

 

  

Distributions to shareholders from distributable earnings:

     

Class A

      –       (101,790,912 ) 

 

  

Class C

      –       (4,343,882 ) 

 

  

Class R

      –       (1,502,521 ) 

 

  

Class Y

      –       (106,700,334 ) 

 

  

Class R6

      –       (17,684,381 ) 

 

  

Total distributions from distributable earnings

      –       (232,022,030 ) 

 

  

Share transactions–net:

     

Class A

      22,408,496       112,944,825  

 

  

Class C

      2,008,555       10,049,530  

 

  

Class R

      1,493,280       3,342,282  

 

  

Class Y

      188,788,527       370,852,528  

 

  

Class R6

      108,006,785       160,103,595  

 

  

Net increase in net assets resulting from share transactions

      322,705,643       657,292,760  

 

  

Net increase in net assets

      361,336,588       459,363,195  

 

  

Net assets:

     

Beginning of period

      2,063,826,664       1,604,463,469  

 

  

End of period

    $ 2,425,163,252     $ 2,063,826,664  

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

10   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

(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 10/31/22

      $18.37         $ 0.05        $  0.18         $  0.23         $      –         $      –         $      –         $18.60         1.25 %      $751,567         1.08 %(d)      1.08 %(d)      0.58 %(d)      20 % 

Year ended 04/30/22

      20.84       0.01       0.62       0.63       (0.00 )      (3.10 )      (3.10 )      18.37       3.75       721,429       1.09       1.09       0.11       79  

Year ended 04/30/21

      9.62       0.03       11.24       11.27       (0.05 )      –       (0.05 )      20.84       117.30       687,428       1.12       1.12       0.24       71  

Year ended 04/30/20

      14.10       0.02       (4.14 )      (4.12 )      –       (0.36 )      (0.36 )      9.62       (30.02 )      372,448       1.13       1.13       0.16       47  

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  

Class C

                                                                                                                 

Six months ended 10/31/22

      10.00       (0.01 )      0.10       0.09       –       –       –       10.09       0.90       25,668       1.83 (d)      1.83 (d)      (0.17 )(d)      20  

Year ended 04/30/22

      12.85       (0.07 )      0.32       0.25       (0.00 )      (3.10 )      (3.10 )      10.00       2.99       23,397       1.84       1.84       (0.64 )      79  

Year ended 04/30/21

      5.96       (0.04 )      6.94       6.90       (0.01 )      –       (0.01 )      12.85       115.93 (e)      17,598       1.81 (e)      1.81 (e)      (0.45 )(e)      71  

Year ended 04/30/20

      8.93       (0.04 )      (2.57 )      (2.61 )      –       (0.36 )      (0.36 )      5.96       (30.50 )(e)      10,133       1.84 (e)      1.84 (e)      (0.55 )(e)      47  

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  

Class R

                                                                                                                 

Six months ended 10/31/22

      18.28       0.03       0.17       0.20       –       –       –       18.48       1.09       12,978       1.33 (d)      1.33 (d)      0.33 (d)      20  

Year ended 04/30/22

      20.79       (0.03 )      0.62       0.59       (0.00 )      (3.10 )      (3.10 )      18.28       3.52       11,315       1.34       1.34       (0.14 )      79  

Year ended 04/30/21

      9.61       (0.00 )(f)      11.21       11.21       (0.03 )      –       (0.03 )      20.79       116.81       9,140       1.37       1.37       (0.01 )      71  

Period ended 04/30/20(g)

     8.49       (0.00 )(f)      1.12       1.12       –       –       –       9.61       13.19       3,866       1.37 (d)      1.37 (d)      (0.08 )(d)      47  

Class Y

                                                                                                                 

Six months ended 10/31/22

      19.84       0.08       0.18       0.26       –       –       –       20.10       1.31       1,297,568       0.83 (d)      0.83 (d)      0.83 (d)      20  

Year ended 04/30/22

      22.23       0.08       0.67       0.75       (0.04 )      (3.10 )      (3.14 )      19.84       4.06       1,085,935       0.84       0.84       0.36       79  

Year ended 04/30/21

      10.25       0.07       11.98       12.05       (0.07 )      –       (0.07 )      22.23       117.78       812,019       0.87       0.87       0.49       71  

Year ended 04/30/20

      14.95       0.06       (4.40 )      (4.34 )      –       (0.36 )      (0.36 )      10.25       (29.79 )      457,857       0.88       0.88       0.41       47  

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  

Class R6

                                                                                                                 

Six months ended 10/31/22

      20.01       0.09       0.19       0.28       –       –       –       20.29       1.40       337,382       0.70 (d)      0.70 (d)      0.96 (d)      20  

Year ended 04/30/22

      22.39       0.11       0.67       0.78       (0.06 )      (3.10 )      (3.16 )      20.01       4.17       221,751       0.70       0.70       0.50       79  

Year ended 04/30/21

      10.31       0.09       12.07       12.16       (0.08 )      –       (0.08 )      22.39       118.25       78,279       0.73       0.73       0.63       71  

Year ended 04/30/20

      15.02       0.08       (4.43 )      (4.35 )      –       (0.36 )      (0.36 )      10.31       (29.71 )      60,628       0.70       0.70       0.59       47  

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  

 

(a) 

Calculated using average shares outstanding.

(b) 

Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.

(c) 

Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended April 30, 2020, the portfolio turnover calculation excludes the value of securities purchased of $23,823,797 in connection with the acquisition of Invesco Oppenheimer Small Cap Value Fund into the Fund.

(d) 

Annualized.

(e) 

The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.94% for the year ended April 31, 2021, 0.96% for the year ended April 30, 2020 and 0.99% for the year ended April 30, 2018, respectively.

(f) 

Amount represents less than $(0.005).

(g) 

Commencement date of April 17, 2020.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

11   Invesco Small Cap Value Fund

Notes to Financial Statements

October 31, 2022

(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 an open-end series management investment company authorized to issue an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.

The Fund’s investment objective is long-term growth of capital.

The Fund currently consists of five different classes of shares: Class A, Class C, Class R, Class Y and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met. Under certain circumstances, load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y and Class R6 shares are sold at net asset value. Class C shares held for eight 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 eighth 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.

Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.

Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.

Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.

Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.

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 may be used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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 market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism, significant governmental actions or adverse investor sentiment generally 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.

The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used.

 

 

12   Invesco Small Cap Value Fund

Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.

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 an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.

The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.

C.

Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues, the country that has the primary market for the issuer’s securities and its “country of risk” as determined by a third party service provider, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

D.

Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.

E.

Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F.

Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R6 are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.

G.

Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.

H.

Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.

I.

Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “affiliated money market funds”) and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities.

The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon also serves as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the six months ended October 31, 2022, the Fund paid the Adviser $5,671 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.

 

13   Invesco Small Cap Value Fund

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 exchange of the two currencies on the settlement date, 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).

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 for hedging 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.

COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance.

NOTE 2–Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2022, the effective advisory fee rate incurred by the Fund was 0.64%.

Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco 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, 2023, 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 and Class R6 shares to 2.00%, 2.75%, 2.25%, 1.75% and 1.75%, 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 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, 2023. 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, 2024, 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, 2022, the Adviser waived advisory fees of $44,934.

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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Administrative 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

 

14   Invesco Small Cap Value Fund

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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc.(“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively the “Plan”). The Fund, pursuant to the Plans, reimburses IDI for its allocated share of expenses incurred for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Class A shares and up to a maximum annual rate of 1.00% of the average daily net assets of Class C shares. The Fund pursuant to the Class R Plan, pays IDI compensation at the annual rate of 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. For the six months ended October 31, 2022, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.

Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2022, IDI advised the Fund that IDI retained $56,087 in front-end sales commissions from the sale of Class A shares and $1,718 and $6,111 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.

For the six months ended October 31, 2022, the Fund incurred $1,632 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. 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 Adviser’s 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, 2022. 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

    $ 2,217,644,302      $ 66,847,517       $–      $ 2,284,491,819  

 

  

Money Market Funds

      124,904,956        235,177,606         –        360,082,562  

 

  

Total Investments in Securities

      2,342,549,258        302,025,123         –        2,644,574,381  

 

  

Other Investments - Liabilities*

           

 

  

Forward Foreign Currency Contracts

      –        (449,081 )        –        (449,081 ) 

 

  

Total Investments

    $ 2,342,549,258      $ 301,576,042       $–      $ 2,644,125,300  

 

  

 

*

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 and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.

For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.

Value of Derivative Investments at Period-End

The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of October 31, 2022:

 

     Value  
     Currency  
Derivative Liabilities    Risk  

 

  

Unrealized depreciation on forward foreign currency contracts outstanding

    $ (449,081 ) 

 

  

Derivatives not subject to master netting agreements

      –  

 

  

Total Derivative Liabilities subject to master netting agreements

    $ (449,081 ) 

 

  

 

15   Invesco Small Cap Value Fund

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, 2022.

 

     Financial                      
     Derivative         Collateral       
     Liabilities         (Received)/Pledged       
     Forward Foreign   Net Value of               Net  
Counterparty    Currency Contracts   Derivatives     Non-Cash    Cash    Amount  

 

  

Bank of America, N.A.

      $(355,399 )        $(355,399 )    $–    $–      $(355,399 ) 

 

  

Royal Bank of Canada

      (93,682 )      (93,682 )      –      –      (93,682 ) 

 

  

Total

      $(449,081 )      $(449,081 )    $–    $–      $(449,081 ) 

 

  

Effect of Derivative Investments for the six months ended October 31, 2022

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 (Loss):

   

Forward foreign currency contracts

      $(2,410,298)  

 

  

Change in Net Unrealized Appreciation (Depreciation):

   

Forward foreign currency contracts

           (449,081)  

 

  

Total

      $(2,859,379)  

 

  

The table below summarizes the average notional value of derivatives held during the period.

 

     Forward  
     Foreign Currency  
     Contracts  

 

  

Average notional value

      $90,069,711  

 

  

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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,413.

NOTE 6–Trustees’ and Officers’ Fees and Benefits

Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.

NOTE 7–Cash Balances

The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.

NOTE 8–Tax Information

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

 

16   Invesco Small Cap Value Fund

The Fund had a capital loss carryforward as of April 30, 2022, as follows:

 

Capital Loss Carryforward*  

 

  
Expiration    Short-Term      Long-Term      Total  

 

  

Not subject to expiration

    $ 5,865,361      $ 1,119,483      $ 6,984,844  

 

  

 

*

Capital loss carryforward 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 9–Investment Transactions

The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2022 was $658,023,532 and $411,434,869, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investments on a Tax Basis  

 

  

Aggregate unrealized appreciation of investments

    $ 305,315,620  

 

  

Aggregate unrealized (depreciation) of investments

      (186,386,178 ) 

 

  

Net unrealized appreciation of investments

    $ 118,929,442  

 

  

Cost of investments for tax purposes is $2,525,195,858.

