N-CSR 1 d820775dncsr.htm N-CSR N-CSR

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-06463

 

 

AIM International Mutual Funds (Invesco International Mutual Funds)

(Exact name of registrant as specified in charter)

 

 

11 Greenway Plaza, Suite 1000 Houston, Texas 77046

(Address of principal executive offices) (Zip code)

 

 

Philip A. Taylor 11 Greenway Plaza, Suite 1000 Houston, Texas 77046

(Name and address of agent for service)

 

 

Registrant’s telephone number, including area code: (713) 626-1919

Date of fiscal year end: 10/31

Date of reporting period: 10/31/14

 

 

 

Item 1. Report to Stockholders.

 

LOGO

 

Letters to Shareholders

 

LOGO

Philip Taylor

     

Dear Shareholders:

This annual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Inside, your Fund’s portfolio managers discuss how they managed your Fund and the factors that affected its performance during the reporting period. I hope you find this report of interest.

During the reporting period covered by this report, the US economy showed signs of continued improvement. After contracting in the first quarter of 2014, the economy expanded strongly in the second quarter and unemployment trended lower. Much of the credit for this improvement goes to the US Federal Reserve (the Fed), which undertook an extraordinary asset purchase program following the global financial crisis. The Fed’s goal was to jumpstart the economy by encouraging banks to lend more, businesses to hire more and consumers to spend more. Signs of a stronger US economy prompted the Fed to reduce,

or “taper,” its asset purchase program. Despite this, interest rates remained near historical low levels due largely to heavy investor demand for bonds. While signs of economic improvement were evident in the US, European economies showed signs of weakening. That, together with geopolitical uncertainty and worries about the first diagnosed cases of Ebola outside of Africa, caused increased volatility in US and European equities.

Extended periods of market strength can lull investors into complacency – just as prolonged periods of market weakness or volatility can discourage investors from initiating long-term investment plans. That’s why Invesco has always encouraged investors to work with a professional financial adviser who can stress the importance of starting to save and invest early and the importance of adhering to a disciplined investment plan – when times are good and when they’re uncertain. A financial adviser who knows your unique financial situation, investment goals and risk tolerance can be an invaluable partner as you seek to achieve your financial goals. He or she can offer a long-term perspective when markets are volatile and time-tested advice and guidance when your financial situation or investment goals change.

Timely information when and where you want it

Invesco’s efforts to help investors achieve their financial objectives include providing individual investors and financial professionals with timely information about the markets, the economy and investing – whenever and wherever they want it.

Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including prices, performance, holdings and portfolio manager commentaries. You can access information about your individual Invesco account whenever it’s convenient for you; just complete a simple, secure online registration. Use the “Log In” box on our home page to get started.

Invesco’s mobile app for iPad® (available free from the App StoreSM) allows you to obtain the same detailed information about your Fund and the same investment insights from our investment leaders, market strategists, economists and retirement experts on the go. You also can watch portfolio manager videos and have instant access to Invesco news and updates wherever you may be.

In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.

Have questions?

For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.

All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.

Sincerely,

 

LOGO

Philip Taylor

Senior Managing Director, Invesco Ltd.

iPad is a trademark of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.

 

 

2                         Invesco Asia Pacific Growth Fund

LOGO

Bruce Crockett

     

Dear Fellow Shareholders:

There are a variety of factors that can impact investment performance, many of which are uncontrollable by us as investors. These factors can include various economic trends and geopolitical developments.

While the members of the Invesco Funds Board, which I chair, can’t dictate the performance of the Invesco funds, be assured that your Board works diligently throughout the year to focus on how your investments are managed. Our job is to represent you and your interests on a variety of fund management-related matters. We regularly monitor how the portfolio management teams of the Invesco funds are performing in light of ever-changing and often unpredictable economic and market conditions. We review the investment strategies and investment process employed by each fund’s management team as explained in the fund’s prospectus.

    

Perhaps our most significant responsibility is conducting the annual review of the funds’

advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information from Invesco that allows us to evaluate the quality of its services and the reasonableness of its fees. We also use information from a variety of independent sources, including materials provided by the independent senior officer of the Invesco funds, who reports directly to the independent trustees on the Board. Additionally, we meet with legal counsel and review performance and fee data prepared for us by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.

After a careful review, the members of the Invesco Funds Board approved the continuation of advisory and sub-advisory contracts with Invesco Advisers and its affiliates. Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.

As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.

Sincerely,

 

LOGO

Bruce L. Crockett

Independent Chair

Invesco Funds Board of Trustees

 

3                         Invesco Asia Pacific Growth Fund

 

Management’s Discussion of Fund Performance

 

 

Performance summary

For the fiscal year ended October 31, 2014, Invesco Asia Pacific Growth Fund, at net asset value (NAV), delivered positive returns and outperformed the Fund’s style-specific benchmark, the MSCI All Country Asia Pacific ex-Japan Index. During the reporting period, stock selection in Singapore, particularly in the information technology (IT) sector, led Fund performance versus the style-specific index. Fund holdings in the Philippines, most notably in the utilities sector, also meaningfully contributed to relative performance.

Some of the Fund’s relative outperformance versus the style-specific index was offset by the Fund’s lack of exposure to India. Fund holdings in the energy sector and an overweight exposure to the consumer discretionary sector, relative to the MSCI All Country Asia Pacific ex-Japan Index, also detracted from relative performance.

Your Fund’s long-term performance appears later in this report.

 

 

Fund vs. Indexes

Total returns, 10/31/13 to 10/31/14, 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

      6.51 % 

Class B Shares

      5.70   

Class C Shares

      5.70   

Class Y Shares

      6.80   

MSCI EAFE Indexq (Broad Market Index)

      –0.60   

MSCI All Country Asia Pacific ex-Japan Indexq (Style-Specific Index)

      4.00   

Lipper Pacific Region ex-Japan Funds Indexn (Peer Group Index)

      6.35   

Source(s): qFactSet Research Systems Inc.; nLipper Inc.

 

 

Market conditions and your Fund

Global equity markets generally rose during the fiscal year ended October 31, 2014, on signs that economic growth was accelerating as a result of the loose monetary policies of many developed countries’ central banks. While 2014 began on an optimistic note, global equity markets pulled back at various points in reaction to economic and geopolitical concerns.

These concerns included worries about potentially negative effects of the US Federal Reserve reducing the scope of its asset purchase program beginning in early

2014, an Argentine sovereign bond default and eurozone banking concerns. Global equity markets also fell as geopolitical tensions in Ukraine and the Middle East weakened the outlook for global growth.

Meanwhile, the Bank of Japan remained committed to extraordinary monetary stimulus. Consumer spending in Japan has been weak for some time, and retail sales and household spending increased only gradually during the reporting period – although improved corporate earnings were an encouraging sign.

Equity market performance in emerging markets was mixed. China continued

 

 

to face headwinds and struggled to balance structural reforms with its desire to maintain satisfactory growth, while many countries in Asia, including India, Indonesia and the Philippines, experienced strong positive gains.

    In this environment, the Fund, at NAV, delivered positive returns for the fiscal year, outperforming the Fund’s style-specific benchmark. At the sector level, relative outperformance was led by strong stock selection in the IT sector. Stock selection and overweight exposure to the utilities sector, stock selection in the financials sector and overweight exposure to the health care sector also benefited relative performance during the fiscal year.

    In the IT sector, Avago Technologies was the largest contributor to both the sector and the Fund’s overall performance on an absolute and relative basis. The Singapore-based semiconductor equipment manufacturer focuses on the wireless communications, wired infrastructure, industrial and automotive electronics industries. The company recently announced a strategic acquisition of a US-based company, LSI Logic, which was positively received by investors and bolstered its performance during the reporting period. Chinese search engine giant Baidu was also a significant contributor to the Fund’s performance during the fiscal year.

    In the utilities sector, two Philippine energy companies led performance in the sector. Renewable energy producer First Gen and Energy Development, the largest geothermal energy producer in the Philippines and second largest in the world, were the top contributors to Fund performance in the sector. Kasikornbank, a commercial bank in Thailand, led relative Fund performance in the financials sector. In the health care sector, Kossan Rubber

 
Portfolio Composition       
By sector   
 

Financials

     29.1 % 

Consumer Discretionary

     13.8   

Information Technology

     12.4   

Industrials

     8.5   

Materials

     6.9   

Telecommunication Services

     5.7   

Utilities

     5.2   

Health Care

     4.6   

Consumer Staples

     4.5   

Energy

     1.1   

Money Market Funds

  

Plus Other Assets Less Liabilities

     8.2   

Top 10 Equity Holdings*

 

       
 
  1.   Hutchinson Whampoa Ltd.     3.9 % 
  2.   Kasikornbank PCL     3.7   
  3.   Hongkong Land Holdings Ltd.     3.3   
  4.   Industrial and Commercial  
    Bank of China Ltd.-Class H     3.2   
  5.   Cheung Kong (Holdings) Ltd.     2.9   
  6.   Stella International Holdings Ltd.     2.9   
  7.   Amcor Ltd.     2.8   
  8.   Taiwan Semiconductor  
    Manufacturing Co. Ltd.     2.8   
  9.   Lee & Man Paper  
    Manufacturing Co. Ltd.     2.8   
10.   PT Bank Mandiri Persero Tbk     2.7   
 
Total Net Assets      $920.0 million   
Total Number of Holdings*      50   

The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.

*Excluding money market fund holdings.

 

 

4                         Invesco Asia Pacific Growth Fund

Industries, a Malaysian-based company that manufactures rubber products for the medical industry, was a leading contributor to relative Fund performance.

In contrast, Fund holdings in the energy sector detracted from relative performance during the reporting period. CNOOC, a China-based energy investment holding company engaged in upstream activities, was one of the leading detractors from the Fund’s relative performance. In the first quarter of 2014, the company’s announcement that new projects had not begun as fast as expected raised the risk that their five-year production growth goals may be missed. Despite the short-term disappointment, we remain positive about this high quality company as valuation remains attractive relative to long-term earnings power. WorleyParsons, an Australian company that supplies engineering and consulting services to the energy and resources industries, also detracted from Fund performance. We subsequently sold our position in the company during the reporting period.

Overweight exposure relative to the Fund’s style-specific index in the consumer discretionary sector detracted from relative performance as well. South Korean department store operator, Hyundai Department Store was the leading detractor in the sector. Fund exposure to the consumer staples sector also hurt relative Fund performance. Australian-based beverage company, Coca-Cola Amatil was the largest detractor from relative results in the sector.

Geographically, stock selection in Singapore and Malaysia led Fund performance versus the Fund’s style-specific index. Overweight exposure to the Philippines and stock selection and underweight exposure to Australia also contributed to relative performance during the reporting period.

From a geographic perspective, not having any exposure to India was the largest detractor from relative performance. Fund holdings in China and an underweight position versus the style-specific index in Taiwan detracted from relative performance as well.

The Fund ended the reporting period with meaningful overweight exposures versus its style-specific index to the consumer discretionary, health care and utilities sectors. Conversely, the Fund had meaningful underweight positions in the financials, energy, IT and consumer staples sectors versus the MSCI All Country Asia Pacific ex-Japan Index.

With market volatility likely to continue for some time, our focus remains on ensuring that our portfolio is comprised of high-quality, reasonably-valued companies capable of sustained earnings growth. We believe that this balanced, EQV-focused (earnings, quality and valuation) approach may help deliver attractive returns over the long term.

We thank you for your continued investment in Invesco Asia Pacific Growth Fund.

The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

See important Fund and, if applicable, index disclosures later in this report.

 

LOGO

 

   

Shuxin (Steve) Cao

Chartered Financial Analyst, Portfolio Manager, is lead manager of Invesco Asia Pacific Growth

Fund. He joined Invesco in 1997. Mr. Cao earned a BA in English from the Tianjin Foreign Language Institute and an MBA from Texas A&M University. He is also a Certified Public Accountant.

 

LOGO

 

   

Brent Bates

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco Asia Pacific Growth Fund.

He joined Invesco in 1996. Mr. Bates earned a BBA from Texas A&M University and is a Certified Public Accountant.

 

LOGO

 

   

Mark Jason

Chartered Financial Analyst, Portfolio Manager, is manager of Asia Pacific Growth Fund. He joined

Invesco in 2001. Mr. Jason earned a BS in finance and BS in real estate from California State University, Northridge.
 

 

 

5                         Invesco Asia Pacific Growth Fund

 

Your Fund’s Long-Term Performance

Results of a $10,000 Investment – Oldest Share Class(es)

Fund and index data from 10/31/04

 

LOGO

 

Past performance cannot guarantee comparable future results.

The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical

shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the contingent deferred sales charges, if applicable. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group,

if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.

 

 

 

continued from page 8

 

 

About indexes used in this report

n   The MSCI EAFE® Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   The MSCI All Country Asia Pacific ex-Japan Index is an unmanaged index considered representative of Pacific region stock markets, excluding Japan. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   The Lipper Pacific Region ex-Japan Funds Index is an unmanaged index considered representative of Pacific region ex-Japan funds tracked by Lipper.
n   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).
n   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.

 

 

Other information

n   CPA® and Certified Public Accountant® are trademarks owned by the American Institute of Certified Public Accountants.
n   The returns shown in management’s discussion of Fund performance are based on net asset values (NAVs) calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the NAVs for shareholder transactions and the returns based on those NAVs may differ from the NAVs and returns reported in the Financial Highlights.
n   Industry 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.
 

 

6                         Invesco Asia Pacific Growth Fund

Average Annual Total Returns  

As of 10/31/14, including maximum applicable sales charges

 

 

   

Class A Shares        

Inception (11/3/97)

     9.61 % 

10 Years

     13.13   

  5 Years

     11.85   

  1 Year

     0.65   

Class B Shares

        

Inception (11/3/97)

     9.62 % 

10 Years

     13.10   

  5 Years

     12.02   

  1 Year

     0.73   

Class C Shares

        

Inception (11/3/97)

     9.16 % 

10 Years

     12.93   

  5 Years

     12.27   

  1 Year

     4.71   

Class Y Shares

        

10 Years

     13.94 % 

  5 Years

     13.41   

  1 Year

     6.80   

Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes

in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.

The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C and Class Y shares was 1.49%, 2.24%, 2.24% and 1.24%, respectively.1 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C and Class Y shares was 1.51%, 2.26%, 2.26% and 1.26%, respectively.

Average Annual Total Returns  

As of 9/30/14, the most recent calendar quarter end, including maximum applicable sales charges

 

    

Class A Shares

        

Inception (11/3/97)

     9.51 % 

10 Years

     13.16   

  5 Years

     11.32   

  1 Year

     1.36   

Class B Shares

        

Inception (11/3/97)

     9.52 % 

10 Years

     13.14   

  5 Years

     11.48   

  1 Year

     1.45   

Class C Shares

        

Inception (11/3/97)

     9.06 % 

10 Years

     12.97   

  5 Years

     11.74   

  1 Year

     5.46   

Class Y Shares

        

10 Years

     13.97 % 

  5 Years

     12.87   

  1 Year

     7.52   

The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class Y 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.

Had the adviser not waived fees and/or reimbursed expenses in the past, performance would have been lower.

 

1 Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least June 30, 2016. See current prospectus for more information.
 

 

7                         Invesco Asia Pacific Growth Fund

 

Invesco Asia Pacific Growth Fund’s investment objective is long-term growth of capital.

n   Unless otherwise stated, information presented in this report is as of October 31, 2014, and is based on total net assets.
n   Unless otherwise noted, all data provided by Invesco.
n   To access your Fund’s reports/prospectus, visit invesco.com/fundreports.

 

 

About share classes

n   Class B shares may not be purchased for new or additional investments. Please see the prospectus for more information.
n   Class Y shares are available to only certain investors. Please see the prospectus for more information.

 

 

Principal risks of investing in the Fund

n   Depositary receipts risk. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts or to pass through to them any voting rights with respect to the deposited securities.
n   Derivatives risk. The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity, interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets, the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic exposure created by owning the derivative. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also be less liquid than

more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could impact the Fund’s ability to use certain derivatives or their cost. Also, derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly during adverse market conditions.

n   Developing/emerging markets securities risk. The prices of securities issued by foreign companies and governments located in developing/emerging market countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries.
n   Foreign securities risk. The Fund’s foreign investments may be affected by changes in a foreign country’s exchange rates, political and social instability, changes in economic or taxation policies, difficulties when enforcing obligations, decreased liquidity, and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies.
n   Geographic focus risk. From time to time the Fund may invest a substantial amount of its assets in securities of issuers located in a single country or a limited number of countries. If the Fund focuses its investments in this manner, it assumes the risk that economic, political and social conditions in those countries will have a significant impact

on its investment performance. The Fund’s investment performance may also be more volatile if it focuses its investments in certain countries, especially emerging markets countries.

n   Growth investing risk. Growth stocks tend to be more expensive relative to their earnings or assets compared with other types of stock. As a result they tend to be more sensitive to changes in their earnings and can be more volatile.
n   Management risk. The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results.
n   Market risk. The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment, general economic and market conditions, regional or global instability, and currency and interest rate fluctuations.
n   Preferred securities risk. Preferred securities may include provisions that permit the issuer, in its discretion, to defer or omit distributions for a certain period of time. If the Fund owns a security that is deferring or omitting its distributions, the Fund may be required to report the distribution on its tax returns, even though it may not have received this income. Further, preferred securities may lose substantial value due to the omission or deferment of dividend payments.
n   Small- and mid-capitalization risks. Stocks of small- and mid-sized companies tend to be more vulnerable to adverse developments and may have little or no operating history or track record of success, and limited product lines, markets, management and financial resources. The securities of small- and mid-sized companies may be more volatile due to less market interest and less publicly available information about the issuer. They also may be illiquid or restricted as to resale, or may trade less frequently and in smaller volumes, all of which may cause difficulty when establishing or closing a position at a desirable price.
 

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

continued on page 6

 

 

8                         Invesco Asia Pacific Growth Fund

Schedule of Investments

October 31, 2014

 

 

     Shares     Value  

Common Stocks & Other Equity Interests–91.77%

  

Australia–10.99%   

Amcor Ltd.

     2,528,911      $ 26,170,412   

BHP Billiton Ltd.

     243,325        7,262,666   

Brambles Ltd.

     1,999,681        16,842,387   

Coca-Cola Amatil Ltd.

     1,426,906        11,513,690   

Computershare Ltd.

     1,669,832        18,104,264   

CSL Ltd.

     299,670        21,216,277   
              101,109,696   
China–22.46%   

Baidu, Inc.–ADR(a)

     92,565        22,101,745   

Belle International Holdings Ltd.

     12,384,000        15,761,251   

China Mobile Ltd.

     1,143,500        14,229,056   

CNOOC Ltd.

     6,129,500        9,595,386   

Golden Eagle Retail Group Ltd.

     7,949,000        9,737,528   

Industrial & Commercial Bank of China Ltd.–Class H

     44,090,000        29,165,543   

Lee & Man Paper Manufacturing Ltd.

     46,665,000        25,633,828   

Minth Group Ltd.

     12,028,000        23,047,553   

NetEase, Inc.–ADR

     129,288        12,246,159   

Stella International Holdings Ltd.

     9,143,000        26,382,017   

Want Want China Holdings Ltd.

     13,560,000        18,738,555   
              206,638,621   
Hong Kong–12.52%   

Cheung Kong (Holdings) Ltd.

     1,509,000        26,737,725   

First Pacific Co. Ltd.

     10,376,000        11,198,711   

Galaxy Entertainment Group Ltd.

     1,539,000        10,507,930   

Hongkong Land Holdings Ltd.

     4,400,000        30,668,000   

Hutchison Whampoa Ltd.

     2,845,000        36,061,882   
              115,174,248   
Indonesia–9.59%   

PT Bank Central Asia Tbk

     15,676,000        16,960,433   

PT Bank Mandiri Persero Tbk

     28,732,900        24,658,931   

PT Indocement Tunggal Prakarsa Tbk

     2,270,500        4,572,905   

PT Perusahaan Gas Negara Persero Tbk

     42,334,400        20,843,168   

PT Summarecon Agung Tbk

     30,844,100        3,227,004   

PT Telekomunikasi Indonesia Persero Tbk

     78,138,200        17,934,918   
              88,197,359   
Malaysia–4.39%   

Kossan Rubber Industries Berhad

     14,912,400        20,853,333   

Public Bank Berhad

     3,454,100        19,491,319   
              40,344,652   
     Shares     Value  
Philippines–9.73%   

Ayala Corp.

     287,540      $ 4,420,734   

Energy Development Corp.

     89,841,450        15,449,026   

First Gen Corp.

     19,370,389        11,178,544   

GMA Holdings, Inc.–PDR

     46,337,700        6,607,872   

Manila Water Co. Inc.

     1,137,400        737,786   

Metro Pacific Investments Corp.

     124,340,000        14,074,135   

Philippine Long Distance Telephone Co.

     294,470        20,551,125   

SM Investments Corp.

     497,181        8,679,619   

SM Prime Holdings Inc.

     20,117,500        7,863,077   
              89,561,918   
Singapore–8.30%    

Avago Technologies Ltd.

     245,092        21,139,185   

Keppel Corp. Ltd.

     2,247,200        16,579,539   

Keppel REIT

     17,623,000        16,748,711   

United Overseas Bank Ltd.

     1,218,000        21,857,069   
              76,324,504   
South Korea–3.07%    

Hyundai Department Store Co., Ltd.

     109,145        13,800,073   

Samsung Electronics Co., Ltd.

     12,489        14,466,761   
              28,266,834   
Taiwan–2.81%    

Taiwan Semiconductor Manufacturing Co. Ltd.

     5,989,464        25,821,269   
Thailand–7.91%    

Kasikornbank PCL

     4,669,400        34,194,108   

Major Cineplex Group PCL

     19,943,000        14,555,149   

Siam Commercial Bank PCL (The)

     3,232,500        17,615,070   

Thai Stanley Electric PCL

     960,700        6,451,803   
              72,816,130   

Total Common Stocks & Other Equity Interests
(Cost $619,651,079)

   

     844,255,231   

Money Market Funds–6.50%

  

  

Liquid Assets Portfolio–Institutional
Class(b)

     29,885,996        29,885,996   

Premier Portfolio–Institutional Class(b)

     29,885,995        29,885,995   

Total Money Market Funds
(Cost $59,771,991)

   

     59,771,991   

TOTAL INVESTMENTS–98.27%
(Cost $679,423,070)

   

     904,027,222   

OTHER ASSETS LESS LIABILITIES–1.73%

  

     15,959,166   

NET ASSETS–100.00%

  

   $ 919,986,388   
 

Investment Abbreviations:

 

ADR  

– American Depositary Receipt

PDR  

– Philippine Depositary Receipt

REIT  

– Real Estate Investment Trust

Notes to Schedule of Investments:

 

(a)  Non-income producing security.
(b)  The money market fund and the Fund are affiliated by having the same investment adviser.

 

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

 

9                         Invesco  Asia Pacific Growth Fund

Statement of Assets and Liabilities

October 31, 2014

 

 

Assets:

  

Investments, at value (Cost $619,651,079)

   $ 844,255,231   

Investments in affiliated money market funds, at value and cost

     59,771,991   

Total investments, at value (Cost $679,423,070)

     904,027,222   

Foreign currencies, at value (Cost $17,144,585)

     17,002,377   

Receivable for:

  

Investments sold

     108,549   

Fund shares sold

     5,601,494   

Dividends

     340,200   

Investment for trustee deferred compensation and retirement plans

     128,008   

Other assets

     36,677   

Total assets

     927,244,527   

Liabilities:

  

Payable for:

  

Fund shares reacquired

     496,208   

Accrued foreign taxes

     5,779,791   

Accrued fees to affiliates

     556,699   

Accrued trustees’ and officers’ fees and benefits

     2,863   

Accrued other operating expenses

     277,459   

Trustee deferred compensation and retirement plans

     145,119   

Total liabilities

     7,258,139   

Net assets applicable to shares outstanding

   $ 919,986,388   

Net assets consist of:

  

Shares of beneficial interest

   $ 657,943,186   

Undistributed net investment income

     11,301,321   

Undistributed net realized gain

     26,282,876   

Net unrealized appreciation

     224,459,005   
    $ 919,986,388   

Net Assets:

  

Class A

   $ 551,538,855   

Class B

   $ 14,713,839   

Class C

   $ 95,276,548   

Class Y

   $ 258,457,146   

Shares outstanding, $0.001 par value per share,
with an unlimited number of shares authorized:

   

Class A

     16,500,006   

Class B

     472,386   

Class C

     3,077,198   

Class Y

     7,704,616   

Class A:

  

Net asset value per share

   $ 33.43   

Maximum offering price per share

  

(Net asset value of $33.43 ¸ 94.50%)

   $ 35.38   

Class B:

  

Net asset value and offering price per share

   $ 31.15   

Class C:

  

Net asset value and offering price per share

   $ 30.96   

Class Y:

  

Net asset value and offering price per share

   $ 33.55   
 

 

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

 

10                         Invesco  Asia Pacific Growth Fund

Statement of Operations

For the year ended October 31, 2014

 

Investment income:

  

Dividends (net of foreign withholding taxes of $1,688,331)

   $ 24,402,493   

Dividends from affiliated money market funds

     33,024   

Total investment income

     24,435,517   

Expenses:

  

Advisory fees

     7,429,046   

Administrative services fees

     203,198   

Custodian fees

     553,643   

Distribution fees:

  

Class A

     1,337,661   

Class B

     178,316   

Class C

     927,124   

Transfer agent fees

     1,587,868   

Trustees’ and officers’ fees and benefits

     42,038   

Other

     282,481   

Total expenses

     12,541,375   

Less: Fees waived and expense offset arrangement(s)

     (124,660 ) 

Net expenses

     12,416,715   

Net investment income

     12,018,802   

Realized and unrealized gain (loss) from:

  

Net realized gain (loss) from:

  

Investment securities

     26,996,118   

Foreign currencies

     (453,564 ) 
      26,542,554   

Change in net unrealized appreciation (depreciation) of:

  

Investment securities (net of foreign taxes on holdings of $1,367,842)

     15,301,499   

Foreign currencies

     (295,407 ) 
      15,006,092   

Net realized and unrealized gain

     41,548,646   

Net increase in net assets resulting from operations

   $ 53,567,448   

 

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

 

11                         Invesco  Asia Pacific Growth Fund

Statement of Changes in Net Assets

For the years ended October 31, 2014 and 2013

 

     2014      2013  

Operations:

     

Net investment income

   $ 12,018,802       $ 6,288,256   

Net realized gain

     26,542,554         40,343,992   

Change in net unrealized appreciation

     15,006,092         31,144,966   

Net increase in net assets resulting from operations

     53,567,448         77,777,214   

Distributions to shareholders from net investment income:

     

Class A

     (4,576,835 )       (3,012,794 ) 

Class B

     (30,319 )       —   

Class C

     (134,057 )       —   

Class Y

     (1,264,757 )       (540,337 ) 

Total distributions from net investment income

     (6,005,968 )       (3,553,131 ) 

Distributions to shareholders from net realized gains:

     

Class A

     (28,052,371 )       (9,721,485 ) 

Class B

     (1,182,957 )       (603,903 ) 

Class C

     (5,230,262 )       (1,852,367 ) 

Class Y

     (6,036,431 )       (1,304,896 ) 

Total distributions from net realized gains

     (40,502,021 )       (13,482,651 ) 

Share transactions–net:

     

Class A

     (3,644,054 )       53,882,110   

Class B

     (7,240,752 )       (6,880,003 ) 

Class C

     (854,323 )       9,131,466   

Class Y

     129,189,934         54,724,041   

Net increase in net assets resulting from share transactions

     117,450,805         110,857,614   

Net increase in net assets

     124,510,264         171,599,046   

Net assets:

     

Beginning of year

     795,476,124         623,877,078   

End of year (includes undistributed net investment income of $11,301,321 and $5,675,461, respectively)

   $ 919,986,388       $ 795,476,124   

Notes to Financial Statements

October 31, 2014

NOTE 1—Significant Accounting Policies

Invesco Asia Pacific Growth Fund (the “Fund”) is a series portfolio of AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of eight separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.

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

The Fund currently consists of four different classes of shares: Class A, Class B, Class C and Class Y. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.

The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.

A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they

 

12                         Invesco  Asia Pacific Growth Fund

may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and ask prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

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 of the Fund’s investments.

Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

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

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

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

C. Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

 

13                         Invesco  Asia Pacific Growth Fund

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 and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets.
G. Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
H. Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
I. Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.

The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.

J. Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis or through forward foreign currency contracts to manage or minimize currency or exchange rate risk.

The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.

A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.

 

14                         Invesco  Asia Pacific Growth Fund

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:

 

Average Daily Net Assets   Rate

First $250 million

     0 .935%   

Next $250 million

     0 .91%   

Next $500 million

     0 .885%   

Next $1.5 billion

     0 .86%   

Next $2.5 billion

     0 .835%   

Next $2.5 billion

     0 .81%   

Next $2.5 billion

     0 .785%   

Over $10 billion

     0 .76%     

For the year ended October 31, 2014, the effective advisory fees incurred by the Fund was 0.91%.

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

The Adviser has contractually agreed, through at least June 30, 2015, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C and Class Y shares to 2.25%, 3.00%, 3.00% and 2.00%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee 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; 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, 2015. The fee waiver agreement cannot be terminated during its term. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.

Further, the Adviser has contractually agreed, through at least June 30, 2016, 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 year ended October 31, 2014, the Adviser waived advisory fees of $121,693.

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 year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.

The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended October 31, 2014, the expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C and Class Y shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B and Class C shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of each class of Class B and Class C shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the year ended October 31, 2014, 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 year ended October 31, 2014, IDI advised the Fund that IDI retained $177,782 in front-end sales commissions from the sale of Class A shares and $8,995, $10,471 and $15,671 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.

Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.

 

15                         Invesco  Asia Pacific Growth Fund

NOTE 3—Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.
  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of October 31, 2014. 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.

During the year ended October 31, 2014, there were transfers from Level 1 to Level 2 of $230,609,169 and from Level 2 to Level 1 of $113,167,338, due to foreign fair value adjustments.

 

     Level 1        Level 2        Level 3        Total  

Australia

   $ —         $ 101,109,696         $ —         $ 101,109,696   

China

     151,922,663           54,715,958           —           206,638,621   

Hong Kong

     88,436,523           26,737,725           —           115,174,248   

Indonesia

     20,843,168           67,354,191           —           88,197,359   

Malaysia

     20,853,333           19,491,319           —           40,344,652   

Philippines

     44,960,904           44,601,014           —           89,561,918   

Singapore

     21,139,185           55,185,319           —           76,324,504   

South Korea

     —           28,266,834           —           28,266,834   

Taiwan

     —           25,821,269           —           25,821,269   

Thailand

     21,006,952           51,809,178           —           72,816,130   

United States

     59,771,991           —           —           59,771,991   

Total Investments

   $ 428,934,719         $ 475,092,503         $ —         $ 904,027,222   

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 year ended October 31, 2014, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,967.

NOTE 5—Trustees’ and Officers’ Fees and Benefits

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

NOTE 6—Cash Balances

The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.

 

16                         Invesco  Asia Pacific Growth Fund

NOTE 7—Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2014 and 2013:

 

     2014        2013  

Ordinary income

   $ 6,005,968         $ 3,553,131   

Long-term capital gain

     40,502,021           13,482,651   

Total distributions

   $ 46,507,989         $ 17,035,782   

Tax Components of Net Assets at Period-End:

 

     2014  

Undistributed ordinary income

   $ 11,489,788   

Undistributed long-term gain

     26,802,298   

Net unrealized appreciation — investments

     224,028,205   

Net unrealized appreciation (depreciation) — other investments

     (145,147 ) 

Temporary book/tax differences

     (131,942 ) 

Shares of beneficial interest

     657,943,186   

Total net assets

   $ 919,986,388   

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to wash sales and passive foreign investment companies.

The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund does not have a capital loss carryforward as of October 31, 2014.

NOTE 8—Investment Securities

The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2014 was $219,668,928 and $110,306,835, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis  

Aggregate unrealized appreciation of investment securities

   $ 241,920,475   

Aggregate unrealized (depreciation) of investment securities

     (17,892,270 ) 

Net unrealized appreciation of investment securities

   $ 224,028,205   

Cost of investments for tax purposes is $679,999,017.

NOTE 9—Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of foreign currency transactions, on October 31, 2014, undistributed net investment income was decreased by $386,974 and undistributed net realized gain was increased by $386,974. This reclassification had no effect on the net assets of the Fund.

 

17                         Invesco  Asia Pacific Growth Fund

NOTE 10—Share Information

 

     Summary of Share Activity  
    Years ended October 31,  
    2014(a)      2013  
     Shares      Amount      Shares      Amount  

Sold:

           

Class A

     3,593,919       $ 115,311,135         5,889,455       $ 189,661,022   

Class B

     13,322         396,533         60,321         1,805,112   

Class C

     522,102         15,457,978         932,471         27,957,828   

Class Y

     5,784,873         182,921,092         3,751,686         121,128,269   

Issued as reinvestment of dividends:

           

Class A

     986,444         29,474,930         371,809         11,455,419   

Class B

     39,872         1,117,602         19,368         562,054   

Class C

     178,309         4,967,702         59,702         1,722,404   

Class Y

     206,630         6,182,381         47,330         1,460,123   

Automatic conversion of Class B shares to Class A shares:

           

Class A

     154,084         4,883,279         134,345         4,441,862   

Class B

     (164,822 )       (4,883,279 )       (146,371 )       (4,441,862 ) 

Reacquired:

           

Class A

     (4,840,275 )       (153,313,398 )       (4,730,060 )       (151,676,193 ) 

Class B

     (132,579 )       (3,871,608 )       (160,134 )       (4,805,307 ) 

Class C

     (725,341 )       (21,280,003 )       (687,635 )       (20,548,766 ) 

Class Y

     (1,892,515 )       (59,913,539 )       (2,107,171 )       (67,864,351 ) 

Net increase in share activity

     3,724,023       $ 117,450,805         3,435,116       $ 110,857,614   

 

(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.

 

18                         Invesco  Asia Pacific Growth Fund

NOTE 11—Financial Highlights

The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.

 

     Net asset
value,
beginning
of period		     Net
investment
income(a)		     Net gains
(losses)
on securities
(both
realized and
unrealized)		     Total from
investment
operations		     Dividends
from net
investment
income		     Distributions
from net
realized
gains		     Total
distributions		     Net asset
value, end
of period(b)		     Total
return(c)		     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(d)		  

Class A

                            

Year ended 10/31/14

   $ 33.45      $ 0.48      $ 1.47      $ 1.95      $ (0.27 )    $ (1.70 )    $ (1.97 )    $ 33.43        6.54 %    $ 551,539        1.47 %(e)      1.48 %(e)      1.52 %(e)      15 % 

Year ended 10/31/13

     30.65        0.30        3.35        3.65        (0.20 )      (0.65 )      (0.85 )      33.45        12.16        555,505        1.47        1.49        0.95        18   

Year ended 10/31/12

     28.42        0.26        4.34        4.60        (0.27 )      (2.10 )      (2.37 )      30.65        17.77        457,964        1.54        1.55        0.89        16   

Year ended 10/31/11

     30.30        0.28        (1.68 )      (1.40 )      (0.23 )      (0.25 )      (0.48 )      28.42        (4.67 )      385,828        1.53        1.55        0.93        27   

Year ended 10/31/10

     22.23        0.23        8.12        8.35        (0.28 )      —        (0.28 )      30.30        37.97        429,596        1.60        1.61        0.91        25   

Class B

                            

Year ended 10/31/14

     31.29        0.23        1.37        1.60        (0.04 )      (1.70 )      (1.74 )      31.15        5.74        14,714        2.22 (e)      2.23 (e)      0.77 (e)      15   

Year ended 10/31/13

     28.74        0.06        3.14        3.20        —        (0.65 )      (0.65 )      31.29        11.32        22,421        2.22        2.24        0.20        18   

Year ended 10/31/12

     26.73        0.04        4.10        4.14        (0.03 )      (2.10 )      (2.13 )      28.74        16.94        27,112        2.29        2.30        0.14        16   

Year ended 10/31/11

     28.58        0.05        (1.59 )      (1.54 )      (0.06 )      (0.25 )      (0.31 )      26.73        (5.41 )      30,394        2.28        2.30        0.18        27   

Year ended 10/31/10

     21.02        0.04        7.69        7.73        (0.17 )      —        (0.17 )      28.58        36.98        40,299        2.35        2.36        0.16        25   

Class C

                            

Year ended 10/31/14

     31.11        0.23        1.36        1.59        (0.04 )      (1.70 )      (1.74 )      30.96        5.73        95,277        2.22 (e)      2.23 (e)      0.77 (e)      15   

Year ended 10/31/13

     28.58        0.06        3.12        3.18        —        (0.65 )      (0.65 )      31.11        11.31        96,520        2.22        2.24        0.20        18   

Year ended 10/31/12

     26.60        0.04        4.07        4.11        (0.03 )      (2.10 )      (2.13 )      28.58        16.91        79,959        2.29        2.30        0.14        16   

Year ended 10/31/11

     28.44        0.05        (1.58 )      (1.53 )      (0.06 )      (0.25 )      (0.31 )      26.60        (5.41 )      76,962        2.28        2.30        0.18        27   

Year ended 10/31/10

     20.92        0.04        7.65        7.69        (0.17 )      —        (0.17 )      28.44        36.97        85,918        2.35        2.36        0.16        25   

Class Y

                            

Year ended 10/31/14

     33.57        0.57        1.47        2.04        (0.36 )      (1.70 )      (2.06 )      33.55        6.80        258,457        1.22 (e)      1.23 (e)      1.77 (e)      15   

Year ended 10/31/13

     30.75        0.39        3.35        3.74        (0.27 )      (0.65 )      (0.92 )      33.57        12.43        121,030        1.22        1.24        1.20        18   

Year ended 10/31/12

     28.52        0.33        4.35        4.68        (0.35 )      (2.10 )      (2.45 )      30.75        18.07        58,843        1.29        1.30        1.14        16   

Year ended 10/31/11

     30.39        0.35        (1.68 )      (1.33 )      (0.29 )      (0.25 )      (0.54 )      28.52        (4.43 )      35,862        1.28        1.30        1.18        27   

Year ended 10/31/10

     22.28        0.30        8.14        8.44        (0.33 )      —        (0.33 )      30.39        38.31        32,436        1.35        1.36        1.16        25   

 

(a)  Calculated using average shares outstanding.
(b)  Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share for the fiscal years ended October 31, 2012 and prior.
(c)  Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.
(d)  Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
(e)  Ratios are based on average daily net assets (000’s) of $535,065, $17,832, $92,712 and $172,645 for Class A, Class B, Class C and Class Y shares, respectively.

 

19                         Invesco  Asia Pacific Growth Fund

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of AIM International Mutual Funds (Invesco International Mutual Funds)

and Shareholders of Invesco Asia Pacific Growth Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco Asia Pacific Growth Fund (one of the funds constituting AIM International Mutual Funds (Invesco International Mutual Funds), hereafter referred to as the “Fund”) at October 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2014 by correspondence with the custodian, provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

December 23, 2014

Houston, Texas

 

20                         Invesco  Asia Pacific Growth Fund

Calculating your ongoing Fund expenses

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2014 through October 31, 2014.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

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

 

Class   Beginning
Account Value
(05/01/14)		     ACTUAL     HYPOTHETICAL
(5% annual return before
expenses)		     Annualized
Expense
Ratio		  
    Ending
Account Value
(10/31/14)1		     Expenses
Paid During
Period2		     Ending
Account Value
(10/31/14)		     Expenses
Paid During
Period2		    
A   $ 1,000.00      $ 1,073.90      $ 7.58      $ 1,017.90      $ 7.38        1.45 % 
B     1,000.00        1,070.10        11.48        1,014.12        11.17        2.20   
C     1,000.00        1,069.80        11.48        1,014.12        11.17        2.20   
Y     1,000.00        1,075.30        6.28        1,019.16        6.11        1.20   

 

1 The actual ending account value is based on the actual total return of the Fund for the period May 1, 2014 through October 31, 2014, 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.

 

21                         Invesco  Asia Pacific Growth Fund

Approval of Investment Advisory and Sub-Advisory Contracts

 

The Board of Trustees (the Board) of AIM International Mutual Funds (Invesco International Mutual Funds) is required under the Investment Company Act of 1940, as amended, to approve annually the renewal of Invesco Asia Pacific Growth Fund’s (the Fund) investment advisory agreements. During contract renewal meetings held on June 16-17, 2014, the Board as a whole, and the disinterested or “independent” Trustees, who comprise over 75% of the Board, voting separately, approved the continuance for the Fund of the 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 Australia 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, 2014.

In evaluating the fairness and reasonableness of compensation under the Fund’s investment advisory agreement and the sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board determined that the continuation of the Fund’s investment advisory agreement and the sub-advisory contracts are in the best interest of the Fund and its shareholders and that the compensation payable to Invesco Advisers and the Affiliated Sub-Advisers under the agreements is fair and reasonable.

The Board’s Fund Evaluation Process

The Board’s Investments Committee has established three Sub-Committees, each of which is primarily responsible for overseeing the management of a number of the funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet throughout the year to review the performance of their assigned Invesco Funds, including reviewing materials prepared under the direction of the independent Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review the performance, investment objective(s), policies, strategies, limitations and investment risks of these funds. The Sub-Committees meet regularly and at designated contract renewal meetings each year to conduct a review of the performance, fees, expenses and other matters related to their assigned Invesco Funds. Each Sub-Committee recommends to the Investments Committee, which in turn recommends to the full Board, whether and on what terms to

approve the continuance of each Invesco Fund’s investment advisory agreement and sub-advisory contracts for another year.

During the contract renewal process, the Trustees receive comparative performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Lipper Inc. (Lipper), an independent provider of investment company data. The Trustees also receive 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 addition to meetings with Invesco Advisers and fund counsel, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

The Trustees recognized that the advisory fee rates for the Invesco Funds, in many cases, are the result of years of review and negotiation. The Trustees’ deliberations and conclusions in a particular year may be based in part on their deliberations and conclusions regarding these arrangements throughout the year and in prior years. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.

The discussion below serves as the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. Unless otherwise stated, this information is current as of June 17, 2014, and may not reflect consideration of factors that became known to the Board after that date.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

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

The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers, with whom the Sub-Committees met

during the year. The Board’s review of the qualifications of Invesco Advisers to provide advisory services included the Board’s consideration of Invesco Advisers’ investment process oversight, independent credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, equity and fixed income trading operations, internal audit, distribution and legal and compliance.

In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship and the greater uncertainty that may be associated with entering into a new relationship. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s investment advisory agreement.

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 that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, 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 benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s sub-advisory contracts.

B. Fund Performance

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

The Board compared the Fund’s performance during the past one, three and five calendar years to the performance of funds in the Lipper performance universe and against the Lipper Pacific Region Ex-Japan Funds Index. The Board noted that performance of Class A shares of the Fund was in the second quintile of the performance universe for the one year period and the first quintile for the three and five year

 

 

22                         Invesco  Asia Pacific Growth Fund

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 year period and above the performance of the Index for the three and five year periods. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.

C. Advisory and Sub-Advisory Fees

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Lipper expense group at a common asset level. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in the expense group. The Board noted that the term “contractual management fee” may include both advisory and certain administrative services fees, but that Lipper does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco does not charge the Invesco Funds for the administrative services included in the term as defined by Lipper. The Board also reviewed the methodology used by Lipper in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group.

The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund through at least February 28, 2015 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 funds or client accounts using an investment process substantially similar to the investment process used for the Fund.

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. The Board also noted that the sub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers.

D. Economies of Scale and Breakpoints

The Board considered the extent to which there are economies of scale in the provision of advisory services to the Fund. The Board also considered whether the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule and was assisted in this review by a report from the Senior Officer. The Board also noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of

the Invesco Funds and other clients advised by Invesco Advisers.

E. Profitability and Financial Resources

The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the profitability of Invesco Advisers and its affiliates in providing these services for the year ended December 31, 2013. The Board received information from Invesco Advisers about the methodology used to prepare the profitability information. The Board considered the profitability of Invesco Advisers in managing the Fund and the Invesco Funds. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its subsidiaries provide to the Invesco Funds and the Fund. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund to be excessive given the nature, quality and extent of the services provided to the Invesco Funds. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each Affiliated Sub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.

F. Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for their provision of transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Lipper and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; that the services are required for the operation of the Fund; that Invesco Advisers and its affiliates can provide services, the nature and quality of which are at least equal to those provided by others offering the same or similar services; and that the fees for such services are fair and reasonable in light of the usual and customary charges by others for services of the same nature and quality.

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 shift the payment obligation for research services from Invesco Advisers and the Affiliated Sub-Advisers to the Invesco Funds and that the research received may be used with other clients of Invesco Advisers and may reduce Invesco Advisers’ and the Affiliated

Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.

The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisors from the Fund’s investment of uninvested cash and cash collateral from any securities lending arrangements in the affiliated money market funds are fair and reasonable.

The Board also considered the Fund may use an affiliated broker to execute certain trades for the Fund to among other things, control information leakage, and were advised that such trades would be executed in compliance with rules under the Investment Company Act of 1940, as amended.

 

 

23                         Invesco  Asia Pacific Growth Fund

Tax Information

Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2014:

 

Federal and State Income Tax

  

Long-Term Capital Gain Distributions

    $ 40,502,021   

Qualified Dividend Income*

      99.92 % 

Corporate Dividends Received Deduction*

      0.00 % 

U.S. Treasury Obligations*

      0.00 % 

Foreign Taxes

    $ 0.0597  per share 

Foreign Source Income

    $ 0.9301  per share 

 

  * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

24                         Invesco  Asia Pacific Growth Fund

Trustees and Officers

 

The address of each trustee and officer is AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Interested Persons                

Martin L. Flanagan1 — 1960

Trustee

   2007  

Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business

 

Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization).

   144   None

Philip A. Taylor2 — 1954

Trustee, President and Principal Executive Officer

   2006  

Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.

 

Formerly: Director and Chairman, Van Kampen Investor Services Inc.; Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company) and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships) and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.

   144   None

Wayne W. Whalen3 — 1939

Trustee

   2010   Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex   144   Director of the Mutual fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy

 

1  Mr. Flanagan is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer of the Adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the Adviser.
2  Mr. Taylor is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer and a director of the Adviser.
3  Mr. Whalen is retiring effective December 31, 2014. He has been deemed to be an interested person of the Trust because of his prior service as counsel to the predecessor funds of certain Invesco open-end funds and his affiliation with the law firm that served as counsel to such predecessor funds and the Invesco closed-end funds.

 

T-1                         Invesco  Asia Pacific Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees                

Bruce L. Crockett — 1944

Trustee and Chair

   1992  

Chairman, Crockett Technologies Associates (technology consulting company)

 

Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer, COMSAT Corporation; Chairman, Board of Governors of INTELSAT (international communications company); ACE Limited (insurance company); and Investment Company Institute

   144   ALPS (Attorneys Liability Protection Society) (insurance company)

David C. Arch — 1945

Trustee

   2010   Chairman of Blistex Inc., a consumer health care products manufacturer   144   Board member of the Illinois Manufacturers’ Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan; Member of the Audit Committee of the Edward-Elmhurst Hospital

Frank S. Bayley — 1939

Trustee

   2001   Retired. Formerly: Director, Badgley Funds Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP   144   Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee, The Curtis Institute of Music

James T. Bunch — 1942

Trustee

   2003  

Managing Member, Grumman Hill Group LLC (family office private equity investments)

 

Formerly: Founder, Green Manning & Bunch Ltd. (investment banking firm) (1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation

   144   Chairman, Board of Governors, Western Golf Association; Chairman, Evans Scholars Foundation; and Director, Denver Film Society

Rodney F. Dammeyer — 1940

Trustee

   2010  

Chairman of CAC,LLC, (private company offering capital investment and management advisory services)

 

Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex

   144   Director of Quidel Corporation and Stericycle, Inc.

Albert R. Dowden — 1941

Trustee

   2000  

Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Nature’s Sunshine Products, Inc. and Reich & Tang Funds (5 portfolios) (registered investment company)

 

Formerly: Director, Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company); Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director, Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company)

   144   Director of: Nature’s Sunshine Products, Inc., Reich & Tang Funds, Homeowners of America Holding Corporation/ Homeowners of America Insurance Company, the Boss Group

Jack M. Fields — 1952

Trustee

   1997  

Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)

 

Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives

   144   Insperity, Inc. (formerly known as Administaff)

Prema Mathai-Davis — 1950

Trustee

   1998   Retired. Formerly: Chief Executive Officer, YWCA of the U.S.A.   144   None

Larry Soll — 1942

Trustee

   2003   Retired. Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company)   144   None

Hugo F. Sonnenschein — 1940

Trustee

   2010   President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to 2000, President of the University of Chicago   144   Trustee of the University of Rochester and a member of its investment committee; Member of the National Academy of Sciences and the American Philosophical Society; Fellow of the American Academy of Arts and Sciences

 

T-2                         Invesco  Asia Pacific Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees—(continued)

Raymond Stickel, Jr. — 1944

Trustee

   2005   Retired. Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche   144   None

Suzanne H. Woolsey — 1941

Trustee

   2014   Chief Executive Officer of Woolsey Partners LLC   144   Emeritus Chair of the Board of Trustees of the Institute for Defense Analyses; Trustee of Colorado College; Trustee of California Institute of Technology; Prior to 2014, Director of Fluor Corp.; Prior to 2010, Trustee of the German Marshall Fund of the United States; Prior to 2010 Trustee of the Rocky Mountain Institute
Other Officers                

Russell C. Burk — 1958

Senior Vice President and Senior Officer

   2005   Senior Vice President and Senior Officer, The Invesco Funds   N/A   N/A

John M. Zerr — 1962

Senior Vice President, Chief Legal Officer and Secretary

   2006  

Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust; and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company)

   N/A   N/A

Sheri Morris — 1964

Vice President, Treasurer and Principal Financial Officer

   1999  

Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust

   N/A   N/A

 

T-3                         Invesco  Asia Pacific Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Other Officers—(continued)                

Karen Dunn Kelley — 1960

Vice President

   2004  

Senior Managing Director, Investments; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc. and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only)

 

Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only)

   N/A   N/A

Crissie M. Wisdom — 1969

Anti-Money Laundering Compliance Officer

   2013   Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc.   N/A   N/A

Todd L. Spillane — 1958

Chief Compliance Officer

   2006  

Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)

 

Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company

   N/A   N/A

The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.

 

Office of the Fund

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Investment Adviser

Invesco Advisers, Inc.

1555 Peachtree Street, N.E.

Atlanta, GA 30309

  

Distributor

Invesco Distributors, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Auditors

PricewaterhouseCoopers LLP

1000 Louisiana Street, Suite 5800

Houston, TX 77002-5678

     

Counsel to the Fund

Stradley Ronon Stevens & Young, LLP

2005 Market Street, Suite 2600

Philadelphia, PA 19103-7018

  

Counsel to the Independent Trustees

Goodwin Procter LLP

901 New York Avenue, N.W.

Washington, D.C. 20001

  

Transfer Agent

Invesco Investment Services, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Custodian

State Street Bank and Trust Company

225 Franklin Street

Boston, MA 02110-2801

 

T-4                         Invesco  Asia Pacific Growth Fund

 

 

 

 

LOGO

 

 

Invesco mailing information

Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.

 

 

Important notice regarding delivery of security holder documents

To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.

 

 

Fund holdings and proxy voting information

The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms

N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.

Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.

    LOGO

Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.

   

 

SEC file numbers: 811-06463 and 033-44611    APG-AR-1    Invesco Distributors, Inc.

LOGO

 

 

Letters to Shareholders

 

 

LOGO

      Philip Taylor

    

Dear Shareholders:

This annual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Inside, your Fund’s portfolio managers discuss how they managed your Fund and the factors that affected its performance during the reporting period. I hope you find this report of interest.

    During the reporting period covered by this report, the US economy showed signs of continued improvement. After contracting in the first quarter of 2014, the economy expanded strongly in the second quarter and unemployment trended lower. Much of the credit for this improvement goes to the US Federal Reserve (the Fed), which undertook an extraordinary asset purchase program following the global financial crisis. The Fed’s goal was to jumpstart the economy by encouraging banks to lend more, businesses to hire more and consumers to spend more. Signs of a stronger US economy prompted the Fed to reduce, or “taper,” its

asset purchase program. Despite this, interest rates remained near historical low levels due largely to heavy investor demand for bonds. While signs of economic improvement were evident in the US, European economies showed signs of weakening. That, together with geopolitical uncertainty and worries about the first diagnosed cases of Ebola outside of Africa, caused increased volatility in US and European equities.

    Extended periods of market strength can lull investors into complacency – just as prolonged periods of market weakness or volatility can discourage investors from initiating long-term investment plans. That’s why Invesco has always encouraged investors to work with a professional financial adviser who can stress the importance of starting to save and invest early and the importance of adhering to a disciplined investment plan – when times are good and when they’re uncertain. A financial adviser who knows your unique financial situation, investment goals and risk tolerance can be an invaluable partner as you seek to achieve your financial goals. He or she can offer a long-term perspective when markets are volatile and time-tested advice and guidance when your financial situation or investment goals change.

Timely information when and where you want it

Invesco’s efforts to help investors achieve their financial objectives include providing individual investors and financial professionals with timely information about the markets, the economy and investing – whenever and wherever they want it.

    Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including prices, performance, holdings and portfolio manager commentaries. You can access information about your individual Invesco account whenever it’s convenient for you; just complete a simple, secure online registration. Use the “Log In” box on our home page to get started.

    Invesco’s mobile app for iPad® (available free from the App StoreSM) allows you to obtain the same detailed information about your Fund and the same investment insights from our investment leaders, market strategists, economists and retirement experts on the go. You also can watch portfolio manager videos and have instant access to Invesco news and updates wherever you may be.

    In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.

Have questions?

For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.

    All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.

Sincerely,

 

LOGO

Philip Taylor

Senior Managing Director, Invesco Ltd.

iPad is a trademark of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.

 

 

2                             Invesco European Growth Fund

 

 

 

LOGO

      Bruce Crockett

    

Dear Fellow Shareholders:

There are a variety of factors that can impact investment performance, many of which are uncontrollable by us as investors. These factors can include various economic trends and geopolitical developments.

     While the members of the Invesco Funds Board, which I chair, can’t dictate the performance of the Invesco funds, be assured that your Board works diligently throughout the year to focus on how your investments are managed. Our job is to represent you and your interests on a variety of fund management-related matters. We regularly monitor how the portfolio management teams of the Invesco funds are performing in light of ever-changing and often unpredictable economic and market conditions. We review the investment strategies and investment process employed by each fund’s management team as explained in the fund’s prospectus.

     Perhaps our most significant responsibility is conducting the annual review of the funds’

advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information from Invesco that allows us to evaluate the quality of its services and the reasonableness of its fees. We also use information from a variety of independent sources, including materials provided by the independent senior officer of the Invesco funds, who reports directly to the independent trustees on the Board. Additionally, we meet with legal counsel and review performance and fee data prepared for us by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.

    After a careful review, the members of the Invesco Funds Board approved the continuation of advisory and sub-advisory contracts with Invesco Advisers and its affliates. Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.

    As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.

Sincerely,

 

LOGO

Bruce L. Crockett

Independent Chair

Invesco Funds Board of Trustees

 

3                             Invesco European Growth Fund

 

Management’s Discussion of Fund Performance

 

 

 

Performance summary

For the fiscal year ended October 31, 2014, Invesco European Growth Fund, at net asset value (NAV), delivered negative returns performing in line with its style-specific benchmark, the MSCI Europe Growth Index. Favorable stock selection in the industrials, information technology (IT) and health care sectors contributed to Fund performance.

    Your Fund’s long-term performance appears later in this report.

 

 

Fund vs. Indexes

Total returns, 10/31/13 to 10/31/14, 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   -1.22%
Class B Shares       -1.96    
Class C Shares       -1.96    
Class R Shares       -1.46    
Class Y Shares       -0.98    
Investor Class Shares       -1.21    
MSCI EAFE Index‚ (Broad Market Index)       -0.60    
MSCI Europe Growth Index‚ (Style-Specific Index)       -1.39    
Lipper European Funds Indexn (Peer Group Index)       -1.31    
Source(s): ‚ FactSet Research Systems Inc.; n Lipper Inc.    

 

 

Market conditions and your Fund

Global equity markets generally rose during the fiscal year ended October 31, 2014, on signs that economic growth was accelerating and continued monetary policies of many developed countries central banks. While 2014 began on an optimistic note, global equity markets pulled back at various points in reaction to economic and geopolitical concerns.

    These concerns included worries about potentially negative effects of the US Federal Reserve reducing the scope of its asset purchase program beginning in early 2014, an Argentine sovereign bond default and eurozone banking concerns. Global equity markets also fell as geopolitical tensions in Ukraine and the Middle East weakened the outlook for global growth.

    Advanced economies such as the UK and US saw a modest but stronger rebound than Europe, where a nascent recovery has stalled. A more supportive monetary policy in the eurozone may be positive for European equity markets, but we have yet to see evidence of any significant earnings recovery coming through.

    Meanwhile, the Bank of Japan remained committed to extraordinary monetary stimulus. Consumer spending in Japan has been weak for some time, and retail sales and household spending increased only gradually during the reporting period – although improved corporate earnings were an encouraging sign.

    Equity market performance in emerging markets was mixed. China continued to face headwinds and struggled to balance structural reforms with its desire to maintain satisfactory growth, while many

 

countries in Asia including India, Indonesia and the Philippines, experienced strong positive gains.

    Regardless of the macroeconomic environment, we remained focused on our bottom-up investment approach of identifying attractive companies that fit our EQV (earning, quality and valuation) process.

    The Fund delivered positive returns in five of 10 invested sectors with holdings in the health care sector contributing the most to absolute results. Relative to the style-specific index, stock selection in the weak industrials sector was the largest contributor to Fund performance. Stock selection in the IT sector was also supportive.

    The Fund’s health care holdings delivered strong double-digit returns with particular strength in the pharmaceutical industry. Shire, an Ireland-based global specialty biopharmaceutical company, was one of the Fund’s top performers. Shire’s stock price rose more than 50% during the fiscal year as it was subject to a takeover bid by US drug maker AbbVie (not a Fund holding).

    In contrast, stock selection in the materials sector and an overweight exposure to the energy sector, the reporting period’s weakest sector, detracted from relative returns.

    Prosafe and Sberbank were two of the Fund largest detractors for the reporting period. Norwegian company Prosafe, a global leader in offshore accommodation rigs, has been under pressure due to broad-based weakness in oilfield services. Sberbank, a leading Russian bank, has been vulnerable to negative sentiment toward Russia. We believe the bank’s fundamentals remain strong and valuation appears attractive.

 
Portfolio Composition     
By sector   
Consumer Discretionary       22.3 %
Financials       20.2  
Industrials       16.4  
Health Care       9.3  
Energy       9.1  
Consumer Staples       8.7  
Information Technology       5.9  
Materials       3.2  
Utilities       0.8  

Money Market Funds

Plus Other Assets Less Liabilities

       4.1  

Top 10 Equity Holdings*

 

     

  1.   British Sky Broadcasting

        Group PLC

       3.0 %
  2.   Reed Elsevier PLC       2.7  
  3.   Aryzta AG       2.5  
  4.   SAP S.E.       2.4  

  5.   British American Tobacco

        PLC

       2.4  
  6.   DCC PLC       2.4  

  7.   Haci Omer Sabanci Holding

        A.S.

       2.3  
  8.   WPP PLC       2.2  
  9.   Roche Holding AG       2.1  
10.   MorphoSys AG       1.9  

Total Net Assets

       $1.6 billion  

Total Number of Holdings*

       73  

The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.

*Excluding money market fund holdings.

 

 

4                             Invesco European Growth Fund

    In broad geographic terms, the Fund benefited most significantly from strong outperformance in the United Kingdom, Ireland and Sweden versus the style-specific index. The Fund’s energy holdings in Norway were down meaningfully. Elsewhere, select holdings in Switzerland and a modest exposure to Russia detracted from Fund performance as well.

    Stock selection in the portfolio is driven by the underlying fundamentals of each individual company, not by any top-down macroeconomic views. This focus on bottom-up stock selection is the key driver of the portfolio’s overall profile. The Fund ended the reporting period with overweight exposures (relative to the Fund’s style-specific benchmark) to the consumer discretionary, financials, energy, industrials and utilities sectors. The Fund had underweight exposures to the consumer staples, materials, health care, telecommunication services and IT sectors.

    As always, regardless of the macroeconomic environment, we remain focused on a bottom-up investment approach of identifying attractive companies that fit our EQV-focused investment process. We continue to look for high-quality growth companies that exhibit the following characteristics: strong organic revenue growth, high returns on capital, pricing power, strong balance sheets, cash generation and reasonable valuations. In addition, we continue to favor companies that are able to consistently generate cash during weak economic environments. We believe that this balanced EQV-focused approach may help deliver attractive returns over the long term.

    We thank you for your continued investment in Invesco European Growth Fund.

The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

See important Fund and, if applicable, index disclosures later in this report.

 

 

LOGO   

Jason Holzer

Chartered Financial Analyst, Portfolio Manager, is lead manager of Invesco European Growth

Fund with respect to the Fund’s small and mid-cap investments. He joined Invesco in 1996. Mr. Holzer earned a BA in quantitative economics and an MS in engineering economic systems from Stanford University.

 

LOGO   

Clas Olsson

Portfolio Manager and Chief Investment Officer of Invesco’s international growth investments team,

is lead manager of Invesco European Growth Fund with respect to the Fund’s large-cap investments. He joined Invesco in 1994. Mr. Olsson became a commissioned officer at the Royal Swedish Naval Academy in 1988. He also earned a BBA from The University of Texas at Austin.

 

LOGO   

Matthew Dennis

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco European Growth Fund.

He joined Invesco in 2000. Mr. Dennis earned a BA in economics from The University of Texas at Austin and an MS in finance from Texas A&M University.

 

LOGO   

Borge Endresen

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco European Growth Fund.

He joined Invesco in 1999. Mr. Endresen earned a BS in finance from the University of Oregon and an MBA from The University of Texas at Austin.

 

LOGO   

Richard Nield

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco European Growth Fund.

He joined Invesco in 2000. Mr. Nield earned a Bachelor of Commerce degree in finance and international business from McGill University in Montreal.
 

 

5                             Invesco European Growth Fund

 

Your Fund’s Long-Term Performance

 

 

Results of a $10,000 Investment – Oldest Share Class(es)

Fund and index data from 10/31/04

 

LOGO

 

Past performance cannot guarantee comparable future results.

    The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical

 

shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the contingent deferred sales charges, if applicable. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group,

 

if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.

 

 

 

 

continued from page 8

n   Preferred securities risk. Preferred securities may include provisions that permit the issuer, in its discretion, to defer or omit distributions for a certain period of time. If the Fund owns a security that is deferring or omitting its distributions, the Fund may be required to report the distribution on its tax returns, even though it may not have received this income. Further, preferred securities may lose substantial value due to the omission or deferment of dividend payments.
n   Small- and mid-capitalization risk. Stocks of small- and mid-sized companies tend to be more vulnerable to adverse developments and may have little or no operating history or track record of success, and limited product lines, markets, management and financial resources. The securities of small- and mid-sized companies may be more volatile due to less market interest and less publicly available information about the issuer. They also may be illiquid or restricted as to resale, or may trade less frequently and in smaller volumes,

all of which may cause difficulty when establishing or closing a position at a desirable price.

 

 

About indexes used in this report

n   The MSCI EAFE® Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   The MSCI Europe Growth Index is an unmanaged index considered representative of European growth stocks. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   The Lipper European Growth Funds Index is an unmanaged index considered representative of European funds tracked by Lipper.
n   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).
n   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.

 

 

Other information

n   The returns shown in management’s discussion of Fund performance are based on net asset values (NAVs) calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the NAVs for shareholder transactions and the returns based on those NAVs may differ from the NAVs and returns reported in the Financial Highlights.
n   Industry 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.
 

 

6                             Invesco European Growth Fund

 

 

 

Average Annual Total Returns

As of 10/31/14, including maximum applicable sales charges

 

   

Class A Shares          
Inception (11/3/97)       10.68 %
10 Years       7.88  
  5 Years       8.56  
  1 Year       -6.65  
Class B Shares          
Inception (11/3/97)       10.69 %
10 Years       7.86  
  5 Years       8.69  
  1 Year       -6.73  
Class C Shares          
Inception (11/3/97)       10.26 %
10 Years       7.70  
  5 Years       8.98  
  1 Year       -2.91  
Class R Shares          
Inception (6/3/02)       9.67 %
10 Years       8.24  
  5 Years       9.52  
  1 Year       -1.46  
Class Y Shares          
10 Years       8.66 %
  5 Years       10.07  
  1 Year       -0.98  
Investor Class Shares          
Inception (9/30/03)       10.94 %
10 Years       8.53  
  5 Years       9.83  

  1 Year

       -1.21  

Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

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

    The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date

 

Average Annual Total Returns
As of 9/30/14, the most recent calendar quarter end, including maximum applicable sales charges    
Class A Shares          
Inception (11/3/97)       10.85 %
10 Years       8.39  
  5 Years       8.85  
  1 Year       -2.55  
Class B Shares          
Inception (11/3/97)       10.85 %
10 Years       8.36  
  5 Years       8.98  
  1 Year       -2.61  
Class C Shares          
Inception (11/3/97)       10.42 %
10 Years       8.20  
  5 Years       9.26  
  1 Year       1.34  
Class R Shares          
Inception (6/3/02)       9.88 %
10 Years       8.74  
  5 Years       9.81  
  1 Year       2.86  
Class Y Shares          
10 Years       9.17 %
  5 Years       10.36  
  1 Year       3.36  
Investor Class Shares          
Inception (9/30/03)       11.19 %
10 Years       9.04  
  5 Years       10.13  

  1 Year

       3.17  

of this report for Class A, Class B, Class C, Class R, Class Y and Investor Class shares was 1.41%, 2.16%, 2.16%, 1.66%, 1.16% and 1.40%, respectively.1 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Investor Class shares was 1.43%, 2.18%, 2.18%, 1.68%, 1.18% and 1.42%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

    Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at

the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R shares, Class Y shares and Investor Class 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.

 

1 Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least June 30, 2016. See current prospectus for more information.
 

 

7                             Invesco European Growth Fund

 

Invesco European Growth Fund’s investment objective is long-term growth of capital.

n   Unless otherwise stated, information presented in this report is as of October 31, 2014, and is based on total net assets.
n   Unless otherwise noted, all data provided by Invesco.
n   To access your Fund’s reports/prospectus, visit invesco.com/fundreports.

 

 

About share classes

n   Class B shares may not be purchased for new or additional investments. Please see the prospectus for more information.
n   Class R shares are generally available only to employer sponsored retirement and benefit plans. Please see the prospectus for more information.
n   Class Y shares are available to only certain investors. Please see the prospectus for more information.
n   Investor Class shares are closed to new investors. Contact your financial advisor about purchasing our other share classes. Please see the prospectus for more information.

 

 

Principal risks of investing in the Fund

n   Depositary receipts risk. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts or to pass through to them any voting rights with respect to the deposited securities.
n   Derivatives risk. The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity, interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets, the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic exposure created by owning the derivative. As a result, an
 

adverse change in the value of the underlying asset could result in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could impact the Fund’s ability to use certain derivatives or their cost. Also, derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly during adverse market conditions.

n   Developing/emerging markets securities risk. The prices of securities issued by foreign companies and governments located in developing/emerging market countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries.
n   Foreign securities risk. The Fund’s foreign investments may be affected by changes in a foreign country’s exchange rates, political and social instability, changes in economic or taxation policies, difficulties when enforcing obligations, decreased liquidity, and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies.
n   Geographic focus risk. From time to time the Fund may invest a substantial amount of its assets in securities of
   

issuers located in a single country or a limited number of countries. If the Fund focuses its investments in this manner, it assumes the risk that economic, political and social conditions in those countries will have a significant impact on its investment performance. The Fund’s investment performance may also be more volatile if it focuses its investments in certain countries, especially emerging markets countries.

n   Growth investing risk. Growth stocks tend to be more expensive relative to their earnings or assets compared with other types of stock. As a result they tend to be more sensitive to changes in their earnings and can be more volatile.
n   Investing in the European Union risk. Many countries in the European Union are susceptible to high economic risks associated with high levels of debt, notably due to investments in sovereign debts of European countries such as Greece, Italy and Spain. One or more member states might exit the European Union, placing its currency and banking system in jeopardy. The European Union faces major issues involving its membership, structure, procedures and policies, including the adoption, abandonment or adjustment of the new constitutional treaty, the European Union’s enlargement to the south and east, and resolution of the European Union’s problematic fiscal and democratic accountability. Efforts of the member states to further unify their economic and monetary policies may increase the potential for the downward movement of one member state’s market to cause a similar effect on other member states’ markets. European countries that are part of the European Economic and Monetary Union may be significantly affected by the tight fiscal and monetary controls that the union seeks to impose on its members.
n   Management risk. The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results.
n   Market risk. The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment, general economic and market conditions, regional or global instability, and currency and interest rate fluctuations.

continued on page 6

 

 

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

 

8                             Invesco European Growth Fund

Schedule of Investments

October 31, 2014

 

 

     Shares      Value  

Common Stocks & Other Equity Interests–95.91%

  

Belgium–1.54%   

Anheuser-Busch InBev N.V.

     225,571       $ 24,997,514   
Denmark–2.51%   

Carlsberg AS–Class B

     249,422         21,962,372   

Novo Nordisk AS–Class B

     416,815         18,837,724   
               40,800,096   
France–5.74%   

Metropole Television S.A.

     407,516         7,049,638   

Publicis Groupe S.A.

     416,122         28,877,074   

Schneider Electric S.E.

     263,263         20,840,020   

Total S.A.

     290,332         17,324,481   

Vicat S.A.

     281,820         19,267,790   
               93,359,003   
Germany–13.06%   

adidas AG

     177,559         12,916,078   

Allianz S.E.

     147,870         23,476,990   

Deutsche Boerse AG

     453,500         30,976,989   

Deutsche Post AG

     576,390         18,096,583   

GEA Group AG

     422,938         19,469,141   

MorphoSys AG(a)

     330,115         31,327,010   

MTU Aero Engines AG

     223,860         19,599,860   

ProSiebenSat.1 Media AG

     437,386         17,643,362   

SAP S.E.

     575,063         39,085,965   
               212,591,978   
Ireland–3.31%   

DCC PLC

     681,736         38,168,624   

Shire PLC

     235,518         15,685,422   
               53,854,046   
Israel–0.70%   

Israel Chemicals Ltd.

     1,695,454         11,435,397   
Italy–2.67%   

Ansaldo STS S.p.A.

     715,137         8,208,626   

Danieli & C. Officine Meccaniche S.p.A.– Savings Shares

     1,109,202         20,015,151   

Prada S.p.A.

     2,446,400         15,245,226   
               43,469,003   
Netherlands–0.35%   

Aalberts Industries N.V.

     213,139         5,682,296   
Norway–2.74%   

Petroleum Geo-Services ASA

     2,246,005         11,137,297   

Prosafe S.E.

     4,929,845         22,582,121   

TGS Nopec Geophysical Co. ASA

     464,767         10,876,652   
               44,596,070   
     Shares      Value  
Russia–1.51%   

Sberbank of Russia–
Preference Shares(a)

     18,607,597       $ 24,617,181   
Spain–0.71%   

Construcciones y Auxiliar de Ferrocarriles S.A.

     34,764         11,568,093   
Sweden–4.51%   

Intrum Justitia AB

     827,756         24,593,027   

Investor AB–Class B

     755,681         27,036,118   

Telefonaktiebolaget LM Ericsson–
Class B

     1,839,236         21,746,378   
               73,375,523   
Switzerland–14.27%   

ABB Ltd.

     1,077,486         23,627,240   

Aryzta AG

     473,160         40,249,580   

Dufry AG(a)

     135,196         19,460,243   

Julius Baer Group Ltd.

     513,404         22,492,743   

Kuoni Reisen Holding AG

     66,248         18,038,844   

Novartis AG

     190,405         17,658,006   

Roche Holding AG

     112,860         33,332,194   

Syngenta AG

     69,229         21,453,886   

Tecan Group AG

     105,086         11,074,330   

UBS AG

     1,429,044         24,835,584   
               232,222,650   
Turkey–2.85%   

Haci Omer Sabanci Holding A.S.

     8,101,545         36,997,517   

Tupras-Turkiye Petrol Rafinerileri A.S.

     436,527         9,476,481   
               46,473,998   
Turkmenistan–1.54%   

Dragon Oil PLC

     2,918,345         25,094,630   
United Kingdom–37.90%   

Aberdeen Asset Management PLC

     3,727,225         25,907,832   

Amlin PLC

     2,516,234         18,345,800   

Balfour Beatty PLC

     2,285,323         5,619,364   

British American Tobacco PLC

     686,043         38,967,713   

British Sky Broadcasting Group PLC

     3,421,195         48,492,798   

Catlin Group Ltd.

     2,453,069         21,077,483   

Centrica PLC

     2,623,166         12,708,069   

Compass Group PLC

     1,612,184         25,978,877   

Halma PLC

     1,116,661         11,148,873   

HomeServe PLC

     2,201,991         12,153,471   

IG Group Holdings PLC

     3,194,258         30,712,145   

Informa PLC

     2,792,356         21,516,981   

John Wood Group PLC

     2,095,113         22,246,553   

Jupiter Fund Management PLC

     2,667,666         15,293,535   

Kingfisher PLC

     3,749,014         18,169,557   

Lancashire Holdings Ltd.

     1,171,980         12,556,088   

Micro Focus International PLC

     1,519,493         24,114,378   

Next PLC

     146,488         15,122,109   
 

 

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

 

9                         Invesco European Growth Fund

     Shares      Value  
United Kingdom–(continued)      

Reed Elsevier PLC

     2,691,110       $ 44,267,142   

Royal Dutch Shell PLC–Class B

     810,893         30,085,209   

Savills PLC

     1,423,820         14,669,207   

Smith & Nephew PLC

     1,357,665         22,993,637   

Smiths Group PLC

     1,087,602         20,296,374   

UBM PLC

     1,081,397         9,858,820   

Ultra Electronics Holdings PLC

     690,708         19,282,157   

Unilever N.V.

     405,842         15,756,387   

William Hill PLC

     4,133,916         23,865,622   

WPP PLC

     1,820,351         35,532,675   
               616,738,856   

Total Common Stocks & Other Equity Interests
(Cost $1,317,820,308)

   

      1,560,876,334   
     Shares      Value  

Money Market Funds–2.83%

  

Liquid Assets Portfolio–Institutional Class(b)

     23,031,017       $ 23,031,017   

Premier Portfolio–
Institutional Class(b)

     23,031,017         23,031,017   

Total Money Market Funds
(Cost $46,062,034)

   

      46,062,034   

TOTAL INVESTMENTS–98.74%
(Cost $1,363,882,342)

   

      1,606,938,368   

OTHER ASSETS LESS LIABILITIES–1.26%

  

      20,512,266   

NET ASSETS–100.00%

  

    $ 1,627,450,634   
 

Notes to Schedule of Investments:

 

(a)  Non-income producing security.
(b)  The money market fund and the Fund are affiliated by having the same investment adviser.

 

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

 

10                         Invesco European Growth Fund

Statement of Assets and Liabilities

October 31, 2014

 

Assets:

  

Investments, at value (Cost $1,317,820,308)

   $ 1,560,876,334   

Investments in affiliated money market funds, at value and cost

     46,062,034   

Total investments, at value (Cost $1,363,882,342)

     1,606,938,368   

Foreign currencies, at value (Cost $358,216)

     353,037   

Receivable for:

  

Investments sold

     14,239,218   

Fund shares sold

     5,960,469   

Dividends

     4,326,285   

Investment for trustee deferred compensation and retirement plans

     207,640   

Other assets

     83,692   

Total assets

     1,632,108,709   

Liabilities:

  

Payable for:

  

Investments purchased

     86,367   

Fund shares reacquired

     3,233,792   

Accrued fees to affiliates

     809,186   

Accrued trustees’ and officers’ fees and benefits

     3,652   

Accrued other operating expenses

     285,904   

Trustee deferred compensation and retirement plans

     239,174   

Total liabilities

     4,658,075   

Net assets applicable to shares outstanding

   $ 1,627,450,634   

Net assets consist of:

  

Shares of beneficial interest

   $ 1,296,204,008   

Undistributed net investment income

     23,615,947   

Undistributed net realized gain

     64,744,573   

Net unrealized appreciation

     242,886,106   
    $ 1,627,450,634   

Net Assets:

  

Class A

   $ 533,549,724   

Class B

   $ 8,585,732   

Class C

   $ 93,679,532   

Class R

   $ 16,209,603   

Class Y

   $ 800,277,729   

Investor Class

   $ 175,148,314   

Shares outstanding, $0.001 par value per share,
with an unlimited number of shares authorized:

   

Class A

     14,227,944   

Class B

     245,244   

Class C

     2,673,200   

Class R

     434,261   

Class Y

     21,271,332   

Investor Class

     4,681,189   

Class A:

  

Net asset value per share

   $ 37.50   

Maximum offering price per share

  

(Net asset value of $37.50 ¸ 94.50%)

   $ 39.68   

Class B:

  

Net asset value and offering price per share

   $ 35.01   

Class C:

  

Net asset value and offering price per share

   $ 35.04   

Class R:

  

Net asset value and offering price per share

   $ 37.33   

Class Y:

  

Net asset value and offering price per share

   $ 37.62   

Investor Class:

  

Net asset value and offering price per share

   $ 37.42   
 

 

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

 

11                         Invesco European Growth Fund

Statement of Operations

For the year ended October 31, 2014

 

Investment income:

  

Dividends (net of foreign withholding taxes of $2,967,288)

   $ 48,455,307   

Dividends from affiliated money market funds

     98,554   

Interest

     7,664   

Total investment income

     48,561,525   

Expenses:

  

Advisory fees

     15,817,349   

Administrative services fees

     407,486   

Custodian fees

     491,076   

Distribution fees:

  

Class A

     1,479,450   

Class B

     112,422   

Class C

     889,342   

Class R

     88,788   

Investor Class

     430,631   

Transfer agent fees

     2,576,455   

Trustees’ and officers’ fees and benefits

     58,231   

Other

     466,602   

Total expenses

     22,817,832   

Less: Fees waived and expense offset arrangement(s)

     (362,874 ) 

Net expenses

     22,454,958   

Net investment income

     26,106,567   

Realized and unrealized gain (loss) from:

  

Net realized gain (loss) from:

  

Investment securities

     68,055,376   

Foreign currencies

     (477,001 ) 
      67,578,375   

Change in net unrealized appreciation (depreciation) of:

  

Investment securities

     (123,426,518 ) 

Foreign currencies

     (214,879 ) 
      (123,641,397 ) 

Net realized and unrealized gain (loss)

     (56,063,022 ) 

Net increase (decrease) in net assets resulting from operations

   $ (29,956,455 ) 

 

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

 

12                         Invesco European Growth Fund

Statement of Changes in Net Assets

For the years ended October 31, 2014 and 2013

 

     2014      2013  

Operations:

     

Net investment income

   $ 26,106,567       $ 14,629,464   

Net realized gain

     67,578,375         27,493,111   

Change in net unrealized appreciation (depreciation)

     (123,641,397 )       184,001,486   

Net increase (decrease) in net assets resulting from operations

     (29,956,455 )       226,124,061   

Distributions to shareholders from net investment income:

     

Class A

     (5,988,738 )       (6,852,015 ) 

Class B

     (82,972 )       (183,960 ) 

Class C

     (439,511 )       (487,737 ) 

Class R

     (161,586 )       (209,318 ) 

Class Y

     (9,199,162 )       (5,374,817 ) 

Investor Class

     (2,330,739 )       (2,895,808 ) 

Total distributions from net investment income

     (18,202,708 )       (16,003,655 ) 

Distributions to shareholders from net realized gains:

     

Class A

     (9,666,633 )       (6,911,369 ) 

Class B

     (243,679 )       (281,354 ) 

Class C

     (1,290,802 )       (745,958 ) 

Class R

     (308,730 )       (238,372 ) 

Class Y

     (12,656,807 )       (4,888,767 ) 

Investor Class

     (3,737,516 )       (2,846,909 ) 

Total distributions from net realized gains

     (27,904,167 )       (15,912,729 ) 

Share transactions–net:

     

Class A

     64,738,152         41,814,991   

Class B

     (3,373,210 )       (5,042,754 ) 

Class C

     43,024,873         9,812,963   

Class R

     855,728         320,311   

Class Y

     212,747,518         287,835,044   

Investor Class

     (14,899,605 )       11,131,571   

Net increase in net assets resulting from share transactions

     303,093,456         345,872,126   

Net increase in net assets

     227,030,126         540,079,803   

Net assets:

     

Beginning of year

     1,400,420,508         860,340,705   

End of year (includes undistributed net investment income of $23,615,947 and $13,332,425, respectively)

   $ 1,627,450,634       $ 1,400,420,508   

Notes to Financial Statements

October 31, 2014

NOTE 1—Significant Accounting Policies

Invesco European Growth Fund (the “Fund”) is a series portfolio of AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of eight separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.

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

The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Investor Class. Investor Class shares of the Fund are offered only to certain grandfathered investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y and Investor Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on

 

13                         Invesco European Growth Fund

or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.

The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.

A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and ask prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

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 of the Fund’s investments.

Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

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

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

 

14                         Invesco European Growth Fund

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

C. Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.
D. Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.
E. Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

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

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

F. Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets.
G. Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
H. Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
I. Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.

The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.

J. Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis or through forward foreign currency contracts to manage or minimize currency or exchange rate risk.

The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.

A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.

 

15                         Invesco European Growth Fund

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:

 

Average Daily Net Assets   Rate

First $250 million

     0 .935%   

Next $250 million

     0 .91%   

Next $500 million

     0 .885%   

Next $1.5 billion

     0 .86%   

Next $2.5 billion

     0 .835%   

Next $2.5 billion

     0 .81%   

Next $2.5 billion

     0 .785%   

Over $10 billion

     0 .76%     

For the year ended October 31, 2014, the effective advisory fees incurred by the Fund was 0.88%.

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

The Adviser has contractually agreed, through at least June 30, 2015, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y and Investor Class shares to 2.25%, 3.00%, 3.00%, 2.50%, 2.00% and 2.25%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2015. The fee waiver agreement cannot be terminated during its term. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.

Further, the Adviser has contractually agreed, through at least June 30, 2016, 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 year ended October 31, 2014, the Adviser waived advisory fees of $359,060.

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 year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.

The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Investor Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C, Class R and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. The Fund, pursuant to the Investor Class Plan, reimburses IDI for its allocated share of expenses incurred pursuant to the Investor Class Plan for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Investor Class shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the year ended October 31, 2014, 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 year ended October 31, 2014, IDI advised the Fund that IDI retained $197,258 in front-end sales commissions from the sale of Class A shares and $16,381, $4,206 and $21,750 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.

Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.

 

16                         Invesco European Growth Fund

NOTE 3—Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.
  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of October 31, 2014. 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.

During the year ended October 31, 2014, there were transfers from Level 1 to Level 2 of $257,802,826 and from Level 2 to Level 1 of $175,627,161, due to foreign fair value adjustments.

 

     Level 1        Level 2        Level 3        Total  

Belgium

   $ —         $ 24,997,514         $ —         $ 24,997,514   

Denmark

     21,962,372           18,837,724           —           40,800,096   

France

     26,317,428           67,041,575           —           93,359,003   

Germany

     175,479,475           37,112,503           —           212,591,978   

Ireland

     15,685,422           38,168,624           —           53,854,046   

Israel

     —           11,435,397           —           11,435,397   

Italy

     28,223,777           15,245,226           —           43,469,003   

Netherlands

     —           5,682,296           —           5,682,296   

Norway

     33,719,418           10,876,652           —           44,596,070   

Russia

     —           24,617,181           —           24,617,181   

Spain

     11,568,093           —           —           11,568,093   

Sweden

     51,629,145           21,746,378           —           73,375,523   

Switzerland

     88,822,997           143,399,653           —           232,222,650   

Turkey

     46,473,998           —           —           46,473,998   

Turkmenistan

     25,094,630           —           —           25,094,630   

United Kingdom

     155,043,520           461,695,336           —           616,738,856   

United States

     46,062,034           —           —           46,062,034   

Total Investments

   $ 726,082,309         $ 880,856,059         $ —         $ 1,606,938,368   

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 year ended October 31, 2014, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $3,814.

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.

 

17                         Invesco European Growth Fund

NOTE 6—Cash Balances

The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.

NOTE 7—Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2014 and 2013:

 

     2014        2013  

Ordinary income

   $ 18,202,708         $ 16,003,655   

Long-term capital gain

     27,904,167           15,912,729   

Total distributions

   $ 46,106,875         $ 31,916,384   

Tax Components of Net Assets at Period-End:

 

     2014  

Undistributed ordinary income

   $ 29,114,611   

Undistributed long-term gain

     65,240,809   

Net unrealized appreciation — investments

     237,281,321   

Net unrealized appreciation (depreciation) — other investments

     (169,920 ) 

Temporary book/tax differences

     (220,195 ) 

Shares of beneficial interest

     1,296,204,008   

Total net assets

   $ 1,627,450,634   

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to passive foreign investment companies and wash sales.

The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund does not have a capital loss carryforward as of October 31, 2014.

NOTE 8—Investment Securities

The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2014 was $709,122,196 and $269,659,602, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis  

Aggregate unrealized appreciation of investment securities

   $ 310,504,915   

Aggregate unrealized (depreciation) of investment securities

     (73,223,594 ) 

Net unrealized appreciation of investment securities

   $ 237,281,321   

Cost of investments for tax purposes is $1,369,657,047.

NOTE 9—Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of passive foreign investment companies, fair fund settlements and foreign currency transactions, on October 31, 2014, undistributed net investment income was increased by $2,379,663 and undistributed net realized gain was decreased by $2,379,663. This reclassification had no effect on the net assets of the Fund.

 

18                         Invesco European Growth Fund

NOTE 10—Share Information

 

     Summary of Share Activity  
    Years ended October 31,  
    2014(a)      2013  
     Shares      Amount      Shares      Amount  

Sold:

           

Class A

     6,165,588       $ 243,448,178         3,051,834       $ 110,544,363   

Class B

     35,238         1,296,324         13,038         444,040   

Class C

     1,603,861         59,196,274         472,914         16,366,896   

Class R

     168,060         6,615,797         167,063         5,906,853   

Class Y

     15,858,930         622,152,874         8,950,533         324,100,471   

Investor Class

     474,978         18,621,091         712,095         25,579,255   

Issued as reinvestment of dividends:

           

Class A

     384,642         14,469,995         413,345         13,363,444   

Class B

     8,937         314,423         15,041         458,756   

Class C

     44,935         1,582,625         38,712         1,181,877   

Class R

     12,556         468,963         13,827         446,317   

Class Y

     373,625         14,003,465         311,924         10,090,743   

Investor Class

     152,084         5,678,807         172,999         5,579,228   

Automatic conversion of Class B shares to Class A shares:

           

Class A

     73,141         2,879,386         99,082         3,489,071   

Class B

     (78,092 )       (2,879,386 )       (105,372 )       (3,489,071 ) 

Reacquired:

           

Class A

     (5,015,693 )       (196,059,407 )       (2,433,163 )       (85,581,887 ) 

Class B

     (57,078 )       (2,104,571 )       (75,199 )       (2,456,479 ) 

Class C

     (493,096 )       (17,754,026 )       (232,876 )       (7,735,810 ) 

Class R

     (159,903 )       (6,229,032 )       (170,746 )       (6,032,859 ) 

Class Y

     (10,851,267 )       (423,408,821 )       (1,297,649 )       (46,356,170 ) 

Investor Class

     (1,004,014 )       (39,199,503 )       (573,336 )       (20,026,912 ) 

Net increase in share activity

     7,697,432       $ 303,093,456         9,544,066       $ 345,872,126   

 

(a)  There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 51% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially.

 

19                         Invesco European Growth Fund

NOTE 11—Financial Highlights

The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.