NOTE 10–Share Information

 

     Summary of Share Activity  

 

  
     Six months ended     Year ended  
     October 31, 2022(a)     April 30, 2022  
     Shares     Amount     Shares     Amount  

 

  

Sold:

         

Class A

      5,265,479     $ 94,929,333       9,439,506     $ 190,915,847  

 

  

Class C

      606,246       5,889,822       1,290,219       14,798,454  

 

  

Class R

      142,128       2,520,865       163,890       3,251,723  

 

  

Class Y

      22,715,536       435,559,487       34,018,696       724,197,121  

 

  

Class R6

      8,095,591       156,623,566       8,818,284       189,023,755  

 

  

Issued as reinvestment of dividends:

         

Class A

      -       -       5,504,500       96,493,889  

 

  

Class C

      -       -       436,669       4,178,927  

 

  

Class R

      -       -       85,969       1,501,008  

 

  

Class Y

      -       -       4,533,685       85,731,979  

 

  

Class R6

      -       -       907,606       17,298,965  

 

  

Automatic conversion of Class C shares to Class A shares:

         

Class A

      28,751       511,919       88,447       1,742,554  

 

  

Class C

      (52,894 )      (511,919 )      (153,262 )      (1,742,554 ) 

 

  

Reacquired:

         

Class A

      (4,147,445 )      (73,032,756 )      (8,757,393 )      (176,207,465 ) 

 

  

Class C

      (347,721 )      (3,369,348 )      (603,967 )      (7,185,297 ) 

 

  

Class R

      (58,849 )      (1,027,585 )      (70,618 )      (1,410,449 ) 

 

  

Class Y

      (12,916,741 )      (246,770,960 )      (20,335,846 )      (439,076,572 ) 

 

  

Class R6

      (2,551,745 )      (48,616,781 )      (2,140,508 )      (46,219,125 ) 

 

  

Net increase in share activity

      16,778,336     $ 322,705,643       33,225,877     $ 657,292,760  

 

  

 

(a) 

There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 56% 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.

 

17   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, 2022 through October 31, 2022.

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.

 

         

ACTUAL

  

HYPOTHETICAL

(5% annual return before
expenses)

     
     Beginning
     Account Value     
(05/01/22)		   Ending
     Account Value     
(10/31/22)1		   Expenses
       Paid During       
Period2 		  Ending
     Account Value     
(10/31/22)		   Expenses
       Paid During       
Period2 		         Annualized        
Expense
Ratio

Class A   

   $1,000.00   $1,012.50   $5.48   $1,019.76   $5.50   1.08%

Class C   

     1,000.00     1,009.00     9.27     1,015.98     9.30   1.83    

Class R   

     1,000.00     1,010.90     6.74     1,018.50     6.77   1.33    

Class Y   

     1,000.00     1,013.10     4.21     1,021.02     4.23   0.83    

Class R6   

     1,000.00     1,014.00     3.55     1,021.68     3.57   0.70    

 

1 

The actual ending account value is based on the actual total return of the Fund for the period May 1, 2022 through October 31, 2022, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.

2 

Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year.

 

18   Invesco Small Cap Value Fund

Approval of Investment Advisory and Sub-Advisory Contracts

    

 

At meetings held on June 10, 2021, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Small Cap Value Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2021. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

The Board’s Evaluation Process

The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

    As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. 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 and as part of meetings convened on April 27, 2021 and June 10, 2021, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

    The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 10, 2021.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

A.

Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of Invesco Advisers’ business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the increased remote working environment resulting from the novel coronavirus (“COVID-19”) pandemic. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers has been able to effectively manage, operate and oversee the Invesco Funds through the challenging COVID-19 pandemic period. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running

an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

    The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

B.

Fund Investment Performance

The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

    The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2020 to the performance of funds in the Broadridge performance universe and against the Russell 2000® Value Index (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 and the second quintile for the three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was above the performance of the Index for the one year period and below the performance of the Index for the three and five year periods. The Board acknowledged limitations regarding the Broadridge data, in particular that differences may exist between a Fund’s investment objective, principal investment strategies and/or investment restrictions and those of the funds in its performance universe. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its conclusions.

 

 

19   Invesco Small Cap Value Fund

C.

Advisory and Sub-Advisory Fees and Fund Expenses

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.

    The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.

    The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.

    The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

D.

Economies of Scale and Breakpoints

The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board requested and received additional information from Invesco Advisers regarding the levels of the Fund’s breakpoints in light of current assets. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

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 in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted that such methodology had recently been

reviewed and enhanced. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

F.

Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

    The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives from Invesco Advisers periodic reports that include a representation to the effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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

advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

    The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

 

 

20   Invesco Small Cap Value Fund

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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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-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/corporate/about-us/esg. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. 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 number(s): 811-03826 and 002-85905                Invesco Distributors, Inc.    VK-SCV-SAR-1                                         

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Semiannual Report to Shareholders   October 31, 2022

Invesco Technology Fund

Nasdaq:

A: ITYAX ∎ C: ITHCX ∎ Y: ITYYX ∎ Investor: FTCHX ∎ R5: FTPIX ∎ R6: FTPSX

 

   
2   Fund Performance
4   Schedule of Investments
6   Financial Statements
9   Financial Highlights
10   Notes to Financial Statements
16   Fund Expenses
17   Approval of Investment Advisory and Sub-Advisory Contracts

 

For the most current month-end Fund performance and commentary, please visit invesco.com/performance.

Unless otherwise noted, all data is provided by Invesco.

This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.

 

 

NOT FDIC INSURED  |  MAY LOSE VALUE  |  NO BANK GUARANTEE

 

Fund Performance

 

 

 

Performance summary

 

 

Fund vs. Indexes

 

Cumulative total returns, 4/30/22 to 10/31/22, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

 

Class A Shares

     -16.55 % 

Class C Shares

     -16.87  

Class Y Shares

     -16.45  

Investor Class Shares

     -16.51  

Class R5 Shares

     -16.42  

Class R6 Shares

     -16.40  

NASDAQ Composite Total Return Index▼ (Broad Market/Style-Specific Index)

     -10.53  

Lipper Science & Technology Funds Index∎ (Peer Group Index)

     -13.77  

 

Source(s): ▼Bloomberg LP; ∎Lipper Inc.

  

The NASDAQ Composite Total Return Index is a broad-based, market index of the common stocks and similar securities listed on the Nasdaq stock market.

 

  The Lipper Science & Technology Funds Index is 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 index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es).

 

  A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.

 

 

 

For more information about your Fund

Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.

  Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.

 

 

2   Invesco Technology Fund

    

    

    

 

 

Average Annual Total Returns

 

As of 10/31/22, including maximum applicable sales charges

 

Class A Shares

        

Inception (3/28/02)

     5.40 % 

10 Years

     10.44  

  5 Years

     5.35  

  1 Year

     -43.07  

Class C Shares

        

Inception (2/14/00)

     -0.15 % 

10 Years

     10.39  

  5 Years

     5.75  

  1 Year

     -40.63  

Class Y Shares

        

Inception (10/3/08)

     11.55 % 

10 Years

     11.34  

  5 Years

     6.82  

  1 Year

     -39.61  

Investor Class Shares

        

Inception (1/19/84)

     9.77 % 

10 Years

     11.17  

  5 Years

     6.66  

  1 Year

     -39.71  

Class R5 Shares

        

Inception (12/21/98)

     5.45 % 

10 Years

     11.56  

  5 Years

     6.93  

  1 Year

     -39.58  

Class R6 Shares

        

10 Years

     11.31 % 

  5 Years

     6.97  

  1 Year

     -39.54  

Class R6 shares incepted on April 4, 2017. Performance shown prior to that date is that of Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.

    The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.

    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 a front-end sales charge or a CDSC; therefore, performance is at net asset value.

    The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.

    Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.

 

 

3   Invesco Technology Fund

Schedule of Investments(a)

October 31, 2022

(Unaudited)

 

     Shares      Value  

 

  

Common Stocks & Other Equity Interests–96.88%

 

Advertising–1.30%

      

Trade Desk, Inc. (The), Class A(b)(c)

     256,344      $ 13,647,755  

 

  

Application Software–16.11%

      

Atlassian Corp., Class A(b)(c)

     82,390        16,702,925  

 

  

Datadog, Inc., Class A(b)

     197,143        15,871,983  

 

  

HubSpot, Inc.(b)(c)

     24,484        7,260,975  

 

  

Intuit, Inc.

      59,511        25,440,953  

 

  

Paycom Software, Inc.(b)

     64,014        22,148,844  

 

  

salesforce.com, inc.(b)(c)

     146,355        23,795,859  

 

  

Synopsys, Inc.(b)

     98,217        28,733,383  

 

  

Workday, Inc., Class A(b)(c)

     185,485        28,902,273  

 

  
        168,857,195  

 

  

Data Processing & Outsourced Services–5.58%

 

Fiserv, Inc.(b)

     166,000        17,054,840  

 

  

PayPal Holdings, Inc.(b)

     60,478        5,054,751  

 

  

Visa, Inc., Class A(c)

     175,478        36,352,023  

 

  
        58,461,614  

 

  

Interactive Home Entertainment–4.80%

 

   

Electronic Arts, Inc.

      140,460        17,692,341  

 

  

Nintendo Co. Ltd. (Japan)

      376,000        15,321,943  

 

  

Take-Two Interactive Software, Inc.(b)

     146,339        17,338,245  

 

  
        50,352,529  

 

  

Interactive Media & Services–6.07%

 

   

Alphabet, Inc., Class A(b)

     582,999        55,099,235  

 

  

Baidu, Inc., ADR (China)(b)

     65,642        5,026,208  

 

  

Kuaishou Technology (China)(b)(d)

     850,500        3,508,478  

 

  
        63,633,921  

 

  

Internet & Direct Marketing Retail–6.26%

 

   

Amazon.com, Inc.(b)

     456,317        46,745,113  

 

  

JD.com, Inc., ADR (China)

      504,399        18,809,039  

 

  
        65,554,152  

 

  

Internet Services & Infrastructure–4.78%

 

   

Cloudflare, Inc., Class A(b)(c)

     245,613        13,832,924  

 

  

MongoDB, Inc.(b)

     80,524        14,738,308  

 

  

Snowflake, Inc., Class A(b)(c)

     134,385        21,541,915  

 

  
        50,113,147  

 

  

IT Consulting & Other Services–1.23%

 

   

EPAM Systems, Inc.(b)

     36,839        12,893,650  

 

  

Movies & Entertainment–2.66%

      

Netflix, Inc.(b)

     95,397        27,844,476  

 

  

Pharmaceuticals–3.76%

      

Bayer AG (Germany)

      749,685        39,438,685  

 

  

Semiconductor Equipment–0.82%

      

Applied Materials, Inc.