 

     Net asset
value,
beginning
of period		     Net
investment
income(a)		     Net gains
(losses)
on securities
(both
realized and
unrealized)		     Total from
investment
operations		     Dividends
from net
investment
income		     Distributions
from net
realized
gains		     Total
distributions		     Net asset
value, end
of  period(b)		     Total
return(c)		     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(d)		  

Class A

                            

Year ended 10/31/14

   $ 39.17      $ 0.54      $ (1.02 )    $ (0.48 )    $ (0.45 )    $ (0.74 )    $ (1.19 )    $ 37.50        (1.22 )%    $ 533,550        1.34 %(e)      1.36 %(e)      1.38 %(e)      18 % 

Year ended 10/31/13

     32.84        0.48        7.06        7.54        (0.60 )      (0.61 )      (1.21 )      39.17        23.72        494,360        1.39        1.41        1.35        15   

Year ended 10/31/12

     30.13        0.59        3.07 (f)      3.66        (0.95 )      —        (0.95 )      32.84        12.64 (f)      377,331        1.47        1.48        1.94        14   

Year ended 10/31/11

     30.81        0.58        (0.89 )(f)      (0.31 )      (0.37 )      —        (0.37 )      30.13        (1.02 )(f)      362,913        1.44        1.45        1.84        21   

Year ended 10/31/10

     26.66        0.29        4.23        4.52        (0.37 )      —        (0.37 )      30.81        17.12        433,347        1.50        1.51        1.07        25   

Class B

                            

Year ended 10/31/14

     36.71        0.23        (0.94 )      (0.71 )      (0.25 )      (0.74 )      (0.99 )      35.01        (1.96 )      8,586        2.09 (e)      2.11 (e)      0.63 (e)      18   

Year ended 10/31/13

     30.87        0.20        6.64        6.84        (0.39 )      (0.61 )      (1.00 )      36.71        22.82        12,343        2.14        2.16        0.60        15   

Year ended 10/31/12

     28.27        0.34        2.90 (f)      3.24        (0.64 )      —        (0.64 )      30.87        11.80 (f)      15,089        2.22        2.23        1.19        14   

Year ended 10/31/11

     28.92        0.32        (0.84 )(f)      (0.52 )      (0.13 )      —        (0.13 )      28.27        (1.78 )(f)      21,177        2.19        2.20        1.09        21   

Year ended 10/31/10

     25.06        0.08        3.97        4.05        (0.19 )      —        (0.19 )      28.92        16.24        31,767        2.25        2.26        0.32        25   

Class C

                            

Year ended 10/31/14

     36.74        0.23        (0.94 )      (0.71 )      (0.25 )      (0.74 )      (0.99 )      35.04        (1.96 )      93,680        2.09 (e)      2.11 (e)      0.63 (e)      18   

Year ended 10/31/13

     30.90        0.20        6.64        6.84        (0.39 )      (0.61 )      (1.00 )      36.74        22.80        55,760        2.14        2.16        0.60        15   

Year ended 10/31/12

     28.30        0.34        2.90 (f)      3.24        (0.64 )      —        (0.64 )      30.90        11.79 (f)      38,282        2.22        2.23        1.19        14   

Year ended 10/31/11

     28.95        0.32        (0.84 )(f)      (0.52 )      (0.13 )      —        (0.13 )      28.30        (1.78 )(f)      41,078        2.19        2.20        1.09        21   

Year ended 10/31/10

     25.08        0.08        3.98        4.06        (0.19 )      —        (0.19 )      28.95        16.27        56,637        2.25        2.26        0.32        25   

Class R

                            

Year ended 10/31/14

     39.02        0.44        (1.01 )      (0.57 )      (0.38 )      (0.74 )      (1.12 )      37.33        (1.46 )      16,210        1.59 (e)      1.61 (e)      1.13 (e)      18   

Year ended 10/31/13

     32.73        0.39        7.04        7.43        (0.53 )      (0.61 )      (1.14 )      39.02        23.42        16,137        1.64        1.66        1.10        15   

Year ended 10/31/12

     30.00        0.51        3.07 (f)      3.58        (0.85 )      —        (0.85 )      32.73        12.36 (f)      13,204        1.72        1.73        1.69        14   

Year ended 10/31/11

     30.68        0.50        (0.89 )(f)      (0.39 )      (0.29 )      —        (0.29 )      30.00        (1.28 )(f)      14,911        1.69        1.70        1.59        21   

Year ended 10/31/10

     26.56        0.22        4.21        4.43        (0.31 )      —        (0.31 )      30.68        16.82        17,578        1.75        1.76        0.82        25   

Class Y

                            

Year ended 10/31/14

     39.28        0.64        (1.03 )      (0.39 )      (0.53 )      (0.74 )      (1.27 )      37.62        (0.98 )      800,278        1.09 (e)      1.11 (e)      1.63 (e)      18   

Year ended 10/31/13

     32.92        0.57        7.07        7.64        (0.67 )      (0.61 )      (1.28 )      39.28        24.01        624,166        1.14        1.16        1.60        15   

Year ended 10/31/12

     30.22        0.67        3.08 (f)      3.75        (1.05 )      —        (1.05 )      32.92        12.96 (f)      260,860        1.22        1.23        2.19        14   

Year ended 10/31/11

     30.91        0.66        (0.91 )(f)      (0.25 )      (0.44 )      —        (0.44 )      30.22        (0.80 )(f)      215,716        1.19        1.20        2.09        21   

Year ended 10/31/10

     26.73        0.36        4.25        4.61        (0.43 )      —        (0.43 )      30.91        17.44        190,994        1.25        1.26        1.32        25   

Investor Class

                            

Year ended 10/31/14

     39.08        0.55        (1.02 )      (0.47 )      (0.45 )      (0.74 )      (1.19 )      37.42        (1.19 )(g)      175,148        1.31 (e)(g)      1.33 (e)      1.41 (e)(g)      18   

Year ended 10/31/13

     32.78        0.48        7.04        7.52        (0.61 )      (0.61 )      (1.22 )      39.08        23.74        197,655        1.38        1.40        1.36        15   

Year ended 10/31/12

     30.07        0.61        3.07 (f)      3.68        (0.97 )      —        (0.97 )      32.78        12.75 (f)      155,575        1.41        1.42        2.00        14   

Year ended 10/31/11

     30.76        0.60        (0.92 )(f)      (0.32 )      (0.37 )      —        (0.37 )      30.07        (1.03 )(f)      153,892        1.38        1.39        1.90        21   

Year ended 10/31/10

     26.61        0.30        4.22        4.52        (0.37 )      —        (0.37 )      30.76        17.16        175,069        1.47        1.48        1.10        25   

 

(a)  Calculated using average shares outstanding.
(b)  Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share for fiscal years ended October 31, 2012 and prior.
(c)  Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.
(d)  Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
(e)  Ratios are based on average daily net assets (000’s omitted) of $591,780, $11,242, $88,934, $17,758, $880,465 and $198,175 for Class A, Class B, Class C, Class R, Class Y and Investor Class shares, respectively.
(f)  Includes litigation proceeds received during the period. Had the litigation proceeds not been received, Net gains (losses) on securities (both realized and unrealized) per share, for the year ended October 31, 2012, would have been $2.96, $2.79, $2.79, $2.95, $2.97 and $2.96 for Class A, Class B, Class C, Class R, Class Y and Investor Class shares, respectively, and total returns would have been lower. Net gains (losses) on securities (both realized and unrealized) per share, for the year ended October 31, 2011, would have been $(1.11), $(1.06), $(1.06), $(1.11), $(1.13) and $(1.14) for Class A, Class B, Class C, Class R, Class Y and Investor Class shares, respectively, and total returns would have been lower.
(g)  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 0.21%.

 

20                         Invesco European Growth Fund

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of AIM International Mutual Funds (Invesco International Mutual Funds)

and Shareholders of Invesco European Growth Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco European Growth Fund (one of the funds constituting AIM International Mutual Funds (Invesco International Mutual Funds), hereafter referred to as the “Fund”) at October 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2014 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

December 23 2014

Houston, Texas

 

21                         Invesco European Growth Fund

Calculating your ongoing Fund expenses

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2014 through October 31, 2014.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

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

 

Class   Beginning
Account Value
(05/01/14)		     ACTUAL    

HYPOTHETICAL

(5% annual return before

expenses)

      Annualized
Expense
Ratio		  
    Ending
Account Value
(10/31/14)1		      Expenses
Paid During
Period2		     Ending
Account Value
(10/31/14)		     Expenses
Paid During
Period2		     
A   $ 1,000.00      $ 923.40       $ 6.50      $ 1,018.45      $ 6.82         1.34 % 
B     1,000.00        919.90         10.11        1,014.67        10.61         2.09   
C     1,000.00        919.90         10.11        1,014.67        10.61         2.09   
R     1,000.00        922.40         7.70        1,017.19        8.08         1.59   
Y     1,000.00        924.50         5.29        1,019.71        5.55         1.09   
Investor     1,000.00        923.50         6.25        1,018.70        6.56         1.29   

 

1  The actual ending account value is based on the actual total return of the Fund for the period May 1, 2014 through October 31, 2014, 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.

 

22                         Invesco European Growth Fund

Approval of Investment Advisory and Sub-Advisory Contracts

 

The Board of Trustees (the Board) of AIM International Mutual Funds (Invesco International Mutual Funds) is required under the Investment Company Act of 1940, as amended, to approve annually the renewal of Invesco European Growth Fund’s (the Fund) investment advisory agreements. During contract renewal meetings held on June 16-17, 2014, the Board as a whole, and the disinterested or “independent” Trustees, who comprise over 75% of the Board, voting separately, approved the continuance for the Fund of the 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 Australia 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, 2014.

In evaluating the fairness and reasonableness of compensation under the Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board determined that the continuation of the Fund’s investment advisory agreement and the sub-advisory contracts are in the best interest of the Fund and its shareholders and that the compensation payable to Invesco Advisers and the Affiliated Sub-Advisers under the agreements is fair and reasonable.

The Board’s Fund Evaluation Process

The Board’s Investments Committee has established three Sub-Committees, each of which is primarily responsible for overseeing the management of a number of the funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet throughout the year to review the performance of their assigned Invesco Funds, including reviewing materials prepared under the direction of the independent Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review the performance, investment objective(s), policies, strategies, limitations and investment risks of these funds. The Sub-Committees meet regularly and at designated contract renewal meetings each year to conduct a review of the performance, fees, expenses and other matters related to their assigned Invesco Funds. Each Sub-Committee recommends to the Investments Committee, which in turn recommends to the full Board, whether and on what terms to

approve the continuance of each Invesco Fund’s investment advisory agreement and sub-advisory contracts for another year.

During the contract renewal process, the Trustees receive comparative performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Lipper Inc. (Lipper), an independent provider of investment company data. The Trustees also receive 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 addition to meetings with Invesco Advisers and fund counsel, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

The Trustees recognized that the advisory fee rates for the Invesco Funds are, in many cases, the result of years of review and negotiation. The Trustees’ deliberations and conclusions in a particular year may be based in part on their deliberations and conclusions regarding these arrangements throughout the year and in prior years. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.

The discussion below serves as the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. Unless otherwise stated, this information is current as of June 17, 2014, and may not reflect consideration of factors that became known to the Board after that date.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

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

The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers, with whom the Sub-Committees met

during the year. The Board’s review of the qualifications of Invesco Advisers to provide advisory services included the Board’s consideration of Invesco Advisers’ investment process oversight, independent credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, equity and fixed income trading operations, internal audit, distribution and legal and compliance.

In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship and the greater uncertainty that may be associated with entering into a new relationship. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s investment advisory agreement.

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 that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, 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 benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s sub-advisory contracts.

B. Fund Performance

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

The Board compared the Fund’s performance during the past one, three and five calendar years to the performance of funds in the Lipper performance universe and against the Lipper European Funds Index. The Board noted that performance of Class A shares of the Fund was in the fourth quintile of the performance universe for the one year period, the second quintile for the three year period and the first

 

 

23                         Invesco European Growth Fund

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 below the performance of the Index for the one year period and above the performance of the Index for the three and five year periods. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.

C. Advisory and Sub-Advisory Fees

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Lipper expense group at a common asset level. 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 the expense group. The Board noted that the term “contractual management fee” may include both advisory and certain administrative services fees, but that Lipper does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco does not charge the Invesco Funds for the administrative services included in the term as defined by Lipper. The Board also reviewed the methodology used by Lipper in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group.

The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund through at least June 30, 2015 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 compared the Fund’s effective advisory fee rate (the advisory fee rate after advisory fee waivers and before other expense limitations/waivers) to the effective advisory fee rates of other funds advised by Invesco Advisers and its affiliates with that are managed using an investment process substantially similar to the investment process used for the Fund. The Board noted that Invesco Advisers sub-advises two off-shore funds using an investment process substantially similar to the investment process used for the Fund, each of which had an effective advisory fee rate before and after waivers higher than the Fund’s rate. The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other client accounts using an investment process substantially similar to the investment process used for the Fund.

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. The Board also noted that the sub-advisory fees are not paid directly

by the Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers.

D. Economies of Scale and Breakpoints

The Board considered the extent to which there are economies of scale in the provision of advisory services to the Fund. The Board also considered whether the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule and was assisted in this review by a report from the Senior Officer. The Board also noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds and other clients advised by Invesco Advisers.

E. Profitability and Financial Resources

The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the profitability of Invesco Advisers and its affiliates in providing these services for the year ended December 31, 2013. The Board received information from Invesco Advisers about the methodology used to prepare the profitability information. The Board considered the profitability of Invesco Advisers in managing the Fund and the Invesco Funds. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its subsidiaries provide to the Invesco Funds and the Fund. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund to be excessive given the nature, quality and extent of the services provided to the Invesco Funds. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each Affiliated Sub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.

F. Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for their provision of transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Lipper and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; that the services are required for the operation of the Fund; that Invesco Advisers and its affiliates can provide services, the nature and quality of which are at least equal to those provided by others offering the same or similar services; and that the fees for such

services are fair and reasonable in light of the usual and customary charges by others for services of the same nature and quality.

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 shift the payment obligation for research services from Invesco Advisers and the Affiliated Sub-Advisers to the Invesco Funds and that the research received may be used with other clients of Invesco Advisers and may reduce Invesco Advisers’ and the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.

The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisors from the Fund’s investment of uninvested cash and cash collateral from any securities lending arrangements in the affiliated money market funds are fair and reasonable.

The Board also considered the Fund may use an affiliated broker to execute certain trades for the Fund to among other things, control information leakage, and were advised that such trades would be executed in compliance with rules under the Investment Company Act of 1940, as amended.

 

 

24                         Invesco European Growth Fund

Tax Information

Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2014:

 

Federal and State Income Tax

  

Long-Term Capital Gain Distributions

   $ 27,904,167   

Qualified Dividend Income*

     100 % 

Corporate Dividends Received Deduction*

     0 % 

U.S. Treasury Obligations*

     0 % 

Foreign Taxes

     $0.0711 per share   

Foreign Source Income

     $1.2324 per share   

 

  * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

25                         Invesco European Growth Fund

Trustees and Officers

 

The address of each trustee and officer is AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Interested Persons                

Martin L. Flanagan1 — 1960

Trustee

   2007  

Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business

 

Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization).

   144   None

Philip A. Taylor2 — 1954

Trustee, President and Principal Executive Officer

   2006  

Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.

 

Formerly: Director and Chairman, Van Kampen Investor Services Inc.; Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company) and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships) and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.

   144   None

Wayne W. Whalen3 — 1939

Trustee

   2010   Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex   144   Director of the Mutual fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy

 

1  Mr. Flanagan is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer of the Adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the Adviser.
2  Mr. Taylor is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer and a director of the Adviser.
3  Mr. Whalen is retiring effective December 31, 2014. He has been deemed to be an interested person of the Trust because of his prior service as counsel to the predecessor funds of certain Invesco open-end funds and his affiliation with the law firm that served as counsel to such predecessor funds and the Invesco closed-end funds.

 

T-1                         Invesco European Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees                

Bruce L. Crockett — 1944

Trustee and Chair

   1992  

Chairman, Crockett Technologies Associates (technology consulting company)

 

Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer, COMSAT Corporation; Chairman, Board of Governors of INTELSAT (international communications company); ACE Limited (insurance company); and Investment Company Institute

   144   ALPS (Attorneys Liability Protection Society) (insurance company)

David C. Arch — 1945

Trustee

   2010   Chairman of Blistex Inc., a consumer health care products manufacturer   144   Board member of the Illinois Manufacturers’ Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan; Member of the Audit Committee of the Edward-Elmhurst Hospital

Frank S. Bayley — 1939

Trustee

   2001   Retired. Formerly: Director, Badgley Funds Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP   144   Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee, The Curtis Institute of Music

James T. Bunch — 1942

Trustee

   2003  

Managing Member, Grumman Hill Group LLC (family office private equity investments)

 

Formerly: Founder, Green Manning & Bunch Ltd. (investment banking firm) (1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation

   144   Chairman, Board of Governors, Western Golf Association; Chairman, Evans Scholars Foundation; and Director, Denver Film Society

Rodney F. Dammeyer — 1940

Trustee

   2010  

Chairman of CAC,LLC, (private company offering capital investment and management advisory services)

 

Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex

   144   Director of Quidel Corporation and Stericycle, Inc.

Albert R. Dowden — 1941

Trustee

   2000  

Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Nature’s Sunshine Products, Inc. and Reich & Tang Funds (5 portfolios) (registered investment company)

 

Formerly: Director, Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company); Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director, Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company)

   144   Director of: Nature’s Sunshine Products, Inc., Reich & Tang Funds, Homeowners of America Holding Corporation/ Homeowners of America Insurance Company, the Boss Group

Jack M. Fields — 1952

Trustee

   1997  

Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)

 

Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives

   144   Insperity, Inc. (formerly known as Administaff)

Prema Mathai-Davis — 1950

Trustee

   1998   Retired. Formerly: Chief Executive Officer, YWCA of the U.S.A.   144   None

Larry Soll — 1942

Trustee

   2003   Retired. Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company)   144   None

Hugo F. Sonnenschein — 1940

Trustee

   2010   President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to 2000, President of the University of Chicago   144   Trustee of the University of Rochester and a member of its investment committee; Member of the National Academy of Sciences and the American Philosophical Society; Fellow of the American Academy of Arts and Sciences

 

T-2                         Invesco European Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees—(continued)

Raymond Stickel, Jr. — 1944

Trustee

   2005   Retired. Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche   144   None

Suzanne H. Woolsey — 1941

Trustee

   2014   Chief Executive Officer of Woolsey Partners LLC   144   Emeritus Chair of the Board of Trustees of the Institute for Defense Analyses; Trustee of Colorado College; Trustee of California Institute of Technology; Prior to 2014, Director of Fluor Corp.; Prior to 2010, Trustee of the German Marshall Fund of the United States; Prior to 2010 Trustee of the Rocky Mountain Institute
Other Officers                

Russell C. Burk — 1958

Senior Vice President and Senior Officer

   2005   Senior Vice President and Senior Officer, The Invesco Funds   N/A   N/A

John M. Zerr — 1962

Senior Vice President, Chief Legal Officer and Secretary

   2006  

Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust; and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company)

   N/A   N/A

Sheri Morris — 1964

Vice President, Treasurer and Principal Financial Officer

   1999  

Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust

   N/A   N/A

 

T-3                         Invesco European Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Other Officers—(continued)                

Karen Dunn Kelley — 1960

Vice President

   2004  

Senior Managing Director, Investments; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc. and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only)

 

Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only)

   N/A   N/A

Crissie M. Wisdom — 1969

Anti-Money Laundering Compliance Officer

   2013   Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc.   N/A   N/A

Todd L. Spillane — 1958

Chief Compliance Officer

   2006  

Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)

 

Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company

   N/A   N/A

The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.

 

Office of the Fund

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Investment Adviser

Invesco Advisers, Inc.

1555 Peachtree Street, N.E.

Atlanta, GA 30309

  

Distributor

Invesco Distributors, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Auditors

PricewaterhouseCoopers LLP

1000 Louisiana Street, Suite 5800

Houston, TX 77002-5678

     

Counsel to the Fund

Stradley Ronon Stevens & Young, LLP

2005 Market Street, Suite 2600

Philadelphia, PA 19103-7018

  

Counsel to the Independent Trustees

Goodwin Procter LLP

901 New York Avenue, N.W.

Washington, D.C. 20001

  

Transfer Agent

Invesco Investment Services, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Custodian

State Street Bank and Trust Company

225 Franklin Street

Boston, MA 02110-2801

 

T-4                         Invesco European Growth Fund

 

 

LOGO

 

 

Invesco mailing information

Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.

 

 

Important notice regarding delivery of security holder documents

To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.

 

 

Fund holdings and proxy voting information

The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.

    A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.   

LOGO

    Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.   

SEC file numbers: 811-06463 and 033-44611                        EGR-AR-1        Invesco Distributors, Inc.

LOGO

Letters to Shareholders

 

LOGO

 

   

Dear Shareholders:

 

This annual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Inside, your Fund’s portfolio managers discuss how they managed your Fund and the factors that affected its performance during the reporting period. I hope you find this report of interest.

 

During the reporting period covered by this report, the US economy showed signs of continued improvement. After contracting in the first quarter of 2014, the economy expanded strongly in the second quarter and unemployment trended lower. Much of the credit for this improvement goes to the US Federal Reserve (the Fed), which undertook an extraordinary asset purchase program following the global financial crisis. The Fed’s goal was to jumpstart the economy by encouraging banks to lend more, businesses to hire more and consumers to spend more. Signs of a stronger US economy prompted the Fed to reduce, or

“taper,” its asset purchase program. Despite this, interest rates remained near historical low levels due largely to heavy investor demand for bonds. While signs of economic improvement were evident in the US, European economies showed signs of weakening. That, together with geopolitical uncertainty and worries about the first diagnosed cases of Ebola outside of Africa, caused increased volatility in US and European equities.

Extended periods of market strength can lull investors into complacency – just as prolonged periods of market weakness or volatility can discourage investors from initiating long-term investment plans. That’s why Invesco has always encouraged investors to work with a professional financial adviser who can stress the importance of starting to save and invest early and the importance of adhering to a disciplined investment plan – when times are good and when they’re uncertain. A financial adviser who knows your unique financial situation, investment goals and risk tolerance can be an invaluable partner as you seek to achieve your financial goals. He or she can offer a long-term perspective when markets are volatile and time-tested advice and guidance when your financial situation or investment goals change.

Timely information when and where you want it

Invesco’s efforts to help investors achieve their financial objectives include providing individual investors and financial professionals with timely information about the markets, the economy and investing – whenever and wherever they want it.

Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including prices, performance, holdings and portfolio manager commentaries. You can access information about your individual Invesco account whenever it’s convenient for you; just complete a simple, secure online registration. Use the “Log In” box on our home page to get started.

Invesco’s mobile app for iPad® (available free from the App StoreSM) allows you to obtain the same detailed information about your Fund and the same investment insights from our investment leaders, market strategists, economists and retirement experts on the go. You also can watch portfolio manager videos and have instant access to Invesco news and updates wherever you may be.

In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.

Have questions?

For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.

All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.

Sincerely,

 

LOGO

Philip Taylor

Senior Managing Director, Invesco Ltd.

iPad is a trademark of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affliated with Apple Inc.

 

 

2

    Invesco Global Growth Fund

LOGO   

Dear Fellow Shareholders:

 

There are a variety of factors that can impact investment performance, many of which are uncontrollable by us as investors. These factors can include various economic trends and geopolitical developments.

 

While the members of the Invesco Funds Board, which I chair, can’t dictate the performance of the Invesco funds, be assured that your Board works diligently throughout the year to focus on how your investments are managed. Our job is to represent you and your interests on a variety of fund management-related matters. We regularly monitor how the portfolio management teams of the Invesco funds are performing in light of ever-changing and often unpredictable economic and market conditions. We review the investment strategies and investment process employed by each fund’s management team as explained in the fund’s prospectus.

  

Perhaps our most significant responsibility is conducting the annual review of the funds’

advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information from Invesco that allows us to evaluate the quality of its services and the reasonableness of its fees. We also use information from a variety of independent sources, including materials provided by the independent senior officer of the Invesco funds, who reports directly to the independent trustees on the Board. Additionally, we meet with legal counsel and review performance and fee data prepared for us by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.

After a careful review, the members of the Invesco Funds Board approved the continuation of advisory and sub-advisory contracts with Invesco Advisers and its affiliates. Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.

As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.

Sincerely,

 

LOGO

Bruce L. Crockett

Independent Chair

Invesco Funds Board of Trustees

 

3

    Invesco Global Growth Fund

 

Management’s Discussion of Fund Performance

 

    

 

Performance summary

For the fiscal year ended October 31, 2014, Invesco Global Growth Fund, at net asset value (NAV), delivered positive returns and performed in line with its style-specific benchmark, the MSCI All Country World Growth Index. The Fund’s investments in the Asia/Pacific and Africa/Middle East regions provided the largest contributions to relative Fund performance, with the Fund’s exposure to Singapore and Israel leading the gains. In contrast, stock selection in Germany and Switzer-land were key detractors from relative results.

Your Fund’s long-term performance appears later in this report.

 

 

Fund vs. Indexes

Total returns, 10/31/13 to 10/31/14, 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

     9.00 % 

Class B Shares

     8.17   

Class C Shares

     8.21   

Class Y Shares

     9.27   

Class R5 Shares

     9.49   

Class R6 Shares

     9.53   

MSCI All Country World Indexq (Broad Market Index)*

     7.77   

MSCI World Indexq (Former Broad Market Index)*

     8.67   

MSCI All Country World Growth Indexq (Style-Specific Index)*

     8.70   

MSCI World Growth Indexq (Former Style-Specific Index)*

     9.57   

Lipper Global Large-Cap Growth Funds Index¡ (Peer Group Index)

     7.49   

Source(s): qFactSet Research Systems Inc.; ¡Lipper Inc.

 

* The Fund has elected to use the MSCI All Country World Index as its broad market benchmark rather than the MSCI World Index and the MSCI All Country World Growth Index as its style-specific benchmark rather than the MSCI World Growth Index because the MSCI All Country World Index and the MSCI All Country World Growth Index more closely reflect the performance of the types of securities in which the Fund invests.

 

 

Market conditions and your Fund

Global equity markets generally rose during the fiscal year ended October 31, 2014, on signs that economic growth was accelerating as a result of the loose monetary policies of many developed countries’ central banks. While 2014 began on an optimistic note, global equity markets pulled back at various points in reaction to economic and geopolitical concerns.

These concerns included worries about potentially negative effects of the US Federal Reserve reducing the scope of its

asset purchase program beginning in early 2014, an Argentine sovereign bond default and eurozone banking concerns. Global equity markets also fell as geopolitical tensions in Ukraine and the Middle East weakened the outlook for global growth.

Advanced economies such as the UK and US saw a modest but stronger rebound than Europe, where a nascent recovery has stalled. A more supportive monetary policy in the eurozone may be positive for equity markets there, and we have seen evidence of earnings recovery coming through.

 

Meanwhile, the Bank of Japan remained committed to extraordinary monetary stimulus. Consumer spending in Japan has been weak for some time, and retail sales and household spending increased only gradually during the reporting period – although improved corporate earnings were an encouraging sign.

Equity market performance in emerging markets was mixed. China continued to face headwinds and struggled to balance structural reforms with its desire to maintain satisfactory growth, while many countries in Asia experienced a stealth bull market.

We continued to construct the Fund’s portfolio on a bottom-up basis, selecting stocks on an individual basis. From a sector perspective, the Fund delivered positive returns across eight of 10 invested sectors. Stock selection and overweight exposure to the strong information technology (IT) sector was the largest contributor to relative and absolute performance. Semiconductor and Inter-net software stocks showed particular strength. Avago Technologies, a Singapore-based semiconductor company, was the Fund’s strongest performer. In August 2014, the company reported earnings and forward guidance that were significantly better than consensus expectations. The market was pleasantly surprised by the speed and integration of the company’s acquisition of LSI. In addition, the company’s stock price rallied in anticipation of greater-than-expected Avago Technologies content embedded in the latest iPhones.

Stock selection in the health care sector, particularly in the pharmaceuticals and biotechnology industries, delivered double-digit gains adding to both relative and absolute Fund returns. Gilead Sciences, a US-based biopharmaceutical company, was a top performer for the Fund in this sector. The company saw

 
Portfolio Composition        

By sector

  
 

Consumer Discretionary

     25.0 % 

Information Technology

     23.9   

Financials

     14.4   

Health Care

     11.2   

Industrials

     7.2   

Energy

     6.8   

Consumer Staples

     6.0   

Materials

     2.5   

Money Market Funds

  

Plus Other Assets Less Liabilities

     3.0   

Top 10 Equity Holdings*

  

   
   

1.

  

Gilead Sciences, Inc.

     2.1 % 

2.

  

Apple Inc.

     2.1   

3.

  

Teva Pharmaceutical Industries Ltd.–ADR

     2.0   

4.

  

EMC Corp.

     1.7   

5.

  

Banco Bradesco S.A.–ADR

     1.7   

6.

  

British Sky Broadcasting Group PLC

     1.5   

7.

  

Suncor Energy, Inc.

     1.5   

8.

  

Amcor Ltd.

     1.5   

9.

  

BM&FBOVESPA S.A.

     1.5   

10.

  

Reed Elsevier PLC

     1.5   

Total Net Assets

   $ 351.6 million   

Total Number of Holdings*

     91   

The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.

 

* Excluding money market fund holdings.
 

 

4

    Invesco Global Growth Fund

impressive results from the launch of Sovaldi, its hepatitis-C drug. Gilead Sciences also reported a substantial increase in its free cash flow. Phase III results for drugs in its HIV business show promise, and that could help push the company’s patent protection through to the late 2020s. Elsewhere, stock selection in the consumer staples sector also contributed to Fund performance.

In broad geographic terms, the Fund delivered positive returns in all major regions with Fund holdings in Asia/Pacific and Africa/Middle East contributing to relative returns. Stock selection in Singapore, Israel, Japan and Thailand were key country level contributors to Fund performance. An underweight position in the weak Japanese market was supportive of Fund returns on a relative basis.

In contrast, an overweight position in the consumer discretionary sector detracted from relative Fund results. From a geographic perspective, stock selection in Germany, Switzerland, South Korea and Canada detracted from relative results. Underweight exposure to the strong US market was also a drag on relative results. However, strong stock selection in the US helped the Fund deliver better returns in this market than its style-specific benchmark, the MSCI All Country World Growth Index.

Some of the largest stock level detractors included Brazilian exchange BM&FBOVESPA S.A., China-based oil company CNOOC, German athletic clothing manufacture Adidas and US-based retailer Urban Outfitters. Urban Outfitters struggled with sales as the company continued the turnaround of its Urban Outfitter division. The company’s other two brands, Anthropologie and Free People, continued to perform well. We continued to own Urban Outfitters because the company has one of the best online strategies among peers. The company’s store count is still relatively small, with ample room to continue growing its store footprint. We did, however, sell out of our position in CNOOC during the reporting period.

Stock selection in the portfolio is driven by the underlying fundamentals of each individual company, not by any top-down macroeconomic views. This focus on bottom-up stock selection is the key driver of the portfolio’s overall profile. Over the reporting period, we initiated positions in eight new stocks and sold out of 12 stocks. Overall exposure in the financials and health care sectors increased modestly while exposure in the telecommunication services sector came down.

The Fund’s positioning is driven by our stock selection process as opposed to top-down allocation decisions. In terms of sector positioning at fiscal year end, the Fund’s largest absolute and overweight positions were in the IT, consumer discretionary, energy and financials sectors. The Fund ended the reporting period underweight relative to the MSCI All Country World Growth Index in the consumer staples, materials, industrials and health care sectors. From a geographic perspective, the Fund ended the fiscal year with overweight exposure to Europe and Asia relative to the style-specific index. Our allocation to the US remained underweight despite the addition of several new US holdings to the portfolio during the reporting period. Valuations continue to be the primary limiting factor to an increase in our US exposure.

As always, regardless of the macroeconomic environment, we remain focused on a bottom-up investment approach of identifying attractive companies that fit our EQV-focused (earnings, quality and valuation) investment process. We continue to look for quality growth companies that exhibit the following characteristics: strong organic revenue growth, high returns on capital, pricing power, strong balance sheets, cash generation and reasonable valuations. In addition, we continue to favor companies that are able to consistently generate cash during weak economic environments. We believe that this balanced EQV-focused approach may help deliver attractive returns over the long term.

We thank you for your continued investment in Invesco Global Growth Fund.

The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

See important Fund and, if applicable, index disclosures later in this report.

LOGO  

Matthew Dennis

Chartered Financial Analyst, Portfolio Manager, is lead manager of Invesco Global Growth Fund. He joined Invesco in 2000. Mr. Dennis earned a BA in economics from

The University of Texas at Austin and an MS in finance from Texas A&M University.

 

LOGO  

Ryan Amerman

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco Global Growth Fund. He joined Invesco in 1996. Mr. Amerman earned a BBA from

Stephen F. Austin State University and an MBA from the University of St. Thomas.

 

LOGO  

Mark Jason

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco Global Growth Fund. He joined Invesco in 2001. Mr. Jason earned a BS in finance and a BS in real estate

from California State University, Northridge.

 

 

5

    Invesco Global Growth Fund

 

Your Fund’s Long-Term Performance

Results of a $10,000 Investment – Oldest Share Class(es)

Fund and index data from 10/31/04

 

LOGO

 

1 Source: FactSet Research Systems Inc.
2 Source: Lipper Inc.

 

During the reporting period, the Fund has elected to use the MSCI All Country World Index as its broad market benchmark rather than the MSCI World Index and the MSCI All Country World Growth Index as its style-specific benchmark rather than the MSCI World Growth Index because the MSCI All Country World Index and the MSCI All Country World Growth Index more closely reflect the performance of the types of securities in which the Fund invests. Because this is the first reporting period since we have adopted the new

index, SEC guidelines require that we compare performance to both the old and new indexes.

Past performance cannot guarantee comparable future results.

The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the contingent

deferred sales charges, if applicable. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.

 

 

continued from page 8

 

preferred securities. Preferred securities may include provisions that permit the issuer, in its discretion, to defer or omit distributions for a certain period of time. If the Fund owns a security that is deferring or omitting its distributions, the Fund may be required to report the distribution on its tax returns, even though it may not have received this income. Further, preferred securities may lose substantial value due to the omission or deferment of dividend payments.

 

•   Small- and mid-capitalization risks.

Stocks of small- and mid-sized companies tend to be more vulnerable to adverse developments and may have little or no operating history or track record of success, and limited product lines, markets, management and financial resources. The securities of small- and mid-sized companies may be more

volatile due to less market interest and less publicly available information about the issuer. They also may be illiquid or restricted as to resale, or may trade less frequently and in smaller volumes, all of which may cause difficulty when establishing or closing a position at a desirable price.

 

 

About indexes used in this report

 

•   The MSCI All Country World Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of developed and emerging markets. The index is computed using the net return, which withholds applicable taxes for non-resident investors.

 

•   The MSCI World IndexSM is an unmanaged index considered representative of stocks of developed countries. The index is computed using the net

return, which withholds applicable taxes for non-resident investors.

 

•   The MSCI All Country World Growth Index captures large and mid-cap securities exhibiting overall growth style characteristics across 23 developed markets countries and 21 emerging markets countries. The index is computed using the net return, which with- holds applicable taxes for non-resident investors.

 

•   The MSCI World Growth Index is an unmanaged index considered representative of growth stocks of developed countries. The index is computed using the net return, which withholds appli- cable taxes for non-resident investors.

 

•   The Lipper Global Large-Cap Growth Funds Index is an unmanaged index considered representative of global large-cap growth funds tracked by Lipper.

 

•   The Fund is not managed to track the
 

 

6

    Invesco Global Growth Fund    continued on page 7

 

Average Annual Total Returns

 

As of 10/31/14, including maximum applicable sales charges

 

Class A Shares

   

Inception (9/15/94)

      6.72 % 

10 Years

      6.99   

5 Years

      10.29   

1 Year

      2.99   

Class B Shares

   

Inception (9/15/94)

      6.80 % 

10 Years

      6.97   

5 Years

      10.45   

1 Year

      3.17   

Class C Shares

   

Inception (8/4/97)

      3.96 % 

10 Years

      6.80   

5 Years

      10.72   

1 Year

      7.21   

Class Y Shares

   

10 Years

      7.76 % 

5 Years

      11.82   

1 Year

      9.27   

Class R5 Shares

   

10 Years

      8.01 % 

5 Years

      12.08   

1 Year

      9.49   

Class R6 Shares

   

10 Years

      7.70 % 

5 Years

      11.77   

1 Year

      9.53   

Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

Class R5 shares incepted on September 28, 2007. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable

 

Average Annual Total Returns

 

As of 9/30/14, the most recent calendar quarter end, including maximum applicable sales charges

 

Class A Shares

   

Inception (9/15/94)

      6.71 % 

10 Years

      7.15   

5 Years

      9.87   

1 Year

      5.03   

Class B Shares

   

Inception (9/15/94)

      6.78 % 

10 Years

      7.13   

5 Years

      10.03   

1 Year

      5.32   

Class C Shares

   

Inception (8/4/97)

      3.93 % 

10 Years

      6.96   

5 Years

      10.30   

1 Year

      9.32   

Class Y Shares

   

10 Years

      7.93 % 

5 Years

      11.40   

1 Year

      11.46   

Class R5 Shares

   

10 Years

      8.17 % 

5 Years

      11.66   

1 Year

      11.69   

Class R6 Shares

   

10 Years

      7.86 % 

5 Years

      11.34   

1 Year

      11.69   

to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

The performance data quoted

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

The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares was 1.48%, 2.23%, 2.23%, 1.23%, 1.00% and 1.00%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.

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

 

 

 

continued from page 6

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.

 

Other information

 

•   The returns shown in management’s discussion of Fund performance are based on net asset values (NAVs) calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the NAVs for shareholder transactions and the returns based on those NAVs may differ from the NAVs and returns reported in the Financial Highlights.
•   Industry 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.
 

 

7 Invesco Global Growth Fund

 

 

Invesco Global Growth Fund’s investment objective is long-term growth of capital.

 

•   Unless otherwise stated, information presented in this report is as of October 31, 2014, and is based on total net assets.

 

•   Unless otherwise noted, all data provided by Invesco.

 

•   To access your Fund’s reports/prospectus, visit invesco.com/fundreports.

 

 

About share classes

 

•   Class B shares may not be purchased for new or additional investments. Please see the prospectus for more information.

 

•   Class Y shares are available to only certain investors. Please see the prospectus for more information.

 

•   Class R5 shares and Class R6 shares are primarily intended for employer sponsored retirement and benefit plans that meet certain standards and for institutional investors. Please see the prospectus for more information.

 

 

Principal risks of investing in the Fund

 

•   Depositary receipts risk. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts or to pass through to them any voting rights with respect to the deposited securities.

 

•   Derivatives risk. The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity, interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets, the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks.

Counterparty risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic exposure created by owning the derivative. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a loss that is substantially

greater than the amount invested in the derivative, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could impact the Fund’s ability to use certain derivatives or their cost. Also, derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly during adverse market conditions.

 

•   Developing/emerging markets securities risk. The prices of securities issued by foreign companies and governments located in developing/emerging market countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries.

 

•   Foreign securities risk. The Fund’s foreign investments may be affected by changes in a foreign country’s exchange rates, political and social instability, changes in economic or taxation policies, difficulties when enforcing obligations, decreased liquidity, and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies.

 

•   Geographic focus risk. From time to time the Fund may invest a substantial amount of its assets in securities of issuers located in a single country or a limited number of countries. If the Fund
   

focuses its investments in this manner, it assumes the risk that economic, political and social conditions in those countries will have a significant impact on its investment performance. The Fund’s investment performance may also be more volatile if it focuses its investments in certain countries, especially emerging markets countries.

 

•   Growth investing risk. Growth stocks tend to be more expensive relative to their earnings or assets compared with other types of stock. As a result they tend to be more sensitive to changes in their earnings and can be more volatile.

 

•   Investing in the European Union risk. Many countries in the European Union are susceptible to high economic risks associated with high levels of debt, notably due to investments in sovereign debts of European countries such as Greece, Italy and Spain. One or more member states might exit the European Union, placing its currency and banking system in jeopardy. The European Union faces major issues involving its membership, structure, procedures and policies, including the adoption, abandonment or adjustment of the new constitutional treaty, the European Union’s enlargement to the south and east, and resolution of the European Union’s problematic fiscal and democratic accountability. Efforts of the member states to further unify their economic and monetary policies may increase the potential for the downward movement of one member state’s market to cause a similar effect on other member states’ markets. European countries that are part of the European Economic and Monetary Union may be significantly affected by the tight fiscal and monetary controls that the union seeks to impose on its members.

 

•   Management risk. The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results.

 

•   Market risk. The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment, general economic and market conditions, regional or global instability, and currency and interest rate fluctuations.

 

•   Preferred securities risk. There are special risks associated with investing in
 

 

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

 

8    Invesco Global Growth Fund    continued on page 6

Schedule of Investments

October 31, 2014

 

     Shares      Value  

Common Stocks & Other Equity Interests–96.98%

  

Australia–2.09%     

Amcor Ltd.

     517,205       $ 5,352,291   

Brambles Ltd.

     236,616         1,992,907   
         7,345,198   
Belgium–1.18%     

Anheuser-Busch InBev N.V.

     37,318         4,135,537   
Brazil–5.06%     

Banco Bradesco S.A.–ADR

     392,353         5,877,448   

BM&FBOVESPA S.A.

     1,188,900         5,229,625   

BRF S.A.

     126,041         3,280,220   

Cielo S.A.

     208,364         3,421,441   
         17,808,734   
Canada–4.30%     

Cenovus Energy Inc.

     95,420         2,361,580   

CGI Group Inc.–Class A(a)

     122,264         4,197,705   

Encana Corp.

     170,160         3,170,965   

Suncor Energy, Inc.

     152,055         5,399,983   
         15,130,233   
China–4.28%     

Baidu, Inc.–ADR(a)

     19,733         4,711,648   

Great Wall Motor Co. Ltd.–Class H

     1,066,500         4,675,762   

Industrial & Commercial Bank of China Ltd.–Class H

     4,419,000         2,923,169   

NetEase, Inc.–ADR

     28,955         2,742,618   
         15,053,197   
Denmark–2.11%     

Carlsberg AS–Class B

     50,439         4,441,309   

Novo Nordisk AS–Class B

     65,831         2,975,196   
         7,416,505   
France–2.28%     

Publicis Groupe S.A.

     36,206         2,512,540   

Schneider Electric S.E.

     39,560         3,131,588   

Total S.A.

     39,705         2,369,248   
         8,013,376   
Germany–4.38%     

adidas AG

     30,217         2,198,059   

Deutsche Boerse AG

     53,904         3,681,993   

Deutsche Post AG

     41,308         1,296,923   

ProSiebenSat.1 Media AG

     82,242         3,317,494   

SAP S.E.

     72,128         4,902,406   
         15,396,875   
Hong Kong–2.56%     

Galaxy Entertainment Group Ltd.

     700,000         4,779,435   

Hutchison Whampoa Ltd.

     333,000         4,220,951   
         9,000,386   
     Shares      Value  
Indonesia–1.12%     

PT Bank Mandiri Persero Tbk

     4,608,800       $ 3,955,329   
Israel–3.04%     

Check Point Software Technologies Ltd.(a)

     46,921         3,483,884   

Teva Pharmaceutical Industries Ltd.–ADR

     127,336         7,190,664   
         10,674,548   
Italy–0.77%     

Prada S.p.A.

     435,400         2,713,281   
Japan–5.30%     

FANUC Corp.

     19,100         3,356,229   

Japan Tobacco, Inc.

     104,500         3,621,074   

Keyence Corp.

     4,600         2,224,545   

Komatsu Ltd.

     122,600         2,946,313   

Toyota Motor Corp.

     64,700         3,892,625   

Yahoo Japan Corp.

     737,800         2,612,085   
         18,652,871   
Mexico–0.86%     

Grupo Televisa S.A.B.–ADR

     83,206         3,007,065   
Singapore–2.55%     

Avago Technologies Ltd.

     55,242         4,764,623   

United Overseas Bank Ltd.

     234,000         4,199,141   
         8,963,764   
South Korea–1.10%     

Samsung Electronics Co., Ltd.

     3,335         3,863,131   
Spain–0.90%     

Amadeus IT Holding S.A.–Class A

     85,628         3,150,178   
Sweden–1.03%     

Telefonaktiebolaget LM Ericsson–Class B

     306,518         3,624,144   
Switzerland–5.87%     

ABB Ltd.

     189,916         4,164,500   

Julius Baer Group Ltd.

     62,975         2,758,998   

Novartis AG

     32,035         2,970,900   

Roche Holding AG

     15,517         4,582,807   

Syngenta AG

     10,600         3,284,912   

UBS AG

     164,863         2,865,180   
         20,627,297   
Taiwan–1.44%     

Taiwan Semiconductor Manufacturing Co. Ltd.

     1,173,428         5,058,783   
Thailand–1.04%   

Kasikornbank PCL–NVDR

     505,900         3,666,815   
Turkey–0.68%   

Akbank T.A.S.

     665,275         2,403,563   
 

 

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

 

9                         Invesco Global Growth Fund

     Shares      Value  
United Kingdom–11.35%     

Aberdeen Asset Management PLC

     495,500       $ 3,444,206   

British American Tobacco PLC

     55,344         3,143,577   

British Sky Broadcasting Group PLC

     383,974         5,442,535   

Compass Group PLC

     158,224         2,549,636   

Kingfisher PLC

     667,002         3,232,618   

Next PLC

     24,988         2,579,537   

Reed Elsevier PLC

     316,952         5,213,670   

Royal Dutch Shell PLC–Class B

     85,896         3,186,856   

Smith & Nephew PLC

     224,917         3,809,231   

Unilever N.V.

     64,663         2,510,473   

WPP PLC

     246,802         4,817,497   
         39,929,836   
United States–31.69%     

Aon PLC

     33,835         2,909,810   

Apple Inc.

     68,849         7,435,692   

Cadence Design Systems, Inc.(a)

     242,754         4,357,434   

Cameron International Corp.(a)

     70,759         4,213,698   

Cardinal Health, Inc.

     21,856         1,715,259   

Celgene Corp.(a)

     39,305         4,209,172   

Cisco Systems, Inc.

     192,605         4,713,044   

Citrix Systems, Inc.(a)

     55,433         3,560,462   

Comcast Corp.–Class A

     84,187         4,659,751   

DIRECTV(a)

     42,592         3,696,560   

Discovery Communications, Inc.–Class A(a)

     71,975         2,544,316   

Dollar General Corp.(a)

     60,569         3,795,859   

EMC Corp.

     209,352         6,014,683   

Expedia, Inc.

     56,289         4,782,876   
     Shares      Value  
United States–(continued)     

Express Scripts Holding Co.(a)

     57,389       $ 4,408,623   

First Republic Bank

     51,871         2,641,790   

Garmin Ltd.

     43,758         2,427,694   

Gilead Sciences, Inc.(a)

     66,502         7,448,224   

Google Inc.–Class A(a)

     4,811         2,732,023   

Google Inc.–Class C(a)

     4,811         2,689,734   

Ingersoll-Rand PLC

     67,119         4,202,992   

JPMorgan Chase & Co.

     70,125         4,241,160   

Macy’s, Inc.

     79,958         4,623,172   

Microsoft Corp.

     81,630         3,832,529   

Newell Rubbermaid Inc.

     112,315         3,743,459   

Occidental Petroleum Corp.

     34,610         3,077,867   

Scripps Networks Interactive Inc.–Class A

     30,863         2,383,858   

Urban Outfitters, Inc.(a)

     143,723         4,363,430   
         111,425,171   

Total Common Stocks & Other Equity Interests
(Cost $242,747,779)

   

      341,015,817   

Money Market Funds–1.74%

  

Liquid Assets Portfolio–Institutional Class(b)

     3,062,666         3,062,666   

Premier Portfolio–Institutional Class(b)

     3,062,666         3,062,666   

Total Money Market Funds
(Cost $6,125,332)

              6,125,332   

TOTAL INVESTMENTS–98.72%
(Cost $248,873,111)

   

      347,141,149   

OTHER ASSETS LESS LIABILITIES–1.28%

  

      4,507,451   

NET ASSETS–100.00%

  

    $ 351,648,600   
 

Investment Abbreviations:

 

ADR  

– American Depositary Receipt

NVDR  

– Non-Voting Depositary Receipt

Notes to Schedule of Investments:

 

(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same investment adviser.

 

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

 

10                         Invesco Global Growth Fund

Statement of Assets and Liabilities

October 31, 2014

 

Assets:

  

Investments, at value (Cost $242,747,779)

   $ 341,015,817   

Investments in affiliated money market funds, at value and cost

     6,125,332   

Total investments, at value (Cost $248,873,111)

     347,141,149   

Foreign currencies, at value (Cost $1,118,142)

     1,096,497   

Receivable for:

  

Investments sold

     4,610,020   

Fund shares sold

     101,372   

Dividends

     455,346   

Investment for trustee deferred compensation and retirement plans

     137,662   

Other assets

     29,030   

Total assets

     353,571,076   

Liabilities:

  

Payable for:

  

Investments purchased

     724,674   

Fund shares reacquired

     431,835   

Accrued fees to affiliates

     348,687   

Accrued trustees’ and officers’ fees and benefits

     2,231   

Accrued other operating expenses

     262,027   

Trustee deferred compensation and retirement plans

     153,022   

Total liabilities

     1,922,476   

Net assets applicable to shares outstanding

   $ 351,648,600   

Net assets consist of:

  

Shares of beneficial interest

   $ 225,594,233   

Undistributed net investment income

     1,716,269   

Undistributed net realized gain

     26,097,874   

Net unrealized appreciation

     98,240,224   
    $ 351,648,600   

Net Assets:

  

Class A

   $ 314,679,119   

Class B

   $ 5,584,779   

Class C

   $ 25,896,298   

Class Y

   $ 4,357,647   

Class R5

   $ 1,118,200   

Class R6

   $ 12,557   

Shares outstanding, $0.001 par value per share,
with an unlimited number of shares authorized:

   

Class A

     10,081,849   

Class B

     192,292   

Class C

     891,569   

Class Y

     139,210   

Class R5

     35,869   

Class R6

     403   

Class A:

  

Net asset value per share

   $ 31.21   

Maximum offering price per share

  

(Net asset value of $31.21 ¸ 94.50%)

   $ 33.03   

Class B:

  

Net asset value and offering price per share

   $ 29.04   

Class C:

  

Net asset value and offering price per share

   $ 29.05   

Class Y:

  

Net asset value and offering price per share

   $ 31.30   

Class R5:

  

Net asset value and offering price per share

   $ 31.17   

Class R6:

  

Net asset value and offering price per share

   $ 31.16   
 

 

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

 

11                         Invesco Global Growth Fund

Statement of Operations

For the year ended October 31, 2014

 

Investment income:

  

Dividends (net of foreign withholding taxes of $464,395)

   $ 7,807,760   

Dividends from affiliated money market funds

     3,763   

Total investment income

     7,811,523   

Expenses:

  

Advisory fees

     2,836,820   

Administrative services fees

     107,175   

Custodian fees

     137,234   

Distribution fees:

  

Class A

     798,937   

Class B

     69,542   

Class C

     261,136   

Transfer agent Fees — A, B, C and Y

     875,688   

Transfer agent fees — R5

     66   

Transfer agent fees — R6

     1   

Trustees’ and officers’ fees and benefits

     31,099   

Other

     216,350   

Total expenses

     5,334,048   

Less: Fees waived and expense offset arrangement(s)

     (16,801 ) 

Net expenses

     5,317,247   

Net investment income

     2,494,276   

Realized and unrealized gain from:

  

Net realized gain (loss) from:

  

Investment securities (Net of foreign taxes of $11,550)

     28,130,636   

Foreign currencies

     (145,281 ) 
      27,985,355   

Change in net unrealized appreciation (depreciation) of:

  

Investment securities (net of foreign taxes on holdings of $153,095)

     93,295   

Foreign currencies

     (34,377 ) 
      58,918   

Net realized and unrealized gain

     28,044,273   

Net increase in net assets resulting from operations

   $ 30,538,549   

 

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

 

12                         Invesco Global Growth Fund

Statement of Changes in Net Assets

For the years ended October 31, 2014 and 2013

 

     2014      2013  

Operations:

     

Net investment income

   $ 2,494,276       $ 1,601,274   

Net realized gain

     27,985,355         16,487,121   

Change in net unrealized appreciation

     58,918         54,403,225   

Net increase in net assets resulting from operations

     30,538,549         72,491,620   

Distributions to shareholders from net investment income:

     

Class A

     (2,140,605 )       (2,395,341 ) 

Class B

     (4,867 )       (15,637 ) 

Class C

     (15,887 )       (37,417 ) 

Class Y

     (30,510 )       (26,329 ) 

Class R5

     (9,515 )       (4,626 ) 

Class R6

     (139 )       (123 ) 

Total distributions from net investment income

     (2,201,523 )       (2,479,473 ) 

Distributions to shareholders from net realized gains:

     

Class A

     (10,686,960 )       (1,505,256 ) 

Class B

     (275,973 )       (53,432 ) 

Class C

     (900,875 )       (127,872 ) 

Class Y

     (108,786 )       (12,951 ) 

Class R5

     (27,580 )       (2,094 ) 

Class R6

     (402 )       (54 ) 

Total distributions from net realized gains

     (12,000,576 )       (1,701,659 ) 

Share transactions–net:

     

Class A

     (25,348,475 )       (13,001,461 ) 

Class B

     (2,699,528 )       (3,152,701 ) 

Class C

     (384,084 )       (1,434,446 ) 

Class Y

     1,053,144         177,617   

Class R5

     240,932         306,498   

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

     (27,138,011 )       (17,104,493 ) 

Net increase (decrease) in net assets

     (10,801,561 )       51,205,995   

Net assets:

     

Beginning of year

     362,450,161         311,244,166   

End of year (includes undistributed net investment income of $1,716,269 and $1,475,482, respectively)

   $ 351,648,600       $ 362,450,161   

Notes to Financial Statements

October 31, 2014

NOTE 1—Significant Accounting Policies

Invesco Global Growth Fund (the “Fund”) is a series portfolio of AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of eight separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.

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

The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class Y, Class R5 and Class R6. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.

 

13                         Invesco Global Growth Fund

The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.

A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and ask prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

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 of the Fund’s investments.

Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

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

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

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

 

14                         Invesco Global Growth Fund

C. Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.
D. Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.
E. Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

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

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

F. Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
G. Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
H. Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
I. Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.

The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.

J. Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis or through forward foreign currency contracts to manage or minimize currency or exchange rate risk.

The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.

A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the

 

15                         Invesco Global Growth Fund

Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:

 

Average Daily Net Assets   Rate  

First $250 million

     0.80%   

Next $250 million

     0.78%   

Next $500 million

     0.76%   

Next $1.5 billion

     0.74%   

Next $2.5 billion

     0.72%   

Next $2.5 billion

     0.70%   

Next $2.5 billion

     0.68%   

Over $10 billion

     0.66%   

For the year ended October 31, 2014, the effective advisory fees incurred by the Fund was 0.79%.

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

The Adviser has contractually agreed, through at least June 30, 2015, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares to 2.25%, 3.00%, 3.00%, 2.00%, 2.00% and 2.00%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee 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, 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, 2015. The fee waiver agreement cannot be terminated during its term. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.

Further, the Adviser has contractually agreed, through at least June 30, 2016, 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 year ended October 31, 2014, the Adviser waived advisory fees of $14,447.

The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

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 year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B and Class C shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and Class C shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the year ended October 31, 2014, 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 year ended October 31, 2014, IDI advised the Fund that IDI retained $29,849 in front-end sales commissions from the sale of Class A shares and $3,716, $2,612 and $532 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.

Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.

 

16                         Invesco Global Growth Fund

NOTE 3—Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.
  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of October 31, 2014. 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.

During the year ended October 31, 2014, there were transfers from Level 1 to Level 2 of $21,150,398 and from Level 2 to Level 1 of $7,182,998, due to foreign fair value adjustments.

 

     Level 1        Level 2        Level 3        Total  

Australia

   $ —         $ 7,345,198         $ —         $ 7,345,198   

Belgium

     —           4,135,537           —           4,135,537   

Brazil

     17,808,734           —           —           17,808,734   

Canada

     15,130,233           —           —           15,130,233   

China

     15,053,197           —           —           15,053,197   

Denmark

     4,441,309           2,975,196           —           7,416,505   

France

     —           8,013,376           —           8,013,376   

Germany

     12,079,381           3,317,494           —           15,396,875   

Hong Kong

     9,000,386           —           —           9,000,386   

Indonesia

     —           3,955,329           —           3,955,329   

Israel

     10,674,548           —           —           10,674,548   

Italy

     —           2,713,281           —           2,713,281   

Japan

     —           18,652,871           —           18,652,871   

Mexico

     3,007,065           —           —           3,007,065   

Singapore

     4,764,623           4,199,141           —           8,963,764   

South Korea

     —           3,863,131           —           3,863,131   

Spain

     —           3,150,178           —           3,150,178   

Sweden

     —           3,624,144           —           3,624,144   

Switzerland

     —           20,627,297           —           20,627,297   

Taiwan

     —           5,058,783           —           5,058,783   

Thailand

     —           3,666,815           —           3,666,815   

Turkey

     2,403,563           —           —           2,403,563   

United Kingdom

     5,442,535           34,487,301           —           39,929,836   

United States

     117,550,503           —           —           117,550,503   

Total Investments

   $ 217,356,077         $ 129,785,072         $ —         $ 347,141,149   

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 year ended October 31, 2014, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,354.

 

17                         Invesco Global Growth 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 State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.

NOTE 7—Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2014 and 2013:

 

     2014        2013  

Ordinary income

   $ 2,201,523         $ 2,479,473   

Long-term capital gain

     12,000,576           1,701,659   

Total distributions

   $ 14,202,099         $ 4,181,132   

Tax Components of Net Assets at Period-End:

 

     2014  

Undistributed ordinary income

   $ 3,780,580   

Undistributed long-term gain

     24,386,954   

Net unrealized appreciation — investments

     98,051,575   

Net unrealized appreciation (depreciation) — other investments

     (27,814 ) 

Temporary book/tax differences

     (136,928 ) 

Shares of beneficial interest

     225,594,233   

Total net assets

   $ 351,648,600   

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to wash sales.

The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund does not have a capital loss carryforward as of October 31, 2014.

NOTE 8—Investment Securities

The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2014 was $92,808,978 and $130,462,057, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis  

Aggregate unrealized appreciation of investment securities

   $ 103,023,918   

Aggregate unrealized (depreciation) of investment securities

     (4,972,343 ) 

Net unrealized appreciation of investment securities

   $ 98,051,575   

Cost of investments for tax purposes is $249,089,574.

 

18                         Invesco Global Growth Fund

NOTE 9—Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of foreign currency transactions and fair funds settlement, on October 31, 2014, undistributed net investment income was decreased by $51,966, undistributed net realized gain was increased by $63,827 and shares of beneficial interest was decreased by $11,861. This reclassification had no effect on the net assets of the Fund.

NOTE 10—Share Information

 

     Summary of Share Activity  
    Years ended October 31,  
    2014(a)      2013  
     Shares      Amount      Shares      Amount  

Sold:

           

Class A

     489,665       $ 14,890,326         956,280       $ 26,752,277   

Class B

     11,127         311,076         7,664         190,510   

Class C

     89,429         2,522,033         77,900         1,962,790   

Class Y

     78,631         2,411,319         49,882         1,325,358   

Class R5

     9,250         275,709         11,730         299,943   

Issued as reinvestment of dividends:

           

Class A

     411,588         11,705,557         144,891         3,528,101   

Class B

     10,187         271,391         2,889         66,151   

Class C

     32,091         854,895         6,632         151,871   

Class Y

     3,967         112,890         1,408         34,337   

Class R5

     1,293         36,579         271         6,555   

Automatic conversion of Class B shares to Class A shares:

           

Class A

     73,470         2,249,836         90,938         2,400,034   

Class B

     (78,694 )       (2,249,836 )       (97,048 )       (2,400,034 ) 

Reacquired:

           

Class A

     (1,793,277 )       (54,194,194 )       (1,740,636 )       (45,681,873 ) 

Class B

     (36,467 )       (1,032,159 )       (41,159 )       (1,009,328 ) 

Class C

     (133,101 )       (3,761,012 )       (144,223 )       (3,549,107 ) 

Class Y

     (48,426 )       (1,471,065 )       (43,887 )       (1,182,078 ) 

Class R5

     (2,345 )       (71,356 )       —         —   

Net increase (decrease) in share activity

     (881,612 )     $ (27,138,011 )       (716,468 )     $ (17,104,493 ) 

 

(a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 41% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially.

 

19                         Invesco Global Growth Fund

NOTE 11—Financial Highlights

The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.

 

     Net asset
value,
beginning
of period		     Net
investment
income
(loss)(a)		     Net gains
(losses)
on securities
(both
realized and
unrealized)		     Total from
investment
operations		     Dividends
from net
investment
income		     Distributions
from net
realized
gains		     Total
distributions		     Net asset
value, end
of period(b)		     Total
return(c)		     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(d)		  

Class A

                            

Year ended 10/31/14

   $ 29.84      $ 0.23      $ 2.34      $ 2.57      $ (0.20 )    $ (1.00 )    $ (1.20 )    $ 31.21        9.00 %    $ 314,679        1.43 %(e)      1.43 %(e)      0.76 %(e)      27 % 

Year ended 10/31/13

     24.22        0.15        5.82        5.97        (0.22 )      (0.13 )      (0.35 )      29.84        24.96        325,319        1.43        1.47        0.56        29   

Year ended 10/31/12

     22.26        0.20        1.90        2.10        (0.14 )      —        (0.14 )      24.22        9.50        277,313        1.34        1.56        0.85        33   

Year ended 10/31/11

     22.30        0.12        (0.02 )      0.10        (0.14 )      —        (0.14 )      22.26        0.41        185,484        1.62        1.63        0.50        28   

Year ended 10/31/10

     19.51        0.09        2.88        2.97        (0.18 )      —        (0.18 )      22.30        15.33        208,436        1.62        1.63        0.44        41   

Class B

                            

Year ended 10/31/14

     27.87        0.01        2.18        2.19        (0.02 )      (1.00 )      (1.02 )      29.04        8.17        5,585        2.18 (e)      2.18 (e)      0.01 (e)      27   

Year ended 10/31/13

     22.64        (0.05 )      5.45        5.40        (0.04 )      (0.13 )      (0.17 )      27.87        24.03        7,975        2.18        2.22        (0.19 )      29   

Year ended 10/31/12

     20.83        0.02        1.79        1.81        —        —        —        22.64        8.69        9,368        2.09        2.31        0.10        33   

Year ended 10/31/11

     20.90        (0.05 )      (0.02 )      (0.07 )      —        —        —        20.83        (0.33 )      10,776        2.37        2.38        (0.25 )      28   

Year ended 10/31/10

     18.29        (0.06 )      2.71        2.65        (0.04 )      —        (0.04 )      20.90        14.53        15,713        2.37        2.38        (0.31 )      41   

Class C

                            

Year ended 10/31/14

     27.87        0.01        2.19        2.20        (0.02 )      (1.00 )      (1.02 )      29.05        8.21        25,896        2.18 (e)      2.18 (e)      0.01 (e)      27   

Year ended 10/31/13

     22.64        (0.05 )      5.45        5.40        (0.04 )      (0.13 )      (0.17 )      27.87        24.03        25,175        2.18        2.22        (0.19 )      29   

Year ended 10/31/12

     20.83        0.02        1.79        1.81        —        —        —        22.64        8.69        21,803        2.09        2.31        0.10        33   

Year ended 10/31/11

     20.90        (0.05 )      (0.02 )      (0.07 )      —        —        —        20.83        (0.33 )      10,838        2.37        2.38        (0.25 )      28   

Year ended 10/31/10

     18.30        (0.06 )      2.70        2.64        (0.04 )      —        (0.04 )      20.90        14.47        12,893        2.37        2.38        (0.31 )      41   

Class Y

                            

Year ended 10/31/14

     29.94        0.31        2.33        2.64        (0.28 )      (1.00 )      (1.28 )      31.30        9.24        4,358        1.18 (e)      1.18 (e)      1.01 (e)      27   

Year ended 10/31/13

     24.29        0.22        5.83        6.05        (0.27 )      (0.13 )      (0.40 )      29.94        25.31        3,144        1.18        1.22        0.81        29   

Year ended 10/31/12

     22.33        0.25        1.91        2.16        (0.20 )      —        (0.20 )      24.29        9.78        2,372        1.09        1.31        1.10        33   

Year ended 10/31/11

     22.37        0.17        (0.02 )      0.15        (0.19 )      —        (0.19 )      22.33        0.66        1,400        1.37        1.38        0.75        28   

Year ended 10/31/10

     19.57        0.14        2.89        3.03        (0.23 )      —        (0.23 )      22.37        15.58        1,123        1.37        1.38        0.69        41   

Class R5

                            

Year ended 10/31/14

     29.82        0.38        2.31        2.69        (0.34 )      (1.00 )      (1.34 )      31.17        9.49        1,118        0.94 (e)      0.94 (e)      1.25 (e)      27   

Year ended 10/31/13

     24.18        0.27        5.80        6.07        (0.30 )      (0.13 )      (0.43 )      29.82        25.51        825        0.99        0.99        1.00        29   

Year ended 10/31/12

     22.33        0.28        1.90        2.18        (0.33 )      —        (0.33 )      24.18        9.95        379        0.99        0.99        1.20        33   

Year ended 10/31/11

     22.37        0.28        (0.06 )      0.22        (0.26 )      —        (0.26 )      22.33        0.95        306        0.82        0.83        1.30        28   

Year ended 10/31/10

     19.59        0.20        2.89        3.09        (0.31 )      —        (0.31 )      22.37        15.93        9        1.07        1.08        0.99        41   

Class R6

                            

Year ended 10/31/14

     29.80        0.38        2.32        2.70        (0.34 )      (1.00 )      (1.34 )      31.16        9.53        13        0.94 (e)      0.94 (e)      1.25 (e)      27   

Year ended 10/31/13

     24.17        0.27        5.79        6.06        (0.30 )      (0.13 )      (0.43 )      29.80        25.52        12        0.99        0.99        1.00        29   

Year ended 10/31/12(f)

     24.84        0.03        (0.70 )      (0.67 )      —        —        —        24.17        (2.70 )      10        0.95 (g)      0.96 (g)      1.24 (g)      33   

 

(a)  Calculated using average shares outstanding.
(b)  Includes redemption fees added to shares of beneficial interest for Class A, Class B, Class C, Class Y and Class R5, which were less than $0.005 per share for the fiscal years ended October 31, 2012 and prior.
(c)  Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.
(d)  Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the period ended October 31, 2012, the portfolio turnover calculation excludes the value of securities purchased of $92,850,953 and sold of $35,562,826 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Global Advantage into the Fund.
(e)  Ratios are based on average daily net assets (000’s omitted) of $319,575, $6,954, $26,114, $3,610, $1,020 and $12 for Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares, respectively.
(f)  Commencement date of September 24, 2012.
(g)  Annualized.

 

20                         Invesco Global Growth Fund

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of AIM International Mutual Funds (Invesco International Mutual Funds)

and Shareholders of Invesco Global Growth Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco Global Growth Fund (one of the funds constituting AIM International Mutual Funds (Invesco International Mutual Funds), hereafter referred to as the “Fund”) at October 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2014 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

December 23, 2014

Houston, Texas

 

21                         Invesco Global Growth Fund

Calculating your ongoing Fund expenses

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2014 through October 31, 2014.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

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

 

Class  

Beginning

Account Value

(05/01/14)

     ACTUAL    

HYPOTHETICAL

(5% annual return before

expenses)

     

Annualized

Expense

Ratio

  
   

Ending

Account Value

(10/31/14)1

    

Expenses

Paid During

Period2

    

Ending

Account Value

(10/31/14)

     

Expenses

Paid During

Period2

     
A   $ 1,000.00      $ 1,020.90      $ 7.08      $ 1,018.20       $ 7.07         1.39 % 
B     1,000.00        1,017.20        10.88        1,014.42         10.87         2.14   
C     1,000.00        1,017.50        10.88        1,014.42         10.87         2.14   
Y     1,000.00        1,022.20        5.81        1,019.46         5.80         1.14   
R5     1,000.00        1,023.70        4.64        1,020.62         4.63         0.91   
R6     1,000.00        1,023.70        4.64        1,020.62         4.63         0.91   

 

1  The actual ending account value is based on the actual total return of the Fund for the period May 1, 2014 through October 31, 2014, 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.

 

22                         Invesco Global Growth Fund

Approval of Investment Advisory and Sub-Advisory Contracts

 

The Board of Trustees (the Board) of AIM International Mutual Funds (Invesco International Mutual Funds) is required under the Investment Company Act of 1940, as amended, to approve annually the renewal of Invesco Global Growth Fund’s (the Fund) investment advisory agreements. During contract renewal meetings held on June 16-17, 2014, the Board as a whole, and the disinterested or “independent” Trustees, who comprise over 75% of the Board, voting separately, approved the continuance for the Fund of the 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 Australia 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, 2014.

In evaluating the fairness and reasonableness of compensation under the Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board determined that the continuation of the Fund’s investment advisory agreement and the sub-advisory contracts are in the best interest of the Fund and its shareholders and that the compensation payable to Invesco Advisers and the Affiliated Sub-Advisers under the agreements is fair and reasonable.

The Board’s Fund Evaluation Process

The Board’s Investments Committee has established three Sub-Committees, each of which is primarily responsible for overseeing the management of a number of the funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet throughout the year to review the performance of their assigned Invesco Funds, including reviewing materials prepared under the direction of the independent Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review the performance, investment objective(s), policies, strategies, limitations and investment risks of these funds. The Sub-Committees meet regularly and at designated contract renewal meetings each year to conduct a review of the performance, fees, expenses and other matters related to their assigned Invesco Funds. Each Sub-Committee recommends to the Investments Committee, which in turn recommends to the full Board, whether and on what terms to

approve the continuance of each Invesco Fund’s investment advisory agreement and sub-advisory contracts for another year.

During the contract renewal process, the Trustees receive comparative performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Lipper Inc. (Lipper), an independent provider of investment company data. The Trustees also receive 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 addition to meetings with Invesco Advisers and fund counsel, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

The Trustees recognized that the advisory fee rates for the Invesco Funds are, in many cases, the result of years of review and negotiation. The Trustees’ deliberations and conclusions in a particular year may be based in part on their deliberations and conclusions regarding these arrangements throughout the year and in prior years. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.

The discussion below serves as the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. Unless otherwise stated, this information is current as of June 17, 2014, and may not reflect consideration of factors that became known to the Board after that date.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

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

The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers, with whom the Sub-Committees met

during the year. The Board’s review of the qualifications of Invesco Advisers to provide advisory services included the Board’s consideration of Invesco Advisers’ investment process oversight, independent credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, equity and fixed income trading operations, internal audit, distribution and legal and compliance.

In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship and the greater uncertainty that may be associated with entering into a new relationship. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s investment advisory agreement.

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 that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, 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 benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s sub-advisory contracts.

B. Fund Performance

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

The Board compared the Fund’s performance during the past one, three and five calendar years to the performance of funds in the Lipper performance universe and against the Lipper Global Large-Cap Growth Funds Index. The Board noted that performance of Class A shares of the Fund was in the third quintile of the performance universe for the one and three year periods and the fourth quintile for the five

 

 

23                         Invesco Global Growth Fund

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. Invesco Advisers noted that two separate investment teams manage the Fund with an allocation to at least three countries and that a dedicated portfolio manager was appointed to the international growth team to provide U.S. coverage. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.

C. Advisory and Sub-Advisory Fees

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Lipper expense group at a common asset level. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in the expense group. The Board noted that the term “contractual management fee” may include both advisory and certain administrative services fees, but that Lipper does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco does not charge the Invesco Funds for the administrative services included in the term as defined by Lipper. The Board also reviewed the methodology used by Lipper in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group.

The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund through at least June 30, 2015 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 compared the Fund’s effective advisory fee rate (the advisory fee rate after advisory fee waivers and before other expense limitations/waivers) to the effective advisory fee rates of other funds advised by Invesco Advisers and its affiliates that are managed using an investment process substantially similar to the investment process used for the Fund. The Board noted that the Fund’s rate was below the rate of one off-shore fund using a similar investment process. The Board noted that Invesco Advisers and its affiliates do not manage other funds or client accounts using an investment process substantially similar to the investment process used for the Fund.

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. The Board also noted

that the sub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers.

D. Economies of Scale and Breakpoints

The Board considered the extent to which there are economies of scale in the provision of advisory services to the Fund. The Board also considered whether the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule and was assisted in this review by a report from the Senior Officer. The Board also noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds and other clients advised by Invesco Advisers.

E. Profitability and Financial Resources

The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the profitability of Invesco Advisers and its affiliates in providing these services for the year ended December 31, 2013. The Board received information from Invesco Advisers about the methodology used to prepare the profitability information. The Board considered the profitability of Invesco Advisers in managing the Fund and the Invesco Funds. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its subsidiaries provide to the Invesco Funds and the Fund. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund to be excessive given the nature, quality and extent of the services provided to the Invesco Funds. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each Affiliated Sub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.

F. Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for their provision of transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Lipper and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; that the services are required for the operation of the Fund; that Invesco Advisers and its affiliates can provide services, the nature and quality of which are at least equal to those provided by others offering the same or

similar services; and that the fees for such services are fair and reasonable in light of the usual and customary charges by others for services of the same nature and quality.

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 shift the payment obligation for research services from Invesco Advisers and the Affiliated Sub-Advisers to the Invesco Funds and that the research received may be used with other clients of Invesco Advisers and may reduce Invesco Advisers’ and the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.

The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisors From the Fund’s investment of uninvested cash and cash collateral from any securities lending arrangements in the affiliated money market funds are fair and reasonable.

The Board also considered the Funds may use an affiliated broker to execute certain trades for the Fund to among other things, control information leakage, and were advised that such trades would be executed in compliance with rules under the Investment Company Act of 1940, as amended.

 

 

24                         Invesco Global Growth Fund

Tax Information

Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2014:

 

Federal and State Income Tax

  

Long-Term Capital Gain Distributions

   $ 12,000,576   

Qualified Dividend Income*

     100 % 

Corporate Dividends Received Deduction*

     21.50 % 

U.S. Treasury Obligations*

     0.00 % 

 

  * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

25                         Invesco Global Growth Fund

Trustees and Officers

 

The address of each trustee and officer is AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Interested Persons                

Martin L. Flanagan1 — 1960

Trustee

   2007  

Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business

 

Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization).

   144   None

Philip A. Taylor2 — 1954

Trustee, President and Principal Executive Officer

   2006  

Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.

 

Formerly: Director and Chairman, Van Kampen Investor Services Inc.; Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company) and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships) and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.

   144   None

Wayne W. Whalen3 — 1939

Trustee

   2010   Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex   144   Director of the Mutual fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy

 

1  Mr. Flanagan is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer of the Adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the Adviser.
2  Mr. Taylor is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer and a director of the Adviser.
3  Mr. Whalen is retiring effective December 31, 2014. He has been deemed to be an interested person of the Trust because of his prior service as counsel to the predecessor funds of certain Invesco open-end funds and his affiliation with the law firm that served as counsel to such predecessor funds and the Invesco closed-end funds.

 

T-1                         Invesco Global Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees                

Bruce L. Crockett — 1944

Trustee and Chair

   1992  

Chairman, Crockett Technologies Associates (technology consulting company)

 

Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer, COMSAT Corporation; Chairman, Board of Governors of INTELSAT (international communications company); ACE Limited (insurance company); and Investment Company Institute

   144   ALPS (Attorneys Liability Protection Society) (insurance company)

David C. Arch — 1945

Trustee

   2010   Chairman of Blistex Inc., a consumer health care products manufacturer   144   Board member of the Illinois Manufacturers’ Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan; Member of the Audit Committee of the Edward-Elmhurst Hospital

Frank S. Bayley — 1939

Trustee

   2001   Retired. Formerly: Director, Badgley Funds Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP   144   Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee, The Curtis Institute of Music

James T. Bunch — 1942

Trustee

   2003  

Managing Member, Grumman Hill Group LLC (family office private equity investments)

 

Formerly: Founder, Green Manning & Bunch Ltd. (investment banking firm) (1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation

   144   Chairman, Board of Governors, Western Golf Association; Chairman, Evans Scholars Foundation; and Director, Denver Film Society

Rodney F. Dammeyer — 1940

Trustee

   2010  

Chairman of CAC,LLC, (private company offering capital investment and management advisory services)

 

Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex

   144   Director of Quidel Corporation and Stericycle, Inc.

Albert R. Dowden — 1941

Trustee

   2000  

Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Nature’s Sunshine Products, Inc. and Reich & Tang Funds (5 portfolios) (registered investment company)

 

Formerly: Director, Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company); Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director, Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company)

   144   Director of: Nature’s Sunshine Products, Inc., Reich & Tang Funds, Homeowners of America Holding Corporation/ Homeowners of America Insurance Company, the Boss Group

Jack M. Fields — 1952

Trustee

   1997  

Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)

 

Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives

   144   Insperity, Inc. (formerly known as Administaff)

Prema Mathai-Davis — 1950

Trustee

   1998   Retired. Formerly: Chief Executive Officer, YWCA of the U.S.A.   144   None

Larry Soll — 1942

Trustee

   2003   Retired. Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company)   144   None

Hugo F. Sonnenschein — 1940

Trustee

   2010   President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to 2000, President of the University of Chicago   144   Trustee of the University of Rochester and a member of its investment committee; Member of the National Academy of Sciences and the American Philosophical Society; Fellow of the American Academy of Arts and Sciences

 

T-2                         Invesco Global Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees—(continued)

Raymond Stickel, Jr. — 1944

Trustee

   2005   Retired. Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche   144   None

Suzanne H. Woolsey — 1941

Trustee

   2014   Chief Executive Officer of Woolsey Partners LLC   144   Emeritus Chair of the Board of Trustees of the Institute for Defense Analyses; Trustee of Colorado College; Trustee of California Institute of Technology; Prior to 2014, Director of Fluor Corp.; Prior to 2010, Trustee of the German Marshall Fund of the United States; Prior to 2010 Trustee of the Rocky Mountain Institute
Other Officers                

Russell C. Burk — 1958

Senior Vice President and Senior Officer

   2005   Senior Vice President and Senior Officer, The Invesco Funds   N/A   N/A

John M. Zerr — 1962

Senior Vice President, Chief Legal Officer and Secretary

   2006  

Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust; and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company)

   N/A   N/A

Sheri Morris — 1964

Vice President, Treasurer and Principal Financial Officer

   1999  

Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust

   N/A   N/A

 

T-3                         Invesco Global Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Other Officers—(continued)                

Karen Dunn Kelley — 1960

Vice President

   2004  

Senior Managing Director, Investments; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc. and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only)

 

Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only)

   N/A   N/A

Crissie M. Wisdom — 1969

Anti-Money Laundering Compliance Officer

   2013   Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc.   N/A   N/A

Todd L. Spillane — 1958

Chief Compliance Officer

   2006  

Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)

 

Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company

   N/A   N/A

The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.

 

Office of the Fund

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Investment Adviser

Invesco Advisers, Inc.

1555 Peachtree Street, N.E.

Atlanta, GA 30309

  

Distributor

Invesco Distributors, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Auditors

PricewaterhouseCoopers LLP

1000 Louisiana Street, Suite 5800

Houston, TX 77002-5678

     

Counsel to the Fund

Stradley Ronon Stevens & Young, LLP

2005 Market Street, Suite 2600

Philadelphia, PA 19103-7018

  

Counsel to the Independent Trustees

Goodwin Procter LLP

901 New York Avenue, N.W.

Washington, D.C. 20001

  

Transfer Agent

Invesco Investment Services, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Custodian

State Street Bank and Trust Company

225 Franklin Street

Boston, MA 02110-2801

 

T-4                         Invesco Global Growth Fund

LOGO

 

Go Paperless with eDelivery

Visit invesco.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that’s all about eeees:

  •   environmentally friendly. Go green by reducing the number of trees used to produce paper.

 

  •   economical. Help reduce your fund’s printing and delivery expenses and put more capital back in your fund’s returns.
  •   efficient. Stop waiting for regular mail. Your documents will be sent via email as soon as they’re available.

 

  •   easy. Download, save and print files using your home computer with a few clicks of your mouse.
 

This service is provided by Invesco Investment Services, Inc.

 

 

Invesco mailing information

Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.

 

 

Important notice regarding delivery of security holder documents

To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.

 

 

Fund holdings and proxy voting information

The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.

 

Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.

 

Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.

    LOGO  

 

SEC file numbers: 811-06463 and 033-44611    GLG-AR-1    Invesco Distributors, Inc.

LOGO

 

Letters to Shareholders

 

LOGO

        Philip Taylor

   

Dear Shareholders:

This annual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Inside, your Fund’s portfolio managers discuss how they managed your Fund and the factors that affected its performance during the reporting period. I hope you find this report of interest.

During the reporting period covered by this report, the US economy showed signs of continued improvement. After contracting in the first quarter of 2014, the economy expanded strongly in the second quarter and unemployment trended lower. Much of the credit for this improvement goes to the US Federal Reserve (the Fed), which undertook an extraordinary asset purchase program following the global financial crisis. The Fed’s goal was to jumpstart the economy by encouraging banks to lend more, businesses to hire more and consumers to spend more. Signs of a stronger US economy prompted the Fed to reduce, or “taper,” its asset purchase program. Despite this, interest rates remained near historical low levels due largely to heavy investor demand

for bonds. While signs of economic improvement were evident in the US, European economies showed signs of weakening. That, together with geopolitical uncertainty and worries about the first diagnosed cases of Ebola outside of Africa, caused increased volatility in US and European equities.

Extended periods of market strength can lull investors into complacency – just as prolonged periods of market weakness or volatility can discourage investors from initiating long-term investment plans. That’s why Invesco has always encouraged investors to work with a professional financial adviser who can stress the importance of starting to save and invest early and the importance of adhering to a disciplined investment plan – when times are good and when they’re uncertain. A financial adviser who knows your unique financial situation, investment goals and risk tolerance can be an invaluable partner as you seek to achieve your financial goals. He or she can offer a long-term perspective when markets are volatile and time-tested advice and guidance when your financial situation or investment goals change.

Timely information when and where you want it

Invesco’s efforts to help investors achieve their financial objectives include providing individual investors and financial professionals with timely information about the markets, the economy and investing – whenever and wherever they want it.

Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including prices, performance, holdings and portfolio manager commentaries. You can access information about your individual Invesco account whenever it’s convenient for you; just complete a simple, secure online registration. Use the “Log In” box on our home page to get started.

Invesco’s mobile app for iPad® (available free from the App StoreSM) allows you to obtain the same detailed information about your Fund and the same investment insights from our investment leaders, market strategists, economists and retirement experts on the go. You also can watch portfolio manager videos and have instant access to Invesco news and updates wherever you may be.

In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.

Have questions?

For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.

All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.

Sincerely,

 

LOGO

Philip Taylor

Senior Managing Director, Invesco Ltd.

iPad is a trademark of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.

 

2                         Invesco Global Opportunities Fund

 

LOGO

      Bruce Crockett

   

Dear Fellow Shareholders:

There are a variety of factors that can impact investment performance, many of which are uncontrollable by us as investors. These factors can include various economic trends and geopolitical developments.

While the members of the Invesco Funds Board, which I chair, can’t dictate the performance of the Invesco funds, be assured that your Board works diligently throughout the year to focus on how your investments are managed. Our job is to represent you and your interests on a variety of fund management-related matters. We regularly monitor how the portfolio management teams of the Invesco funds are performing in light of ever-changing and often unpredictable economic and market conditions. We review the investment strategies and investment process employed by each fund’s management team as explained in the fund’s prospectus.

  

Perhaps our most significant responsibility is conducting the annual review of the funds’

advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information from Invesco that allows us to evaluate the quality of its services and the reasonableness of its fees. We also use information from a variety of independent sources, including materials provided by the independent senior officer of the Invesco funds, who reports directly to the independent trustees on the Board. Additionally, we meet with legal counsel and review performance and fee data prepared for us by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.

After a careful review, the members of the Invesco Funds Board approved the continuation of advisory and sub-advisory contracts with Invesco Advisers and its affiliates. Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.

As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.

Sincerely,

 

LOGO

Bruce L. Crockett

Independent Chair

Invesco Funds Board of Trustees

 

3                         Invesco Global Opportunities Fund

 

Management’s Discussion of Fund Performance

 

 

Performance summary

For the reporting period ended October 31, 2014, the Fund posted positive returns at net asset value, but underperformed the MSCI All Country World Index and the Lipper Global Large-Cap Core Funds Index, its broad market/style-specific and peer group benchmarks, respectively. As European markets continued to struggle over the past year, the portfolio’s large overweight position in the region relative to its broad market/style-specific benchmark detracted from Fund performance.

    Your Fund’s long-term performance appears later in this report.

 

 

Fund vs. Indexes

Total returns, 10/31/13 to 10/31/14, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

 

Class A Shares

      2.11 % 

Class C Shares

      1.39   

Class R Shares

      1.94   

Class Y Shares

      2.39   

Class R5 Shares

      2.39   

Class R6 Shares

      2.39   

MSCI All Country World Index‚ (Broad Market/Style-Specific Index)

      7.77   

Lipper Global Large-Cap Core Funds Indexn (Peer Group Index)

      8.30   

Source(s): ‚FactSet Research Systems Inc.; nLipper Inc.

 

 

Market conditions and your Fund

Global equity markets generally rose during the fiscal year ended October 31, 2014, on signs that economic growth was accelerating as a result of the loose monetary policies of many developed countries’ central banks. While 2014 began on an optimistic note, global equity markets pulled back at various points in reaction to economic and geopolitical concerns.

These concerns included worries about potentially negative effects of the US Federal Reserve reducing the scope of its asset purchase program beginning in early 2014, an Argentine sovereign bond default and eurozone banking concerns. Global equity markets also fell as geopolitical tensions in Ukraine and the Middle

East weakened the outlook for global growth.

Advanced economies such as the UK and US saw a modest but stronger rebound than Europe, where a nascent recovery has stalled. A more supportive monetary policy in the eurozone may be positive for equity markets there, and we have seen evidence of earnings recovery coming through.

As European markets continued to struggle during the reporting period, the portfolio’s large overweight position in the region compared to its broad market/ style-specific benchmark detracted from performance. Meanwhile, strong stock selection in the US was offset by an underweight position in the US market. For example, McGraw Hill Financial was

 

the biggest contributor to Fund performance during the reporting period. We believe the company is a high-quality business with high growth potential in its S&P Ratings and S&P Indices divisions. In December 2013, the company’s board of directors authorized the repurchase of a meaningful percentage of the company’s outstanding shares, illustrating the company’s strong financial position. During the reporting period, the company’s stock continued to exhibit solid price performance, revenue growth and earnings per share growth. MasterCard was another strong US performer, which we introduced to the portfolio during the second quarter of 2014.

    In terms of sectors, the Fund benefited from its underweight position in the energy sector versus its broad market/ style-specific benchmark, as the energy sector posted negative returns for the reporting period. Security selection in the information technology and materials sectors also detracted from relative performance.

    Amid mixed equity market performance in emerging markets, some of our holdings with exposure to emerging markets, such as Holcim and Standard Chartered, detracted from Fund performance. While we believe each of these holdings may be beneficial in the long term, their exposure to emerging markets hurt their near-term performance.

    We seek companies with sound fundamentals, good management, strong balance sheets and attractive valuations, regardless of their location. As bottom-up stock pickers, we seek out the most attractive and compelling investment opportunities from around the world, unconstrained by limitations on market capitalization, style or sector.

 
Portfolio Composition        
By sector   

Consumer Discretionary

      20.6 % 

Financials

      19.2   

Information Technology

      16.6   

Consumer Staples

      15.3   

Industrials

      13.6   

Materials

      8.8   

Health Care

      3.9   

Energy

      2.0   

Top 10 Equity Holdings

    

      
  1.   MasterCard, Inc.-Class A      6.7 % 
  2.   Booker Group PLC      6.1   
  3.   Citigroup Inc.      5.7   
  4.   First Republic Bank      4.9   
  5.   JP Morgan Chase & Co.      4.6   
  6.   Thomas Cook Group PLC      4.1   
  7.   Beiersdorf AG      3.8   
  8.   McGraw Hill Financial, Inc.      3.6   
  9.   British American Tobacco PLC      3.3   
10.   DS Smith PLC      3.2   

Top Five Countries

    

        
  1.   United States      40.2 % 
  2.   United Kingdom      25.8   
  3.   Germany      8.5   
  4.   Switzerland      7.0   
  5.   Hong Kong      4.7   

 

   
Total Net Assets    $ 16.6 million   
Total Number of Holdings      37   
 

The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.

 

4                         Invesco Global Opportunities Fund

    We thank you for your investment in Invesco Global Opportunities Fund.

The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

See important Fund and, if applicable, index disclosures later in this report.

Stephen Anness

Portfolio Manager, is lead manager of Invesco Global Opportunities Fund. He joined Invesco in 2002. Mr. Anness earned a BSc in economics from the University of Swansea, the Securities Institute Diploma and the Investment Management Certificate.

Andrew Hall

Portfolio Manager, is manager of Invesco Global Opportunities Fund. He joined Invesco in 2013. Mr. Hall earned a BSc degree in economics from Nottingham University.

 

 

5                         Invesco Global Opportunities Fund

 

Your Fund’s Long-Term Performance

Results of a $10,000 Investment – Oldest Share Class(es) since Inception

Fund data from 8/3/12; index data from 7/31/12

 

LOGO

 

Past performance cannot guarantee comparable future results.

The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the

peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.

 

 

 

continued from page 8

 

 

Other information

n   The returns shown in management’s discussion of Fund performance are based on net asset values (NAVs) calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the NAVs for shareholder transactions and the returns based on those NAVs may differ from the NAVs and returns reported in the Financial Highlights.
n   Industry 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.
 

 

6                         Invesco Global Opportunities Fund

 

Average Annual Total Returns  
As of 10/31/14, including maximum applicable sales charges    
Class A Shares         
Inception (8/3/12)      17.91 % 

  1 Year

      -3.53   

Class C Shares

         

Inception (8/3/12)

      20.01 % 
  1 Year      0.41   

Class R Shares

         

Inception (8/3/12)

      20.64 % 
  1 Year      1.94   

Class Y Shares

         

Inception (8/3/12)

      21.21 % 
  1 Year      2.39   
Class R5 Shares         
Inception (8/3/12)      21.21 % 

  1 Year

      2.39   

Class R6 Shares

         

Inception

      21.22 % 
  1 Year      2.39   

Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

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

The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares was 1.37%, 2.12%, 1.62%, 1.12%, 1.12% and 1.12%, respectively.1 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C,

Average Annual Total Returns  
As of 9/30/14, the most recent calendar quarter end, including maximum applicable sales charges     

Class A Shares

         

Inception (8/3/12)

      17.44 % 

  1 Year

      -2.73   

Class C Shares

         

Inception (8/3/12)

      19.64 % 
  1 Year      1.21   

Class R Shares

         

Inception (8/3/12)

      20.26 % 
  1 Year      2.76   

Class Y Shares

         

Inception (8/3/12)

      20.83 % 
  1 Year      3.15   
Class R5 Shares         

Inception (8/3/12)

      20.87 % 

  1 Year

      3.22   

Class R6 Shares

         

Inception

      20.83 % 
  1 Year      3.22   

Class R, Class Y, Class R5 and Class R6 shares was 4.81%, 5.56%, 5.06%, 4.56%, 4.54% and 4.54%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 class 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.

Had the adviser not waived fees and/or reimbursed expenses, performance would have been lower.

 

1 Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least February 29, 2016. See current prospectus for more information.
 