      33,244        2,935,113  

 

  

ASML Holding N.V., New York Shares (Netherlands)

      11,900        5,621,798  

 

  
        8,556,911  

 

  
     Shares      Value  

 

  

Semiconductors–17.15%

      

Advanced Micro Devices, Inc.(b)

     332,620      $ 19,977,157  

 

  

Broadcom, Inc.

      61,183        28,763,352  

 

  

Lattice Semiconductor Corp.(b)

     349,030        16,931,445  

 

  

Marvell Technology, Inc.(c)

     707,225        28,062,688  

 

  

Micron Technology, Inc.

      163,217        8,830,040  

 

  

Monolithic Power Systems, Inc.

      56,429        19,154,824  

 

  

NVIDIA Corp.

      238,032        32,127,179  

 

  

ON Semiconductor Corp.(b)(c)

     284,554        17,480,152  

 

  

QUALCOMM, Inc.

      71,353        8,395,394  

 

  
        179,722,231  

 

  

Systems Software–20.08%

      

Crowdstrike Holdings, Inc., Class A(b)

     94,799        15,281,599  

 

  

Darktrace PLC (United
Kingdom)(b)

     312,965        1,278,852  

 

  

KnowBe4, Inc., Class A(b)

     879,054        21,607,147  

 

  

Microsoft Corp.

      474,439        110,131,525  

 

  

Palo Alto Networks, Inc.(b)

     196,467        33,711,773  

 

  

ServiceNow, Inc.(b)

     67,411        28,362,504  

 

  
        210,373,400  

 

  

Technology Hardware, Storage & Peripherals–6.28%

 

Apple, Inc.

      429,431        65,848,950  

 

  

Total Common Stocks & Other Equity Interests
(Cost $843,101,726)

 

      1,015,298,616  

 

  

Money Market Funds–2.99%

 

Invesco Government & Agency Portfolio, Institutional Class, 3.07%(e)(f)

     10,756,759        10,756,759  

 

  

Invesco Liquid Assets Portfolio, Institutional Class, 3.03%(e)(f)

     8,252,362        8,254,013  

 

  

Invesco Treasury Portfolio, Institutional Class, 3.08%(e)(f)

     12,293,439        12,293,438  

 

  

Total Money Market Funds
(Cost $31,302,484)

 

      31,304,210  

 

  

TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-99.87% (Cost $874,404,210)

 

      1,046,602,826  

 

  

Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds–8.77%

      

Invesco Private Government Fund, 3.18%(e)(f)(g)

     25,738,059        25,738,059  

 

  

Invesco Private Prime Fund, 3.28%(e)(f)(g)

     66,160,327        66,160,327  

 

  

Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $91,894,186)

 

      91,898,386  

 

  

TOTAL INVESTMENTS IN
SECURITIES–108.64%
(Cost $966,298,396)

 

      1,138,501,212  

 

  

OTHER ASSETS LESS LIABILITIES–(8.64)%

 

      (90,571,967 ) 

 

  

NET ASSETS–100.00%

 

    $ 1,047,929,245  

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

4   Invesco Technology Fund

Investment Abbreviations:

ADR - American Depositary Receipt

Notes to Schedule of Investments:

 

(a)

Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.

(b) 

Non-income producing security.

(c) 

All or a portion of this security was out on loan at October 31, 2022.

(d) 

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, 2022 represented less than 1% of the Fund’s Net Assets.

(e) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended October 31, 2022.

 

     Value
April 30, 2022		     Purchases
at Cost		     Proceeds
from Sales		     Change in
Unrealized
Appreciation		    

Realized

Gain

(Loss)

     Value
October 31, 2022		     Dividend Income  
Investments in Affiliated Money Market Funds:                                                        

Invesco Government & Agency Portfolio, Institutional Class

     $ 17,624,636       $ 57,775,742     $ (64,643,619 )        $ -             $ -            $ 10,756,759           $ 58,520       

Invesco Liquid Assets Portfolio, Institutional Class

     13,155,917         41,268,387       (46,174,013 )      2,171           1,551            8,254,013         73,808       

Invesco Treasury Portfolio, Institutional Class

     20,142,441         66,029,420       (73,878,422 )      -           -            12,293,438         105,449       
Investments Purchased with Cash Collateral from Securities on Loan:                                                        

Invesco Private Government Fund

     4,664,621         196,248,764       (175,175,326 )      -           -            25,738,059         198,567*      

Invesco Private Prime Fund

     10,884,116         434,668,157       (379,394,142 )      4,200           (2,004)           66,160,327         544,958*      

Total

     $ 66,471,731       $ 795,990,470     $ (739,265,522 )        $ 6,371             $ (453)           $ 123,202,596           $ 981,302       

 

  *

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(f) 

The rate shown is the 7-day SEC standardized yield as of October 31, 2022.

(g) 

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, 2022

 

Information Technology

      72.03 % 

Communication Services

      14.84  

Consumer Discretionary

      6.25  

Health Care

      3.76  

Money Market Funds Plus Other Assets Less Liabilities

      3.12  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

5   Invesco Technology Fund

Statement of Assets and Liabilities

October 31, 2022

(Unaudited)

 

Assets:

   

Investments in unaffiliated securities, at value
(Cost $843,101,726)*

    $ 1,015,298,616  

 

  

Investments in affiliated money market funds, at value
(Cost $123,196,670)

      123,202,596  

 

  

Foreign currencies, at value (Cost $2,657)

      2,631  

 

  

Receivable for:

   

Investments sold

      13,158,183  

 

  

Fund shares sold

      404,152  

 

  

Dividends

      296,638  

 

  

Investment for trustee deferred compensation and retirement plans

      140,954  

 

  

Other assets

      84,897  

 

  

Total assets

      1,152,588,667  

 

  

Liabilities:

   

Payable for:

   

Investments purchased

      11,308,060  

 

  

Fund shares reacquired

      528,414  

 

  

Collateral upon return of securities loaned

      91,894,186  

 

  

Accrued fees to affiliates

      633,786  

 

  

Accrued trustees’ and officers’ fees and benefits

      738  

 

  

Accrued other operating expenses

      136,939  

 

  

Trustee deferred compensation and retirement plans

      157,299  

 

  

Total liabilities

      104,659,422  

 

  

Net assets applicable to shares outstanding

    $ 1,047,929,245  

 

  

Net assets consist of:

   

Shares of beneficial interest

    $ 901,016,489  

 

  

Distributable earnings

      146,912,756  

 

  
   $ 1,047,929,245  

 

  

Net Assets:

   

Class A

    $    564,800,205  

 

  

Class C

    $ 27,760,205  

 

  

Class Y

    $ 35,430,218  

 

  

Investor Class

    $ 417,695,635  

 

  

Class R5

    $ 479,327  

 

  

Class R6

    $ 1,763,655  

 

  

Shares outstanding, no par value, with an unlimited number of shares authorized:

 

Class A

      15,131,758  

 

  

Class C

      1,133,637  

 

  

Class Y

      914,606  

 

  

Investor Class

      11,221,385  

 

  

Class R5

      9,817  

 

  

Class R6

      36,035  

 

  

Class A:

   

Net asset value per share

    $ 37.33  

 

  

Maximum offering price per share
(Net asset value of $37.33 ÷ 94.50%)

    $ 39.50  

 

  

Class C:

   

Net asset value and offering price per share

    $ 24.49  

 

  

Class Y:

   

Net asset value and offering price per share

    $ 38.74  

 

  

Investor Class:

   

Net asset value and offering price per share

    $ 37.22  

 

  

Class R5:

   

Net asset value and offering price per share

    $ 48.83  

 

  

Class R6:

   

Net asset value and offering price per share

    $ 48.94  

 

  

 

*

At October 31, 2022, securities with an aggregate value of $88,605,199 were on loan to brokers.

 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

6   Invesco Technology Fund

Statement of Operations

For the six months ended October 31, 2022

(Unaudited)

 

Investment income:

   

Dividends (net of foreign withholding taxes of $163,323)

    $ 4,228,834  

 

  

Dividends from affiliated money market funds (includes net securities lending income of $69,361)

      307,138  

 

  

Total investment income

      4,535,972  

 

  

Expenses:

   

Advisory fees

      3,772,779  

 

  

Administrative services fees

      86,612  

 

  

Custodian fees

      6,820  

 

  

Distribution fees:

   

Class A

      796,641  

 

  

Class C

      164,655  

 

  

Investor Class

      248,896  

 

  

Transfer agent fees – A, C, Y and Investor

      1,102,760  

 

  

Transfer agent fees – R5

      246  

 

  

Transfer agent fees – R6

      246  

 

  

Trustees’ and officers’ fees and benefits

      12,796  

 

  

Registration and filing fees

      80,307  

 

  

Reports to shareholders

      81,366  

 

  

Professional services fees

      33,482  

 

  

Other

      (988 ) 

 

  

Total expenses

      6,386,618  

 

  

Less: Fees waived and/or expense offset arrangement(s)

      (23,330 ) 

 

  

Net expenses

      6,363,288  

 

  

Net investment income (loss)

      (1,827,316 ) 

 

  

Realized and unrealized gain (loss) from:

   

Net realized gain (loss) from:

   

Unaffiliated investment securities

      (26,340,138 ) 

 

  

Affiliated investment securities

      (453 ) 

 

  

Foreign currencies

      43,746  

 

  
     (26,296,845 ) 

 

  

Change in net unrealized appreciation (depreciation) of:

   

Unaffiliated investment securities

      (182,847,135 ) 

 

  

Affiliated investment securities

      6,371  

 

  

Foreign currencies

      (9,249 ) 

 

  
     (182,850,013 ) 

 

  

Net realized and unrealized gain (loss)

      (209,146,858 ) 

 

  

Net increase (decrease) in net assets resulting from operations

    $ (210,974,174 ) 

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

7   Invesco Technology Fund

Statement of Changes in Net Assets

For the six months ended October 31, 2022 and the year ended April 30, 2022

(Unaudited)

 

    

October 31,

2022

    

April 30,

2022

  

 

  

Operations:

     

Net investment income (loss)

    $ (1,827,316 )    $ (12,267,559 ) 

 

  

Net realized gain (loss)

      (26,296,845 )      230,924,324  

 

  

Change in net unrealized appreciation (depreciation)

      (182,850,013 )      (558,336,094 ) 

 

  

Net increase (decrease) in net assets resulting from operations

      (210,974,174 )      (339,679,329 ) 

 

  

Distributions to shareholders from distributable earnings:

     

Class A

      –       (208,241,881 ) 

 

  

Class C

      –       (15,986,805 ) 

 

  

Class Y

      –       (14,567,335 ) 

 

  

Investor Class

      –       (155,570,359 ) 

 

  

Class R5

      –       (201,871 ) 

 

  

Class R6

      –       (377,737 ) 

 