 

7                         Invesco Global Opportunities Fund

 

Invesco Global Opportunities Fund’s investment objective is long-term growth of capital.

n   Unless otherwise stated, information presented in this report is as of October 31, 2014, and is based on total net assets.
n   Unless otherwise noted, all data provided by Invesco.
n   To access your Fund’s reports/prospectus, visit invesco.com/fundreports.

 

 

About share classes

n   Class R shares are generally available only to employer sponsored retirement and benefit plans. Please see the prospectus for more information.
n   Class Y shares are available to only certain investors. Please see the prospectus for more information.
n   Class R5 shares and Class R6 shares are primarily intended for employer sponsored retirement and benefit plans that meet certain standards and for institutional investors. Please see the prospectus for more information.

 

 

Principal risks of investing in the Fund

n   Active trading risk. The Fund engages in frequent trading of portfolio securities. Active trading results in added expenses and may result in a lower return and increased tax liability.
n   Convertible securities risk. The Fund may own convertible securities, the value of which may be affected by market interest rates, the risk that the issuer will default, the value of the underlying stock or the right of the issuer to buy back the convertible securities.
n   Depositary receipts risk. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts or to pass through to them any voting rights with respect to the deposited securities.
n   Developing/emerging markets securities risk. The prices of securities issued by foreign companies and governments located in developing/emerging market countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes,
   

nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries.

n   Foreign securities risk. The Fund’s foreign investments may be affected by changes in a foreign country’s exchange rates, political and social instability, changes in economic or taxation policies, difficulties when enforcing obligations, decreased liquidity, and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies.
n   Geographic focus risk. From time to time the Fund may invest a substantial amount of its assets in securities of issuers located in a single country or a limited number of countries. If the Fund focuses its investments in this manner, it assumes the risk that economic, political and social conditions in those countries will have a significant impact on its investment performance. The Fund’s investment performance may also be more volatile if it focuses its investments in certain countries, especially emerging markets countries.
n   Management risk. The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results.
n   Market risk. The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment, general economic and market conditions, regional or global instability, and currency and interest rate fluctuations.
n   Preferred securities risk. Preferred securities may include provisions that permit the issuer, in its discretion, to defer or omit distributions for a certain period of time. If the Fund owns a security that is deferring or omitting its distributions, the Fund may be required to report the distribution on its tax returns, even though it may not have received this income. Further, preferred securities may lose substantial value
   

due to the omission or deferment of dividend payments.

n   Small- and mid-capitalization risks. Stocks of small- and mid-sized companies tend to be more vulnerable to adverse developments and may have little or no operating history or track record of success, and limited product lines, markets, management and financial resources. The securities of small- and mid-sized companies may be more volatile due to less market interest and less publicly available information about the issuer. They also may be illiquid or restricted as to resale, or may trade less frequently and in smaller volumes, all of which may cause difficulty when establishing or closing a position at a desirable price.
n   Warrants risk. Warrants may be significantly less valuable on their relevant expiration date resulting in a loss of money or they may expire worthless resulting in a total loss of the investment. Warrants may also be postponed or terminated early resulting in a partial or total loss of the investment. Warrants may also be subject to illiquidity.

 

 

About indexes used in this report

n   The MSCI All Country World Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of developed and emerging markets. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   The Lipper Global Large-Cap Core Funds Index is an unmanaged index considered representative of global large-cap core funds tracked by Lipper.
n   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).
n   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.

continued on page 6

 

 

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

 

8                         Invesco Global Opportunities Fund

Schedule of Investments

October 31, 2014

 

     Shares      Value  

Common Stocks & Other Equity Interests–100.06%

  

Brazil–1.45%   

EZ TEC Empreendimentos e Participacoes S.A.

     28,100       $ 240,404   
Cambodia–1.98%   

NagaCorp Ltd.

     390,000         327,887   
China–2.01%   

NetEase, Inc.–ADR

     3,525         333,888   
France–1.75%   

Safran S.A.

     4,580         290,749   
Germany–8.52%   

Beiersdorf AG

     7,869         636,603   

Continental AG

     1,416         277,958   

SAP S.E.

     7,322         497,663   
               1,412,224   
Hong Kong–4.66%   

Hutchison Whampoa Ltd.

     30,000         380,266   

Standard Chartered PLC

     24,950         391,688   
               771,954   
Norway–2.05%   

Statoil ASA

     14,859         339,574   
South Korea–2.43%   

Samsung Electronics Co., Ltd.

     348         403,109   
Spain–2.17%   

Mediaset Espana Comunicacion S.A.(a)

     28,619         359,016   
Switzerland–7.01%   

Holcim Ltd.

     7,210         511,226   

Novartis AG

     4,836         448,487   

Roche Holding AG

     681         201,127   
               1,160,840   
     Shares      Value  
United Kingdom–25.84%   

Booker Group PLC

     451,250       $ 1,014,387   

British American Tobacco PLC

     9,682         549,944   

DS Smith PLC

     125,007         530,343   

HSBC Holdings PLC

     27,200         277,216   

International Consolidated Airlines Group S.A.(a)

     57,531         376,687   

Rio Tinto Ltd.

     7,725         412,201   

Rolls-Royce Holdings PLC

     32,438         438,285   

Rolls-Royce Holdings PLC–Class C Preference Shares(a)

     2,592,720         4,148   

Thomas Cook Group PLC(a)

     340,256         677,586   
               4,280,797   
United States–40.19%   

Citigroup Inc.

     17,523         938,006   

First Republic Bank

     15,855         807,495   

Google Inc.–Class A(a)

     447         253,838   

Google Inc.–Class C(a)

     296         165,488   

J. C. Penney Co., Inc.(a)

     36,093         274,668   

JPMorgan Chase & Co.

     12,607         762,471   

Las Vegas Sands Corp.

     5,678         353,512   

MasterCard, Inc.–Class A

     13,213         1,106,589   

McGraw Hill Financial, Inc.

     6,555         593,096   

Mead Johnson Nutrition Co.

     3,301         327,822   

Samsonite International S.A.

     95,100         317,546   

United Technologies Corp.

     3,695         395,365   

WESCO International, Inc.(a)

     4,407         363,181   
               6,659,077   

TOTAL INVESTMENTS–100.06%
(Cost $15,723,749)

   

      16,579,519   

OTHER ASSETS LESS LIABILITIES–(0.06)%

  

      (10,091 ) 

NET ASSETS–100.00%

  

    $ 16,569,428   
 

Investment Abbreviations:

 

ADR  

– American Depositary Receipt

Notes to Schedule of Investments:

 

(a)  Non-income producing security.

 

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

 

9                         Invesco  Global Opportunities Fund

Statement of Assets and Liabilities

October 31, 2014

 

Assets:

  

Investments, at value (Cost $15,723,749)

   $ 16,579,519   

Foreign currencies, at value (Cost $156,689)

     156,352   

Receivable for:

  

Investments sold

     479,432   

Fund shares sold

     7,119   

Dividends

     48,060   

Investment for trustee deferred compensation and retirement plans

     8,911   

Other assets

     30,686   

Total assets

     17,310,079   

Liabilities:

  

Payable for:

  

Investments purchased

     162,585   

Fund shares reacquired

     45,616   

Amount due custodian

     461,409   

Accrued fees to affiliates

     8,450   

Accrued trustees’ and officers’ fees and benefits

     1,907   

Accrued other operating expenses

     51,645   

Trustee deferred compensation and retirement plans

     9,039   

Total liabilities

     740,651   

Net assets applicable to shares outstanding

   $ 16,569,428   

Net assets consist of:

  

Shares of beneficial interest

   $ 14,081,104   

Undistributed net investment income

     211,244   

Undistributed net realized gain

     1,424,791   

Net unrealized appreciation

     852,289   
    $ 16,569,428   

Net Assets:

  

Class A

   $ 11,112,760   

Class C

   $ 2,347,996   

Class R

   $ 157,786   

Class Y

   $ 2,922,288   

Class R5

   $ 14,829   

Class R6

   $ 13,769   

Shares outstanding, $0.001 par value per share,
with an unlimited number of shares authorized:

   

Class A

     753,689   

Class C

     161,854   

Class R

     10,755   

Class Y

     197,324   

Class R5

     1,001   

Class R6

     930   

Class A:

  

Net asset value per share

   $ 14.74   

Maximum offering price per share

  

(Net asset value of $14.74 ¸ 94.50%)

   $ 15.60   

Class C:

  

Net asset value and offering price per share

   $ 14.51   

Class R:

  

Net asset value and offering price per share

   $ 14.67   

Class Y:

  

Net asset value and offering price per share

   $ 14.81   

Class R5:

  

Net asset value and offering price per share

   $ 14.81   

Class R6:

  

Net asset value and offering price per share

   $ 14.81   
 

 

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

 

10                         Invesco  Global Opportunities Fund

Statement of Operations

For the year ended October 31, 2014

 

Investment income:

  

Dividends (net of foreign withholding taxes of $30,164)

    $ 538,243   

Dividends from affiliated money market funds

      196   

Total investment income

      538,439   

Expenses:

   

Advisory fees

      185,826   

Administrative services fees

      50,000   

Custodian fees

      32,406   

Distribution fees:

   

Class A

      34,682   

Class C

      30,081   

Class R

      680   

Transfer agent fees — A, C, R and Y

      48,336   

Transfer agent fees — R5

      9   

Transfer agent fees — R6

      8   

Trustees’ and officers’ fees and benefits

      23,071   

Registration and filing fees

      72,274   

Professional services fees

      57,167   

Other

      26,617   

Total expenses

      561,157   

Less: Fees waived, expenses reimbursed and expense offset arrangement(s)

      (238,868 ) 

Net expenses

      322,289   

Net investment income

      216,150   

Realized and unrealized gain (loss) from:

   

Net realized gain from:

   

Investment securities

      1,456,898   

Foreign currencies

      960   
       1,457,858   

Change in net unrealized appreciation (depreciation) of:

   

Investment securities

      (1,281,418 ) 

Foreign currencies

      (4,174 ) 
       (1,285,592 ) 

Net realized and unrealized gain

      172,266   

Net increase in net assets resulting from operations

    $ 388,416   

 

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

 

11                         Invesco  Global Opportunities Fund

Statement of Changes in Net Assets

For the years ended October 31, 2014 and 2013

 

     2014      2013  

Operations:

  

   

Net investment income

   $ 216,150       $ 83,414   

Net realized gain

     1,457,858         547,443   

Change in net unrealized appreciation (depreciation)

     (1,285,592 )       1,936,534   

Net increase in net assets resulting from operations

     388,416         2,567,391   

Distributions to shareholders from net investment income:

     

Class A

     (52,017 )       (11,076 ) 

Class C

     (7,371 )       (149 ) 

Class R

     (331 )       (70 ) 

Class Y

     (26,397 )       (10,751 ) 

Class R5

     (72 )       (73 ) 

Class R6

     (67 )       (67 ) 

Total distributions from net investment income

     (86,255 )       (22,186 ) 

Distributions to shareholders from net realized gains:

     

Class A

     (355,668 )       —   

Class C

     (68,538 )       —   

Class R

     (2,483 )       —   

Class Y

     (148,828 )       —   

Class R5

     (409 )       —   

Class R6

     (379 )       —   

Total distributions from net realized gains

     (576,305 )       —   

Share transactions–net:

     

Class A

     315,968         7,678,774   

Class C

     1,139,176         1,172,984   

Class R

     121,483         24,088   

Class Y

     (2,420,079 )       2,981,520   

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

     (843,452 )       11,857,366   

Net increase (decrease) in net assets

     (1,117,596 )       14,402,571   

Net assets:

     

Beginning of year

     17,687,024         3,284,453   

End of year (includes undistributed net investment income of $211,244 and $80,387, respectively)

   $ 16,569,428       $ 17,687,024   

Notes to Financial Statements

October 31, 2014

NOTE 1—Significant Accounting Policies

Invesco Global Opportunities Fund (the “Fund”) is a series portfolio of AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of eight separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.

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

The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value.

The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.

A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a

 

12                         Invesco  Global Opportunities Fund

particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and ask prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

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 of the Fund’s investments.

Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

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

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

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

C.

Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets,

 

13                         Invesco  Global Opportunities Fund

  the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.
D. Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.
E. Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

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

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

F. Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
G. Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
H. Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
I. Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.

The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.

J. Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis or through forward foreign currency contracts to manage or minimize currency or exchange rate risk.

The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.

A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.

 

14                         Invesco  Global Opportunities Fund

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:

 

Average Daily Net Assets   Rate  

First $250 million

     0.80%   

Next $250 million

     0.78%   

Next $500 million

     0.76%   

Next $1.5 billion

     0.74%   

Next $2.5 billion

     0.72%   

Next $2.5 billion

     0.70%   

Next $2.5 billion

     0.68%   

Over $10 billion

     0.66%   

For the year ended October 31, 2014, the effective advisory fees incurred by the Fund was 0.80%.

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

The Adviser has contractually agreed, through at least February 29, 2016, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.36%, 2.11%, 1.61%, 1.11%, 1.11% and 1.11%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, 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 February 29, 2016. The fee waiver agreement cannot be terminated during its term.

Further, the Adviser has contractually agreed, through at least June 30, 2016, 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 year ended October 31, 2014, the Adviser waived advisory fees and reimbursed fund level expenses of $190,515 and reimbursed class level expenses of $28,788, $6,242, $282, $12,830, $9 and $8 of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.

The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

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 year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. 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 year ended October 31, 2014, 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 year ended October 31, 2014, IDI advised the Fund that IDI retained $14,280 in front-end sales commissions from the sale of Class A shares and $402 from Class C shares for CDSC imposed upon redemptions by shareholders.

Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.

NOTE 3—Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the

 

15                         Invesco  Global Opportunities Fund

securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.
  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of October 31, 2014. 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.

During the year ended October 31, 2014, there were transfers from Level 1 to Level 2 of $1,365,979 and from Level 2 to Level 1 of $636,603, due to foreign fair value adjustments.

 

     Level 1        Level 2        Level 3        Total  

Brazil

   $ 240,404         $ —         $ —         $ 240,404   

Cambodia

     327,887           —           —           327,887   

China

     333,888           —           —           333,888   

France

     —           290,749           —           290,749   

Germany

     1,412,224           —           —           1,412,224   

Hong Kong

     380,266           391,688           —           771,954   

Norway

     —           339,574           —           339,574   

South Korea

     —           403,109           —           403,109   

Spain

     —           359,016           —           359,016   

Switzerland

     —           1,160,840           —           1,160,840   

United Kingdom

     4,148           4,276,649           —           4,280,797   

United States

     6,341,531           317,546           —           6,659,077   

Total Investments

   $ 9,040,348         $ 7,539,171         $ —         $ 16,579,519   

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 year ended October 31, 2014, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $194.

NOTE 5—Trustees’ and Officers’ Fees and Benefits

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

NOTE 6—Cash Balances

The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.

 

16                         Invesco  Global Opportunities Fund

NOTE 7—Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2014 and 2013:

 

     2014        2013  

Ordinary income

   $ 554,408         $ 22,186   

Long-term capital gain

     108,152           —   

Total distributions

   $ 662,560         $ 22,186   

Tax Components of Net Assets at Period-End:

 

     2014  

Undistributed ordinary income

   $ 341,009   

Undistributed long-term gain

     1,606,656   

Net unrealized appreciation — investments

     551,573   

Net unrealized appreciation (depreciation) — other investments

     (3,481 ) 

Temporary book/tax differences

     (7,433 ) 

Shares of beneficial interest

     14,081,104   

Total net assets

   $ 16,569,428   

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to wash sales.

The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund does not have a capital loss carryforward as of October 31, 2014.

NOTE 8—Investment Securities

The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2014 was $23,801,547 and $24,409,418, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis  

Aggregate unrealized appreciation of investment securities

   $ 1,157,646   

Aggregate unrealized (depreciation) of investment securities

     (606,073 ) 

Net unrealized appreciation of investment securities

   $ 551,573   

Cost of investments for tax purposes is $16,027,946.

NOTE 9—Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of foreign currency transactions, on October 31, 2014, undistributed net investment income was increased by $962 and undistributed net realized gain was decreased by $962. This reclassification had no effect on the net assets of the Fund.

 

17                         Invesco  Global Opportunities Fund

NOTE 10—Share Information

 

     Summary of Share Activity  
    Years ended October 31,  
    2014(a)      2013  
     Shares      Amount      Shares      Amount  

Sold:

           

Class A

     741,237       $ 11,169,969         945,762       $ 12,451,560   

Class C

     202,171         3,016,505         89,846         1,225,373   

Class R

     11,394         171,587         1,692         24,088   

Class Y

     222,189         3,411,391         223,414         3,118,586   

Issued as reinvestment of dividends:

           

Class A

     23,196         337,728         50         547   

Class C

     5,221         75,282         7         80   

Class R

     162         2,351         —         —   

Class Y

     7,113         103,855         —         —   

Reacquired:

           

Class A

     (743,200 )       (11,191,729 )       (369,206 )       (4,773,333 ) 

Class C

     (133,053 )       (1,952,611 )       (3,702 )       (52,469 ) 

Class R

     (3,494 )       (52,455 )       —         —   

Class Y

     (394,270 )       (5,935,325 )       (9,623 )       (137,066 ) 

Net increase (decrease) in share activity

     (61,334 )     $ (843,452 )       878,240       $ 11,857,366   

 

(a)  There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 38% 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  Global Opportunities Fund

NOTE 11—Financial Highlights

The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.

 

     Net asset
value,
beginning
of period		     Net
investment
income(a)		    

Net gains
(losses)

on securities

(both
realized and
unrealized)

    

Total from
investment

operations

    

Dividends
from net
investment

income

    

Distributions

from net
realized

gains

    

Total

distributions

    

Net asset

value, end

of period

     Total
return(b)		    

Net assets,

end of period

(000’s omitted)

    

Ratio of
expenses

to average

net assets
with fee waivers
and/or expenses

absorbed

    

Ratio of
expenses
to average net
assets without

fee waivers

and/or expenses
absorbed

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

Class A

                            

Year ended 10/31/14

   $ 14.90      $ 0.14      $ 0.17      $ 0.31      $ (0.06 )    $ (0.41 )    $ (0.47 )    $ 14.74        2.11 %    $ 11,113        1.36 %(d)      2.39 %(d)      0.96 %(d)      106 % 

Year ended 10/31/13

     10.64        0.13        4.20        4.33        (0.07 )      —        (0.07 )      14.90        40.94        10,912        1.36        4.80        0.97        76   

Year ended 10/31/12(e)

     10.00        0.02        0.62        0.64        —        —        —        10.64        6.40        1,658        1.35 (f)      11.20 (f)      0.80 (f)      9   

Class C

                            

Year ended 10/31/14

     14.76        0.03        0.17        0.20        (0.04 )      (0.41 )      (0.45 )      14.51        1.39        2,348        2.11 (d)      3.14 (d)      0.21 (d)      106   

Year ended 10/31/13

     10.62        0.03        4.18        4.21        (0.07 )      —        (0.07 )      14.76        39.85        1,292        2.11        5.55        0.22        76   

Year ended 10/31/12(e)

     10.00        0.00        0.62        0.62        —        —        —        10.62        6.20        14        2.10 (f)      11.95 (f)      0.05 (f)      9   

Class R

                            

Year ended 10/31/14

     14.85        0.11        0.17        0.28        (0.05 )      (0.41 )      (0.46 )      14.67        1.94        158        1.61 (d)      2.64 (d)      0.71 (d)      106   

Year ended 10/31/13

     10.63        0.09        4.20        4.29        (0.07 )      —        (0.07 )      14.85        40.59        40        1.61        5.05        0.72        76   

Year ended 10/31/12(e)

     10.00        0.01        0.62        0.63        —        —        —        10.63        6.30        11        1.60 (f)      11.45 (f)      0.55 (f)      9   

Class Y

                            

Year ended 10/31/14

     14.94        0.18        0.17        0.35        (0.07 )      (0.41 )      (0.48 )      14.81        2.39        2,922        1.11 (d)      2.14 (d)      1.21 (d)      106   

Year ended 10/31/13

     10.65        0.16        4.20        4.36        (0.07 )      —        (0.07 )      14.94        41.21        5,414        1.11        4.55        1.22        76   

Year ended 10/31/12(e)

     10.00        0.03        0.62        0.65        —        —        —        10.65        6.50        1,581        1.10 (f)      10.95 (f)      1.05 (f)      9   

Class R5

                            

Year ended 10/31/14

     14.94        0.18        0.17        0.35        (0.07 )      (0.41 )      (0.48 )      14.81        2.39        15        1.11 (d)      1.99 (d)      1.21 (d)      106   

Year ended 10/31/13

     10.64        0.16        4.21        4.37        (0.07 )      —        (0.07 )      14.94        41.34        15        1.11        4.53        1.22        76   

Year ended 10/31/12(e)

     10.00        0.03        0.61        0.64        —        —        —        10.64        6.40        11        1.10 (f)      11.00 (f)      1.05 (f)      9   

Class R6

                            

Year ended 10/31/14

     14.94        0.18        0.17        0.35        (0.07 )      (0.41 )      (0.48 )      14.81        2.39        14        1.11 (d)      1.99 (d)      1.21 (d)      106   

Year ended 10/31/13

     10.64        0.16        4.21        4.37        (0.07 )      —        (0.07 )      14.94        41.34        14        1.11        4.53        1.22        76   

Year ended 10/31/12(e)

     10.76        0.01        (0.13 )      (0.12 )      —        —        —        10.64        (1.12 )      10        1.10 (f)      8.37 (f)      1.05 (f)      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)  Ratios are based on average daily net assets (000’s omitted) of $13,873, $3,008, $136, $6,182, $15 and $14 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.
(e) Commencement date of August 3, 2012 for Class A, Class C, Class R, Class Y and Class R5 shares and September 24, 2012 for Class R6 shares.
(f)  Annualized.

 

19                         Invesco  Global Opportunities Fund

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of AIM International Mutual Funds (Invesco International Mutual Funds)

and Shareholders of Invesco Global Opportunities Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco Global Opportunities Fund (one of the funds constituting AIM International Mutual Funds (Invesco International Mutual Funds), hereafter referred to as the “Fund”) at October 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period August 3, 2012 (commencement of operations) through October 31, 2012, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2014 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

December 23, 2014

Houston, Texas

 

20                         Invesco  Global 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, 2014 through October 31, 2014.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

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

 

Class  

Beginning

Account Value

(05/01/14)

     ACTUAL    

HYPOTHETICAL

(5% annual return before

expenses)

    

Annualized

Expense

Ratio

  
   

Ending

Account Value

(10/31/14)1

    

Expenses

Paid During

Period2

    

Ending

Account Value

(10/31/14)

    

Expenses

Paid During

Period2

    
A   $ 1,000.00      $ 967.80      $ 6.75      $ 1,018.35      $ 6.92        1.36 % 
C     1,000.00        964.80        10.45        1,014.57        10.71        2.11   
R     1,000.00        967.00        7.98        1,017.09        8.19        1.61   
Y     1,000.00        969.20        5.51        1,019.61        5.65        1.11   
R5     1,000.00        969.20        5.51        1,019.61        5.65        1.11   
R6     1,000.00        969.20        5.51        1,019.61        5.65        1.11   

 

1  The actual ending account value is based on the actual total return of the Fund for the period May 1, 2014 through October 31, 2014, 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.

 

21                         Invesco  Global Opportunities Fund

Approval of Investment Advisory and Sub-Advisory Contracts

 

The Board of Trustees (the Board) of AIM International Mutual Funds (Invesco International Mutual Funds) is required under the Investment Company Act of 1940, as amended, to approve annually the renewal of Invesco Global Opportunities Income Fund’s (the Fund) investment advisory agreements. During contract renewal meetings held on June 16-17, 2014, the Board as a whole, and the disinterested or “independent” Trustees, who comprise over 75% of the Board, voting separately, approved the continuance for the Fund of the 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 Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc., Invesco Canada Ltd. and Invesco PowerShares Capital Management LLC (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2014.

In evaluating the fairness and reasonableness of compensation under the Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board determined that continuation of the Fund’s investment advisory agreement and the sub-advisory contracts are in the best interest of the Fund and its shareholders and that the compensation payable to Invesco Advisers and the Affiliated Sub-Advisers under the agreements is fair and reasonable.

The Board’s Fund Evaluation Process

The Board’s Investments Committee has established three Sub-Committees, each of which is primarily responsible for overseeing the management of a number of the funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet throughout the year to review the performance of their assigned Invesco Funds, including reviewing materials prepared under the direction of the independent Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review the performance, investment objective(s), policies, strategies, limitations and investment risks of these funds. The Sub-Committees meet regularly and at designated contract renewal meetings each year to conduct a review of the performance, fees, expenses and other matters related to their assigned Invesco Funds. Each Sub-Committee recommends to the Investments

Committee, which in turn recommends to the full Board, whether and on what terms to approve the continuance of each Invesco Fund’s investment advisory agreement and sub-advisory contracts for another year.

During the contract renewal process, the Trustees receive comparative performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Lipper Inc. (Lipper), an independent provider of investment company data. The Trustees also receive 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 addition to meetings with Invesco Advisers and fund counsel, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

The Trustees recognized that the advisory fee rates for the Invesco Funds are, in many cases, the result of years of review and negotiation. The Trustees’ deliberations and conclusions in a particular year may be based in part on their deliberations and conclusions regarding these same arrangements throughout the year and in prior years. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.

The discussion below serves as the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. Unless otherwise stated, this information is current as of June 17, 2014, and may not reflect consideration of factors that became known to the Board after that date.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

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

The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of

Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers, with whom the Sub-Committees met during the year. The Board’s review of the qualifications of Invesco Advisers to provide advisory services included the Board’s consideration of Invesco Advisers’ investment process oversight, independent credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, equity and fixed income trading operations, internal audit, distribution and legal and compliance.

In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship and the greater uncertainty that may be associated with entering into a new relationship. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s investment advisory agreement.

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 that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, 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 benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s sub-advisory contracts.

B. Fund Performance

The Board considered Fund performance as a relevant factor in considering whether to approve the investment advisory agreement as well as the sub-advisory contracts for the Fund, as Invesco Asset Management Limited currently manages assets of the Fund.

The Board noted that the Fund recently began operations and that comparative performance data for only the past calendar year was available. The Board compared the Fund’s performance during the past calendar year to the performance of funds in the Lipper performance universe and against the Lipper

 

 

22                         Invesco Global Opportunities Fund

Global Large-Cap Core Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that the Fund’s performance was above the performance of the Index for the one year period. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.

C. Advisory and Sub-Advisory Fees

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Lipper expense group at a common asset level. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in the expense group. The Board noted that the term “contractual management fee” may include both advisory and certain administrative services fees, but that Lipper does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not charge the Invesco Funds for the administrative services included in the term as defined by Lipper. The Board also reviewed the methodology used by Lipper in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group.

The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund through at least February 28, 2015 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 compared the Fund’s effective advisory fee rate (the advisory fee rate after advisory fee waivers and before other expense limitations/waivers) to the effective advisory fee rates of other mutual funds advised by Invesco Advisers and its affiliates that are managed using an investment process substantially similar to the investment process used for the Fund. The Board noted that the Fund’s rate was below the rate of an off-shore fund with a similar investment process. The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other client accounts using an investment process substantially similar to the investment process used for the Fund.

The Board also considered the services 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. The Board noted that Invesco Advisers retains overall responsibility for, and provides services to, sub-advised

Invesco Funds, including oversight of the Affiliated Sub-Advisers as well as the additional services described herein other than day-to-day portfolio management. The Board also noted that the sub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers.

D. Economies of Scale and Breakpoints

The Board considered the extent to which there are economies of scale in the provision of advisory services to the Fund. The Board also considered whether the Fund benefits from

economies of scale through contractual breakpoints in the Fund’s advisory fee schedule and was assisted in this review by a report from the Senior Officer. The Board also noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds and other clients advised by Invesco Advisers.

E. Profitability and Financial Resources

The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the profitability of Invesco Advisers and its affiliates in providing these services for the year ended December 31, 2013. The Board received information from Invesco Advisers about the methodology used to prepare the profitability information. The Board considered the profitability of Invesco Advisers in managing the Fund and the Invesco Funds. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its subsidiaries provide to the Invesco Funds. The Board noted that Invesco Advisers and its subsidiaries did not make a profit from managing the Fund as a result of fee and expense waivers. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each Affiliated Sub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.

F. Collateral Benefits to Invesco Advisers and its Affiliates

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

nature and quality of which are at least equal to those provided by others offering the same or similar services; and that the fees for such services are fair and reasonable in light of the usual and customary charges by others for services of the same nature and quality.

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 shift the payment obligation for research services from Invesco Advisers and the Affiliated Sub-Advisers to the Invesco Funds and that the research received may be used with other clients of Invesco Advisers and may reduce Invesco Advisers’ and the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.

The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisors from the Fund’s investment of uninvested cash and cash collateral from any securities lending arrangements in the affiliated money market funds are fair and reasonable.

The Board also considered the Fund may use an affiliated broker to execute certain trades for the Fund to among other things, control information leakage, and were advised that such trades would be executed in compliance with rules under the Investment Company Act of 1940, as amended.

 

 

23                         Invesco Global Opportunities Fund

Tax Information

Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2014:

 

Federal and State Income Tax

  

Long-Term Capital Gain Distributions

   $ 108,152   

Qualified Dividend Income*

     29.29 % 

Corporate Dividends Received Deduction*

     6.31 % 

U.S. Treasury Obligations*

     0.00 % 

 

  * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

Non-Resident Alien Shareholders

  

Qualified Short-Term Gains

   $ 468,153   

 

24                         Invesco  Global Opportunities Fund

Trustees and Officers

 

The address of each trustee and officer is AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Interested Persons                

Martin L. Flanagan1 — 1960

Trustee

   2007  

Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business

 

Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization).

   144   None

Philip A. Taylor2 — 1954

Trustee, President and Principal Executive Officer

   2006  

Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.

 

Formerly: Director and Chairman, Van Kampen Investor Services Inc.; Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company) and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships) and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.

   144   None

Wayne W. Whalen3 — 1939

Trustee

   2010   Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex   144   Director of the Mutual fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy

 

1  Mr. Flanagan is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer of the Adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the Adviser.
2  Mr. Taylor is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer and a director of the Adviser.
3  Mr. Whalen is retiring effective December 31, 2014. He has been deemed to be an interested person of the Trust because of his prior service as counsel to the predecessor funds of certain Invesco open-end funds and his affiliation with the law firm that served as counsel to such predecessor funds and the Invesco closed-end funds.

 

T-1                         Invesco  Global Opportunities Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees                

Bruce L. Crockett — 1944

Trustee and Chair

   1992  

Chairman, Crockett Technologies Associates (technology consulting company)

 

Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer, COMSAT Corporation; Chairman, Board of Governors of INTELSAT (international communications company); ACE Limited (insurance company); and Investment Company Institute

   144   ALPS (Attorneys Liability Protection Society) (insurance company)

David C. Arch — 1945

Trustee

   2010   Chairman of Blistex Inc., a consumer health care products manufacturer   144   Board member of the Illinois Manufacturers’ Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan; Member of the Audit Committee of the Edward-Elmhurst Hospital

Frank S. Bayley — 1939

Trustee

   2001   Retired. Formerly: Director, Badgley Funds Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP   144   Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee, The Curtis Institute of Music

James T. Bunch — 1942

Trustee

   2003  

Managing Member, Grumman Hill Group LLC (family office private equity investments)

 

Formerly: Founder, Green Manning & Bunch Ltd. (investment banking firm) (1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation

   144   Chairman, Board of Governors, Western Golf Association; Chairman, Evans Scholars Foundation; and Director, Denver Film Society

Rodney F. Dammeyer — 1940

Trustee

   2010  

Chairman of CAC,LLC, (private company offering capital investment and management advisory services)

 

Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex

   144   Director of Quidel Corporation and Stericycle, Inc.

Albert R. Dowden — 1941

Trustee

   2000  

Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Nature’s Sunshine Products, Inc. and Reich & Tang Funds (5 portfolios) (registered investment company)

 

Formerly: Director, Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company); Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director, Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company)

   144   Director of: Nature’s Sunshine Products, Inc., Reich & Tang Funds, Homeowners of America Holding Corporation/ Homeowners of America Insurance Company, the Boss Group

Jack M. Fields — 1952

Trustee

   1997  

Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)

 

Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives

   144   Insperity, Inc. (formerly known as Administaff)

Prema Mathai-Davis — 1950

Trustee

   1998   Retired. Formerly: Chief Executive Officer, YWCA of the U.S.A.   144   None

Larry Soll — 1942

Trustee

   2003   Retired. Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company)   144   None

Hugo F. Sonnenschein — 1940

Trustee

   2010   President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to 2000, President of the University of Chicago   144   Trustee of the University of Rochester and a member of its investment committee; Member of the National Academy of Sciences and the American Philosophical Society; Fellow of the American Academy of Arts and Sciences

 

T-2                         Invesco  Global Opportunities Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees—(continued)

Raymond Stickel, Jr. — 1944

Trustee

   2005   Retired. Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche   144   None

Suzanne H. Woolsey — 1941

Trustee

   2014   Chief Executive Officer of Woolsey Partners LLC   144   Emeritus Chair of the Board of Trustees of the Institute for Defense Analyses; Trustee of Colorado College; Trustee of California Institute of Technology; Prior to 2014, Director of Fluor Corp.; Prior to 2010, Trustee of the German Marshall Fund of the United States; Prior to 2010 Trustee of the Rocky Mountain Institute
Other Officers                

Russell C. Burk — 1958

Senior Vice President and Senior Officer

   2005   Senior Vice President and Senior Officer, The Invesco Funds   N/A   N/A

John M. Zerr — 1962

Senior Vice President, Chief Legal Officer and Secretary

   2006  

Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust; and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company)

   N/A   N/A

Sheri Morris — 1964

Vice President, Treasurer and Principal Financial Officer

   1999  

Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust

   N/A   N/A

 

T-3                         Invesco  Global Opportunities Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Other Officers—(continued)                

Karen Dunn Kelley — 1960

Vice President

   2004  

Senior Managing Director, Investments; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc. and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only)

 

Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only)

   N/A   N/A

Crissie M. Wisdom — 1969

Anti-Money Laundering Compliance Officer

   2013   Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc.   N/A   N/A

Todd L. Spillane — 1958

Chief Compliance Officer

   2006  

Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)

 

Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company

   N/A   N/A

The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.

 

Office of the Fund

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Investment Adviser

Invesco Advisers, Inc.

1555 Peachtree Street, N.E.

Atlanta, GA 30309

  

Distributor

Invesco Distributors, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Auditors

PricewaterhouseCoopers LLP

1000 Louisiana Street, Suite 5800

Houston, TX 77002-5678

     

Counsel to the Fund

Stradley Ronon Stevens & Young, LLP

2005 Market Street, Suite 2600

Philadelphia, PA 19103-7018

  

Counsel to the Independent Trustees

Goodwin Procter LLP

901 New York Avenue, N.W.

Washington, D.C. 20001

  

Transfer Agent

Invesco Investment Services, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Custodian

State Street Bank and Trust Company

225 Franklin Street

Boston, MA 02110-2801

 

T-4                         Invesco  Global Opportunities Fund

 

 

 

LOGO

 

 

Invesco mailing information

Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.

 

 

Important notice regarding delivery of security holder documents

To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.

 

 

Fund holdings and proxy voting information

The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s

Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.

Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.

Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.

    LOGO

 

SEC file numbers: 811-06463 and 033-44611                GLOPP-AR-1                Invesco Distributors, Inc.

LOGO

 

Letters to Shareholders

 

 

 

LOGO

      Philip Taylor

    

Dear Shareholders:

This annual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Inside, your Fund’s portfolio managers discuss how they managed your Fund and the factors that affected its performance during the reporting period. I hope you find this report of interest.

    During the reporting period covered by this report, the US economy showed signs of continued improvement. After contracting in the first quarter of 2014, the economy expanded strongly in the second quarter and unemployment trended lower. Much of the credit for this improvement goes to the US Federal Reserve (the Fed), which undertook an extraordinary asset purchase program following the global financial crisis. The Fed’s goal was to jumpstart the economy by encouraging banks to lend more, businesses to hire more and consumers to spend more. Signs of a stronger US economy prompted the Fed to reduce, or “taper,” its

asset purchase program. Despite this, interest rates remained near historical low levels due largely to heavy investor demand for bonds. While signs of economic improvement were evident in the US, European economies showed signs of weakening. That, together with geopolitical uncertainty and worries about the first diagnosed cases of Ebola outside of Africa, caused increased volatility in US and European equities.

    Extended periods of market strength can lull investors into complacency – just as prolonged periods of market weakness or volatility can discourage investors from initiating long-term investment plans. That’s why Invesco has always encouraged investors to work with a professional financial adviser who can stress the importance of starting to save and invest early and the importance of adhering to a disciplined investment plan – when times are good and when they’re uncertain. A financial adviser who knows your unique financial situation, investment goals and risk tolerance can be an invaluable partner as you seek to achieve your financial goals. He or she can offer a long-term perspective when markets are volatile and time-tested advice and guidance when your financial situation or investment goals change.

Timely information when and where you want it

Invesco’s efforts to help investors achieve their financial objectives include providing individual investors and financial professionals with timely information about the markets, the economy and investing – whenever and wherever they want it.

    Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including prices, performance, holdings and portfolio manager commentaries. You can access information about your individual Invesco account whenever it’s convenient for you; just complete a simple, secure online registration. Use the “Log In” box on our home page to get started.

    Invesco’s mobile app for iPad® (available free from the App StoreSM) allows you to obtain the same detailed information about your Fund and the same investment insights from our investment leaders, market strategists, economists and retirement experts on the go. You also can watch portfolio manager videos and have instant access to Invesco news and updates wherever you may be.

    In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.

Have questions?

For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.

    All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.

Sincerely,

 

LOGO

Philip Taylor

Senior Managing Director, Invesco Ltd.

iPad is a trademark of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.

 

2                             Invesco Global Small & Mid Cap Growth Fund

    

 

 

 

LOGO

      Bruce Crockett

    

Dear Fellow Shareholders:

There are a variety of factors that can impact investment performance, many of which are uncontrollable by us as investors. These factors can include various economic trends and geopolitical developments.

    While the members of the Invesco Funds Board, which I chair, can’t dictate the performance of the Invesco funds, be assured that your Board works diligently throughout the year to focus on how your investments are managed. Our job is to represent you and your interests on a variety of fund management-related matters. We regularly monitor how the portfolio management teams of the Invesco funds are performing in light of ever-changing and often unpredictable economic and market conditions. We review the investment strategies and investment process employed by each fund’s management team as explained in the fund’s prospectus.

    Perhaps our most significant responsibility is conducting the annual review of the funds’

advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information from Invesco that allows us to evaluate the quality of its services and the reasonableness of its fees. We also use information from a variety of independent sources, including materials provided by the independent senior officer of the Invesco funds, who reports directly to the independent trustees on the Board. Additionally, we meet with legal counsel and review performance and fee data prepared for us by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.

    After a careful review, the members of the Invesco Funds Board approved the continuation of advisory and sub-advisory contracts with Invesco Advisers and its affiliates. Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.

    As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.

Sincerely,

 

LOGO

Bruce L. Crockett

Independent Chair

Invesco Funds Board of Trustees

 

3                             Invesco Global Small & Mid Cap Growth Fund

 

Management’s Discussion of Fund Performance

 

Performance summary

For the fiscal year ended October 31, 2014, Invesco Global Small & Mid Cap Growth Fund delivered positive returns but underperformed its style-specific benchmark, the MSCI World Growth Index. The Fund’s investments in Europe provided the largest positive contribution to relative Fund performance, with the Fund’s exposure to Ireland and Switzerland leading the gains. In contrast, stock selection combined with a meaningful underweight to the strong US market detracted from relative results.

    Your Fund’s long-term performance appears later in this report.

 

Fund vs. Indexes

Total returns, 10/31/13 to 10/31/14, 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       7.69 %    
Class B Shares       6.87      
Class C Shares       6.92      
Class Y Shares       7.94      
Class R5 Shares       8.10      
MSCI World Index‚ (Broad Market Index)       8.67      
MSCI World Growth Index‚ (Style-Specific Index)       9.57      
Lipper Global Small/Mid-Cap Funds Classification Averagen (Peer Group)       3.68      

 

Source(s): ‚FactSet Research Systems Inc.; nLipper Inc.

      

 

 

Market conditions and your Fund

Global equity markets generally rose during the fiscal year ended October 31, 2014, on signs that economic growth was accelerating as a result of the loose monetary policies of many developed countries’ central banks. While 2014 began on an optimistic note, global equity markets pulled back at various points in reaction to economic and geopolitical concerns.

    These concerns included worries about potentially negative effects of the US Federal Reserve reducing the scope of its asset purchase program beginning in early 2014, an Argentine sovereign bond default and eurozone banking concerns. Global equity markets also fell as geopolitical tensions in Ukraine and the Middle East weakened the outlook for global growth.

    Advanced economies such as the UK and US saw a modest but stronger rebound than Europe, where a nascent recovery has stalled. A more supportive monetary policy in the eurozone may be positive for equity markets there, and we have seen evidence of earnings recovery coming through.

    Meanwhile, the Bank of Japan remained committed to extraordinary monetary stimulus. Consumer spending in Japan has been weak for some time, and retail sales and household spending increased only gradually during the reporting period – although improved corporate earnings were an encouraging sign.

    Equity market performance in emerging markets was mixed. China continued to face headwinds and struggled to balance structural reforms with its desire to

 

maintain satisfactory growth, while many countries in Asia, including India, Indonesia and the Philippines, experienced strong positive gains.

    We continued to construct the Fund’s portfolio on a bottom-up basis, selecting stocks on an individual basis versus focusing on macro, top-down themes. From a sector perspective, the Fund delivered positive returns across eight of 10 invested sectors. Stock selection in the consumer staples sector enabled the Fund to deliver double-digit returns in this sector versus the MSCI World Growth Index. Switzerland-based Aryzta, one of the world’s largest frozen bakery companies, was a top performer for the consumer staples sector and also one of the Fund’s top contributors.

    In contrast, stock selection in the materials sector detracted from both absolute and relative results. Particular weakness was seen in the Fund’s exposure to the paper and forest products industry. Key detractors in the materials sector included Brazilian-based wood panel manufacturer Duratex and China-based paper manufacturer Lee & Man Paper Manufacturing.

    From a geographic perspective, Fund investments in Europe provided the largest contribution to relative performance versus the style-specific index, with the Fund’s exposures to Ireland and Switzerland leading the gains. Shire, an Ireland-based global specialty biopharmaceutical company, was the Fund’s top performer. Shire’s stock price rose over 50% during the fiscal year as it was subject to a take-over bid by US drugmaker AbbVie (not a Fund holding).

    Conversely, stock selection combined with a meaningful underweight to the US

 
Portfolio Composition     
By sector   
Financials       22.8 %
Industrials       14.7  
Information Technology       13.8  
Consumer Discretionary       11.8  
Energy       8.8  
Health Care       8.6  
Materials       4.2  
Consumer Staples       3.7  
Utilities       2.7  
Telecommunication Services       0.9  

Money Market Funds

Plus Other Assets Less Liabilities

       8.0  
Top 10 Equity Holdings*     

    

    
  1.  DCC PLC       2.8 %
  2.  IG Group Holdings PLC       2.5  
  3.  Cielo S.A.       2.5  
  4.  MorphoSys AG       2.4  

  5.  Micro Focus International

       PLC

       2.3  
  6.  Onex Corp.       2.3  

  7.  CETIP S.A. - Mercados

       Organizados

       2.1  
  8.  Hongkong Land Holdings Ltd.       2.0  

  9.  Siam Commercial Bank

       PCL (The)

       2.0  
10.  Aryzta AG       1.8  

Total Net Assets

       $629.8 million  

Total Number of Holdings*

       100  

The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.

*Excluding money market fund holdings.

 

 

4                             Invesco Global Small & Mid Cap Growth Fund

detracted from relative results versus the Fund’s style-specific index. Elsewhere, exposure to certain weak emerging markets, including Brazil and Turkey, detracted from relative performance. As a reminder, the Fund’s style-specific index does not have any exposure to emerging markets.

    The Fund’s positioning is driven by our stock selection process, as opposed to any top-down or macro-based allocation criteria. At the end of the reporting period, the Fund’s most significant overweight exposures versus the style-specific benchmark were in the UK and Canada. The most significant underweight exposures were in the US and Japan.

    At the sector level, the most significant overweight positions versus the style-specific index at the end of the reporting period were in the financials and industrials sectors. The most significant underweight exposure was in the consumer staples sector.

    As always, regardless of the macroeconomic environment, we remain focused on a bottom-up investment approach of identifying attractive companies that fit our EQV-focused (earnings, quality and valuations) investment process. We continue to look for quality growth companies that exhibit the following characteristics: strong organic revenue growth, high returns on capital, pricing power, strong balance sheets, cash generation and reasonable valuations. In addition, we continue to favor companies that are able to consistently generate cash during weak economic environments. We believe that this balanced EQV-focused approach may help deliver attractive returns over the long term.

    We thank you for your continued investment in Invesco Global Small & Mid Cap Growth Fund.

The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

See important Fund and, if applicable, index disclosures later in this report.

LOGO   

Shuxin (Steve) Cao

Chartered Financial Analyst, Portfolio Manager, is lead manager of Invesco Global Small & Mid Cap Growth Fund

with respect to the Fund’s investments in Asia Pacific and Latin America. He joined Invesco in 1997. Mr. Cao earned a BA in English from the Tianjin Foreign Language Institute and an MBA from Texas A&M University. He is also a Certified Public Accountant.

 

LOGO   

Jason Holzer

Chartered Financial Analyst, Portfolio Manager, is lead manager of Invesco Global Small & Mid Cap Growth Fund

with respect to the Fund’s investments in Europe and Canada. He joined Invesco in 1996. Mr. Holzer earned a BA in quantitative economics and an MS in engineering economic systems from Stanford University.

 

LOGO   

Jim Leach

Chartered Financial Analyst, Portfolio Manager, is lead manager of Invesco Global Small & Mid Cap Growth with

respect to the domestic portion of the Fund’s portfolio. He joined Invesco in 2011. Mr. Leach earned a BS in mechanical engineering from the University of California and an MBA from New York University Stern School of Business.

 

LOGO   

Borge Endresen

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco Global Small & Mid Cap Growth Fund. He

joined Invesco in 1999. Mr. Endresen earned a BS in finance from the University of Oregon and an MBA from The University of Texas at Austin.
 

 

5                             Invesco Global Small & Mid Cap Growth Fund

 

Your Fund’s Long-Term Performance

 

 

Results of a $10,000 Investment – Oldest Share Class(es)

Fund and index data from 10/31/04

 

LOGO

 

Past performance cannot guarantee comparable future results.

    The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical

shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the contingent deferred sales charges, if applicable. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group,

if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.

 

 

 

continued from page 8

 

 

About indexes used in this report

n   The MSCI World IndexSM is an unmanaged index considered representative of stocks of developed countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   The MSCI World Growth Index is an unmanaged index considered representative of growth stocks of developed countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   The Lipper Global Small/Mid-Cap Funds Classification Average represents an average of all funds in the Lipper Global Small/Mid-Cap Funds classification.
n   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).
n   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.

 

Other information

n   CPA® and Certified Public Accountant® are trademarks owned by the American Institute of Certified Public Accountants.
n   The returns shown in management’s discussion of Fund performance are based on net asset values (NAVs) calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the NAVs for shareholder transactions and the returns based on those NAVs may differ from the NAVs and returns reported in the Financial Highlights.
n   Industry 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.
 

 

6                             Invesco Global Small & Mid Cap Growth Fund

    

 

 

Average Annual Total Returns

  

As of 10/31/14, including maximum applicable sales charges

    

   

  

Class A Shares        
Inception (9/15/94)     8.50 % 
10 Years     8.61   
  5 Years     11.19   
  1 Year     1.75   
Class B Shares        
Inception (9/15/94)     8.57 % 
10 Years     8.59   
  5 Years     11.34   
  1 Year     2.06   
Class C Shares        
Inception (8/4/97)     5.72 % 
10 Years     8.42   
  5 Years     11.61   
  1 Year     5.96   
Class Y Shares        
10 Years     9.40 % 
  5 Years     12.72   
  1 Year     7.94   
Class R5 Shares        
10 Years     9.63 % 
  5 Years     12.96   
  1 Year     8.10   

Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

    Class R5 shares incepted on September 28, 2007. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

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

Average Annual Total Returns

  

As of 9/30/14, the most recent calendar quarter end, including maximum applicable sales charges    
Class A Shares        
Inception (9/15/94)     8.57 % 
10 Years     9.12   
  5 Years     10.61   
  1 Year     5.84   
Class B Shares        
Inception (9/15/94)     8.64 % 
10 Years     9.10   
  5 Years     10.77   
  1 Year     6.15   
Class C Shares        
Inception (8/4/97)     5.79 % 
10 Years     8.94   
  5 Years     11.04   
  1 Year     10.21   
Class Y Shares        
10 Years     9.91 % 
  5 Years     12.15   
  1 Year     12.28   
Class R5 Shares        
10 Years     10.14 % 
  5 Years     12.39   
  1 Year     12.42   

    The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class Y and Class R5 shares was 1.38%, 2.13%, 2.13%, 1.13% and 0.96%, respectively.1 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class Y and Class R5 shares was 1.39%, 2.14%, 2.14%, 1.14% and 0.97%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

    Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class Y and Class R5 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.

 

1 Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least June 30, 2016. See current prospectus for more information.
 

 

7                             Invesco Global Small & Mid Cap Growth Fund

 

Invesco Global Small & Mid Cap Growth Fund’s investment objective is long-term growth of capital.

n   Unless otherwise stated, information presented in this report is as of October 31, 2014, and is based on total net assets.
n   Unless otherwise noted, all data provided by Invesco.
n   To access your Fund’s reports/prospectus, visit invesco.com/fundreports.

 

 

About share classes

n   Class B shares may not be purchased for new or additional investments. Please see the prospectus for more information.
n   Class Y shares are available to only certain investors. Please see the prospectus for more information.
n   Class R5 shares are primarily intended for employer sponsored retirement and benefit plans that meet certain standards and for institutional investors. Please see the prospectus for more information.

 

 

Principal risks of investing in the Fund

n   Depositary receipts risk. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts or to pass through to them any voting rights with respect to the deposited securities.
n   Derivatives risk. The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity, interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets, the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic exposure created by owning the derivative. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a loss that is
   

substantially greater than the amount invested in the derivative, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could impact the Fund’s ability to use certain derivatives or their cost. Also, derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly during adverse market conditions.

n   Developing/emerging markets securities risk. The prices of securities issued by foreign companies and governments located in developing/emerging market countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries.
n   Foreign securities risk. The Fund’s foreign investments may be affected by changes in a foreign country’s exchange rates, political and social instability, changes in economic or taxation policies, difficulties when enforcing obligations, decreased liquidity, and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies.
n   Geographic focus risk. From time to time the Fund may invest a substantial amount of its assets in securities of issuers located in a single country or a limited number of countries. If the Fund
   

focuses its investments in this manner, it assumes the risk that economic, political and social conditions in those countries will have a significant impact on its investment performance. The Fund’s investment performance may also be more volatile if it focuses its investments in certain countries, especially emerging markets countries.

n   Growth investing risk. Growth stocks tend to be more expensive relative to their earnings or assets compared with other types of stock. As a result they tend to be more sensitive to changes in their earnings and can be more volatile.
n   Management risk. The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results.
n   Market risk. The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment, general economic and market conditions, regional or global instability, and currency and interest rate fluctuations.
n   Preferred securities risk. Preferred securities may include provisions that permit the issuer, in its discretion, to defer or omit distributions for a certain period of time. If the Fund owns a security that is deferring or omitting its distributions, the Fund may be required to report the distribution on its tax returns, even though it may not have received this income. Further, preferred securities may lose substantial value due to the omission or deferment of dividend payments.
n   Small- and mid-capitalization risks. Stocks of small- and mid-sized companies tend to be more vulnerable to adverse developments and may have little or no operating history or track record of success, and limited product lines, markets, management and financial resources. The securities of small- and mid-sized companies may be more volatile due to less market interest and less publicly available information about the issuer. They also may be illiquid or restricted as to resale, or may trade less frequently and in smaller volumes, all of which may cause difficulty when establishing or closing a position at a desirable price.

continued on page 6

 

 

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

 

8                             Invesco Global Small & Mid Cap Growth Fund

Schedule of Investments

October 31, 2014

 

 

     Shares      Value  

Common Stocks & Other Equity Interests–92.03%

  

Australia–1.22%   

Computershare Ltd.

     706,036       $ 7,654,819   
Brazil–7.03%   

BR Malls Participacoes S.A.

     796,100         6,393,216   

CETIP S.A.–Mercados Organizados

     1,048,865         13,290,703   

Cielo S.A.

     946,452         15,541,215   

Duratex S.A.

     2,525,713         9,071,366   
               44,296,500   
Canada–7.93%   

Fairfax Financial Holdings Ltd.

     20,671         9,445,486   

MacDonald, Dettwiler and Associates Ltd.

     35,900         2,737,817   

Onex Corp.

     253,123         14,283,514   

Open Text Corp.

     90,310         4,988,728   

Paramount Resources Ltd.–Class A(a)

     267,039         11,184,879   

Precision Drilling Corp.

     348,455         2,903,534   

TransForce, Inc.

     180,000         4,402,165   
               49,946,123   
China–2.10%   

Lee & Man Paper Manufacturing Ltd.

     12,159,000         6,679,132   

NetEase, Inc.–ADR

     69,458         6,579,062   
               13,258,194   
Germany–5.04%   

Brenntag AG

     61,276         2,967,254   

Deutsche Boerse AG

     151,855         10,372,681   

MorphoSys AG(a)

     157,821         14,976,781   

MTU Aero Engines AG

     39,000         3,414,610   
               31,731,326   
Hong Kong–2.01%   

Hongkong Land Holdings Ltd.

     1,820,000         12,685,400   
Indonesia–1.36%   

PT Perusahaan Gas Negara Persero Tbk

     17,335,000         8,534,816   
Ireland–3.49%   

DCC PLC

     308,961         17,297,922   

Shire PLC

     70,296         4,681,691   
               21,979,613   
Israel–0.67%   

Israel Chemicals Ltd.

     624,624         4,212,927   
Japan–3.06%   

EXEDY Corp.

     339,300         8,630,602   

THK Co., Ltd.

     417,300         10,643,952   
               19,274,554   
Netherlands–0.85%   

NXP Semiconductors N.V.(a)

     78,045         5,358,570   
     Shares      Value  
Norway–1.35%   

Petroleum Geo–Services A.S.A.

     800,453       $ 3,969,218   

Prosafe S.E.

     994,000         4,553,212   
               8,522,430   
Philippines–1.87%   

Ayala Corp.

     197,389         3,034,724   

Energy Development Corp.

     50,672,100         8,713,512   
               11,748,236   
Switzerland–2.65%   

Aryzta AG

     135,514         11,527,563   

Tecan Group AG

     49,036         5,167,585   
               16,695,148   
Thailand–1.99%   

Siam Commercial Bank PCL (The)

     2,302,100         12,544,982   
Turkey–2.54%   

Haci Omer Sabanci Holding A.S.

     1,770,697         8,086,284   

Tupras-Turkiye Petrol Rafinerileri A.S.

     363,635         7,894,083   
               15,980,367   
Turkmenistan–1.21%   

Dragon Oil PLC

     887,085         7,627,977   
United Kingdom–17.00%   

Aberdeen Asset Management PLC

     611,000         4,247,043   

Compass Group PLC

     431,721         6,956,791   

HomeServe PLC

     1,650,642         9,110,405   

IG Group Holdings PLC

     1,623,859         15,613,076   

Informa PLC

     1,064,791         8,204,931   

John Wood Group PLC

     575,000         6,105,527   

Jupiter Fund Management PLC.

     958,750         5,496,444   

Lancashire Holdings Ltd.

     637,330         6,828,078   

Micro Focus International PLC

     927,956         14,726,677   

Savills PLC

     548,358         5,649,574   

Smiths Group PLC

     396,534         7,399,952   

UBM PLC

     374,848         3,417,393   

Ultra Electronics Holdings PLC

     266,074         7,427,857   

William Hill PLC

     1,019,541         5,885,940   
               107,069,688   
United States–28.66%   

Actavis PLC(a)

     18,869         4,580,261   

Alliance Data Systems Corp.(a)

     11,256         3,189,388   

Ameriprise Financial, Inc.

     37,183         4,691,379   

Amphenol Corp.–Class A

     83,250         4,210,785   

B/E Aerospace, Inc.(a)

     29,801         2,218,684   

Baker Hughes Inc.

     56,034         2,967,561   

Brunswick Corp.

     94,316         4,413,989   

Cadence Design Systems, Inc.(a)

     194,574         3,492,603   

Carlisle Cos. Inc.

     47,105         4,186,692   
 

 

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

 

9                         Invesco Global Small & Mid Cap Growth Fund

     Shares      Value  
United States–(continued)   

Cavium Inc.(a)

     65,815       $ 3,376,968   

Cimarex Energy Co.

     22,657         2,575,421   

Cinemark Holdings, Inc.

     108,002         3,814,631   

Cognex Corp.(a)

     86,804         3,433,966   

Concho Resources Inc.(a)

     33,460         3,648,144   

Constellation Brands, Inc.–Class A(a)

     28,163         2,578,041   

Delta Air Lines, Inc.

     51,117         2,056,437   

Discover Financial Services

     47,902         3,055,190   

EQT Corp.

     22,612         2,126,432   

Flowserve Corp.

     40,577         2,758,830   

Foster Wheeler AG

     76,684         2,379,505   

Harman International Industries, Inc.

     42,057         4,514,398   

IHS Inc.–Class A(a)

     31,440         4,119,583   

Illumina, Inc.(a)

     23,009         4,431,073   

Integrated Device Technology, Inc.(a)

     265,830         4,362,270   

KAR Auction Services Inc.

     91,882         2,789,537   

Kroger Co. (The)

     65,545         3,651,512   

L Brands, Inc.

     31,017         2,236,946   

Lazard Ltd.–Class A

     88,355         4,347,950   

Lennox International Inc.

     41,565         3,695,960   

LKQ Corp.(a)

     78,532         2,243,659   

MasTec Inc.(a)

     95,389         2,731,941   

Mead Johnson Nutrition Co.

     56,586         5,619,556   

Medivation Inc.(a)

     36,796         3,889,337   

O’Reilly Automotive, Inc.(a)

     26,564         4,672,076   

Omnicare, Inc.

     78,195         5,207,005   

Palo Alto Networks, Inc.(a)

     52,317         5,529,907   
     Shares      Value  
United States–(continued)   

PPG Industries, Inc.

     32,930       $ 6,707,512   

Royal Caribbean Cruises Ltd.

     28,003         1,903,364   

SBA Communications Corp.–
Class A(a)

     49,228         5,529,781   

Signet Jewelers Ltd.

     39,209         4,705,472   

SVB Financial Group(a)

     28,962         3,243,454   

Team Health Holdings, Inc.(a)

     87,057         5,444,545   

Tesla Motors, Inc.(a)

     11,099         2,682,628   

Tractor Supply Co.

     51,272         3,754,136   

Under Armour, Inc.–Class A(a)

     38,008         2,492,565   

United Rentals, Inc.(a)

     27,810         3,060,769   

Universal Health Services, Inc.–Class B

     37,657         3,905,407   

VWR Corp.(a)

     79,652         1,777,833   

Wynn Resorts Ltd.

     18,922         3,595,369   

Yelp Inc.(a)

     31,594         1,895,640   
               180,496,092   

Total Common Stocks & Other Equity Interests
(Cost $408,861,473)

   

      579,617,762   

Money Market Funds–7.22%

  

   

Liquid Assets Portfolio–
Institutional Class(b)

     22,738,034         22,738,034   

Premier Portfolio–
Institutional Class(b)

     22,738,035         22,738,035   

Total Money Market Funds
(Cost $45,476,069)

   

      45,476,069   

TOTAL INVESTMENTS–99.25%
(Cost $454,337,542)

   

      625,093,831   

OTHER ASSETS LESS LIABILITIES–0.75%

     4,728,611   

NET ASSETS–100.00%

            $ 629,822,442   
 

Investment Abbreviations:

 

ADR  

– American Depositary Receipt

Notes to Schedule of Investments:

 

(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same investment adviser.

 

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

 

10                         Invesco Global Small & Mid Cap Growth Fund

Statement of Assets and Liabilities

October 31, 2014

 

Assets:

  

Investments, at value (Cost $408,861,473)

   $ 579,617,762   

Investments in affiliated money market funds, at value and cost

     45,476,069   

Total investments, at value (Cost $454,337,542)

     625,093,831   

Foreign currencies, at value (Cost $2,502,121)

     2,485,882   

Receivable for:

  

Investments sold

     10,761,326   

Fund shares sold

     288,144   

Dividends

     1,253,200   

Investment for trustee deferred compensation and retirement plans

     212,346   

Other assets

     32,417   

Total assets

     640,127,146   

Liabilities:

  

Payable for:

  

Investments purchased

     7,697,149   

Fund shares reacquired

     358,834   

Accrued foreign taxes

     1,430,973   

Accrued fees to affiliates

     407,301   

Accrued trustees’ and officers’ fees and benefits

     2,600   

Accrued other operating expenses

     166,549   

Trustee deferred compensation and retirement plans

     241,298   

Total liabilities

     10,304,704   

Net assets applicable to shares outstanding

   $ 629,822,442   

Net assets consist of:

  

Shares of beneficial interest

   $ 386,347,142   

Undistributed net investment income

     3,055,070   

Undistributed net realized gain

     69,706,864   

Net unrealized appreciation

     170,713,366   
    $ 629,822,442   

Net Assets:

  

Class A

   $ 557,237,632   

Class B

   $ 11,706,546   

Class C

   $ 30,069,150   

Class Y

   $ 17,829,521   

Class R5

   $ 12,979,593   

Shares outstanding, $0.001 par value per share,
with an unlimited number of shares authorized:

   

Class A

     25,813,777   

Class B

     634,762   

Class C

     1,629,118   

Class Y

     823,102   

Class R5

     602,346   

Class A:

  

Net asset value per share

   $ 21.59   

Maximum offering price per share

  

(Net asset value of $21.59 ¸ 94.50%)

   $ 22.85   

Class B:

  

Net asset value and offering price per share

   $ 18.44   

Class C:

  

Net asset value and offering price per share

   $ 18.46   

Class Y:

  

Net asset value and offering price per share

   $ 21.66   

Class R5:

  

Net asset value and offering price per share

   $ 21.55   
 

 

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

 

11                         Invesco Global Small & Mid Cap Growth Fund

Statement of Operations

For the year ended October 31, 2014

 

Investment income:

  

Dividends (net of foreign withholding taxes of $569,059)

    $ 12,035,728   

Dividends from affiliated money market funds

      16,217   

Total investment income

      12,051,945   

Expenses:

   

Advisory fees

      4,995,271   

Administrative services fees

      166,633   

Custodian fees

      244,700   

Distribution fees:

   

Class A

      1,406,043   

Class B

      137,158   

Class C

      301,170   

Transfer agent fees — A, B, C and Y

      1,324,353   

Transfer agent fees — R5

      13,830   

Trustees’ and officers’ fees and benefits

      37,724   

Other

      257,222   

Total expenses

      8,884,104   

Less: Fees waived and expense offset arrangement(s)

      (62,274 ) 

Net expenses

      8,821,830   

Net investment income

      3,230,115   

Realized and unrealized gain (loss) from:

   

Net realized gain (loss) from:

   

Investment securities(includes net gains (losses) from securities sold to affiliates of $(36,957))

      70,857,376   

Foreign currencies

      (124,920 ) 
       70,732,456   

Change in net unrealized appreciation (depreciation) of:

   

Investment securities (net of foreign taxes on holdings of $86,656)

      (27,282,712 ) 

Foreign currencies

      (30,282 ) 
       (27,312,994 ) 

Net realized and unrealized gain

      43,419,462   

Net increase in net assets resulting from operations

    $ 46,649,577   

 

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

 

12                         Invesco Global Small & Mid Cap Growth Fund

Statement of Changes in Net Assets

For the years ended October 31, 2014 and 2013

 

     2014      2013  

Operations:

  

   

Net investment income

   $ 3,230,115       $ 4,842,929   

Net realized gain

     70,732,456         52,924,561   

Change in net unrealized appreciation (depreciation)

     (27,312,994 )       78,871,723   

Net increase in net assets resulting from operations

     46,649,577         136,639,213   

Distributions to shareholders from net investment income:

     

Class A

     (4,339,742 )       (4,227,552 ) 

Class B

     (31,052 )       (57,975 ) 

Class C

     (59,279 )       (77,135 ) 

Class Y

     (107,366 )       (79,225 ) 

Class R5

     (263,504 )       (261,890 ) 

Total distributions from net investment income

     (4,800,943 )       (4,703,777 ) 

Distributions to shareholders from net realized gains:

     

Class A

     (46,022,548 )       (6,624,317 ) 

Class B

     (1,462,246 )       (269,646 ) 

Class C

     (2,791,497 )       (358,765 ) 

Class Y

     (882,116 )       (100,004 ) 

Class R5

     (1,885,173 )       (280,332 ) 

Total distributions from net realized gains

     (53,043,580 )       (7,633,064 ) 

Share transactions–net:

     

Class A

     15,791,123         (40,619,630 ) 

Class B

     (3,174,863 )       (5,498,523 ) 

Class C

     2,473,205         787,053   

Class Y

     7,387,012         1,252,481   

Class R5

     (9,025,593 )       (2,525,975 ) 

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

     13,450,884         (46,604,594 ) 

Net increase in net assets

     2,255,938         77,697,778   

Net assets:

     

Beginning of year

     627,566,504         549,868,726   

End of year (includes undistributed net investment income of $3,055,070 and $4,572,759, respectively)

   $ 629,822,442       $ 627,566,504   

Notes to Financial Statements

October 31, 2014

NOTE 1—Significant Accounting Policies

Invesco Global Small & Mid Cap Growth Fund (the “Fund”) is a series portfolio of AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of eight separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.

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

The Fund currently consists of five different classes of shares: Class A, Class B, Class C, Class Y and Class R5. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y and Class R5 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.

 

13                         Invesco Global Small & Mid Cap Growth Fund

The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.

A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and ask prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

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 of the Fund’s investments.

Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

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

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

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

 

14                         Invesco Global Small & Mid Cap Growth Fund

C. Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.
D. Distributions — Distributions from 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 are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
G. Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
H. Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
I. Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.

The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.

J. Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis or through forward foreign currency contracts to manage or minimize currency or exchange rate risk.

The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.

A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the

 

15                         Invesco Global Small & Mid Cap Growth Fund

Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:

 

Average Daily Net Assets   Rate  

First $250 million

     0.80%   

Next $250 million

     0.78%   

Next $500 million

     0.76%   

Next $1.5 billion

     0.74%   

Next $2.5 billion

     0.72%   

Next $2.5 billion

     0.70%   

Next $2.5 billion

     0.68%   

Over $10 billion

     0.66%   

For the year ended October 31, 2014, the effective advisory fees incurred by the Fund was 0.78%.

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

The Adviser has contractually agreed, through at least June 30, 2015, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class Y and Class R5 shares to 2.25%, 3.00%, 3.00%, 2.00% and 2.00%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee 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, 2015. The fee waiver agreement cannot be terminated during its term. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.

Further, the Adviser has contractually agreed, through at least June 30, 2016, 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 year ended October 31, 2014, the Adviser waived advisory fees of $58,552.

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 year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.

The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class Y and Class R5 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B and Class C shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and Class C shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the year ended October 31, 2014, 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 year ended October 31, 2014, IDI advised the Fund that IDI retained $93,386 in front-end sales commissions from the sale of Class A shares and $333, $4,746 and $1,351 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.

For the year ended October 31, 2014, the Fund incurred $1,526 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.

 

16                         Invesco Global Small & Mid Cap Growth Fund

NOTE 3—Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.
  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of October 31, 2014. 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.

During the year ended October 31, 2014, there were transfers from Level 1 to Level 2 of $61,796,762 and from Level 2 to Level 1 of $58,296,789, due to foreign fair value adjustments.

 

     Level 1        Level 2        Level 3        Total  

Australia

   $ —         $ 7,654,819         $ —         $ 7,654,819   

Brazil

     44,296,500           —           —           44,296,500   

Canada

     49,946,123           —           —           49,946,123   

China

     13,258,194           —           —           13,258,194   

Germany

     28,764,072           2,967,254           —           31,731,326   

Hong Kong

     12,685,400           —           —           12,685,400   

Indonesia

     8,534,816           —           —           8,534,816   

Ireland

     4,681,691           17,297,922           —           21,979,613   

Israel

     —           4,212,927           —           4,212,927   

Japan

     —           19,274,554           —           19,274,554   

Netherlands

     5,358,570           —           —           5,358,570   

Norway

     8,522,430           —           —           8,522,430   

Philippines

     3,034,724           8,713,512           —           11,748,236   

Switzerland

     16,695,148           —           —           16,695,148   

Thailand

     —           12,544,982           —           12,544,982   

Turkey

     15,980,367           —           —           15,980,367   

Turkmenistan

     7,627,977           —           —           7,627,977   

United Kingdom

     52,527,589           54,542,099           —           107,069,688   

United States

     225,972,161           —           —           225,972,161   

Total Investments

   $ 497,885,762         $ 127,208,069         $ —         $ 625,093,831   

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 year ended October 31, 2014, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $3,722.

NOTE 5—Security Transactions with Affiliated Funds

The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended October 31, 2014, the Fund engaged in securities sales of $298,957, which resulted in net realized gains (losses) of $(36,957).

 

17                         Invesco Global Small & Mid Cap Growth Fund

NOTE 6—Trustees’ and Officers’ Fees and Benefits

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

NOTE 7—Cash Balances

The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.

NOTE 8—Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2014 and 2013:

 

     2014        2013  

Ordinary income

   $ 9,132,598         $ 4,703,777   

Long-term capital gain

     48,711,925           7,633,064   

Total distributions

   $ 57,844,523         $ 12,336,841   

Tax Components of Net Assets at Period-End:

 

     2014  

Undistributed ordinary income

   $ 3,275,669   

Undistributed long-term gain

     70,654,419   

Net unrealized appreciation — investments

     169,808,734   

Net unrealized appreciation (depreciation) — other investments

     (42,923 ) 

Temporary book/tax differences

     (220,599 ) 

Shares of beneficial interest

     386,347,142   

Total net assets

   $ 629,822,442   

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to wash sales.

The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund does not have a capital loss carryforward as of October 31, 2014.

NOTE 9—Investment Securities

The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2014 was $200,695,216 and $250,312,388, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis  

Aggregate unrealized appreciation of investment securities

   $ 188,384,660   

Aggregate unrealized (depreciation) of investment securities

     (18,575,926 ) 

Net unrealized appreciation of investment securities

   $ 169,808,734   

Cost of investments for tax purposes is $455,285,097.

 

18                         Invesco Global Small & Mid Cap Growth Fund

NOTE 10—Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of Fair Fund settlements and foreign currency transactions, on October 31, 2014, undistributed net investment income was increased by $53,139 and undistributed net realized gain was decreased by $53,139. This reclassification had no effect on the net assets of the Fund.

NOTE 11—Share Information

 

     Summary of Share Activity  
    Years ended October 31,  
    2014(a)      2013  
     Shares      Amount      Shares      Amount  

Sold:

           

Class A

     1,900,337       $ 40,398,249         1,296,133       $ 25,675,345   

Class B

     19,526         357,338         32,838         561,476   

Class C

     326,870         6,000,317         275,489         4,731,339   

Class Y

     445,673         9,510,891         166,646         3,283,683   

Class R5

     72,662         1,549,385         99,367         1,906,509   

Issued as reinvestment of dividends:

           

Class A

     2,329,616         46,126,396         593,803         10,599,391   

Class B

     84,985         1,447,288         20,760         323,648   

Class C

     158,302         2,697,463         27,510         429,152   

Class Y

     40,273         798,206         9,591         171,400   

Class R5

     57,798         1,138,611         13,878         246,478   

Automatic conversion of Class B shares to Class A shares:

           

Class A

     158,109         3,358,448         182,103         3,563,679   

Class B

     (184,290 )       (3,358,448 )       (209,171 )       (3,563,679 ) 

Reacquired:

           

Class A

     (3,478,136 )       (74,091,970 )       (4,142,993 )       (80,458,045 ) 

Class B

     (88,695 )       (1,621,041 )       (167,221 )       (2,819,968 ) 

Class C

     (341,240 )       (6,224,575 )       (255,740 )       (4,373,438 ) 

Class Y

     (138,395 )       (2,922,085 )       (113,951 )       (2,202,602 ) 

Class R5

     (550,912 )       (11,713,589 )       (237,867 )       (4,678,962 ) 

Net increase (decrease) in share activity

     812,483       $ 13,450,884         (2,408,825 )     $ (46,604,594 ) 

 

(a)  There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 32% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially.

 

19                         Invesco Global Small & Mid Cap Growth Fund

NOTE 12—Financial Highlights

The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.

 

     Net asset
value,
beginning
of period		     Net
investment
income
(loss)(a)		     Net gains
(losses)
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(b)		     Total
return(c)		     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(d)		  

Class A

  

Year ended 10/31/14

   $ 22.11      $ 0.12      $ 1.40      $ 1.52      $ (0.18 )    $ (1.86 )    $ (2.04 )    $ 21.59        7.69 %    $ 557,238        1.35 %(e)      1.36 %(e)      0.54 %(e)      18 % 

Year ended 10/31/13

     17.87        0.17        4.48        4.65        (0.16 )      (0.25 )      (0.41 )      22.11        26.56        550,526        1.37        1.38        0.87        26   

Year ended 10/31/12

     17.93        0.17        1.10        1.27        (0.24 )      (1.09 )      (1.33 )      17.87        7.94        482,051        1.42        1.43        1.00        37   

Year ended 10/31/11

     18.57        0.18        (0.74 )      (0.56 )      (0.08 )      —        (0.08 )      17.93        (3.05 )      508,794        1.40        1.41        0.95        58   

Year ended 10/31/10

     14.79        0.06        3.78        3.84        (0.06 )      —        (0.06 )      18.57        26.07        589,712        1.45        1.46        0.37        39   

Class B

  

Year ended 10/31/14

     19.18        (0.04 )      1.20        1.16        (0.04 )      (1.86 )      (1.90 )      18.44        6.87        11,707        2.10 (e)      2.11 (e)      (0.21 )(e)      18   

Year ended 10/31/13

     15.57        0.02        3.89        3.91        (0.05 )      (0.25 )      (0.30 )      19.18        25.58        15,405        2.12        2.13        0.12        26   

Year ended 10/31/12

     15.74        0.04        0.96        1.00        (0.08 )      (1.09 )      (1.17 )      15.57        7.12        17,529        2.17        2.18        0.25        37   

Year ended 10/31/11

     16.36        0.03        (0.65 )      (0.62 )      —        —        —        15.74        (3.79 )      23,124        2.15        2.16        0.20        58   

Year ended 10/31/10

     13.07        (0.05 )      3.34        3.29        —        —        —        16.36        25.17        34,439        2.20        2.21        (0.38 )      39   

Class C

  

Year ended 10/31/14

     19.19        (0.04 )      1.21        1.17        (0.04 )      (1.86 )      (1.90 )      18.46        6.92        30,069        2.10 (e)      2.11 (e)      (0.21 )(e)      18   

Year ended 10/31/13

     15.58        0.02        3.89        3.91        (0.05 )      (0.25 )      (0.30 )      19.19        25.56        28,505        2.12        2.13        0.12        26   

Year ended 10/31/12

     15.75        0.04        0.96        1.00        (0.08 )      (1.09 )      (1.17 )      15.58        7.11        22,401        2.17        2.18        0.25        37   

Year ended 10/31/11

     16.37        0.03        (0.65 )      (0.62 )      —        —        —        15.75        (3.79 )      23,368        2.15        2.16        0.20        58   

Year ended 10/31/10

     13.08        (0.05 )      3.34        3.29        —        —        —        16.37        25.15        26,369        2.20        2.21        (0.38 )      39   

Class Y

  

Year ended 10/31/14

     22.18        0.17        1.40        1.57        (0.23 )      (1.86 )      (2.09 )      21.66        7.94        17,830        1.10 (e)      1.11 (e)      0.79 (e)      18   

Year ended 10/31/13

     17.92        0.22        4.49        4.71        (0.20 )      (0.25 )      (0.45 )      22.18        26.87        10,546        1.12        1.13        1.12        26   

Year ended 10/31/12

     18.00        0.22        1.09        1.31        (0.30 )      (1.09 )      (1.39 )      17.92        8.18        7,406        1.17        1.18        1.25        37   

Year ended 10/31/11

     18.64        0.23        (0.75 )      (0.52 )      (0.12 )      —        (0.12 )      18.00        (2.81 )      7,589        1.15        1.16        1.20        58   

Year ended 10/31/10

     14.84        0.10        3.80        3.90        (0.10 )      —        (0.10 )      18.64        26.38        7,944        1.20        1.21        0.62        39   

Class R5

  

Year ended 10/31/14

     22.08        0.20        1.39        1.59        (0.26 )      (1.86 )      (2.12 )      21.55        8.10        12,980        0.96 (e)      0.97 (e)      0.93 (e)      18   

Year ended 10/31/13

     17.85        0.25        4.46        4.71        (0.23 )      (0.25 )      (0.48 )      22.08        27.05        22,585        0.95        0.96        1.29        26   

Year ended 10/31/12

     17.95        0.25        1.10        1.35        (0.36 )      (1.09 )      (1.45 )      17.85        8.46        20,481        0.94        0.95        1.48        37   

Year ended 10/31/11

     18.59        0.27        (0.74 )      (0.47 )      (0.17 )      —        (0.17 )      17.95        (2.57 )      22,918        0.91        0.92        1.44        58   

Year ended 10/31/10

     14.81        0.15        3.78        3.93        (0.15 )      —        (0.15 )      18.59        26.72        27,683        0.92        0.93        0.90        39   

 

(a)  Calculated using average shares outstanding.
(b)  Includes redemption fees added to shares of beneficial interest for Class A, Class B, Class C, Class Y and Class R5 shares, which were less than $0.005 per share for the fiscal years ended October 31, 2012 and prior.
(c)  Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.
(d)  Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
(e)  Ratios are based on average daily net assets (000’s omitted) of $562,417, $13,716, $30,117, $14,020 and $17,266 for Class A, Class B, Class C, Class Y and Class R5 shares, respectively.

 

20                         Invesco Global Small & Mid Cap Growth Fund

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of AIM International Mutual Funds (Invesco International Mutual Funds)

and Shareholders of Invesco Global Small & Mid Cap Growth Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco Global Small & Mid Cap Growth Fund (one of the funds constituting AIM International Mutual Funds (Invesco International Mutual Funds), hereafter referred to as the “Fund”) at October 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2014 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

December 23, 2014

Houston, Texas

 

21                         Invesco Global Small & Mid Cap Growth Fund

Calculating your ongoing Fund expenses

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2014 through October 31, 2014.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

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

 

Class   Beginning
Account Value
(05/01/14)		     ACTUAL    

HYPOTHETICAL

(5% annual return before
expenses)

     Annualized
Expense
Ratio		  
    Ending
Account Value
(10/31/14)1		     Expenses
Paid During
Period2		     Ending
Account Value
(10/31/14)		     Expenses
Paid During
Period2		    
A   $ 1,000.00      $ 1,007.50      $ 6.83      $ 1,018.40      $ 6.87        1.35 % 
B     1,000.00        1,003.30        10.60        1,014.62        10.66        2.10   
C     1,000.00        1,003.80        10.61        1,014.62        10.66        2.10   
Y     1,000.00        1,008.40        5.57        1,019.66        5.60        1.10   
R5     1,000.00        1,009.40        5.01        1,020.21        5.04        0.99   

 

1  The actual ending account value is based on the actual total return of the Fund for the period May 1, 2014 through October 31, 2014, 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.

 

22                         Invesco Global Small & Mid Cap Growth Fund

Approval of Investment Advisory and Sub-Advisory Contracts

 

The Board of Trustees (the Board) of AIM International Mutual Funds (Invesco International Mutual Funds) is required under the Investment Company Act of 1940, as amended, to approve annually the renewal of Invesco Global Small & Mid Cap Growth Fund’s (the Fund) investment advisory agreements. During contract renewal meetings held on June 16-17, 2014, the Board as a whole, and the disinterested or “independent” Trustees, who comprise over 75% of the Board, voting separately, approved the continuance for the Fund of the 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 Australia 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, 2014.

In evaluating the fairness and reasonableness of compensation under the Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board determined that the continuation of the Fund’s investment advisory agreement and the sub-advisory contracts are in the best interest of the Fund and its shareholders and that the compensation payable to Invesco Advisers and the Affiliated Sub-Advisers under the agreements is fair and reasonable.

The Board’s Fund Evaluation Process

The Board’s Investments Committee has established three Sub-Committees, each of which is primarily responsible for overseeing the management of a number of the funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet throughout the year to review the performance of their assigned Invesco Funds, including reviewing materials prepared under the direction of the independent Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review the performance, investment objective(s), policies, strategies, limitations and investment risks of these funds. The Sub-Committees meet regularly and at designated contract renewal meetings each year to conduct a review of the performance, fees, expenses and other matters related to their assigned Invesco Funds. Each Sub-Committee recommends to the Investments Committee, which in turn recommends to the full Board, whether and on what terms to

approve the continuance of each Invesco Fund’s investment advisory agreement and sub-advisory contracts for another year.

During the contract renewal process, the Trustees receive comparative performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Lipper Inc. (Lipper), an independent provider of investment company data. The Trustees also receive 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 addition to meetings with Invesco Advisers and fund counsel, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

The Trustees recognized that the advisory fee rates for the Invesco Funds are, in many cases, the result of years of review and negotiation. The Trustees’ deliberations and conclusions in a particular year may be based in part on their deliberations and conclusions regarding these arrangements throughout the year and in prior years. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.

The discussion below serves as the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. Unless otherwise stated, this information is current as of June 17, 2014, and may not reflect consideration of factors that became known to the Board after that date.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

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

The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers, with whom the Sub-Committees met

during the year. The Board’s review of the qualifications of Invesco Advisers to provide advisory services included the Board’s consideration of Invesco Advisers’ investment process oversight, independent credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, equity and fixed income trading operations, internal audit, distribution and legal and compliance.

In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship and the greater uncertainty that may be associated with entering into a new relationship. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s investment advisory agreement.

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 that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, 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 benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s sub-advisory contracts.

B. Fund Performance

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

The Board compared the Fund’s performance during the past one, three and five calendar years to the performance of funds in the Lipper performance universe and against the Lipper Global Small/Mid-Cap Funds Index. The Board noted that performance of Class A shares of the Fund was in the fifth quintile of the performance universe for the one year period and the fourth quintile for the three and five year periods (the

 

 

23                         Invesco Global Small & Mid Cap Growth Fund

first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of the Class A shares of the Fund was below the performance of the Index for the one year period and above the performance of the Index for the three and five year periods. Invesco Advisers noted that two separate investment teams manage the Fund with an allocation to at least three countries, including the U.S. The allocation between U.S. and international sleeves is static, and an underweight to the U.S. may have affected performance. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.

C. Advisory and Sub-Advisory Fees

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Lipper expense group at a common asset level. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in the expense group. The Board noted that the term “contractual management fee” may include both advisory and certain administrative services fees, but that Lipper does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco does not charge the Invesco Funds for the administrative services included in the term as defined by Lipper. The Board also reviewed the methodology used by Lipper in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group.

The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund through at least June 30, 2015 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 compared the Fund’s effective advisory fee rate (the advisory fee rate after advisory fee rate waivers and before other expense limitations/waivers) to the effective advisory fee rates of other funds advised by Invesco Advisers and its affiliates that are managed using an investment process substantially similar to the investment process used for the Fund. The Board noted that Invesco Advisers advises another mutual fund using a substantially similar investment process and that fund which had an effective advisory fee rate before waivers higher than the Fund’s rate. The Board noted that Invesco Advisers and its affiliates do not advise other funds or client accounts using an investment process substantially similar to the investment process used for he Fund.

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. The Board also noted that the sub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers.

D. Economies of Scale and Breakpoints

The Board considered the extent to which there are economies of scale in the provision of advisory services to the Fund. The Board also considered whether the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule and was assisted in this review by a report from the Senior Officer. The Board also noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds and other clients advised by Invesco Advisers.

E. Profitability and Financial Resources

The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the profitability of Invesco Advisers and its affiliates in providing these services for the year ended December 31, 2013. The Board received information from Invesco Advisers about the methodology used to prepare the profitability information. The Board considered the profitability of Invesco Advisers in managing the Fund and the Invesco Funds. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its subsidiaries provide to the Invesco Funds and the Fund. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each Affiliated Sub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.

F. Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for their provision of transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Lipper and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; that the services are required for the operation of the Fund; that Invesco Advisers and its affiliates can provide services, the nature and quality of which are at least equal to those provided by others offering the same or similar services; and that the fees for such

services are fair and reasonable in light of the usual and customary charges by others for services of the same nature and quality.

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 shift the payment obligation for research services from Invesco Advisers and the Affiliated Sub-Advisers to the Invesco Funds and that the research received may be used with other clients of Invesco Advisers and may reduce Invesco Advisers’ and the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.

The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisors from the Fund’s investment of uninvested cash and cash collateral from any securities lending arrangements in the affiliated money market funds are fair and reasonable.

The Board also considered the Fund use an affiliated broker to execute certain trades for the Fund to among other things, control information leakage, and were advised that such trades would be executed in compliance with rules under the Investment Company Act of 1940, as amended.

 

 

24                         Invesco Global Small & Mid Cap Growth Fund

Tax Information

Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2014:

 

Federal and State Income Tax

  

Long-Term Capital Gain Distributions

   $ 48,711,925   

Qualified Dividend Income*

     100.00 % 

Corporate Dividends Received Deduction*

     15.94 % 

U.S. Treasury Obligations*

     0.00 % 

 

  * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

Non-Resident Alien Shareholders

  

Qualified Short-Term Gains

   $ 4,325,842   

 

25                         Invesco Global Small & Mid Cap Growth Fund

Trustees and Officers

 

The address of each trustee and officer is AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Interested Persons                

Martin L. Flanagan1 — 1960

Trustee

   2007  

Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business

 

Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization).

   144   None

Philip A. Taylor2 — 1954

Trustee, President and Principal Executive Officer

   2006  

Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.

 

Formerly: Director and Chairman, Van Kampen Investor Services Inc.; Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company) and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships) and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.

   144   None

Wayne W. Whalen3 — 1939

Trustee

   2010   Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex   144   Director of the Mutual fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy

 

1  Mr. Flanagan is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer of the Adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the Adviser.
2  Mr. Taylor is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer and a director of the Adviser.
3  Mr. Whalen is retiring effective December 31, 2014. He has been deemed to be an interested person of the Trust because of his prior service as counsel to the predecessor funds of certain Invesco open-end funds and his affiliation with the law firm that served as counsel to such predecessor funds and the Invesco closed-end funds.

 

T-1                         Invesco Global Small & Mid Cap Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees                

Bruce L. Crockett — 1944

Trustee and Chair

   1992  

Chairman, Crockett Technologies Associates (technology consulting company)

 

Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer, COMSAT Corporation; Chairman, Board of Governors of INTELSAT (international communications company); ACE Limited (insurance company); and Investment Company Institute

   144   ALPS (Attorneys Liability Protection Society) (insurance company)

David C. Arch — 1945

Trustee

   2010   Chairman of Blistex Inc., a consumer health care products manufacturer   144   Board member of the Illinois Manufacturers’ Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan; Member of the Audit Committee of the Edward-Elmhurst Hospital

Frank S. Bayley — 1939

Trustee

   2001   Retired. Formerly: Director, Badgley Funds Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP   144   Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee, The Curtis Institute of Music

James T. Bunch — 1942

Trustee

   2003  

Managing Member, Grumman Hill Group LLC (family office private equity investments)

 

Formerly: Founder, Green Manning & Bunch Ltd. (investment banking firm) (1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation

   144   Chairman, Board of Governors, Western Golf Association; Chairman, Evans Scholars Foundation; and Director, Denver Film Society

Rodney F. Dammeyer — 1940

Trustee

   2010  

Chairman of CAC,LLC, (private company offering capital investment and management advisory services)

 

Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex

   144   Director of Quidel Corporation and Stericycle, Inc.

Albert R. Dowden — 1941

Trustee

   2000  

Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Nature’s Sunshine Products, Inc. and Reich & Tang Funds (5 portfolios) (registered investment company)

 

Formerly: Director, Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company); Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director, Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company)

   144   Director of: Nature’s Sunshine Products, Inc., Reich & Tang Funds, Homeowners of America Holding Corporation/ Homeowners of America Insurance Company, the Boss Group

Jack M. Fields — 1952

Trustee

   1997  

Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)

 

Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives

   144   Insperity, Inc. (formerly known as Administaff)

Prema Mathai-Davis — 1950

Trustee

   1998   Retired. Formerly: Chief Executive Officer, YWCA of the U.S.A.   144   None

Larry Soll — 1942

Trustee

   2003   Retired. Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company)   144   None

Hugo F. Sonnenschein — 1940

Trustee

   2010   President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to 2000, President of the University of Chicago   144   Trustee of the University of Rochester and a member of its investment committee; Member of the National Academy of Sciences and the American Philosophical Society; Fellow of the American Academy of Arts and Sciences

 

T-2                         Invesco Global Small & Mid Cap Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees—(continued)

Raymond Stickel, Jr. — 1944

Trustee

   2005   Retired. Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche   144   None

Suzanne H. Woolsey — 1941

Trustee

   2014   Chief Executive Officer of Woolsey Partners LLC   144   Emeritus Chair of the Board of Trustees of the Institute for Defense Analyses; Trustee of Colorado College; Trustee of California Institute of Technology; Prior to 2014, Director of Fluor Corp.; Prior to 2010, Trustee of the German Marshall Fund of the United States; Prior to 2010 Trustee of the Rocky Mountain Institute
Other Officers                

Russell C. Burk — 1958

Senior Vice President and Senior Officer

   2005   Senior Vice President and Senior Officer, The Invesco Funds   N/A   N/A

John M. Zerr — 1962

Senior Vice President, Chief Legal Officer and Secretary

   2006  

Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust; and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company)

   N/A   N/A

Sheri Morris — 1964

Vice President, Treasurer and Principal Financial Officer

   1999  

Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust

   N/A   N/A

 

T-3                         Invesco Global Small & Mid Cap Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Other Officers—(continued)                

Karen Dunn Kelley — 1960

Vice President

   2004  

Senior Managing Director, Investments; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc. and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only)

 

Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only)

   N/A   N/A

Crissie M. Wisdom — 1969

Anti-Money Laundering Compliance Officer

   2013   Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc.   N/A   N/A

Todd L. Spillane — 1958

Chief Compliance Officer

   2006  

Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)

 

Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company

   N/A   N/A

The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.