  

Total distributions from distributable earnings

      –       (394,945,988 ) 

 

  

Share transactions–net:

     

Class A

      (17,026,293 )      158,176,772  

 

  

Class C

      (3,268,540 )      6,767,797  

 

  

Class Y

      (3,276,346 )      11,183,160  

 

  

Investor Class

      (13,510,001 )      106,029,412  

 

  

Class R5

      45,091       130,044  

 

  

Class R6

      606,423       608,043  

 

  

Net increase (decrease) in net assets resulting from share transactions

      (36,429,666 )      282,895,228  

 

  

Net increase (decrease) in net assets

      (247,403,840 )      (451,730,089 ) 

 

  

Net assets:

     

Beginning of period

      1,295,333,085       1,747,063,174  

 

  

End of period

    $ 1,047,929,245     $ 1,295,333,085  

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

8   Invesco Technology 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

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 10/31/22

     $ 44.73     $ (0.07 )     $ (7.33 )     $ (7.40 )     $ –     $ 37.33       (16.55 )%     $ 564,800       1.12 %(d)       1.12 %(d)       (0.36 )%(d)       53 %

Year ended 04/30/22

       72.50       (0.49 )       (10.69 )       (11.18 )       (16.59 )       44.73       (20.67 )       695,429       1.02       1.02       (0.75 )       95

Year ended 04/30/21

       50.35       (0.46 )       27.38       26.92       (4.77 )       72.50       54.37       927,620       1.10       1.10       (0.71 )       59

Year ended 04/30/20

       49.68       (0.29 )       5.71       5.42       (4.75 )       50.35       11.31       572,351       1.19       1.19       (0.58 )       38

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

Class C

                                                

Six months ended 10/31/22

       29.46       (0.15 )       (4.82 )       (4.97 )       –       24.49       (16.87 )       27,760       1.87 (d)        1.87 (d)        (1.11 )(d)       53

Year ended 04/30/22

       53.59       (0.68 )       (6.86 )       (7.54 )       (16.59 )       29.46       (21.24 )(e)       37,022       1.74 (e)        1.74 (e)        (1.47 )(e)       95

Year ended 04/30/21

       38.38       (0.72 )       20.70       19.98       (4.77 )       53.59       53.20 (e)        56,566       1.84 (e)        1.84 (e)        (1.45 )(e)       59

Year ended 04/30/20

       39.21       (0.51 )       4.43       3.92       (4.75 )       38.38       10.47       32,723       1.94       1.94       (1.33 )       38

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

Class Y

                                                

Six months ended 10/31/22

       46.37       (0.02 )       (7.61 )       (7.63 )       –       38.74       (16.45 )       35,430       0.87 (d)        0.87 (d)        (0.11 )(d)       53

Year ended 04/30/22

       74.39       (0.34 )       (11.09 )       (11.43 )       (16.59 )       46.37       (20.46 )       46,149       0.77       0.77       (0.50 )       95

Year ended 04/30/21

       51.45       (0.31 )       28.02       27.71       (4.77 )       74.39       54.75       62,294       0.85       0.85       (0.46 )       59

Year ended 04/30/20

       50.55       (0.17 )       5.82       5.65       (4.75 )       51.45       11.57       36,341       0.94       0.94       (0.33 )       38

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

Investor Class

                                                

Six months ended 10/31/22

       44.58       (0.04 )       (7.32 )       (7.36 )       –       37.22       (16.51 )(f)       417,696       0.98 (d)(f)        0.98 (d)(f)        (0.22 )(d)(f)       53

Year ended 04/30/22

       72.24       (0.42 )       (10.65 )       (11.07 )       (16.59 )       44.58       (20.59 )(f)       514,752       0.91 (f)        0.91 (f)        (0.64 )(f)       95

Year ended 04/30/21

       50.13       (0.39 )       27.27       26.88       (4.77 )       72.24       54.53 (f)        698,143       1.00 (f)        1.00 (f)        (0.61 )(f)       59

Year ended 04/30/20

       49.44       (0.24 )       5.68       5.44       (4.75 )       50.13       11.41 (f)        483,563       1.09 (f)        1.09 (f)        (0.48 )(f)       38

Year ended 04/30/19

       46.71       (0.28 )       6.63       6.35       (3.62 )       49.44       15.02 (f)        475,857       1.11 (f)        1.11 (f)        (0.59 )(f)       48

Year ended 04/30/18

       39.53       (0.25 )       9.25       9.00       (1.82 )       46.71       23.03 (f)        447,456       1.19 (f)        1.20 (f)        (0.55 )(f)       47

Class R5

                                                

Six months ended 10/31/22

       58.42       (0.01 )       (9.58 )       (9.59 )       –       48.83       (16.42 )       479       0.78 (d)        0.78 (d)        (0.02 )(d)       53

Year ended 04/30/22

       89.51       (0.38 )       (14.12 )       (14.50 )       (16.59 )       58.42       (20.43 )       520       0.72       0.72       (0.45 )       95

Year ended 04/30/21

       61.17       (0.32 )       33.43       33.11       (4.77 )       89.51       54.88       794       0.77       0.77       (0.38 )       59

Year ended 04/30/20

       59.18       (0.12 )       6.86       6.74       (4.75 )       61.17       11.74       267       0.81       0.81       (0.20 )       38

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

Class R6

                                                

Six months ended 10/31/22

       58.54       0.01       (9.61 )       (9.60 )       –       48.94       (16.40 )       1,764       0.71 (d)        0.71 (d)        0.05 (d)        53

Year ended 04/30/22

       89.60       (0.32 )       (14.15 )       (14.47 )       (16.59 )       58.54       (20.37 )       1,460       0.65       0.65       (0.38 )       95

Year ended 04/30/21

       61.21       (0.29 )       33.45       33.16       (4.77 )       89.60       54.93       1,647       0.74       0.74       (0.35 )       59

Year ended 04/30/20

       59.20       (0.10 )       6.86       6.76       (4.75 )       61.21       11.77       545       0.77       0.77       (0.16 )       38

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

 

(a) 

Calculated using average shares outstanding.

(b) 

Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.

(c) 

Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended April 30, 2020, the portfolio turnover calculation excludes the value of securities purchased of $50,768,823 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Technology Sector Fund into the Fund.

(d) 

Annualized.

(e) 

The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.97% and 0.99% for the year ended April 30, 2022 and 2021, respectively.

(f) 

The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.11%, 0.14%, 0.15%, 0.15%, 0.13% and 0.17% for the six months ended October 31, 2022 and the years ended April 30, 2022, 2021, 2020, 2019 and 2018, respectively.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

9   Invesco Technology Fund

Notes to Financial Statements

October 31, 2022

(Unaudited)

NOTE 1–Significant Accounting Policies

Invesco Technology Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company 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 a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y, Investor Class, Class R5 and Class R6 shares are sold at net asset value. Class C shares held for eight 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 eighth 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.

Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.

Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.

Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.

Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.

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 may be used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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 market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism, significant governmental actions or adverse investor sentiment generally 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.

The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used.

 

10   Invesco Technology Fund

Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.

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 an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.

The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.

C.

Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues, the country that has the primary market for the issuer’s securities and its “country of risk” as determined by a third party service provider, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

D.

Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.

E.

Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F.

Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated based on relative net assets of Class R5 and Class R6. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.

G.

Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.

H.

Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.

I.

Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “affiliated money market funds”) and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities.

The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon also serves as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner

 

11   Invesco Technology Fund

consistent with the federal securities laws. For the six months ended October 31, 2022, the Fund paid the Adviser $4,869 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.

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 exchange of the two currencies on the settlement date, 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).

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 for hedging 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.

The Fund is non-diversified and may invest in securities of fewer issuers than if it were diversified. Thus, the value of the Fund’s shares may vary more widely and the Fund may be subject to greater market and credit risk than if the Fund invested more broadly.

M.

COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance.

NOTE 2–Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with the Adviser. 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

      0.640%  

 

  

Next $1 billion

      0.520%  

 

  

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, 2022, the effective advisory fee rate incurred by the Fund was 0.63%.

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, 2023, 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 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 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, 2023. 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.

 

12   Invesco Technology Fund

Further, the Adviser has contractually agreed, through at least June 30, 2024, 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, 2022, the Adviser waived advisory fees of $13,841.

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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Administrative 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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class Y, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, reimburses IDI for its allocated share of expenses incurred for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Class A shares, up to 1.00% of the average daily net assets of Class C shares, and up to 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, 2022, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.

Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2022, IDI advised the Fund that IDI retained $54,084 in front-end sales commissions from the sale of Class A shares and $1,403 and $864 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.

For the six months ended October 31, 2022, the Fund incurred $8,831 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. 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 Adviser’s 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, 2022. 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

    $ 955,750,658      $ 59,547,958        $–       $ 1,015,298,616  

 

  

Money Market Funds

      31,304,210        91,898,386          –         123,202,596  

 

  

Total Investments

    $ 987,054,868      $ 151,446,344        $–       $ 1,138,501,212  

 

  

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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $9,489.

NOTE 5–Trustees’ and Officers’ Fees and Benefits

Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.

 

13   Invesco Technology 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 at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.

NOTE 7–Tax Information

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP.

Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund did not have a capital loss carryforward as of April 30, 2022.

NOTE 8–Investment Transactions

The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2022 was $612,323,488 and $635,934,204, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investments on a Tax Basis  

 

  

Aggregate unrealized appreciation of investments

    $ 291,659,099  

 

  

Aggregate unrealized (depreciation) of investments

      (128,291,819 ) 

 

  

Net unrealized appreciation of investments

    $ 163,367,280  

 

  

Cost of investments for tax purposes is $975,133,932.

NOTE 9–Share Information

 

     Summary of Share Activity  

 

  
     Six months ended
October 31, 2022(a) 		    Year ended
April 30, 2022		  
     Shares     Amount     Shares     Amount  

 

  

Sold:

         

Class A

      712,330     $   29,536,660        1,371,249     $ 87,998,241  

 

  

Class C

      142,433       3,890,600       234,628       10,650,234  

 

  

Class Y

      94,136       4,104,849       204,239       14,130,751  

 

  

Investor Class

      125,684       5,206,806       239,589       15,831,631  

 

  

Class R5

      987       48,848       9,890       855,884  

 

  

Class R6

      17,313       934,918       20,075       1,635,365  

 

  

Issued as reinvestment of dividends:

         

Class A

      -       -       3,381,794        196,278,887  

 

  

Class C

      -       -       399,683       15,323,844  

 

  

Class Y

      -       -       208,824       12,552,395  

 

  

Investor Class

      -       -       2,530,324       146,328,615  

 

  

Class R5

      -       -       2,589       196,050  

 

  

Class R6

      -       -       4,777       362,355  

 

  

Automatic conversion of Class C shares to Class A shares:

         

Class A

      31,635       1,264,870       77,251       4,881,266  

 

  

Class C

           (48,152 )      (1,264,870 )      (111,048 )      (4,881,266 ) 

 

  

 

14   Invesco Technology Fund

     Summary of Share Activity  

 

  
     Six months ended     Year ended  
     October 31, 2022(a)     April 30, 2022  
     Shares     Amount     Shares     Amount  

 

  

Reacquired:

         

Class A

      (1,158,221 )    $  (47,827,823 )      (2,078,969 )    $ (130,981,622 ) 

 

  

Class C

      (217,400 )      (5,894,270 )      (322,051 )      (14,325,015 ) 

 

  

Class Y

      (174,806 )      (7,381,195 )      (255,186 )      (15,499,986 ) 

 

  

Investor Class

      (451,382 )      (18,716,807 )      (887,693 )      (56,130,834 ) 

 

  

Class R5

      (70 )      (3,757 )      (12,448 )      (921,890 ) 

 

  

Class R6

      (6,218 )      (328,495 )      (18,291 )      (1,389,677 ) 

 

  

Net increase (decrease) in share activity

      (931,731 )    $ (36,429,666 )      4,999,226     $ 282,895,228  

 

  

 

(a) 

There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 21% 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.