 

Office of the Fund

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Investment Adviser

Invesco Advisers, Inc.

1555 Peachtree Street, N.E.

Atlanta, GA 30309

  

Distributor

Invesco Distributors, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Auditors

PricewaterhouseCoopers LLP

1000 Louisiana Street, Suite 5800

Houston, TX 77002-5678

     

Counsel to the Fund

Stradley Ronon Stevens & Young, LLP

2005 Market Street, Suite 2600

Philadelphia, PA 19103-7018

  

Counsel to the Independent Trustees

Goodwin Procter LLP

901 New York Avenue, N.W.

Washington, D.C. 20001

  

Transfer Agent

Invesco Investment Services, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Custodian

State Street Bank and Trust Company

225 Franklin Street

Boston, MA 02110-2801

 

T-4                         Invesco Global Small & Mid Cap Growth Fund

 

 

LOGO

 

 

Invesco mailing information

Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.

 

 

Important notice regarding delivery of security holder documents

To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.

 

 

Fund holdings and proxy voting information

The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.

    A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.

    Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.

  LOGO

SEC file numbers: 811-06463 and 033-44611                        GSMG-AR-1        Invesco Distributors, Inc.

LOGO

 

Letters to Shareholders

 

LOGO

       Philip Taylor

   

Dear Shareholders:

This annual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Inside, your Fund’s portfolio managers discuss how they managed your Fund and the factors that affected its performance during the reporting period. I hope you find this report of interest.

During the reporting period covered by this report, the US economy showed signs of continued improvement. After contracting in the first quarter of 2014, the economy expanded strongly in the second quarter and unemployment trended lower. Much of the credit for this improvement goes to the US Federal Reserve (the Fed), which undertook an extraordinary asset purchase program following the global financial crisis. The Fed’s goal was to jumpstart the economy by encouraging banks to lend more, businesses to hire more and consumers to spend more. Signs of a stronger US economy prompted the Fed to reduce, or “taper,” its asset purchase program. Despite this,

interest rates remained near historical low levels due largely to heavy investor demand for bonds. While signs of economic improvement were evident in the US, European economies showed signs of weakening. That, together with geopolitical uncertainty and worries about the first diagnosed cases of Ebola outside of Africa, caused increased volatility in US and European equities.

    Extended periods of market strength can lull investors into complacency – just as prolonged periods of market weakness or volatility can discourage investors from initiating long-term investment plans. That’s why Invesco has always encouraged investors to work with a professional financial adviser who can stress the importance of starting to save and invest early and the importance of adhering to a disciplined investment plan – when times are good and when they’re uncertain. A financial adviser who knows your unique financial situation, investment goals and risk tolerance can be an invaluable partner as you seek to achieve your financial goals. He or she can offer a long-term perspective when markets are volatile and time-tested advice and guidance when your financial situation or investment goals change.

Timely information when and where you want it

Invesco’s efforts to help investors achieve their financial objectives include providing individual investors and financial professionals with timely information about the markets, the economy and investing – whenever and wherever they want it.

    Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including prices, performance, holdings and portfolio manager commentaries. You can access information about your individual Invesco account whenever it’s convenient for you; just complete a simple, secure online registration. Use the “Log In” box on our home page to get started.

    Invesco’s mobile app for iPad® (available free from the App StoreSM) allows you to obtain the same detailed information about your Fund and the same investment insights from our investment leaders, market strategists, economists and retirement experts on the go. You also can watch portfolio manager videos and have instant access to Invesco news and updates wherever you may be.

    In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.

Have questions?

For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.

    All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.

Sincerely,

 

LOGO

Philip Taylor

Senior Managing Director, Invesco Ltd.

iPad is a trademark of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.

 

2                         Invesco International Core Equity Fund

 

LOGO

      Bruce Crockett

   

Dear Fellow Shareholders:

There are a variety of factors that can impact investment performance, many of which are uncontrollable by us as investors. These factors can include various economic trends and geopolitical developments.

While the members of the Invesco Funds Board, which I chair, can’t dictate the performance of the Invesco funds, be assured that your Board works diligently throughout the year to focus on how your investments are managed. Our job is to represent you and your interests on a variety of fund management-related matters. We regularly monitor how the portfolio management teams of the Invesco funds are performing in light of ever-changing and often unpredictable economic and market conditions. We review the investment strategies and investment process employed by each fund’s management team as explained in the fund’s prospectus.

  

Perhaps our most significant responsibility is conducting the annual review of the funds’

advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information from Invesco that allows us to evaluate the quality of its services and the reasonableness of its fees. We also use information from a variety of independent sources, including materials provided by the independent senior officer of the Invesco funds, who reports directly to the independent trustees on the Board. Additionally, we meet with legal counsel and review performance and fee data prepared for us by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.

    After a careful review, the members of the Invesco Funds Board approved the continuation of advisory and sub-advisory contracts with Invesco Advisers and its affiliates. Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.

    As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.

Sincerely,

 

LOGO

Bruce L. Crockett

Independent Chair

Invesco Funds Board of Trustees

 

3                         Invesco International Core Equity Fund

 

Management’s Discussion of Fund Performance

 

 

Performance summary

For the fiscal year ended October 31, 2014, Invesco International Core Equity Fund, at net asset value, outperformed the MSCI EAFE Index, its broad market/style-specific benchmark. Stock selection in the consumer discretionary, consumer staples, energy, information technology (IT) and telecommunication services sectors contributed positively to Fund performance, while holdings in the industrials and materials sectors detracted from performance for the reporting period.

    Your Fund’s long-term performance appears later in this report.

 

 

Fund vs. Indexes

Total returns, 10/31/13 to 10/31/14, 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

     1.04 % 

Class B Shares

     0.19   

Class C Shares

     0.29   

Class R Shares

     0.70   

Class Y Shares

     1.20   

Investor Class Shares

     0.94   

Class R5 Shares

     1.51   

Class R6 Shares

     1.52   

MSCI EAFE Indexq (Broad Market/Style-Specific Index)

     -0.60   

Lipper International Large-Cap Core Funds Indexn (Peer Group Index)

     0.66   

Source(s): qFactSet Research Systems Inc.; nLipper Inc.

 

 

Market conditions and your Fund

Global equity markets generally rose during the fiscal year ended October 31, 2014, on signs that economic growth was accelerating as a result of the loose monetary policies of many developed countries’ central banks. While 2014 began on an optimistic note, global equity markets pulled back at various points in reaction to economic and geopolitical concerns.

    These concerns included worries about potentially negative effects of the US Federal Reserve reducing the scope of its asset purchase program beginning in early 2014, an Argentine sovereign bond default and eurozone banking concerns. Global equity markets also fell as geopolitical tensions in Ukraine and the Middle East weakened the outlook for global growth.

    Advanced economies such as the UK and US saw a modest but stronger rebound than Europe, where a nascent recovery has stalled. A more supportive monetary policy in the eurozone may be positive for equity markets there, and we have seen evidence of earnings recovery coming through.

    Meanwhile, the Bank of Japan remained committed to extraordinary monetary stimulus. Consumer spending in Japan has been weak for some time, and retail sales and household spending increased only gradually during the reporting period although improved corporate earnings were an encouraging sign.

    Equity market performance in emerging markets was mixed. China continued to face headwinds and struggled to balance structural reforms with its desire to

 

maintain satisfactory growth, while many countries in Asia experienced a stealth bull market.

    The Fund stayed true to its process and benefited from its quality orientation in stock selection. Our stock selection within the consumer discretionary, consumer staples, energy, IT and telecommunication services sectors made the largest contribution to the Fund’s results versus its broad market/style-specific benchmark.

    One of the largest contributors to performance was Dublin-based Shire, a specialty pharmaceutical company, which has been the subject of repeated take-over offers as it provides a strong drug pipeline and tax benefits for potential US-based acquirers. Shire also benefited from general strength in the health care sector as it was easily the best performing sector during the reporting period.

    Within the IT sector, Avago Technologies of Singapore contributed meaningfully to Fund performance. Avago, a developer of a broad range of analog semiconductor devices benefited from its relationship as a supplier to Apple (not a Fund holding) and its growth in the smartphone business. Avago also may benefit through the success of other smart phone makers and the growth of 4G wireless networks in China.

    Among the Fund’s detractors during the reporting period, a few industrial companies stand out. SKF, for example, a bearings and seals manufacturer, was impacted by sluggish industrial growth particularly in Europe as well as in the automotive industry. Additionally, company management’s guidance for the near-term remained cautious, which weighed on the stock.

    SAP, the German enterprise software company, also detracted from Fund results during the reporting period. A tough business environment, especially

 
Portfolio Composition       
By sector   

Financials

     22.5 % 

Industrials

     15.9   

Health Care

     15.6   

Consumer Discretionary

     12.2   

Consumer Staples

     11.3   

Energy

     7.3   

Information Technology

     6.5   

Materials

     3.4   

Telecommunication Services

     2.8   

Utilities

     1.0   
Money Market Funds
Plus Other Assets Less Liabilities		     1.5   
Top 10 Equity Holdings*       
  1.   Sanofi     2.7 % 
  2.   ABB Ltd.     2.5   
  3.   Rio Tinto PLC     2.3   
  4.   ResMed Inc.     2.3   
  5.   Novartis AG-ADR     2.2   
  6.   ING Groep N.V.     2.1   
  7.   LVMH Moet Hennessy Louis Vuitton S.A.     2.1   
  8.   Danone     2.0   
  9.   Aon PLC     2.0   
10.   Roche Holding AG     1.9   

 

 

Top Five Countries       

  1. United Kingdom

     19.3 % 

  2. Japan

     14.0   

  3. France

     11.9   

  4. Switzerland

     9.9   

  5. United States

     8.4   

 

Total Net Assets   $ 128.7 million   
Total Number of Holdings*     76   

The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.

*Excluding money market fund holdings.

 

 

4                         Invesco International Core Equity Fund

in Europe, led to weaker-than-expected earnings. Much of the weakness versus expectations was due to a continued model shift from license sales to cloud-related business, which hurt near-term revenues and margins.

    From a geographic perspective, the Fund’s exposure to the Asia Pacific region and Europe aided Fund performance during the fiscal year. Specifically, stock selection in Germany, the Netherlands, Switzerland, the UK and Singapore positively affected Fund performance. Conversely, stock selection in Australia, Hong Kong, Italy and Sweden detracted from performance versus the Fund’s broad market/style-specific benchmark. At the close of the reporting period, the Fund maintained overweight positions in Canada, France, the Netherlands and Singapore, while holding modestly underweight positions in Australia, Germany, Sweden and Switzerland relative to the Fund’s broad market/style-specific benchmark. In addition, the Fund held notably underweight positions in the UK and Japan.

    The Fund maintained overweight positions in the consumer staples, energy, health care, IT and telecommunication services sectors compared to its broad market/style-specific benchmark. Conversely, in the financials, industrials and materials sectors, the Fund maintained underweight positions.

    Market volatility increased near the end of the fiscal year and we believe this trend is likely to continue. While there are segments of the market that we continue to find attractive, particularly with a long-term perspective, valuations for the broader market are not inexpensive. We remain cautious, mindful of our mandate to provide protection in challenging markets, and are focused on high-quality companies with attractive valuations.

    Thank you for your investment in Invesco International Core Equity Fund.

The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

See important Fund and, if applicable, index disclosures later in this report.

 

LOGO   

Erik Esselink

Portfolio Manager, is manager of Invesco International Core Equity Fund. He joined Invesco in 2007. Mr. Esselink

earned a bachelor of science degree from the Rotterdam School of Economics, where he studied commercial economics.

 

LOGO   

Brian Nelson

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco International Core Equity Fund. He

joined Invesco in 2004. Mr. Nelson earned a BA from the University of California, Santa Barbara.

Assisted by the Global Core Equity Team.

 

 

5                         Invesco International Core Equity Fund

 

Your Fund’s Long-Term Performance

Results of a $10,000 Investment – Oldest Share Class(es)

Fund and index data from 10/31/04

 

LOGO

 

* The Fund’s oldest share class (Investor) does not have a sales charge, therefore, the second oldest share class with a sales charge (Class C) is also included in the chart.

 

Past performance cannot guarantee comparable future results.

    The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including

 

management fees. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses and management fees;

performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.

 

 

 

continued from page 8

n   Management risk. The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results.
n   Market risk. The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment, general economic and market conditions, regional or global instability, and currency and interest rate fluctuations.
n   Preferred securities risk. Preferred securities may include provisions that permit the issuer, in its discretion, to defer or omit distributions for a certain period of time. If the Fund owns a security that is deferring or omitting its distributions, the Fund may be required to report the distribution on its tax returns, even though it may not have received this income. Further, preferred securities may lose substantial value due to the omission or deferment of dividend payments.

 

About indexes used in this report

n   The MSCI EAFE® Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   The Lipper International Large-Cap Core Funds Index is an unmanaged index considered representative of international large-cap core funds tracked by Lipper.
n   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).
n   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.

 

Other information

n   The returns shown in management’s discussion of Fund performance are based on net asset values (NAVs) calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the NAVs for shareholder transactions and the returns based on those NAVs may differ from the NAVs and returns reported in the Financial Highlights.
n   Industry 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.
 

 

6                         Invesco International Core Equity Fund

 

Average Annual Total Returns  

As of 10/31/14, including maximum applicable sales charges

 

   

Class A Shares        

Inception (3/28/02)

     4.06 % 

10 Years

     3.39   

  5 Years

     2.65   

  1 Year

     -4.54   
Class B Shares        

Inception (3/28/02)

     4.10 % 

10 Years

     3.36   

  5 Years

     2.69   

  1 Year

     -4.77   
Class C Shares        

Inception (2/14/00)

     1.68 % 

10 Years

     3.20   

  5 Years

     3.05   

  1 Year

     -0.70   
Class R Shares        

Inception (11/24/03)

     5.02 % 

10 Years

     3.72   

  5 Years

     3.56   

  1 Year

     0.70   
Class Y Shares        

10 Years

     4.13 % 

  5 Years

     4.07   

  1 Year

     1.20   
Investor Class Shares        

Inception (10/28/98)

     3.68 % 

10 Years

     3.97   

  5 Years

     3.80   

  1 Year

     0.94   
Class R5 Shares        

Inception (4/30/04)

     5.13 % 

10 Years

     4.59   

  5 Years

     4.44   

  1 Year

     1.51   
Class R6 Shares        

10 Years

     4.10 % 

  5 Years

     4.06   

  1 Year

     1.52   
Average Annual Total Returns  

As of 9/30/14, the most recent calendar quarter end, including maximum applicable sales charges

 

   

Class A Shares         

Inception (3/28/02)

      4.06 % 

10 Years

      3.72   

  5 Years

      2.21   

  1 Year

      -1.97   
Class B Shares         

Inception (3/28/02)

      4.10 % 

10 Years

      3.69   

  5 Years

      2.23   

  1 Year

      -2.02   
Class C Shares         

Inception (2/14/00)

      1.67 % 

10 Years

      3.53   

  5 Years

      2.59   

  1 Year

      1.97   
Class R Shares         

Inception (11/24/03)

      5.03 % 

10 Years

      4.06   

  5 Years

      3.11   

  1 Year

      3.50   
Class Y Shares         

10 Years

      4.48 % 

  5 Years

      3.64   

  1 Year

      4.06   
Investor Class Shares         

Inception (10/28/98)

      3.68 % 

10 Years

      4.32   

  5 Years

      3.37   

  1 Year

      3.71   
Class R5 Shares         

Inception (4/30/04)

      5.15 % 

10 Years

      4.94   

  5 Years

      4.00   

  1 Year

      4.43   
Class R6 Shares         

10 Years

      4.45 % 

  5 Years

      3.63   

  1 Year

      4.45   
 

Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Investor Class shares and includes the 12b-1 fees applicable to Investor Class shares. Investor Class share performance reflects any applicable fee waivers or expense reimbursements.

    Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Investor Class shares and includes the 12b-1 fees applicable to Investor Class shares. Investor Class share performance reflects any applicable fee waivers or expense reimbursements.

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

    The total annual Fund operating expense ratio set forth in the most

 

recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares was 1.65%, 2.40%, 2.40%, 1.90%, 1.40%, 1.65%, 1.04% and 1.03%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

    Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. 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.

    Had the adviser not waived fees and/or reimbursed expenses in the past for Class C shares, performance would have been lower.

 

 

7                         Invesco International Core Equity Fund

 

Invesco International Core Equity Fund’s investment objective is long-term growth of capital.

n   Unless otherwise stated, information presented in this report is as of October 31, 2014, and is based on total net assets.
n   Unless otherwise noted, all data provided by Invesco.
n   To access your Fund’s reports/prospectus, visit invesco.com/fundreports.

 

 

About share classes

n   Class B shares may not be purchased for new or additional investments. Please see the prospectus for more information.
n   Class R shares are generally available only to employer sponsored retirement and benefit plans. Please see the prospectus for more information.
n   Class Y shares are available only to certain investors. Please see the prospectus for more information.
n   Investor Class shares are closed to new investors. Contact your financial adviser about purchasing our other share classes. Please see the prospectus for more information.
n   Class R5 shares and Class R6 shares are primarily intended for employer sponsored retirement and benefit plans that meet certain standards and for institutional investors. Please see the prospectus for more information.

 

 

Principal risks of investing in the Fund

n   Active trading risk. The Fund engages in frequent trading of portfolio securities. Active trading results in added expenses and may result in a lower return and increased tax liability.
n   Depositary receipts risk. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts or to pass through to them any voting rights with respect to the deposited securities.
n   Derivatives risk. The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity, interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets, the use of derivatives may include other, possibly
 

greater, risks, including counterparty, leverage and liquidity risks. Counterparty risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise perform under the derivative contract. Derivatives create leverage risk because they do not require payment up front equal to the economic exposure created by owning the derivative. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could impact the Fund’s ability to use certain derivatives or their cost. Also, derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly during adverse market conditions.

n   Developing/emerging markets securities risk. The prices of securities issued by foreign companies and governments located in developing/emerging market countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries.
n   Foreign securities risk. The Fund’s foreign investments may be affected by
 

changes in a foreign country’s exchange rates, political and social instability, changes in economic or taxation policies, difficulties when enforcing obligations, decreased liquidity, and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies.

n   Geographic focus risk. From time to time the Fund may invest a substantial amount of its assets in securities of issuers located in a single country or a limited number of countries. If the Fund focuses its investments in this manner, it assumes the risk that economic, political and social conditions in those countries will have a significant impact on its investment performance. The Fund’s investment performance may also be more volatile if it focuses its investments in certain countries, especially emerging markets countries.
n   Investing in the European Union risk. Many countries in the European Union are susceptible to high economic risks associated with high levels of debt, notably due to investments in sovereign debts of European countries such as Greece, Italy and Spain. One or more member states might exit the European Union, placing its currency and banking system in jeopardy. The European Union faces major issues involving its membership, structure, procedures and policies, including the adoption, abandonment or adjustment of the new constitutional treaty, the European Union’s enlargement to the south and east, and resolution of the European Union’s problematic fiscal and democratic accountability. Efforts of the member states to further unify their economic and monetary policies may increase the potential for the downward movement of one member state’s market to cause a similar effect on other member states’ markets. European countries that are part of the European Economic and Monetary Union may be significantly affected by the tight fiscal and monetary controls that the union seeks to impose on its members.

continued on page 6

 

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

 

 

 

8                         Invesco International Core Equity Fund

Schedule of Investments

October 31, 2014

 

     Shares      Value  

Common Stocks & Other Equity Interests–98.47%

  

Australia–1.17%   

Australia and New Zealand Banking
Group Ltd.

     41,325       $ 1,223,026   

Macquarie Atlas Roads Group

     106,213         284,276   
               1,507,302   
Canada–6.88%   

Intact Financial Corp.

     31,119         2,086,843   

Peyto Exploration & Development Corp.

     43,200         1,219,444   

Suncor Energy, Inc.

     61,774         2,193,802   

Toronto-Dominion Bank (The)

     28,430         1,399,425   

Vermilion Energy, Inc.

     34,468         1,956,317   
               8,855,831   
Finland–1.82%   

Sampo Oyj–Class A

     48,887         2,341,925   
France–11.88%   

BNP Paribas S.A.

     11,300         712,541   

Bouygues S.A.

     31,904         1,104,618   

Casino Guichard–Perrachon S.A.

     11,000         1,130,688   

Danone

     38,427         2,610,849   

Edenred

     39,994         1,109,380   

Lafarge S.A.

     7,658         532,616   

LVMH Moet Hennessy Louis Vuitton S.A.

     15,630         2,657,448   

Orpea

     11,015         673,061   

Publicis Groupe S.A.

     13,661         948,015   

Rexel S.A.

     20,941         352,250   

Sanofi

     37,390         3,463,208   
               15,294,674   
Germany–6.90%   

Bayer AG

     13,523         1,922,487   

Daimler AG

     19,866         1,544,180   

Muenchener Rueckversicherungs–Gesellschaft AG

     8,529         1,676,364   

SAP S.E.

     31,662         2,152,007   

Siemens AG

     14,083         1,586,678   
               8,881,716   
Ireland–1.39%   

CRH PLC

     37,354         829,390   

Shire PLC–ADR

     4,800         959,040   
               1,788,430   
Israel–1.79%   

Teva Pharmaceutical Industries Ltd.–ADR

     40,742         2,300,701   
Italy–1.16%   

Prada S.p.A.

     239,700         1,493,738   
Japan–13.97%   

Asahi Group Holdings, Ltd.

     42,997         1,346,082   

Daiwa House Industry Co., Ltd.

     56,400         1,087,061   
     Shares      Value  
Japan–(continued)   

FANUC Corp.

     4,400       $ 773,162   

Isuzu Motors Ltd.

     145,600         1,948,780   

KDDI Corp.

     21,400         1,378,845   

Komatsu Ltd.

     90,600         2,177,291   

Mitsubishi Corp.

     95,900         1,912,227   

Mitsubishi UFJ Financial Group, Inc.

     234,100         1,396,028   

Mizuho Financial Group, Inc.

     728,700         1,328,061   

Nintendo Co., Ltd.

     8,400         913,830   

NTT DoCoMo, Inc.

     79,100         1,326,452   

Sumitomo Corp.

     98,800         1,069,505   

Tokio Marine Holdings, Inc.

     41,000         1,328,825   
               17,986,149   
Netherlands–5.27%   

Heineken N.V.

     29,918         2,234,044   

ING Groep N.V.(a)

     186,294         2,676,909   

Koninklijke Philips N.V.

     66,938         1,872,277   
               6,783,230   
Singapore–3.17%   

Avago Technologies Ltd.

     23,520         2,028,600   

DBS Group Holdings Ltd.

     142,000         2,051,837   
               4,080,437   
Sweden–3.94%   

Sandvik AB

     132,114         1,452,592   

SKF AB–Class B

     94,730         1,901,319   

Svenska Handelsbanken AB–Class A

     36,210         1,726,504   
               5,080,415   
Switzerland–9.87%   

ABB Ltd.

     147,219         3,228,235   

Novartis AG–ADR

     31,123         2,884,791   

Roche Holding AG

     8,406         2,482,637   

Swisscom AG

     1,622         955,968   

TE Connectivity Ltd.

     20,335         1,243,079   

UBS AG

     109,995         1,911,621   
               12,706,331   
Taiwan–1.57%   

Taiwan Semiconductor Manufacturing
Co. Ltd.

     468,000         2,017,602   
United Kingdom–19.34%   

British American Tobacco PLC

     30,317         1,722,026   

British Sky Broadcasting Group PLC

     118,530         1,680,071   

Diageo PLC

     75,421         2,219,968   

Fiat Chrysler Automobiles N.V.(a)

     133,135         1,485,634   

GlaxoSmithKline PLC–ADR

     53,553         2,436,126   

Imperial Tobacco Group PLC

     35,484         1,540,788   

Kingfisher PLC

     312,784         1,515,904   

Liberty Global PLC–Series A(a)

     26,998         1,227,599   
 

 

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

 

9                         Invesco International Core Equity Fund

     Shares      Value  
United Kingdom–(continued)     

Liberty Global PLC–Series C(a)

     28,321       $ 1,259,435   

National Grid PLC

     85,277         1,264,408   

Rio Tinto PLC

     62,959         3,007,066   

Royal Dutch Shell PLC–Class A

     58,343         2,089,306   

SABMiller PLC

     30,270         1,709,766   

Schroders PLC

     13,901         536,996   

Standard Chartered PLC

     80,000         1,204,247   
               24,899,340   
United States–8.35%     

ACE Ltd.

     15,372         1,680,160   

Aon PLC

     30,263         2,602,618   

Eaton Corp. PLC

     24,960         1,707,014   

ResMed Inc.

     55,442         2,895,181   
     Shares      Value  
United States–(continued)     

Schlumberger Ltd.

     18,975       $ 1,872,074   
               10,757,047   

Total Common Stocks & Other Equity Interests
(Cost $125,999,206)

   

      126,774,868   

Money Market Funds–0.90%

  

   

Liquid Assets Portfolio–
Institutional Class(b)

     576,730         576,730   

Premier Portfolio–Institutional Class(b)

     576,730         576,730   

Total Money Market Funds
(Cost $1,153,460)

   

      1,153,460   

TOTAL INVESTMENTS–99.37%
(Cost $127,152,666)

   

      127,928,328   

OTHER ASSETS LESS LIABILITIES–0.63%

  

      811,322   

NET ASSETS–100.00%

  

    $ 128,739,650   
 

Investment Abbreviations:

 

ADR  

– American Depositary Receipt

Notes to Schedule of Investments:

 

(a)  Non-income producing security.
(b)  The money market fund and the Fund are affiliated by having the same investment adviser.

 

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

 

10                         Invesco International Core Equity Fund

Statement of Assets and Liabilities

October 31, 2014

 

Assets:

  

Investments, at value (Cost $125,999,206)

   $ 126,774,868   

Investments in affiliated money market funds, at value and cost

     1,153,460   

Total investments, at value (Cost $127,152,666)

     127,928,328   

Foreign currencies, at value (Cost $261,582)

     260,016   

Receivable for:

  

Investments sold

     335,069   

Fund shares sold

     24,165   

Dividends

     597,220   

Investment for trustee deferred compensation and retirement plans

     101,668   

Other assets

     22,957   

Total assets

     129,269,423   

Liabilities:

  

Payable for:

  

Fund shares reacquired

     290,957   

Accrued fees to affiliates

     60,809   

Accrued trustees’ and officers’ fees and benefits

     2,139   

Accrued other operating expenses

     61,842   

Trustee deferred compensation and retirement plans

     114,026   

Total liabilities

     529,773   

Net assets applicable to shares outstanding

   $ 128,739,650   

Net assets consist of:

  

Shares of beneficial interest

   $ 134,569,666   

Undistributed net investment income

     1,290,638   

Undistributed net realized gain (loss)

     (7,910,640 ) 

Net unrealized appreciation

     789,986   
    $ 128,739,650   

Net Assets:

  

Class A

   $ 40,132,247   

Class B

   $ 1,627,307   

Class C

   $ 10,836,582   

Class R

   $ 1,861,537   

Class Y

   $ 1,574,075   

Investor Class

   $ 12,821,003   

Class R5

   $ 3,126,619   

Class R6

   $ 56,760,280   

Shares outstanding, $0.001 par value per share,
with an unlimited number of shares authorized:

   

Class A

     3,529,149   

Class B

     143,035   

Class C

     978,363   

Class R

     163,564   

Class Y

     136,160   

Investor Class

     1,110,644   

Class R5

     275,399   

Class R6

     4,999,814   

Class A:

  

Net asset value per share

   $ 11.37   

Maximum offering price per share

  

(Net asset value of $11.37 ¸ 94.50%)

   $ 12.03   

Class B:

  

Net asset value and offering price per share

   $ 11.38   

Class C:

  

Net asset value and offering price per share

   $ 11.08   

Class R:

  

Net asset value and offering price per share

   $ 11.38   

Class Y:

  

Net asset value and offering price per share

   $ 11.56   

Investor Class:

  

Net asset value and offering price per share

   $ 11.54   

Class R5:

  

Net asset value and offering price per share

   $ 11.35   

Class R6:

  

Net asset value and offering price per share

   $ 11.35   
 

 

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

 

11                         Invesco International Core Equity Fund

Statement of Operations

For the year ended October 31, 2014

 

Investment income:

  

Dividends (net of foreign withholding taxes of $364,111)

   $ 3,809,443   

Dividends from affiliated money market funds (includes securities lending income of $109,682)

     111,355   

Total investment income

     3,920,798   

Expenses:

  

Advisory fees

     1,003,850   

Administrative services fees

     50,000   

Custodian fees

     61,511   

Distribution fees:

  

Class A

     105,091   

Class B

     20,748   

Class C

     119,912   

Class R

     10,162   

Investor Class

     33,919   

Transfer agent fees — A, B, C, R, Y and Investor

     251,597   

Transfer agent fees — R5

     320   

Transfer agent fees — R6

     1,152   

Trustees’ and officers’ fees and benefits

     25,919   

Other

     192,255   

Total expenses

     1,876,436   

Less: Fees waived and expense offset arrangement(s)

     (7,055 ) 

Net expenses

     1,869,381   

Net investment income

     2,051,417   

Realized and unrealized gain (loss) from:

  

Net realized gain (loss) from:

  

Investment securities (Net of foreign taxes of $9,490)

     9,776,566   

Foreign currencies

     (41,796 ) 
      9,734,770   

Change in net unrealized appreciation (depreciation) of:

  

Investment securities (Net of foreign taxes of $14,478)

     (10,250,101 ) 

Foreign currencies

     (32,105 ) 
      (10,282,206 ) 

Net realized and unrealized gain (loss)

     (547,436 ) 

Net increase in net assets resulting from operations

   $ 1,503,981   

 

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

 

12                         Invesco International Core Equity Fund

Statement of Changes in Net Assets

For the years ended October 31, 2014 and 2013

 

     2014      2013  

Operations:

     

Net investment income

   $ 2,051,417       $ 2,579,095   

Net realized gain

     9,734,770         37,098,687   

Change in net unrealized appreciation (depreciation)

     (10,282,206 )       (1,291,216 ) 

Net increase in net assets resulting from operations

     1,503,981         38,386,566   

Distributions to shareholders from net investment income:

     

Class A

     (699,534 )       (710,340 ) 

Class B

     (22,302 )       (30,084 ) 

Class C

     (119,183 )       (118,668 ) 

Class R

     (29,524 )       (31,854 ) 

Class Y

     (25,536 )       (28,913 ) 

Investor Class

     (234,807 )       (255,659 ) 

Class R5

     (67,893 )       (197,847 ) 

Class R6

     (1,303,221 )       (5,230,104 ) 

Total distributions from net investment income

     (2,502,000 )       (6,603,469 ) 

Share transactions–net:

     

Class A

     (2,299,009 )       (2,345,965 ) 

Class B

     (851,161 )       (1,013,721 ) 

Class C

     (1,517,822 )       (1,189,913 ) 

Class R

     (147,808 )       (302,488 ) 

Class Y

     279,681         (321,805 ) 

Investor Class

     (1,799,147 )       (1,607,037 ) 

Class R5

     125,732         (5,431,002 ) 

Class R6

     (125,941 )       (166,619,388 ) 

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

     (6,335,475 )       (178,831,319 ) 

Net increase (decrease) in net assets

     (7,333,494 )       (147,048,222 ) 

Net assets:

     

Beginning of year

     136,073,144         283,121,366   

End of year (includes undistributed net investment income of $1,290,638 and $1,782,505, respectively)

   $ 128,739,650       $ 136,073,144   

Notes to Financial Statements

October 31, 2014

NOTE 1—Significant Accounting Policies

Invesco International Core Equity Fund (the “Fund”) is a series portfolio of AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of eight separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.

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

The Fund currently consists of eight different classes of shares: Class A, Class B, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6. Investor Class shares of the Fund are offered only to certain grandfathered investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Investor Class, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.

 

13                         Invesco International Core Equity Fund

The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.

A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and ask prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

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 of the Fund’s investments.

Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

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

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

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

 

14                         Invesco International Core Equity Fund

C. Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.
D. Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.
E. Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

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

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

F. Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
G. Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
H. Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
I. Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any.
J. Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.

The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. 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.

 

15                         Invesco International Core Equity Fund

K. Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis or through forward foreign currency contracts to manage or minimize currency or exchange rate risk.

The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.

A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:

 

Average Daily Net Assets   Rate

First $500 million

     0 .75%   

Next $500 million

     0 .65%   

From $1 billion

     0 .55%   

From $2 billion

     0 .45%   

From $4 billion

     0 .40%   

From $6 billion

     0 .375%   

Over $8 billion

     0 .35%     

For the year ended October 31, 2014, the effective advisory fees incurred by the Fund was 0.75%.

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

The Adviser has contractually agreed, through at least June 30, 2015, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares to 2.25%, 3.00%, 3.00%, 2.50%, 2.00%, 2.25%, 2.00% and 2.00%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee 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, 2015. The fee waiver agreement cannot be terminated during its term. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.

Further, the Adviser has contractually agreed, through at least June 30, 2016, 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 year ended October 31, 2014, the Adviser waived advisory fees of $5,947.

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 year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.

The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C, Class R and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares, 0.50% of the average daily net assets of Class R shares and 0.25% of the average daily net assets of Investor Class shares. Of 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

 

16                         Invesco International Core Equity Fund

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 year ended October 31, 2014, 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 year ended October 31, 2014, IDI advised the Fund that IDI retained $6,719 in front-end sales commissions from the sale of Class A shares and $178, $1,140 and $256 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.

Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.

NOTE 3—Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.
  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of October 31, 2014. 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.

During the year ended October 31, 2014, there were transfers from Level 1 to Level 2 of $7,494,925, due to foreign fair value adjustments.

 

     Level 1        Level 2        Level 3        Total  

Australia

   $ —         $ 1,507,302         $ —         $ 1,507,302   

Canada

     8,855,831           —           —           8,855,831   

Finland

     —           2,341,925           —           2,341,925   

France

     2,610,849           12,683,825           —           15,294,674   

Germany

     8,881,716           —           —           8,881,716   

Ireland

     959,040           829,390           —           1,788,430   

Israel

     2,300,701           —           —           2,300,701   

Italy

     —           1,493,738           —           1,493,738   

Japan

     —           17,986,149           —           17,986,149   

Netherlands

     2,234,044           4,549,186           —           6,783,230   

Singapore

     2,028,600           2,051,837           —           4,080,437   

Sweden

     1,726,504           3,353,911           —           5,080,415   

Switzerland

     4,127,870           8,578,461           —           12,706,331   

Taiwan

     —           2,017,602           —           2,017,602   

United Kingdom

     8,088,865           16,810,475           —           24,899,340   

United States

     11,910,507           —           —           11,910,507   

Total Investments

   $ 53,724,527         $ 74,203,801         $ —         $ 127,928,328   

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 year ended October 31, 2014, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,108.

 

17                         Invesco International Core Equity 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 State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.

NOTE 7—Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2014 and 2013:

 

     2014        2013  

Ordinary income

   $ 2,502,000         $ 6,603,469   

Tax Components of Net Assets at Period-End:

 

     2014  

Undistributed ordinary income

   $ 1,392,884   

Undistributed long-term gain

     5,207,873   

Net unrealized appreciation — investments

     248,108   

Net unrealized appreciation — other investments

     14,324   

Temporary book/tax differences

     (102,246 ) 

Capital loss carryforward

     (12,590,959 ) 

Shares of beneficial interest

     134,569,666   

Total net assets

   $ 128,739,650   

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to wash sales.

The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund utilized $4,543,511 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of October 31, 2014, which expires as follows:

 

Capital Loss Carryforward*  
Expiration   Short-Term        Long-Term        Total  

October 31, 2017

   $ 11,001,492         $ —         $ 11,001,492   

Not subject to expiration

     1,329,285           260,182           1,589,467   
    $ 12,330,777         $ 260,182         $ 12,590,959   

 

* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization.

 

18                         Invesco International Core Equity Fund

NOTE 8—Investment Securities

The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2014 was $140,931,879 and $143,699,320, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis  

Aggregate unrealized appreciation of investment securities

   $ 8,068,980   

Aggregate unrealized (depreciation) of investment securities

     (7,820,872 ) 

Net unrealized appreciation of investment securities

   $ 248,108   

Cost of investments for tax purposes is $127,680,220.

NOTE 9—Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of foreign currency transactions and Fair Fund settlements, on October 31, 2014, undistributed net investment income was decreased by $41,284 and undistributed net realized gain (loss) was increased by $41,284. This reclassification had no effect on the net assets of the Fund.

NOTE 10—Share Information

 

     Summary of Share Activity  
    Years ended October 31,  
    2014(a)      2013  
     Shares      Amount      Shares      Amount  

Sold:

           

Class A

     497,949       $ 5,712,670         555,347       $ 5,942,173   

Class B

     8,611         97,374         17,830         190,884   

Class C

     105,522         1,179,598         186,878         1,971,690   

Class R

     64,374         731,130         51,394         545,008   

Class Y

     160,484         1,865,541         40,986         443,049   

Investor Class

     41,213         477,291         77,150         849,117   

Class R5

     45,774         511,417         5,211         62,790   

Class R6

     394,190         4,536,744         303,590         3,190,475   

Issued as reinvestment of dividends:

           

Class A

     61,809         668,156         67,198         679,375   

Class B

     2,006         21,844         2,866         29,204   

Class C

     10,054         106,576         10,612         105,270   

Class R

     2,721         29,524         3,138         31,854   

Class Y

     2,057         22,564         2,676         27,450   

Investor Class

     20,654         226,785         24,114         247,648   

Class R5

     6,302         67,746         19,646         197,834   

Class R6

     121,343         1,303,221         519,891         5,230,104   

Automatic conversion of Class B shares to Class A shares:

           

Class A

     46,434         532,069         63,299         673,135   

Class B

     (46,217 )       (532,069 )       (63,015 )       (673,135 ) 

Reacquired:

           

Class A

     (805,479 )       (9,211,904 )       (913,757 )       (9,640,648 ) 

Class B

     (38,304 )       (438,310 )       (53,237 )       (560,674 ) 

Class C

     (253,142 )       (2,803,996 )       (318,934 )       (3,266,873 ) 

Class R

     (79,275 )       (908,462 )       (82,934 )       (879,350 ) 

Class Y

     (136,622 )       (1,608,424 )       (74,071 )       (792,304 ) 

Investor Class

     (217,046 )       (2,503,223 )       (250,611 )       (2,703,802 ) 

Class R5

     (39,647 )       (453,431 )       (536,200 )       (5,691,626 ) 

Class R6

     (527,417 )       (5,965,906 )       (16,433,366 )       (175,039,967 ) 

Net increase (decrease) in share activity

     (551,652 )     $ (6,335,475 )       (16,774,299 )     $ (178,831,319 ) 

 

(a)  44% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are other mutual funds that are also advised by Invesco.

 

19                         Invesco International Core Equity Fund

NOTE 11—Financial Highlights

The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.

 

     Net asset
value,
beginning
of period		     Net
investment
income(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(b)		     Total
return(c)		     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(d)		  

Class A

  

Year ended 10/31/14

   $ 11.45      $ 0.15      $ (0.04 )    $ 0.11      $ (0.19 )    $ 11.37        1.04 %    $ 40,132        1.59 %(e)      1.59 %(e)      1.34 %(e)      109 % 

Year ended 10/31/13

     9.87        0.13        1.63        1.76        (0.18 )      11.45        18.11        42,703        1.65        1.65        1.20        25   

Year ended 10/31/12

     10.02        0.18        (0.05 )      0.13        (0.28 )      9.87        1.40        39,044        1.59        1.59        1.86        20   

Year ended 10/31/11

     10.96        0.30        (1.11 )      (0.81 )      (0.13 )      10.02        (7.46 )      43,983        1.54        1.54        2.71        26   

Year ended 10/31/10

     10.34        0.17        0.62        0.79        (0.17 )      10.96        7.68        40,422        1.51        1.51        1.59        39   

Class B

  

Year ended 10/31/14

     11.47        0.07        (0.05 )      0.02        (0.11 )      11.38        0.19        1,627        2.34 (e)      2.34 (e)      0.59 (e)      109   

Year ended 10/31/13

     9.87        0.05        1.65        1.70        (0.10 )      11.47        17.35        2,488        2.40        2.40        0.45        25   

Year ended 10/31/12

     10.00        0.11        (0.05 )      0.06        (0.19 )      9.87        0.67        3,085        2.34        2.34        1.11        20   

Year ended 10/31/11

     10.92        0.22        (1.11 )      (0.89 )      (0.03 )      10.00        (8.16 )      4,654        2.29        2.29        1.96        26   

Year ended 10/31/10

     10.30        0.09        0.62        0.71        (0.09 )      10.92        6.88        6,906        2.26        2.26        0.84        39   

Class C

  

Year ended 10/31/14

     11.16        0.07        (0.04 )      0.03        (0.11 )      11.08        0.29        10,837        2.34 (e)      2.34 (e)      0.59 (e)      109   

Year ended 10/31/13

     9.61        0.05        1.60        1.65        (0.10 )      11.16        17.30        12,458        2.40        2.40        0.45        25   

Year ended 10/31/12

     9.74        0.11        (0.05 )      0.06        (0.19 )      9.61        0.69        11,896        2.34        2.34        1.11        20   

Year ended 10/31/11

     10.65        0.21        (1.09 )      (0.88 )      (0.03 )      9.74        (8.28 )      15,597        2.29        2.29        1.96        26   

Year ended 10/31/10

     10.04        0.09        0.61        0.70        (0.09 )      10.65        6.96        20,110        2.26        2.26        0.84        39   

Class R

  

Year ended 10/31/14

     11.47        0.13        (0.06 )      0.07        (0.16 )      11.38        0.70        1,862        1.84 (e)      1.84 (e)      1.09 (e)      109   

Year ended 10/31/13

     9.88        0.10        1.65        1.75        (0.16 )      11.47        17.87        2,016        1.90        1.90        0.95        25   

Year ended 10/31/12

     10.01        0.15        (0.03 )      0.12        (0.25 )      9.88        1.29        2,016        1.84        1.84        1.61        20   

Year ended 10/31/11

     10.95        0.27        (1.11 )      (0.84 )      (0.10 )      10.01        (7.76 )      2,885        1.79        1.79        2.46        26   

Year ended 10/31/10

     10.33        0.14        0.62        0.76        (0.14 )      10.95        7.41        3,028        1.76        1.76        1.34        39   

Class Y

  

Year ended 10/31/14

     11.65        0.19        (0.06 )      0.13        (0.22 )      11.56        1.20        1,574        1.34 (e)      1.34 (e)      1.59 (e)      109   

Year ended 10/31/13

     10.03        0.16        1.67        1.83        (0.21 )      11.65        18.53        1,284        1.40        1.40        1.45        25   

Year ended 10/31/12

     10.18        0.21        (0.05 )      0.16        (0.31 )      10.03        1.67        1,411        1.34        1.34        2.11        20   

Year ended 10/31/11

     11.14        0.33        (1.12 )      (0.79 )      (0.17 )      10.18        (7.23 )      1,354        1.29        1.29        2.96        26   

Year ended 10/31/10

     10.51        0.19        0.64        0.83        (0.20 )      11.14        7.91        1,839        1.26        1.26        1.84        39   

Investor Class

  

Year ended 10/31/14

     11.63        0.16        (0.06 )      0.10        (0.19 )      11.54        0.94        12,821        1.59 (e)      1.59 (e)      1.34 (e)      109   

Year ended 10/31/13

     10.02        0.13        1.66        1.79        (0.18 )      11.63        18.14        14,726        1.65        1.65        1.20        25   

Year ended 10/31/12

     10.16        0.18        (0.04 )      0.14        (0.28 )      10.02        1.48        14,181        1.59        1.59        1.86        20   

Year ended 10/31/11

     11.12        0.30        (1.13 )      (0.83 )      (0.13 )      10.16        (7.53 )      16,009        1.54        1.54        2.71        26   

Year ended 10/31/10

     10.49        0.17        0.63        0.80        (0.17 )      11.12        7.67        19,438        1.51        1.51        1.59        39   

Class R5

  

Year ended 10/31/14

     11.45        0.22        (0.06 )      0.16        (0.26 )      11.35        1.51        3,127        1.01 (e)      1.01 (e)      1.92 (e)      109   

Year ended 10/31/13

     9.89        0.19        1.63        1.82        (0.26 )      11.45        18.71        3,010        1.04        1.04        1.81        25   

Year ended 10/31/12

     10.04        0.24        (0.04 )      0.20        (0.35 )      9.89        2.15        7,656        0.90        0.90        2.55        20   

Year ended 10/31/11

     10.99        0.37        (1.11 )      (0.74 )      (0.21 )      10.04        (6.85 )      208,295        0.91        0.91        3.34        26   

Year ended 10/31/10

     10.37        0.23        0.63        0.86        (0.24 )      10.99        8.35        228,027        0.91        0.91        2.19        39   

Class R6

  

Year ended 10/31/14

     11.45        0.22        (0.06 )      0.16        (0.26 )      11.35        1.52        56,760        1.00 (e)      1.00 (e)      1.93 (e)      109   

Year ended 10/31/13

     9.88        0.19        1.64        1.83        (0.26 )      11.45        18.84        57,388        1.03        1.03        1.82        25   

Year ended 10/31/12(f)

     10.05        0.03        (0.20 )      (0.17 )      —        9.88        (1.69 )      203,831        0.87 (g)      0.87 (g)      2.58 (g)      20   

 

(a)  Calculated using average shares outstanding.
(b)  Includes redemption fees added to shares of beneficial interest for Class A, Class B, Class C, Class R, Class Y, Investor Class and Class R5 shares, which were less than $0.005 per share for the fiscal years ended October 31, 2012 and prior.
(c)  Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.
(d)  Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
(e)  Ratios are based on average daily net assets (000’s omitted) of $42,036, $2,075, $11,991, $2,032, $1,582, $13,568, $2,863 and $57,699 for Class A, Class B, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares, respectively.
(f)  Commencement date of September 24, 2012 for Class R6 shares.
(g)  Annualized.