 

15   Invesco Technology Fund

Calculating your ongoing Fund expenses

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, 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, 2022 through October 31, 2022.

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.

 

          ACTUAL  

HYPOTHETICAL

(5% annual return before

expenses)

     
    

Beginning

     Account Value     

(05/01/22)

  

Ending

     Account Value     

(10/31/22)1

 

Expenses

     Paid During     

Period

  

Ending

     Account Value     

(10/31/22)1

 

Expenses

     Paid During     

Period2

 

      Annualized      

Expense

Ratio

Class A    

   $1,000.00   $834.50   $5.18   $1,019.56   $5.70   1.12%

Class C    

     1,000.00     831.30     8.63     1,015.78     9.50   1.87    

Class Y    

     1,000.00     835.50     4.03     1,020.82     4.43   0.87    

Investor Class    

     1,000.00     834.90     4.53     1,020.27     4.99   0.98    

Class R5    

     1,000.00     835.80     3.61     1,021.27     3.97   0.78    

Class R6    

     1,000.00     836.00     3.29     1,021.63     3.62   0.71    

 

1 

The actual ending account value is based on the actual total return of the Fund for the period May 1, 2022 through October 31, 2022, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.

2 

Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year.

 

16   Invesco Technology Fund

Approval of Investment Advisory and Sub-Advisory Contracts

    

 

At meetings held on June 13, 2022, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Technology Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2022. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

The Board’s Evaluation Process

The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

    As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer. 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 accordance with certain negotiated regulatory requirements. In

addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

    The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

A.

Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board

reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

    The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

B.

Fund Investment Performance

The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

    The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2021 to the performance of funds in the Broadridge performance universe and against the NASDAQ Composite Index (Index). The Board noted that performance of Class A shares of the Fund was in the fourth quintile of its performance universe for the one, three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was below the performance of the Index for the one and three year periods and reasonably comparable to the performance of the Index for the five year period. The Board noted that security selection in certain technology industries negatively impacted the Fund’s relative performance. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its conclusions.

 

 

17   Invesco Technology Fund

C.

Advisory and Sub-Advisory Fees and Fund Expenses

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.

    The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.

    The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.

    The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

D.

Economies of Scale and Breakpoints

The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

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 in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and the periodic review and enhancement of such methodology. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

F.

Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

    The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives from Invesco Advisers periodic reports that include a representation to the effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated

money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

    The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.

    The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

 

 

18   Invesco Technology Fund

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Fund holdings and proxy voting information

The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-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/corporate/about-us/esg. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. 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 number(s): 811-03826 and 002-85905                    Invesco Distributors, Inc.    I-TEC-SAR-1                                         

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Semiannual Report to Shareholders    October 31, 2022

Invesco Value Opportunities Fund

Nasdaq:

A: VVOAX ∎ C: VVOCX ∎ R: VVORX ∎ Y: VVOIX ∎ R5: VVONX ∎ R6: VVOSX

 

    

   
2   Fund Performance
4   Schedule of Investments
7   Financial Statements
10   Financial Highlights
11   Notes to Financial Statements
18   Fund Expenses
19   Approval of Investment Advisory and Sub-Advisory Contracts

For the most current month-end Fund performance and commentary, please visit invesco.com/performance.

Unless otherwise noted, all data is provided by Invesco.

This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.

 

 

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE

 

Fund Performance

 

 

 

Performance summary

 

 

Fund vs. Indexes

 

Cumulative total returns, 4/30/22 to 10/31/22, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

 

Class A Shares

     0.73 % 

Class C Shares

     0.33  

Class R Shares

     0.68  

Class Y Shares

     0.91  

Class R5 Shares

     0.90  

Class R6 Shares

     0.95  

S&P 500 Index▼ (Broad Market Index)

     -5.50  

S&P 1500 Value Index▼ (Style-Specific Index)

     -1.95  

Lipper Multi-Cap Value Funds Index∎ (Peer Group Index)

     -2.63  

Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc.

  

 

The S&P 500® Index is an unmanaged index considered representative of the US stock market.

  The S&P 1500® Value Index tracks the performance of US large-, mid- and small-cap value stocks.

  The Lipper Multi-Cap Value Funds Index is 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 index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es).

  A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.

 

 

 

 

 

 

 

 

 

 

 

 

For more information about your Fund

 

Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.

  Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.

 

 

 

2   Invesco Value Opportunities Fund

    

    

    

 

Average Annual Total Returns

 

As of 10/31/22, including maximum applicable sales charges

 

Class A Shares

        

Inception (6/25/01)

     6.14 % 

10 Years

     9.31  

  5 Years

     7.38  

  1 Year

     -6.65  

Class C Shares

        

Inception (6/25/01)

     6.13 % 

10 Years

     9.30  

  5 Years

     7.82  

  1 Year

     -2.83  

Class R Shares

        

Inception (5/23/11)

     9.04 % 

10 Years

     9.67  

  5 Years

     8.33  

  1 Year

     -1.40  

Class Y Shares

        

Inception (3/23/05)

     6.73 % 

10 Years

     10.21  

  5 Years

     8.86  

  1 Year

     -0.95  

Class R5 Shares

        

Inception (5/23/11)

     9.77 % 

10 Years

     10.39  

  5 Years

     9.02  

  1 Year

     -0.86  

Class R6 Shares

        

10 Years

     10.20 % 

  5 Years

     9.05  

  1 Year

     -0.82  

Performance includes litigation proceeds. Had these proceeds not been received, total returns would have been lower.

    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 Invesco 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 those for Class A, Class C and Class I shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.

    Class R6 shares incepted on April 4, 2017. Performance shown prior to that date is that of the Fund’s Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.

    The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated.

Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.

    Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.

    The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.

    Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.

 

 

3   Invesco Value Opportunities Fund

Schedule of Investments(a)

October 31, 2022

(Unaudited)

 

     Shares      Value  

 

  

Common Stocks & Other Equity Interests–93.93%

 

Aerospace & Defense–2.71%

      

BWX Technologies, Inc.

      271,800      $      15,487,164  

 

  

Huntington Ingalls Industries, Inc.

      61,400        15,784,098  

 

  
        31,271,262  

 

  

Auto Parts & Equipment–1.76%

 

Dana, Inc.

      1,276,668        20,375,621  

 

  

Biotechnology–1.97%

      

Horizon Therapeutics PLC(b)

     365,300        22,765,496  

 

  

Construction & Engineering–5.60%

 

AECOM(c)

     489,073        36,817,415  

 

  

HOCHTIEF AG (Germany)

      129,100        6,865,553  

 

  

MasTec, Inc.(b)(c)

     272,300        20,988,884  

 

  
        64,671,852  

 

  

Construction Machinery & Heavy Trucks–0.74%

 

Oshkosh Corp.

      97,000        8,536,000  

 

  

Distributors–1.57%

      

LKQ Corp.

      325,100        18,088,564  

 

  

Diversified Chemicals–1.77%

      

Huntsman Corp.(c)

     762,000        20,391,120  

 

  

Diversified Metals & Mining–0.86%

 

Teck Resources Ltd., Class B (Canada)(c)

     327,600        9,972,144  

 

  

Electric Utilities–0.89%

      

NRG Energy, Inc.

      230,400        10,229,760  

 

  

Electrical Components & Equipment–1.93%

 

   

nVent Electric PLC

      500        18,250  

 

  

Vertiv Holdings Co.(c)

     1,555,100        22,253,481  

 

  
        22,271,731  

 

  

Electronic Manufacturing Services–5.40%

 

   

Flex Ltd.(b)

     1,921,300        37,619,054  

 

  

Jabil, Inc.

      386,078        24,805,512  

 

  
        62,424,566  

 

  

Food Distributors–2.78%

      

Performance Food Group Co.(b)(c)

     247,000        12,853,880  

 

  

US Foods Holding Corp.(b)

     647,774        19,277,754  

 

  
        32,131,634  

 

  

Forest Products–0.01%

      

Louisiana-Pacific Corp.

      1,000        56,650  

 

  

Gold–1.26%

      

Agnico Eagle Mines Ltd. (Canada)

      131,000        5,758,760  

 

  

Yamana Gold, Inc. (Canada)

      2,016,100        8,830,518  

 

  
        14,589,278  

 

  

Health Care Distributors–0.96%

      

Henry Schein, Inc.(b)

     161,900        11,083,674  

 

  
     Shares      Value  

 

  

Health Care Facilities–4.60%

 

Encompass Health Corp.(c)

     462,300      $      25,167,612  

 

  

Universal Health Services, Inc., Class B

      241,900        28,028,953  

 

  
        53,196,565  

 

  

Health Care Services–2.14%

 

Cigna Corp.

      64,800        20,934,288  

 

  

Fresenius Medical Care AG & Co. KGaA (Germany)

      138,898        3,841,975  

 

  
        24,776,263  

 

  

Hotels, Resorts & Cruise Lines–0.59%

 

Hilton Grand Vacations, Inc.(b)

     2,639        103,554  

 

  

Travel + Leisure Co.

      177,899        6,756,604  

 

  
        6,860,158  

 

  

Household Products–1.10%

      

Spectrum Brands Holdings, Inc.

      274,371        12,659,478  

 

  

Human Resource & Employment Services–1.15%

 

ManpowerGroup, Inc.

      169,178        13,253,405  

 

  

Independent Power Producers & Energy Traders–1.59%

 

Vistra Corp.(c)

     797,800        18,325,466  

 

  

Industrial Machinery–2.00%

      

Crane Holdings Co.

      28,100        2,819,554  

 

  

Timken Co. (The)(c)

     285,300        20,339,037  

 

  
        23,158,591  

 

  

Integrated Oil & Gas–3.65%

      

Cenovus Energy, Inc. (Canada)

      1,011,100        20,424,220  

 

  

Shell PLC, ADR (Netherlands)

      391,700        21,790,271  

 

  
        42,214,491  

 

  

Investment Banking & Brokerage–1.85%

 

   

Goldman Sachs Group, Inc. (The)

      62,100        21,394,071  

 

  

Managed Health Care–3.47%

      

Centene Corp.(b)

     356,800        30,374,384  

 

  

Molina Healthcare, Inc.(b)

     27,000        9,689,220  

 

  
        40,063,604  

 

  

Oil & Gas Exploration & Production–12.39%

 

   

APA Corp.

      702,600        31,940,196  

 

  

ARC Resources Ltd. (Canada)

      1,735,000        24,426,395  

 

  

Diamondback Energy, Inc.

      141,800        22,278,198  

 

  

EQT Corp.

      368,800        15,430,592  

 

  

Ovintiv, Inc.

      475,500        24,084,075  

 

  

Pioneer Natural Resources Co.

      46,804        12,001,014  

 

  

Southwestern Energy Co.(b)

     1,877,400        13,010,382  

 

  
        143,170,852  

 

  

Oil & Gas Refining & Marketing–1.86%

 

   

Phillips 66

      206,300        21,515,027  

 

  

Oil & Gas Storage & Transportation–2.17%

 

   

New Fortress Energy, Inc.(c)

     455,863        25,104,376  

 

  
 

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

4   Invesco Value Opportunities Fund

     Shares      Value  

 

  

Other Diversified Financial Services–1.23%

 

   

Apollo Global Management, Inc.

      257,332      $      14,245,900  

 

  

Paper Packaging–0.36%

      

Sealed Air Corp.

      87,100        4,147,702  

 

  

Regional Banks–7.13%

      

Huntington Bancshares, Inc.

      1,992,829        30,251,144  

 

  

PacWest Bancorp

      288,055        7,161,047  

 

  

SVB Financial Group(b)

     47,700        11,016,792  

 

  

Webster Financial Corp.

      533,932        28,971,151  

 

  

Western Alliance Bancorporation

      73,600        4,943,712  

 

  
        82,343,846  

 

  

Research & Consulting Services–6.40%

 

   

CACI International, Inc., Class A(b)

     78,582        23,891,286  

 

  

Jacobs Solutions, Inc.

      159,500        18,377,590  

 

  

KBR, Inc.

      634,200        31,564,134  

 

  

Science Applications International Corp.

      1,000        108,340  

 

  
        73,941,350  

 

  

Restaurants–1.63%

      

Restaurant Brands International, Inc. (Canada)

      317,900        18,876,902  

 

  

Semiconductor Equipment–1.17%

 

Applied Materials, Inc.

      54,300        4,794,147  

 

  

Lam Research Corp.

      11,500        4,654,970  

 

  

MKS Instruments, Inc.(c)

     50,100        4,115,715  

 

  
        13,564,832  

 

  

Semiconductors–0.65%

      

Skyworks Solutions, Inc.

      86,700        7,457,067  

 

  

Silver–0.00%

      

Pan American Silver Corp. (Canada)

      1,000        15,980  

 

  

Specialty Chemicals–1.18%

      

Axalta Coating Systems Ltd.(b)(c)

     583,000        13,595,560  

 

  

Element Solutions, Inc.

      1,100        18,920  

 

  
        13,614,480  

 

  
     Shares      Value  

 

  

Thrifts & Mortgage Finance–0.00%

 

   

MGIC Investment Corp.

      958        $            13,077  

 

  

Radian Group, Inc.

      1,003        20,932  

 

  
        34,009  

 

  

Trading Companies & Distributors–5.41%

 

AerCap Holdings N.V. (Ireland)(b)

     2,400        128,184  

 

  

Air Lease Corp.

      645,600        22,783,224  

 

  

Univar Solutions, Inc.(b)

     1,027,600        26,183,248  

 

  

WESCO International, Inc.(b)

     97,100        13,377,467  

 

  
        62,472,123  

 

  

Total Common Stocks & Other Equity Interests (Cost $970,270,211)

 

      1,085,265,890  

 

  

Money Market Funds–5.35%

 

Invesco Government & Agency Portfolio, Institutional Class, 3.07%(d)(e)

     21,683,429        21,683,429  

 

  

Invesco Liquid Assets Portfolio,
Institutional Class, 3.03%(d)(e)

     15,350,179        15,353,248  

 

  

Invesco Treasury Portfolio, Institutional Class, 3.08%(d)(e)

     24,781,062        24,781,062  

 

  

Total Money Market Funds (Cost $61,814,060)

 

      61,817,739  

 

  

TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-99.28%
(Cost $1,032,084,271)

         1,147,083,629  

 

  

Investments Purchased with Cash Collateral from Securities on Loan

 

Money Market Funds–8.18%

 

Invesco Private Government Fund, 3.18%(d)(e)(f)

     26,462,896        26,462,896  

 

  

Invesco Private Prime Fund, 3.28%(d)(e)(f)

     68,034,616        68,034,616  

 

  

Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $94,495,068)

 

      94,497,512  

 

  

TOTAL INVESTMENTS IN SECURITIES–107.46%
(Cost $1,126,579,339)

 

      1,241,581,141  

 

  

OTHER ASSETS LESS LIABILITIES–(7.46)%

 

      (86,240,773 ) 

 

  

NET ASSETS–100.00%

 

      $1,155,340,368  

 

  
 

 

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, 2022.

(d) 

Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended October 31, 2022.

 

      Value
April 30, 2022		     

Purchases

at Cost

     

Proceeds

from Sales

     Change in
Unrealized
Appreciation		      Realized
Gain		      Value
October 31, 2022		      Dividend Income  
Investments in Affiliated Money Market Funds:                                                              

Invesco Government & Agency Portfolio, Institutional Class

      $  28,871,686        $  63,816,142      $ (71,004,399 )      $         -              $         -        $  21,683,429            $  149,422      

Invesco Liquid Assets Portfolio, Institutional Class

      20,483,182        45,582,959        (50,717,428 )      3,285              1,250        15,353,248            101,530      

Invesco Treasury Portfolio, Institutional Class

      32,996,212        72,932,734        (81,147,884 )      -              -        24,781,062            158,846     

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

5   Invesco Value Opportunities Fund

      Value
April 30, 2022		     

Purchases

at Cost

     

Proceeds

from Sales

     Change in
Unrealized
Appreciation		      Realized
Gain		      Value
October 31, 2022		      Dividend Income  
Investments Purchased with Cash Collateral from Securities on Loan:                                                              

Invesco Private Government Fund

      $  16,983,103        $154,174,660      $ (144,694,867 )      $        -              $        -        $  26,462,896            $  166,580*      

Invesco Private Prime Fund

      39,627,240        350,020,533        (321,621,769 )      2,444              6,168        68,034,616            458,852*      

Total

      $138,961,423        $686,527,028      $ (669,186,347 )      $5,729              $7,418        $156,315,251            $1,035,230      

 

  * 

Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.

 

(e) 

The rate shown is the 7-day SEC standardized yield as of October 31, 2022.

(f)

The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I.

 

Open Forward Foreign Currency Contracts  

 

  
                          Unrealized  
Settlement           Contract to      Appreciation  
Date      Counterparty    Deliver      Receive      (Depreciation)  

 

  

Currency Risk

         

 

  

11/23/2022

      J.P. Morgan Chase Bank, N.A.      EUR    1,029,703        USD    1,039,520        $   20,408   

 

  

Currency Risk

         

11/23/2022

      Bank of America, N.A.      USD    8,069,736        EUR    8,111,211          (41,953)  

 

  

11/23/2022

      Royal Bank of Canada      EUR  18,030,276        USD  17,820,205          (24,620)  

 

  

Subtotal–Depreciation

              (66,573)  

 

  

Total Forward Foreign Currency Contracts

            $(46,165)  

 

  

Abbreviations:

EUR – Euro

USD – U.S. Dollar

Portfolio Composition

By sector, based on Net Assets

as of October 31, 2022

 

Industrials

      25.93 % 

Energy

      20.08  

Health Care

      13.15  

Financials

      10.21  

Information Technology

      7.22  

Consumer Discretionary

      5.56  

Materials

      5.43  

Consumer Staples

      3.88  

Utilities

      2.47  

Money Market Funds Plus Other Assets Less Liabilities

      6.07  

 

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, 2022

(Unaudited)

 

Assets:

   

Investments in unaffiliated securities, at value
(Cost $970,270,211)*

    $ 1,085,265,890  

 

  

Investments in affiliated money market funds, at value (Cost $156,309,128)

      156,315,251  

 

  

Other investments:

   

Unrealized appreciation on forward foreign currency contracts outstanding

      20,408  

 

  

Cash

      51,876  

 

  

Foreign currencies, at value (Cost $128,407)

      130,718  

 

  

Receivable for:

   

Investments sold

      7,696,881  

 

  

Fund shares sold

      1,245,405  

 

  

Dividends

      551,302  

 

  

Investment for trustee deferred compensation and retirement plans

      346,038  

 

  

Other assets

      87,877  

 

  

Total assets

      1,251,711,646  

 

  

Liabilities:

   

Other investments:

   

Unrealized depreciation on forward foreign currency contracts outstanding

      66,573  

 

  

Payable for:

   

Fund shares reacquired

      854,384  

 

  

Collateral upon return of securities loaned

      94,495,068  

 

  

Accrued fees to affiliates

      465,010  

 

  

Accrued other operating expenses

      119,462  

 

  

Trustee deferred compensation and retirement plans

      370,781  

 

  

Total liabilities

      96,371,278  

 

  

Net assets applicable to shares outstanding

    $ 1,155,340,368  

 

  

Net assets consist of:

   

Shares of beneficial interest

    $ 934,557,665  

 

  

Distributable earnings

      220,782,703  

 

  
   $ 1,155,340,368  

 

  

Net Assets:

   

Class A

    $ 741,587,918  

 

  

Class C

    $ 17,067,289  

 

  

Class R

    $ 13,738,767  

 

  

Class Y

    $ 114,175,783  

 

  

Class R5

    $ 296,470  

 

  

Class R6

    $ 268,474,141  

 

  

Shares outstanding, no par value, with an unlimited number of shares authorized:

 

Class A

      44,553,204  

 

  

Class C

      1,122,948  

 

  

Class R

      839,007  

 

  

Class Y

      6,825,277  

 

  

Class R5

      17,555  

 

  

Class R6

      15,875,481  

 

  

Class A:

   

Net asset value per share

    $ 16.64  

 

  

Maximum offering price per share
(Net asset value of $16.64 ÷ 94.50%)

    $ 17.61  

 

  

Class C:

   

Net asset value and offering price per share

    $ 15.20  

 

  

Class R:

   

Net asset value and offering price per share

    $ 16.38  

 

  

Class Y:

   

Net asset value and offering price per share

    $ 16.73  

 

  

Class R5:

   

Net asset value and offering price per share

    $ 16.89  

 

  

Class R6:

   

Net asset value and offering price per share

    $ 16.91  

 

  

 

*

At October 31, 2022, securities with an aggregate value of $91,651,709 were on loan to brokers.

 

 

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, 2022

(Unaudited)

 

Investment income:

   

Dividends (net of foreign withholding taxes of $242,327)

    $ 11,666,050  

 

  

Dividends from affiliated money market funds (includes net securities lending income of $31,741)

      441,539  

 

  

Total investment income

      12,107,589  

 

  

Expenses:

   

Advisory fees

      3,688,504  

 

  

Administrative services fees

      80,768  

 

  

Custodian fees

      8,685  

 

  

Distribution fees:

   

Class A

      902,046  

 

  

Class C

      82,799  

 

  

Class R

      32,031  

 

  

Transfer agent fees – A, C, R and Y

      678,839  

 

  

Transfer agent fees – R5

      145  

 

  

Transfer agent fees – R6

      37,248  

 

  

Trustees’ and officers’ fees and benefits

      10,501  

 

  

Registration and filing fees

      68,690  

 

  

Reports to shareholders

      37,359  

 

  

Professional services fees

      26,140  

 

  

Other

      (4,931 ) 

 

  

Total expenses

      5,648,824  

 

  

Less: Fees waived and/or expense offset arrangement(s)

      (30,343 ) 

 

  

Net expenses

      5,618,481  

 

  

Net investment income

      6,489,108  

 

  

Realized and unrealized gain (loss) from:

   

Net realized gain (loss) from:

   

Unaffiliated investment securities (includes net gains from securities sold to affiliates of $58,681)

      27,123,812  

 

  

Affiliated investment securities

      7,418  

 

  

Foreign currencies

      (38,651 ) 

 

  

Forward foreign currency contracts

      (430,091 ) 

 

  
     26,662,488  

 

  

Change in net unrealized appreciation (depreciation) of:

   

Unaffiliated investment securities

      (23,587,962 ) 

 

  

Affiliated investment securities

      5,729  

 

  

Foreign currencies

      (30,354 ) 

 

  

Forward foreign currency contracts

      (46,165 ) 

 

  
     (23,658,752 ) 

 

  

Net realized and unrealized gain

      3,003,736  

 

  

Net increase in net assets resulting from operations

    $ 9,492,844  

 

  

 

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, 2022 and the year ended April 30, 2022

(Unaudited)

 

    

October 31,

2022

    

April 30,

2022

  

 

  

Operations:

     

Net investment income

    $ 6,489,108     $ 4,408,219  

 

  

Net realized gain

      26,662,488       137,850,385  

 

  

Change in net unrealized appreciation (depreciation)

      (23,658,752 )      (121,054,418 ) 

 

  

Net increase in net assets resulting from operations

      9,492,844       21,204,186  

 

  

Distributions to shareholders from distributable earnings:

     

Class A

      –       (61,999,730 ) 

 

  

Class C

      –       (1,327,689 ) 

 

  

Class R

      –       (961,705 ) 

 

  

Class Y

      –       (5,271,622 ) 

 

  

Class R5

      –       (50,047 ) 

 

  

Class R6

      –       (5,572,097 ) 

 

  

Total distributions from distributable earnings

      –       (75,182,890 ) 

 

  

Share transactions–net:

     

Class A

      (3,669,137 )      47,424,930  

 

  

Class C

      329,846       4,801,774  

 

  

Class R

      1,623,106       2,232,995  

 

  

Class Y

      (8,961,380 )      49,736,649  

 

  

Class R5

      (15,927 )      (398,634 ) 

 

  

Class R6

      25,879,313       201,419,924  

 

  

Net increase in net assets resulting from share transactions

      15,185,821       305,217,638  

 

  

Net increase in net assets

      24,678,665       251,238,934  

 

  

Net assets:

     

Beginning of period

      1,130,661,703       879,422,769  

 

  

End of period

    $ 1,155,340,368     $ 1,130,661,703  

 

  

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

9   Invesco Value Opportunities 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

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 10/31/22

     $16.52         $ 0.09         $ 0.03         $ 0.12         $       -           $       -           $       -           $16.64         0.73 %        $741,588           1.11 %(d)      1.11 %(d)      1.05 %(d)      23 % 

Year ended 04/30/22

     17.34       0.08       0.60       0.68       (0.10 )      (1.40 )      (1.50 )      16.52       4.01       739,860       1.11       1.11       0.44       65  

Year ended 04/30/21

     9.44       0.06       7.87       7.93       (0.03 )      -       (0.03 )      17.34       84.15       726,801       1.22       1.22       0.45       62  

Year ended 04/30/20

     12.84       0.03       (3.18 )(e)      (3.15 )      -       (0.25 )      (0.25 )      9.44       (25.02 )(e)      440,826       1.21       1.21       0.27       41  

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  

Class C

                                                                                                                

Six months ended 10/31/22

     15.14       0.02       0.04       0.06       -       -       -       15.20       0.40       17,067       1.86 (d)      1.86 (d)      0.30 (d)      23  

Year ended 04/30/22

     16.04       (0.05 )      0.55       0.50       -       (1.40 )      (1.40 )      15.14       3.16       16,682       1.86       1.86       (0.31 )      65  

Year ended 04/30/21

     8.77       (0.02 )      7.29       7.27       -       -       -       16.04       82.90 (f)      12,906       1.89 (f)      1.89 (f)      (0.22 )(f)      62  

Year ended 04/30/20

     12.02       (0.04 )      (2.96 )(e)      (3.00 )      -       (0.25 )      (0.25 )      8.77       (25.48 )(e)(f)      10,107       1.85 (f)      1.85 (f)      (0.37 )(f)      41  

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  

Class R

                                                                                                                

Six months ended 10/31/22

     16.27       0.06       0.05       0.11       -       -       -       16.38       0.68       13,739       1.36 (d)      1.36 (d)      0.80 (d)      23  

Year ended 04/30/22

     17.09       0.03       0.60       0.63       (0.05 )      (1.40 )      (1.45 )      16.27       3.73       12,018       1.36       1.36       0.19       65  

Year ended 04/30/21

     9.31       0.03       7.75       7.78       -       -       -       17.09       83.57       10,385       1.47       1.47       0.20       62  

Year ended 04/30/20

     12.69       0.00       (3.13 )(e)      (3.13 )      -       (0.25 )      (0.25 )      9.31       (25.16 )(e)      6,362       1.46       1.46       0.02       41  

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  

Class Y

                                                                                                                

Six months ended 10/31/22

     16.58       0.11       0.04       0.15       -       -       -       16.73       0.91       114,176       0.86 (d)      0.86 (d)      1.30 (d)      23  

Year ended 04/30/22

     17.42       0.12       0.61       0.73       (0.17 )      (1.40 )      (1.57 )      16.58       4.25       123,154       0.86       0.86       0.69       65  

Year ended 04/30/21

     9.49       0.09       7.91       8.00       (0.07 )      -       (0.07 )      17.42       84.48       81,115       0.97       0.97       0.70       62  

Year ended 04/30/20

     12.86       0.06       (3.18 )(e)      (3.12 )      -       (0.25 )      (0.25 )      9.49       (24.74 )(e)      23,760       0.96       0.96       0.52       41  

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  

Class R5

                                                                                                                

Six months ended 10/31/22

     16.74       0.11       0.04       0.15       -       -       -       16.89       0.90       296       0.80 (d)      0.80 (d)      1.36 (d)      23  

Year ended 04/30/22

     17.58       0.13       0.62       0.75       (0.19 )      (1.40 )      (1.59 )      16.74       4.35       311       0.81       0.81       0.74       65  

Year ended 04/30/21

     9.58       0.11       7.98       8.09       (0.09 )      -       (0.09 )      17.58       84.70       714       0.84       0.84       0.83       62  

Year ended 04/30/20

     12.95       0.08       (3.20 )(e)      (3.12 )      -       (0.25 )      (0.25 )      9.58       (24.57 )(e)      406       0.80       0.80       0.68       41  

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  

Class R6

                                                                                                                

Six months ended 10/31/22

     16.75       0.12       0.04       0.16       -       -       -       16.91       0.95       268,474       0.73 (d)      0.73 (d)      1.43 (d)      23  

Year ended 04/30/22

     17.60       0.14       0.62       0.76       (0.21 )      (1.40 )      (1.61 )      16.75       4.38       238,636       0.74       0.74       0.81       65  

Year ended 04/30/21

     9.59       0.11       8.00       8.11       (0.10 )      -       (0.10 )      17.60       84.81       47,501       0.78       0.78       0.89       62  

Year ended 04/30/20

     12.97       0.09       (3.22 )(e)      (3.13 )      -       (0.25 )      (0.25 )      9.59       (24.61 )(e)      25,226       0.75       0.75       0.73       41  

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  

 

(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) 

Annualized.

(e) 

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 $(3.28), $(3.06), $(3.23), $(3.28), $(3.30) and $(3.32) for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. Total returns would have been lower.

(f) 

The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.92%, 0.89%, 0.96% and 0.95% for the years ended April 30, 2021, 2020, 2019 and 2018, respectively.

 

See accompanying Notes to Financial Statements which are an integral part of the financial statements.

 

10   Invesco Value Opportunities Fund

Notes to Financial Statements

October 31, 2022

(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 an open-end series management investment company authorized to issue an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.

The Fund’s investment objective is 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 a front-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 eight 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 eighth 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.

Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.

Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.

Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.

Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.

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 may be used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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 market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism, significant governmental actions or adverse investor sentiment generally 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.

The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used.

 

11   Invesco Value Opportunities Fund

Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.

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 an accrual basis from settlement date and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.

Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.

The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.

C.

Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues, the country that has the primary market for the issuer’s securities and its “country of risk” as determined by a third party service provider, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

D.

Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.

E.

Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.

F.

Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated based on relative net assets of Class R5 and Class R6. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.

G.

Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.

H.

Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.

I.

Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “affiliated money market funds”) and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities.

The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon also serves as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner

 

12   Invesco Value Opportunities Fund

consistent with the federal securities laws. For the six months ended October 31, 2022, the Fund paid the Adviser $1,974 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.

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 exchange of the two currencies on the settlement date, 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).

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 for hedging 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.

COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance.

NOTE 2–Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2022, the effective advisory fee rate incurred by the Fund was 0.66%.

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, 2023, 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 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 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, 2023. 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, 2024, 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, 2022, the Adviser waived advisory fees of $25,876.

 

13   Invesco Value Opportunities 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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Administrative 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, 2022, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc.(“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively the “Plans”). The Fund, pursuant to the Plans, reimburses IDI for its allocated share of expenses incurred for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Class A shares and up to a maximum annual rate of 1.00% of the average daily net assets of Class C shares. The Fund pursuant to the Class R Plan, pays IDI compensation at the annual rate of 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. For the six months ended October 31, 2022, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.

Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2022, IDI advised the Fund that IDI retained $23,300 in front-end sales commissions from the sale of Class A shares and $104,745 and $680 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.

For the six months ended October 31, 2022, the Fund incurred $1,839 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. 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 Adviser’s 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, 2022. 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

      $1,074,558,362        $ 10,707,528       $–        $1,085,265,890  

 

  

Money Market Funds

      61,817,739        94,497,512         –        156,315,251  

 

  

Total Investments in Securities

      1,136,376,101        105,205,040         –        1,241,581,141  

 

  

Other Investments - Assets*

           

 

  

Forward Foreign Currency Contracts

      –        20,408         –        20,408  

 

  

Other Investments - Liabilities*

           

 

  

Forward Foreign Currency Contracts

      –        (66,573 )        –        (66,573 ) 

 

  

Total Other Investments

      –        (46,165 )        –        (46,165 ) 

 

  

Total Investments

      $1,136,376,101        $105,158,875       $–        $1,241,534,976  

 

  

 

*

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 and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.

 

14   Invesco Value Opportunities Fund

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.

 

     Value  
     Currency  
Derivative Assets    Risk  

 

  

Unrealized appreciation on forward foreign currency contracts outstanding

    $ 20,408  

 

  

Derivatives not subject to master netting agreements

      –  

 

  

Total Derivative Assets subject to master netting agreements

    $ 20,408  

 

  

 

     Value  
     Currency  
Derivative Liabilities    Risk  

 

  

Unrealized depreciation on forward foreign currency contracts outstanding

    $ (66,573 ) 

 

  

Derivatives not subject to master netting agreements

      –  

 

  

Total Derivative Liabilities subject to master netting agreements

    $ (66,573 ) 

 

  

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, 2022.

 

     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		  

 

  

Bank of America, N.A.

    $         –    $(41,953)   $(41,953)   $–    $–      $(41,953 ) 

 

  

J.P. Morgan Chase Bank, N.A.

      20,408                  –          20,408     –      –         20,408  

 

  

Royal Bank of Canada

               –       (24,620)     (24,620)     –      –        (24,620 ) 

 

  

Total

    $20,408    $(66,573)   $(46,165)   $–    $–      $(46,165 ) 

 

  

Effect of Derivative Investments for the six months ended October 31, 2022

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 (Loss):

   

Forward foreign currency contracts

    $(430,091)

 

Change in Net Unrealized Appreciation (Depreciation):

   

Forward foreign currency contracts

        (46,165)

 

Total

    $(476,256)

 

The table below summarizes the average notional value of derivatives held during the period.

 

     Forward
Foreign Currency
Contracts

 

Average notional value

    $22,740,339

 

NOTE 5–Security Transactions with Affiliated Funds

The Fund is permitted to purchase securities from or sell securities to certain other affiliated 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 that is or could be considered an “affiliated person” by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers is made in reliance on Rule 17a-7 of the 1940 Act and, to the extent applicable, related SEC staff positions. Each such transaction is effected at the security’s “current market price”, as provided for in these procedures and Rule 17a-7. Pursuant to these procedures, for the six months ended October 31, 2022, the Fund engaged in securities purchases of $11,042,135 and securities sales of $5,230,467, which resulted in net realized gains of $58,681.

NOTE 6–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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $4,467.

NOTE 7–Trustees’ and Officers’ Fees and Benefits

Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred

 

15   Invesco Value Opportunities Fund

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 8–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 at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.

NOTE 9–Tax Information

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund did not have a capital loss carryforward as of April 30, 2022.

NOTE 10–Investment Transactions

The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2022 was $260,606,160 and $241,412,207, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investments on a Tax Basis  

 

  

Aggregate unrealized appreciation of investments

    $ 175,112,242  

 

  

Aggregate unrealized (depreciation) of investments

      (61,269,182 ) 

 

  

Net unrealized appreciation of investments

    $ 113,843,060  

 

  

Cost of investments for tax purposes is $1,127,691,916.

NOTE 11–Share Information

 

    

Summary of Share Activity

  

 

  
     Six months ended     Year ended  
     October 31, 2022(a)     April 30, 2022  
     Shares     Amount     Shares     Amount  

 

  

Sold:

         

Class A

      2,361,015     $ 37,781,293       5,596,836     $ 98,890,458  

 

  

Class C

      137,768       2,024,697       537,592       8,724,393  

 

  

Class R

      203,215       3,220,148       215,038       3,725,619  

 

  

Class Y

      2,512,688       40,688,762       7,694,815       135,458,385  

 

  

Class R5

      280       4,533       3,020       54,364  

 

  

Class R6

      2,878,363       46,318,019       12,222,090       213,785,199  

 

  

Issued as reinvestment of dividends:

         

Class A

      -       -       3,569,641       58,470,723  

 

  

Class C

      -       -       85,368       1,285,645  

 

  

Class R

      -       -       59,549       961,705  

 

  

Class Y

      -       -       237,341       3,899,517  

 

  

Class R5

      -       -       2,442       40,489  

 

  

Class R6

      -       -       326,930       5,423,773  

 

  

Automatic conversion of Class C shares to Class A shares:

         

Class A

      26,510       426,667       90,227       1,564,188  

 

  

Class C

      (28,983 )      (426,667 )      (98,066 )      (1,564,188 ) 

 

  

 

16   Invesco Value Opportunities Fund

     Summary of Share Activity  

 

  
     Six months ended     Year ended  
     October 31, 2022(a)     April 30, 2022  
     Shares     Amount     Shares     Amount  

 

  

Reacquired:

         

Class A

      (2,619,249 )    $ (41,877,097 )      (6,382,803 )    $ (111,500,439 ) 

 

  

Class C

      (87,399 )      (1,268,184 )      (228,137 )      (3,644,076 ) 

 

  

Class R

      (102,778 )      (1,597,042 )      (143,657 )      (2,454,329 ) 

 

  

Class Y

      (3,114,437 )      (49,650,142 )      (5,161,762 )      (89,621,253 ) 

 

  

Class R5

      (1,331 )      (20,460 )      (27,484 )      (493,487 ) 

 

  

Class R6

      (1,247,537 )      (20,438,706 )      (1,002,981 )      (17,789,048 ) 

 

  

Net increase in share activity

      918,125     $ 15,185,821       17,595,999     $ 305,217,638  

 

  

 

(a) 

There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 21% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially.

In addition, 5% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser.

NOTE 12–Significant 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 American Value Fund (the “Target Fund”) in exchange for shares of the Fund.

    The reorganization is expected to be consummated at the close of business on or about February 10, 2023. 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.

 

17   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, 2022 through October 31, 2022.

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.

 

          ACTUAL  

HYPOTHETICAL

(5% annual return before

expenses)

     
    

Beginning

    Account Value    

(05/01/22)

  

Ending

    Account Value    

(10/31/22)1

  

Expenses

      Paid During      

Period

  

Ending

    Account Value    

(10/31/22)1

  

Expenses

      Paid During      

Period2

 

      Annualized      

Expense

Ratio

Class A

   $1,000.00   $1,007.30   $5.62   $1,019.61   $5.65   1.11%

Class C

     1,000.00     1,004.00     9.40     1,015.83     9.45   1.86    

Class R

     1,000.00     1,006.80     6.88     1,018.35     6.92   1.36    

Class Y

     1,000.00     1,009.10     4.36     1,020.87     4.38   0.86    

Class R5

     1,000.00     1,009.00     4.05     1,021.17     4.08   0.80    

Class R6

     1,000.00     1,009.50     3.70     1,021.53     3.72   0.73    

 

1 

The actual ending account value is based on the actual total return of the Fund for the period May 1, 2022 through October 31, 2022, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.

2 

Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year.

 

18   Invesco Value Opportunities Fund

Approval of Investment Advisory and Sub-Advisory Contracts

 

At meetings held on June 13, 2022, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Value Opportunities Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2022. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.

The Board’s Evaluation Process

The Board has established an Investments Committee, which in turn has established Sub-Committees that meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.

    As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer. 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 accordance with certain negotiated regulatory requirements. In

addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

    The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

A.

Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers

The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board

reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.

    The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided to the Fund by the Affiliated Sub-Advisers are appropriate and satisfactory.

B.

Fund Investment Performance

The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.

    The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2021 to the performance of funds in the Broadridge performance universe and against the S&P Composite 1500® Value Index (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 and three year periods, and the second 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 period and reasonably comparable to the performance of the Index for the five year period. The Board considered how the Fund’s performance rankings had improved compared to its rankings for the prior year. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its conclusions.

 

 

19   Invesco Value Opportunities Fund

C.

Advisory and Sub-Advisory Fees and Fund Expenses

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was above the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components. The Board noted that the Fund’s actual management fees and total expense ratio were in the fourth quintile of its expense group and discussed with management reasons for such relative actual management fees and total expenses.

    The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.

    The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.

    The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.

D. Economies of Scale and Breakpoints

The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment in its business, including investments in business infrastructure, technology and cybersecurity.

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 in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and

the periodic review and enhancement of such methodology. 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 in the aggregate and to most Funds individually. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive, given the nature, extent and quality of the services provided. The Board noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the sub-advisory contracts.

F.

Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.

    The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives from Invesco Advisers periodic reports that include a representation to the effect 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 registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.

    The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.

    The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.

 

 

20   Invesco Value Opportunities Fund

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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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-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/corporate/about-us/esg. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. 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.

 

LOGO

 

SEC file number(s): 811-03826 and 002-85905                     Invesco Distributors, Inc.    VK-VOPP-SAR-1                                         

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.

Not applicable.

 

ITEM 5.

AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

 

ITEM 6.

SCHEDULE OF INVESTMENTS.

Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form.

 

ITEM 7.

DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

 

ITEM 8.

PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES.

Not applicable.

 

ITEM 9.

PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT    INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

 

ITEM 10.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

 

ITEM 11.

CONTROLS AND PROCEDURES.

 

  (a)

As of December 20, 2022, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), to assess the effectiveness of the

 

Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (“Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of December 20, 2022, 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 Form N-CSR is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure.

 

  (b)

There have been no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by this report 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 FOR CLOSED-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 and Section 302 of the Sarbanes-Oxley Act of 2002.

 

13(a) (3)

Not applicable.

 

13(a) (4)

Not applicable.

 

13(b)

Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940 and Section 906 of the Sarbanes-Oxley Act of 2002.

 

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 5, 2023

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 5, 2023

 

  By:  

 /s/ Adrien Deberghes

   Adrien Deberghes
   Principal Financial Officer
  Date:      January 5, 2023