 

20                         Invesco International Core Equity Fund

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of AIM International Mutual Funds (Invesco International Mutual Funds)

and Shareholders of Invesco International Core Equity Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco International Core Equity Fund (one of the funds constituting AIM International Mutual Funds (Invesco International Mutual Funds), hereafter referred to as the “Fund”) at October 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2014 by correspondence with the custodian, provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

December 23, 2014

Houston, Texas

 

21                         Invesco International Core Equity Fund

Calculating your ongoing Fund expenses

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2014 through October 31, 2014.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

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

 

Class   Beginning
Account Value
(05/01/14)		     ACTUAL     HYPOTHETICAL
(5% annual return before
expenses)		     Annualized
Expense
Ratio		  
    Ending
Account Value
(10/31/14)1		     Expenses
Paid During
Period2		     Ending
Account Value
(10/31/14)		     Expenses
Paid During
Period2		    
A   $ 1,000.00      $ 970.10      $ 7.80      $ 1,017.29      $ 7.98        1.57 % 
B     1,000.00        966.00        11.50        1,013.51        11.77        2.32   
C     1,000.00        966.00        11.50        1,013.51        11.77        2.32   
R     1,000.00        967.70        9.03        1,016.03        9.25        1.82   
Y     1,000.00        970.60        6.56        1,018.55        6.72        1.32   
Investor     1,000.00        968.90        7.79        1,017.29        7.98        1.57   
R5     1,000.00        971.70        4.92        1,020.21        5.04        0.99   
R6     1,000.00        971.70        4.87        1,020.27        4.99        0.98   

 

1 The actual ending account value is based on the actual total return of the Fund for the period May 1, 2014 through October 31, 2014, 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.

 

22                         Invesco International Core Equity Fund

Approval of Investment Advisory and Sub-Advisory Contracts

 

The Board of Trustees (the Board) of AIM International Mutual Funds (Invesco International Mutual Funds) is required under the Investment Company Act of 1940, as amended, to approve annually the renewal of Invesco International Core Equity Fund’s (the Fund) investment advisory agreements. During contract renewal meetings held on June 16-17, 2014, the Board as a whole, and the disinterested or “independent” Trustees, who comprise over 75% of the Board, voting separately, approved the continuance for the Fund of the 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 Australia 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, 2014.

In evaluating the fairness and reasonableness of compensation under the Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board determined that continuation of the Fund’s investment advisory agreement and the sub-advisory contracts are in the best interest of the Fund and its shareholders and that the compensation payable to Invesco Advisers and the Affiliated Sub-Advisers under the agreements is fair and reasonable.

The Board’s Fund Evaluation Process

The Board’s Investments Committee has established three Sub-Committees, each of which is primarily responsible for overseeing the management of a number of the funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet throughout the year to review the performance of their assigned Invesco Funds, including reviewing materials prepared under the direction of the independent Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review the performance, investment objective(s), policies, strategies, limitations and investment risks of these funds. The Sub-Committees meet regularly and at designated contract renewal meetings each year to conduct a review of the performance, fees, expenses and other matters related to their assigned Invesco Funds. Each Sub-Committee recommends to the Investments Committee, which in turn recommends to the full Board, whether and on what terms to

approve the continuance of each Invesco Fund’s investment advisory agreement and sub-advisory contracts for another year.

During the contract renewal process, the Trustees receive comparative performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Lipper Inc. (Lipper), an independent provider of investment company data. The Trustees also receive 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 addition to meetings with Invesco Advisers and fund counsel, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

The Trustees recognized that the advisory fee rates for the Invesco Funds are, in many cases, the result of years of review and negotiation. The Trustees’ deliberations and conclusions in a particular year may be based in part on their deliberations and conclusions regarding these same arrangements throughout the year and in prior years. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.

The discussion below serves as the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. Unless otherwise stated, this information is current as of June 17, 2014, and may not reflect consideration of factors that became known to the Board after that date.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

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

The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers, with whom the Sub-Committees met

during the year. The Board’s review of the qualifications of Invesco Advisers to provide advisory services included the Board’s consideration of Invesco Advisers’ investment process oversight, independent credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, equity and fixed income trading operations, internal audit, distribution and legal and compliance.

In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship and the greater uncertainty that may be associated with entering into a new relationship. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s investment advisory agreement.

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 that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, 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 benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s sub-advisory contracts.

B. Fund Performance

The Board considered Fund performance as a relevant factor in considering whether to approve the investment advisory agreement as well as the sub-advisory contracts for the Fund, as Invesco Asset Management Limited currently manages certain assets of the Fund.

The Board compared the Fund’s performance during the past one, three and five calendar years to the performance of funds in the Lipper performance universe and against the Lipper International Large-Cap Core Funds Index. The Board noted that performance of Investor Class 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

 

 

23                         Invesco International Core Equity Fund

noted that performance of Investor Class shares of the Fund was below the performance of the Index for the one, three and five year periods. Invesco Advisers noted that changes to the portfolio management team had been made in February 2014. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.

C. Advisory and Sub-Advisory Fees

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Lipper expense group at a common asset level. The Board noted that the contractual management fee rate for Investor Class shares of the Fund was at the median contractual management fee rate of funds in the expense group. The Board noted that the term “contractual management fee” may include both advisory and certain administrative services fees, but that Lipper does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not charge the Invesco Funds for the administrative services included in the term as defined by Lipper. The Board also reviewed the methodology used by Lipper in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group.

The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund through at least June 30, 2015 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 mutual funds using an investment process substantially similar to the investment process used for the Fund. The Board did note do manage other client accounts using a similar investment process. The Board noted that Invesco Advisers or the Affiliated Sub-Advisers may charge lower fees to large institutional clients. Invesco Advisers reviewed with the Board the significantly greater scope of services it provides to the Invesco Funds relative to certain other client accounts. These additional services include provision of administrative services, officers and office space, oversight of service providers, preparation of annual registration statement updates and financial information and regulatory compliance under the Investment Company Act of 1940, as amended. Invesco Advisers also reviewed generally the higher frequency of shareholder purchases and redemptions in the Invesco Funds relative to the flow of assets for other client accounts. Invesco Advisers advised the Board that advance notice of redemptions is often provided to Invesco Advisers by institutional clients. The Board did note that sub-advisory fee rates charged by the Affiliated

Sub-Advisers to manage the Invesco Funds and to manage other client accounts tended to be more comparable, reflecting a more comparable scope of services. The Board concluded that the aggregate services provided to the Invesco Funds were sufficiently different from those provided to institutional clients to support the difference in fees.

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. The Board also noted that the sub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers.

D. Economies of Scale and Breakpoints

The Board considered the extent to which there are economies of scale in the provision of advisory services to the Fund. The Board also considered whether the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule and was assisted in this review by a report from the Senior Officer. The Board also noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds and other clients advised by Invesco Advisers.

E. Profitability and Financial Resources

The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the profitability of Invesco Advisers and its affiliates in providing these services for the year ended December 31, 2013. The Board received information from Invesco Advisers about the methodology used to prepare the profitability information. The Board considered the profitability of Invesco Advisers in managing the Fund and the Invesco Funds. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its subsidiaries provide to the Invesco Funds and the Fund. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund to be excessive given the nature, quality and extent of the services provided to the Invesco Funds. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each Affiliated Sub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.

F. Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for their provision of transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services,

including information provided by Lipper and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; that the services are required for the operation of the Fund; that Invesco Advisers and its affiliates can provide services, the nature and quality of which are at least equal to those provided by others offering the same or similar services; and that the fees for such services are fair and reasonable in light of the usual and customary charges by others for services of the same nature and quality.

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 shift the payment obligation for research services from Invesco Advisers and the Affiliated Sub-Advisers to the Invesco Funds and that the research received may be used with other clients of Invesco Advisers and may reduce Invesco Advisers’ and the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.

The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisors from the Fund’s investment of uninvested cash and cash collateral from any securities lending arrangements in the affiliated money market funds are fair and reasonable.

The Board also considered the Fund may use an affiliated broker to execute certain trades for the Fund to among other things, control information leakage, and were advised that such trades would be executed in compliance with rules under the Investment Company Act of 1940, as amended.

 

 

24                         Invesco International Core Equity Fund

Tax Information

Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2014:

 

Federal and State Income Tax

  

Qualified Dividend Income*

     100.00 % 

Corporate Dividends Received Deduction*

     0.00 % 

U.S. Treasury Obligations*

     0.00 % 

Foreign Taxes

   $ 0.0318  per share 

Foreign Source Income

   $ 0.3742  per share 

 

  * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

25                         Invesco International Core Equity Fund

Trustees and Officers

 

The address of each trustee and officer is AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Interested Persons                

Martin L. Flanagan1 — 1960

Trustee

   2007  

Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business

 

Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization).

   144   None

Philip A. Taylor2 — 1954

Trustee, President and Principal Executive Officer

   2006  

Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.

 

Formerly: Director and Chairman, Van Kampen Investor Services Inc.; Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company) and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships) and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.

   144   None

Wayne W. Whalen3 — 1939

Trustee

   2010   Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex   144   Director of the Mutual fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy

 

1  Mr. Flanagan is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer of the Adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the Adviser.
2  Mr. Taylor is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer and a director of the Adviser.
3  Mr. Whalen is retiring effective December 31, 2014. He has been deemed to be an interested person of the Trust because of his prior service as counsel to the predecessor funds of certain Invesco open-end funds and his affiliation with the law firm that served as counsel to such predecessor funds and the Invesco closed-end funds.

 

T-1                         Invesco International Core Equity Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees                

Bruce L. Crockett — 1944

Trustee and Chair

   1992  

Chairman, Crockett Technologies Associates (technology consulting company)

 

Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer, COMSAT Corporation; Chairman, Board of Governors of INTELSAT (international communications company); ACE Limited (insurance company); and Investment Company Institute

   144   ALPS (Attorneys Liability Protection Society) (insurance company)

David C. Arch — 1945

Trustee

   2010   Chairman of Blistex Inc., a consumer health care products manufacturer   144   Board member of the Illinois Manufacturers’ Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan; Member of the Audit Committee of the Edward-Elmhurst Hospital

Frank S. Bayley — 1939

Trustee

   2001   Retired. Formerly: Director, Badgley Funds Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP   144   Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee, The Curtis Institute of Music

James T. Bunch — 1942

Trustee

   2003  

Managing Member, Grumman Hill Group LLC (family office private equity investments)

 

Formerly: Founder, Green Manning & Bunch Ltd. (investment banking firm) (1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation

   144   Chairman, Board of Governors, Western Golf Association; Chairman, Evans Scholars Foundation; and Director, Denver Film Society

Rodney F. Dammeyer — 1940

Trustee

   2010  

Chairman of CAC,LLC, (private company offering capital investment and management advisory services)

 

Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex

   144   Director of Quidel Corporation and Stericycle, Inc.

Albert R. Dowden — 1941

Trustee

   2000  

Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Nature’s Sunshine Products, Inc. and Reich & Tang Funds (5 portfolios) (registered investment company)

 

Formerly: Director, Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company); Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director, Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company)

   144   Director of: Nature’s Sunshine Products, Inc., Reich & Tang Funds, Homeowners of America Holding Corporation/ Homeowners of America Insurance Company, the Boss Group

Jack M. Fields — 1952

Trustee

   1997  

Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)

 

Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives

   144   Insperity, Inc. (formerly known as Administaff)

Prema Mathai-Davis — 1950

Trustee

   1998   Retired. Formerly: Chief Executive Officer, YWCA of the U.S.A.   144   None

Larry Soll — 1942

Trustee

   2003   Retired. Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company)   144   None

Hugo F. Sonnenschein — 1940

Trustee

   2010   President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to 2000, President of the University of Chicago   144   Trustee of the University of Rochester and a member of its investment committee; Member of the National Academy of Sciences and the American Philosophical Society; Fellow of the American Academy of Arts and Sciences

 

T-2                         Invesco International Core Equity Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees—(continued)

Raymond Stickel, Jr. — 1944

Trustee

   2005   Retired. Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche   144   None

Suzanne H. Woolsey — 1941

Trustee

   2014   Chief Executive Officer of Woolsey Partners LLC   144   Emeritus Chair of the Board of Trustees of the Institute for Defense Analyses; Trustee of Colorado College; Trustee of California Institute of Technology; Prior to 2014, Director of Fluor Corp.; Prior to 2010, Trustee of the German Marshall Fund of the United States; Prior to 2010 Trustee of the Rocky Mountain Institute
Other Officers                

Russell C. Burk — 1958

Senior Vice President and Senior Officer

   2005   Senior Vice President and Senior Officer, The Invesco Funds   N/A   N/A

John M. Zerr — 1962

Senior Vice President, Chief Legal Officer and Secretary

   2006  

Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust; and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company)

   N/A   N/A

Sheri Morris — 1964

Vice President, Treasurer and Principal Financial Officer

   1999  

Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust

   N/A   N/A

 

T-3                         Invesco International Core Equity Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Other Officers—(continued)                

Karen Dunn Kelley — 1960

Vice President

   2004  

Senior Managing Director, Investments; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc. and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only)

 

Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only)

   N/A   N/A

Crissie M. Wisdom — 1969

Anti-Money Laundering Compliance Officer

   2013   Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc.   N/A   N/A

Todd L. Spillane — 1958

Chief Compliance Officer

   2006  

Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)

 

Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company

   N/A   N/A

The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.

 

Office of the Fund

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Investment Adviser

Invesco Advisers, Inc.

1555 Peachtree Street, N.E.

Atlanta, GA 30309

  

Distributor

Invesco Distributors, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Auditors

PricewaterhouseCoopers LLP

1000 Louisiana Street, Suite 5800

Houston, TX 77002-5678

     

Counsel to the Fund

Stradley Ronon Stevens & Young, LLP

2005 Market Street, Suite 2600

Philadelphia, PA 19103-7018

  

Counsel to the Independent Trustees

Goodwin Procter LLP

901 New York Avenue, N.W.

Washington, D.C. 20001

  

Transfer Agent

Invesco Investment Services, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Custodian

State Street Bank and Trust Company

225 Franklin Street

Boston, MA 02110-2801

 

T-4                         Invesco International Core Equity Fund

 

 

 

 

 

LOGO

 

 

Invesco mailing information

Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.

 

 

Important notice regarding delivery of security holder documents

To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.

 

 

Fund holdings and proxy voting information

The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.

    A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.

    Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.

    LOGO

 

SEC file numbers: 811-06463 and 033-44611                I-ICE-AR-1                    Invesco Distributors, Inc.

 

LOGO

 

Letters to Shareholders

 

 

 

LOGO

      Philip Taylor

     

Dear Shareholders:

This annual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Inside, your Fund’s portfolio managers discuss how they managed your Fund and the factors that affected its performance during the reporting period. I hope you find this report of interest.

During the reporting period covered by this report, the US economy showed signs of continued improvement. After contracting in the first quarter of 2014, the economy expanded strongly in the second quarter and unemployment trended lower. Much of the credit for this improvement goes to the US Federal Reserve (the Fed), which undertook an extraordinary asset purchase program following the global financial crisis. The Fed’s goal was to jumpstart the economy by encouraging banks to lend more, businesses to hire more and consumers to spend more. Signs of a stronger US economy prompted the Fed to reduce, or “taper,”

its asset purchase program. Despite this, interest rates remained near historical low levels due largely to heavy investor demand for bonds. While signs of economic improvement were evident in the US, European economies showed signs of weakening. That, together with geopolitical uncertainty and worries about the first diagnosed cases of Ebola outside of Africa, caused increased volatility in US and European equities.

    Extended periods of market strength can lull investors into complacency – just as prolonged periods of market weakness or volatility can discourage investors from initiating long-term investment plans. That’s why Invesco has always encouraged investors to work with a professional financial adviser who can stress the importance of starting to save and invest early and the importance of adhering to a disciplined investment plan – when times are good and when they’re uncertain. A financial adviser who knows your unique financial situation, investment goals and risk tolerance can be an invaluable partner as you seek to achieve your financial goals. He or she can offer a long-term perspective when markets are volatile and time-tested advice and guidance when your financial situation or investment goals change.

Timely information when and where you want it

Invesco’s efforts to help investors achieve their financial objectives include providing individual investors and financial professionals with timely information about the markets, the economy and investing – whenever and wherever they want it.

    Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including prices, performance, holdings and portfolio manager commentaries. You can access information about your individual Invesco account whenever it’s convenient for you; just complete a simple, secure online registration. Use the “Log In” box on our home page to get started.

    Invesco’s mobile app for iPad® (available free from the App StoreSM) allows you to obtain the same detailed information about your Fund and the same investment insights from our investment leaders, market strategists, economists and retirement experts on the go. You also can watch portfolio manager videos and have instant access to Invesco news and updates wherever you may be.

    In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.

Have questions?

For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.

    All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.

Sincerely,

 

LOGO

Philip Taylor

Senior Managing Director, Invesco Ltd.

iPad is a trademark of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.

 

2                             Invesco International Growth Fund

 

 

 

LOGO

    Bruce Crockett

     

Dear Fellow Shareholders:

There are a variety of factors that can impact investment performance, many of which are uncontrollable by us as investors. These factors can include various economic trends and geopolitical developments.

    While the members of the Invesco Funds Board, which I chair, can’t dictate the performance of the Invesco funds, be assured that your Board works diligently throughout the year to focus on how your investments are managed. Our job is to represent you and your interests on a variety of fund management-related matters. We regularly monitor how the portfolio management teams of the Invesco funds are performing in light of ever-changing and often unpredictable economic and market conditions. We review the investment strategies and investment process employed by each fund’s management team as explained in the fund’s prospectus.

         Perhaps our most significant responsibility is conducting the annual review of the funds’

advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information from Invesco that allows us to evaluate the quality of its services and the reasonableness of its fees. We also use information from a variety of independent sources, including materials provided by the independent senior officer of the Invesco funds, who reports directly to the independent trustees on the Board. Additionally, we meet with legal counsel and review performance and fee data prepared for us by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.

    After a careful review, the members of the Invesco Funds Board approved the continuation of advisory and sub-advisory contracts with Invesco Advisers and its affiliates. Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.

    As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.

Sincerely,

 

LOGO

Bruce L. Crockett

Independent Chair

Invesco Funds Board of Trustees

 

3                             Invesco International Growth Fund

 

Management’s Discussion of Fund Performance

 

 

Performance summary

For the fiscal year ended October 31, 2014, Invesco International Growth Fund, at net asset value, delivered positive returns, outperforming its style-specific benchmark, the Custom International Growth Index. Stock selection in the health care and information technology (IT) sectors was a key driver of relative Fund outperformance.

    Your Fund’s long-term performance appears later in this report.

 

 

Fund vs. Indexes

Total returns, 10/31/13 to 10/31/14, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.

 

Class A Shares       3.98 %
Class B Shares       3.22  
Class C Shares       3.21  
Class R Shares       3.73  
Class Y Shares       4.25  
Class R5 Shares       4.34  
Class R6 Shares       4.42  
MSCI EAFE Index‚ (Broad Market Index)       -0.60  
Custom International Growth Indexn (Style-Specific Index)       0.66  
Lipper International Multi-Cap Growth Funds Index¿ (Peer Group Index)       -0.09  

 

Source(s): ‚FactSet Research Systems Inc.; nInvesco, FactSet Research Systems Inc.; ¿Lipper Inc.

  

 

 

Market conditions and your Fund

Global equity markets generally rose during the fiscal year ended October 31, 2014, on signs that economic growth was accelerating and continued loose monetary policies of many developed countries’ central banks. While 2014 began on an optimistic note, global equity markets pulled back at various points in reaction to economic and geopolitical concerns.

    These concerns included worries about potentially negative effects of the US Federal Reserve reducing the scope of its asset purchase program beginning in early 2014, an Argentine sovereign bond default and eurozone banking concerns. Global equity markets also fell as geopolitical tensions in Ukraine and the Middle East weakened the outlook for global growth.

    Advanced economies such as the UK and US saw a modest but stronger rebound than Europe, where a nascent recovery has stalled. A more supportive monetary policy in the eurozone may be positive for European equity markets, but we have yet to see evidence of any significant earnings recovery coming through.

    Meanwhile, the Bank of Japan remained committed to extraordinary monetary stimulus. Consumer spending in Japan has been weak for some time, and retail sales and household spending increased only gradually during the reporting period – although improved corporate earnings were an encouraging sign.

    Equity market performance in emerging markets was mixed. China continued to face headwinds and struggled to balance structural reforms with its desire to maintain satisfactory growth, while many

 

countries in Asia, including India, Indonesia and the Philippines, experienced strong gains.

    We continued to construct the Fund’s portfolio on a bottom-up basis, selecting stocks on an individual basis. The Fund delivered positive absolute returns in seven of 10 invested sectors with holdings in the health care sector taking the lead. Shire, an Ireland-based global specialty biopharmaceutical company, was one of the Fund’s top performers. Shire’s stock price rose over 50% during the fiscal year as it was subject to a takeover bid by US drugmaker AbbVie (not a Fund holding).

    The portfolio’s IT holdings delivered double-digit gains as well, meaningfully outperforming the style-specific index in this sector. Semiconductor and Internet software stocks showed particular strength. Avago Technologies, a Singapore-based semiconductor company, was the Fund’s strongest performer. In August 2014, the company reported earnings and forward guidance that were significantly better than consensus expectations. The market was pleasantly surprised by the speed and integration of the company’s acquisition of LSI Corp. In addition, Avago Technologies’ stock price rallied in anticipation of greater-than-expected content in the latest iPhones. Stock selection and underweight positions in the weak industrials and materials sectors also contributed to Fund performance as the Fund posted positive returns in both sectors versus the style-specific index, which posted negative returns in the sectors for the reporting period.

    From a sector perspective, Fund holdings in the utilities sector detracted from both absolute and relative results. Some of the largest detractors from Fund performance included Brazilian exchange BM&FBovespa S.A., China-based oil

 
Portfolio Composition     
By sector   
Consumer Discretionary       22.8 %
Financials       16.6  
Information Technology       14.3  
Industrials       10.3  
Health Care       9.2  
Consumer Staples       8.8  
Energy       6.8  
Materials       3.6  
Utilities       0.7  
Money Market Funds
Plus Other Assets Less Liabilities		       6.9  

Top 10 Equity Holdings*

  1.

   Reed Elsevier PLC        2.5 %

  2.

   British Sky Broadcasting
Group PLC		        2.5  

  3.

   Teva Pharmaceutical
Industries Ltd.-ADR		        2.2  

  4.

   Suncor Energy Inc.        2.2  

  5.

   British American Tobacco PLC        2.1  

  6.

   Banco Bradesco S.A.-ADR        2.0  

  7.

   WPP PLC        2.0  

  8.

   Baidu, Inc.-ADR        2.0  

  9.

   Roche Holding AG        2.0  

10.

   Amcor Ltd.        2.0  

Total Net Assets

       $8.6 billion  

Total Number of Holdings*

       72  

The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.

* Excluding money market fund holdings.

 

 

4                             Invesco International Growth Fund

company CNOOC and German athletic clothing manufacturer Adidas.

    In broad geographic terms, the Fund delivered positive absolute returns in all major regions with Fund holdings in Europe, Asia, Africa/Middle East and Latin America contributing to relative Fund outperformance versus the Custom International Growth Index. Top relative country-level contributors included the UK, Singapore, Ireland and Israel.

    In contrast, Fund exposures in Germany and South Korea was down over the reporting period, detracting from both absolute and relative returns. Although Fund holdings in Canada delivered overall positive returns for the fiscal year, select stocks within the energy sector in this market were down and detracted from relative returns versus the style-specific index.

    The Fund’s cash position throughout the fiscal year was a drag as well. It is important to note that we do not use cash for “top-down” tactical asset allocation purposes. Historically, when the portfolio’s cash position has been higher than average, it has reflected a lack of good EQV (earnings, quality and valuation) investment opportunities in the marketplace, rather than an overall negative opinion on markets. However, we did take the chance to deploy cash when markets became more volatile toward the middle to latter part of the reporting period.

    Stock selection in the portfolio is driven by the underlying fundamentals of each individual company, not by any top-down macroeconomic views. This focus on bottom-up stock selection is the key driver of the portfolio’s overall profile. Over the reporting period, we initiated positions in eight new stocks and sold out of 12 stocks. Overall exposures in the financials and health care sectors increased modestly, while exposure in the telecommunication services sector decreased.

    Versus the Fund’s style-specific index, the Fund ended the reporting period with overweight positions in the consumer discretionary, IT and energy sectors, but with underweight exposures mainly to the consumer staples, materials, industrials and telecommunication services sectors.

    As always, regardless of the macroeconomic environment, we remain focused on a bottom-up investment approach of identifying attractive companies that fit our EQV-focused investment process. We continue to look for quality growth companies that exhibit the following characteristics: strong organic revenue growth, high returns on capital, pricing power, strong balance sheets, cash generation and reasonable valuations. In addition, we continue to favor companies that are able to consistently generate cash during weak economic environments. We believe that this balanced EQV-focused approach may help deliver attractive returns over the long term.

    We thank you for your continued investment in Invesco International Growth Fund.

The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

See important Fund and, if applicable, index disclosures later in this report.

 

 

 

 

 

LOGO   

Clas Olsson

Portfolio Manager and Chief Investment Officer of Invesco’s international growth investments

team, is lead manager of Invesco International Growth Fund. He joined Invesco in 1994. Mr. Olsson became a commissioned officer at the Royal Swedish Naval Academy in 1988. He also earned a BBA from The University of Texas at Austin.
LOGO   

Brent Bates

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco International Growth

Fund. He joined Invesco in 1996. Mr. Bates earned a BBA from Texas A&M University and is a Certified Public Accountant.

 

LOGO   

Shuxin (Steve) Cao

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco International Growth

Fund. He joined Invesco in 1997. Mr. Cao earned a BA in English from the Tianjin Foreign Language Institute and an MBA from Texas A&M University. He is also a Certified Public Accountant.

 

LOGO   

Matthew Dennis

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco International Growth

Fund. He joined Invesco in 2000. Mr. Dennis earned a BA in economics from The University of Texas at Austin and an MS in finance from Texas A&M University.

 

LOGO   

Jason Holzer

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco International Growth

Fund. He joined Invesco in 1996. Mr. Holzer earned a BA in quantitative economics and an MS in engineering economic systems from Stanford University.

 

LOGO   

Mark Jason

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco International Growth

Fund. He joined Invesco in 2001. Mr. Jason earned a BS in finance and a BS in real estate from California State University,

Northridge.

 

LOGO   

Richard Nield

Chartered Financial Analyst, Portfolio Manager, is manager of Invesco International Growth

Fund. He joined Invesco in 2000. Mr. Nield earned a Bachelor of Commerce degree in finance and international business from McGill University in Montreal.
 

 

5                             Invesco International Growth Fund

 

Your Fund’s Long-Term Performance

 

 

Results of a $10,000 Investment – Oldest Share Class(es)

Fund and index data from 10/31/04

 

LOGO

 

Past performance cannot guarantee comparable future results.

    The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including

management fees. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses and management fees;

performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.

 

 

 

continued from page 8

regional or global instability, and currency and interest rate fluctuations.

n   Mid-capitalization risk. Stocks of mid-sized companies tend to be more vulnerable to adverse developments and may have little or no operating history or track record of success, and limited product lines, markets, management and financial resources. The securities of mid-sized companies may be more volatile due to less market interest and less publicly available information about the issuer. They also may be illiquid or restricted as to resale, or may trade less frequently and in smaller volumes, all of which may cause difficulty when establishing or closing a position at a desirable price.
n   Preferred securities risk. Preferred securities may include provisions that permit the issuer, in its discretion, to defer or omit distributions for a certain period of time. If the Fund owns a security that is deferring or omitting its distributions, the Fund may be required to report the distribution on its tax returns, even though it may not have
   

received this income. Further, preferred securities may lose substantial value due to the omission or deferment of dividend payments.

 

 

About indexes used in this report

n   The MSCI EAFE® Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   The Custom International Growth Index is composed of the MSCI EAFE® Growth Index through February 28, 2013, and the MSCI All Country World ex U.S. Growth Index thereafter. Both MSCI indexes are computed using the net return, which withholds applicable taxes for non-resident investors.
n   The Lipper International Multi-Cap Growth Funds Index is an unmanaged index considered representative of international multicap growth funds tracked by Lipper.
n   The MSCI EAFE Growth Index is an unmanaged index considered representative
   

of growth stocks of Europe, Australasia and the Far East. The index is computed using the net return, which withholds applicable taxes for non-resident investors.

n   The MSCI All Country World ex US Growth Index is a market capitalization weighted index that includes growth companies in developing and emerging markets throughout the world, excluding the US. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   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).
n   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.

  continued on page 7

 

 

6                             Invesco International Growth Fund

    

 

 

Average Annual Total Returns

As of 10/31/14, including maximum applicable sales charges

 

   

Class A Shares          
Inception (4/7/92)       7.81 %
10 Years       7.61  
  5 Years       7.88  
  1 Year       -1.74  
Class B Shares          
Inception (9/15/94)       6.48 %
10 Years       7.58  
  5 Years       8.00  
  1 Year       -1.78  
Class C Shares          
Inception (8/4/97)       4.79 %
10 Years       7.41  
  5 Years       8.30  
  1 Year       2.21  
Class R Shares          
Inception (6/3/02)       7.80 %
10 Years       7.95  
  5 Years       8.83  
  1 Year       3.73  
Class Y Shares          
10 Years       8.39 %
  5 Years       9.38  
  1 Year       4.25  
Class R5 Shares          
Inception (3/15/02)       8.54 %
10 Years       8.69  
  5 Years       9.52  
  1 Year       4.34  
Class R6 Shares          
10 Years       8.32 %
  5 Years       9.30  
  1 Year       4.42  

Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

    Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees

Average Annual Total Returns

As of 9/30/14, the most recent calendar quarter end, including maximum applicable sales charges

 

   

Class A Shares          
Inception (4/7/92)       7.82 %
10 Years       7.96  
  5 Years       7.54  
  1 Year       0.48  
Class B Shares          
Inception (9/15/94)       6.47 %
10 Years       7.93  
  5 Years       7.65  
  1 Year       0.51  
Class C Shares          
Inception (8/4/97)       4.78 %
10 Years       7.77  
  5 Years       7.95  
  1 Year       4.51  
Class R Shares          
Inception (6/3/02)       7.80 %
10 Years       8.31  
  5 Years       8.50  
  1 Year       6.05  
Class Y Shares          
10 Years       8.74 %
  5 Years       9.04  
  1 Year       6.59  
Class R5 Shares          
Inception (3/15/02)       8.55 %
10 Years       9.05  
  5 Years       9.19  
  1 Year       6.68  
Class R6 Shares          
10 Years       8.67 %
  5 Years       8.95  
  1 Year       6.72  

applicable to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

    The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance.

Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.

    The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares was 1.34%, 2.09%, 2.09%, 1.59%, 1.09%, 0.98% and 0.91%, respectively.1 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares was 1.35%, 2.10%, 2.10%, 1.60%, 1.10%, 0.99% and 0.92%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

    Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. 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.

 

1 Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least June 30, 2016. See current prospectus for more information.
 

 

 

continued from page 6

 

Other information

n   CPA® and Certified Public Accountant® are trademarks owned by the American Institute of Certified Public Accountants.
n   The returns shown in management’s discussion of Fund performance are based on net asset values (NAVs) calculated for
 

shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the NAVs for shareholder transactions and the returns based on those NAVs may differ from the NAVs and returns reported in the Financial Highlights.

n   Industry 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.
 

 

7                             Invesco International Growth Fund

 

Invesco International Growth Fund’s investment objective is long-term growth of capital.

n   Unless otherwise stated, information presented in this report is as of October 31, 2014, and is based on total net assets.
n   Unless otherwise noted, all data provided by Invesco.
n   To access your Fund’s reports/prospectus, visit invesco.com/fundreports.

 

 

About share classes

n   Class B shares may not be purchased for new or additional investments. Please see the prospectus for more information.
n   Class R shares are generally available only to employer sponsored retirement benefit plans. Please see the prospectus for more information.
n   Class Y shares are available to only certain investors. Please see the prospectus for more information.
n   Class R5 shares and Class R6 shares are primarily intended for employer sponsored retirement and benefit plans that meet certain standards and for institutional investors. Please see the prospectus for more information.

 

 

Principal risks of investing in the Fund

n   Depositary receipts risk. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts or to pass through to them any voting rights with respect to the deposited securities.
n   Derivatives risk. The value of a derivative instrument depends largely on (and is derived from) the value of an underlying security, currency, commodity, interest rate, index or other asset (each referred to as an underlying asset). In addition to risks relating to the underlying assets, the use of derivatives may include other, possibly greater, risks, including counterparty, leverage and liquidity risks. Counterparty risk is the risk that the counterparty to the derivative contract will default on its obligation to pay the Fund the amount owed or otherwise perform under the derivative contract. Derivatives create leverage risk because they do not require payment up
   

front equal to the economic exposure created by owning the derivative. As a result, an adverse change in the value of the underlying asset could result in the Fund sustaining a loss that is substantially greater than the amount invested in the derivative, which may make the Fund’s returns more volatile and increase the risk of loss. Derivative instruments may also be less liquid than more traditional investments and the Fund may be unable to sell or close out its derivative positions at a desirable time or price. This risk may be more acute under adverse market conditions, during which the Fund may be most in need of liquidating its derivative positions. Derivatives may also be harder to value, less tax efficient and subject to changing government regulation that could impact the Fund’s ability to use certain derivatives or their cost. Also, derivatives used for hedging or to gain or limit exposure to a particular market segment may not provide the expected benefits, particularly during adverse market conditions.

n   Developing/emerging markets securities risk. The prices of securities issued by foreign companies and governments located in developing/emerging market countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries.
n   Foreign securities risk. The Fund’s foreign investments may be affected by changes in a foreign country’s exchange rates, political and social instability, changes in economic or taxation policies, difficulties when enforcing obligations, decreased liquidity, and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies.
n   Geographic focus risk. From time to time the Fund may invest a substantial amount of its assets in securities of issuers located in a single country or a limited number of countries. If the Fund focuses its investments in this manner, it assumes the risk that economic, political and social conditions in those countries will have a significant impact on its investment performance. The Fund’s investment performance may also be more volatile if it focuses its investments in certain countries, especially emerging markets countries.
n   Growth investing risk. Growth stocks tend to be more expensive relative to their earnings or assets compared with other types of stock. As a result they tend to be more sensitive to changes in their earnings and can be more volatile.
n   Investing in the European Union risk. Many countries in the European Union are susceptible to high economic risks associated with high levels of debt, notably due to investments in sovereign debts of European countries such as Greece, Italy and Spain. One or more member states might exit the European Union, placing its currency and banking system in jeopardy. The European Union faces major issues involving its membership, structure, procedures and policies, including the adoption, abandonment or adjustment of the new constitutional treaty, the European Union’s enlargement to the south and east, and resolution of the European Union’s problematic fiscal and democratic accountability. Efforts of the member states to further unify their economic and monetary policies may increase the potential for the downward movement of one member state’s market to cause a similar effect on other member states’ markets. European countries that are part of the European Economic and Monetary Union may be significantly affected by the tight fiscal and monetary controls that the union seeks to impose on its members.
n   Management risk. The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results.
n   Market risk. The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment, general economic and market conditions,

continued on page 6

 

 

 

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

 

 

8                             Invesco International Growth Fund

Schedule of Investments

October 31, 2014

 

 

     Shares      Value  

Common Stocks & Other Equity Interests–93.08%

  

Australia–3.73%   

Amcor Ltd.

     16,106,575       $ 166,678,745   

Brambles Ltd.

     10,608,884         89,353,718   

CSL Ltd.

     894,977         63,363,299   
         319,395,762   
Belgium–1.50%   

Anheuser-Busch InBev N.V.

     1,157,385         128,260,051   
Brazil–4.37%   

Banco Bradesco S.A.–ADR

     11,537,583         172,832,993   

BM&FBovespa S.A.

     28,510,600         125,409,822   

BRF S.A.

     2,920,200         75,998,264   
         374,241,079   
Canada–7.99%   

Agrium Inc.

     504,253         49,342,425   

Canadian National Railway Co.

     1,179,601         83,176,054   

Cenovus Energy Inc.

     2,330,896         57,688,073   

CGI Group Inc.–Class A(a)

     3,694,180         126,832,748   

Encana Corp.

     5,357,512         99,838,275   

Fairfax Financial Holdings Ltd.

     175,131         80,025,030   

Suncor Energy, Inc.

     5,284,852         187,682,826   
         684,585,431   
China–4.65%   

Baidu, Inc.–ADR(a)

     710,792         169,715,806   

CNOOC Ltd.

     24,473,093         38,311,246   

Great Wall Motor Co. Ltd.–Class H

     25,075,500         109,936,300   

Industrial & Commercial Bank of China Ltd.–Class H

     122,084,461         80,758,892   
         398,722,244   
Denmark–2.24%   

Carlsberg AS–Class B

     1,307,640         115,141,713   

Novo Nordisk AS–Class B

     1,704,307         77,025,214   
         192,166,927   
France–3.74%   

Publicis Groupe S.A.

     2,160,405         149,922,801   

Schneider Electric S.E.

     1,166,852         92,368,538   

Total S.A.

     1,306,903         77,984,571   
         320,275,910   
Germany–7.31%   

adidas AG

     977,163         71,081,236   

Allianz S.E.

     634,475         100,734,181   

Deutsche Boerse AG

     1,799,653         122,927,963   

Deutsche Post AG

     2,781,845         87,339,975   

ProSiebenSat.1 Media AG

     1,968,839         79,419,414   

SAP S.E.

     2,430,838         165,219,547   
         626,722,316   
     Shares      Value  
Hong Kong–3.29%   

Galaxy Entertainment Group Ltd.

     21,931,090       $ 149,740,328   

Hutchison Whampoa Ltd.

     10,450,590         132,466,763   
         282,207,091   
Ireland–0.87%   

Shire PLC

     1,114,576         74,230,398   
Israel–2.22%   

Teva Pharmaceutical Industries Ltd.–ADR

     3,371,757         190,403,118   
Japan–8.13%   

Denso Corp.

     1,241,547         57,826,052   

FANUC Corp.

     502,612         88,318,365   

Japan Tobacco, Inc.

     3,595,600         124,592,664   

Keyence Corp.

     180,227         87,157,204   

Komatsu Ltd.

     4,401,228         105,769,927   

Toyota Motor Corp.

     2,588,830         155,754,920   

Yahoo Japan Corp.

     21,914,700         77,586,140   
         697,005,272   
Mexico–1.89%   

Fomento Economico Mexicano, S.A.B. de C.V.–ADR

     444,004         42,730,945   

Grupo Televisa S.A.B.–ADR

     3,285,490         118,737,609   
         161,468,554   
Singapore–4.46%   

Avago Technologies Ltd.

     1,773,894         152,998,358   

Keppel Corp. Ltd.

     12,123,313         89,444,173   

United Overseas Bank Ltd.

     7,784,166         139,687,235   
         382,129,766   
South Korea–2.66%   

Hyundai Mobis Co., Ltd.

     431,462         102,839,675   

Samsung Electronics Co., Ltd.

     107,775         124,842,272   
         227,681,947   
Spain–0.96%   

Amadeus IT Holding S.A.–Class A

     2,234,983         82,223,046   
Sweden–2.38%   

Investor AB–Class B

     3,318,438         118,724,280   

Telefonaktiebolaget LM Ericsson–Class B

     7,222,587         85,396,928   
         204,121,208   
Switzerland–7.64%   

ABB Ltd.

     5,055,004         110,846,722   

Julius Baer Group Ltd.

     1,824,233         79,921,473   

Novartis AG

     1,067,734         99,020,788   

Roche Holding AG

     573,647         169,421,522   

Syngenta AG

     299,370         92,773,982   

UBS AG

     5,929,627         103,051,936   
               655,036,423   
 

 

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

 

9                         Invesco International Growth Fund

     Shares      Value  
Taiwan–1.79%   

Taiwan Semiconductor Manufacturing Co. Ltd.

     35,659,887       $ 153,733,878   
Thailand–1.24%   

Kasikornbank PCL–NVDR

     14,672,100         106,344,878   
Turkey–1.13%   

Akbank T.A.S.

     26,855,531         97,025,967   
United Kingdom–18.89%   

Aberdeen Asset Management PLC

     13,556,818         94,233,046   

British American Tobacco PLC

     3,222,968         183,066,794   

British Sky Broadcasting Group PLC

     15,001,645         212,636,737   

Centrica PLC

     13,074,206         63,338,694   

Compass Group PLC

     7,884,539         127,052,166   

Informa PLC

     8,233,148         63,441,943   

Kingfisher PLC

     19,451,441         94,271,206   

Next PLC

     695,101         71,756,002   

Reed Elsevier PLC

     13,161,571         216,499,934   
     Shares      Value  
United Kingdom–(continued)   

Royal Dutch Shell PLC–Class B

     3,206,875       $ 118,979,327   

Smith & Nephew PLC

     6,762,332         114,527,964   

Unilever N.V.

     2,269,594         88,114,592   

WPP PLC

     8,747,178         170,742,144   
               1,618,660,549   

Total Common Stocks & Other Equity Interests (Cost $6,131,752,184)

   

      7,976,641,815   

Money Market Funds–6.65%

  

Liquid Assets Portfolio–Institutional Class(b)

     284,777,011         284,777,011   

Premier Portfolio–Institutional Class(b)

     284,777,010         284,777,010   

Total Money Market Funds
(Cost $569,554,021)

   

      569,554,021   

TOTAL INVESTMENTS–99.73%
(Cost $6,701,306,205)

   

      8,546,195,836   

OTHER ASSETS LESS LIABILITIES–0.27%

  

      23,264,294   

NET ASSETS–100.00%

  

    $ 8,569,460,130   
 

Investment Abbreviations:

 

ADR  

– American Depositary Receipt

NVDR  

– Non-Voting Depositary Receipt

Notes to Schedule of Investments:

 

(a)  Non-income producing security.
(b)  The money market fund and the Fund are affiliated by having the same investment adviser.

 

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

 

10                         Invesco International Growth Fund

Statement of Assets and Liabilities

October 31, 2014

 

 

Assets:

  

Investments, at value (Cost $6,131,752,184)

   $ 7,976,641,815   

Investments in affiliated money market funds, at value and cost

     569,554,021   

Total investments, at value (Cost $6,701,306,205)

     8,546,195,836   

Foreign currencies, at value (Cost $19,240,710)

     18,086,476   

Receivable for:

  

Fund shares sold

     29,891,424   

Dividends

     16,006,384   

Investment for trustee deferred compensation and retirement plans

     752,820   

Other assets

     138,683   

Total assets

     8,611,071,623   

Liabilities:

  

Payable for:

  

Investments purchased

     21,347,036   

Fund shares reacquired

     10,894,291   

Accrued foreign taxes

     4,079,935   

Accrued fees to affiliates

     3,458,671   

Accrued trustees’ and officers’ fees and benefits

     11,107   

Accrued other operating expenses

     938,374   

Trustee deferred compensation and retirement plans

     882,079   

Total liabilities

     41,611,493   

Net assets applicable to shares outstanding

   $ 8,569,460,130   

Net assets consist of:

  

Shares of beneficial interest

   $ 6,478,958,864   

Undistributed net investment income

     85,515,588   

Undistributed net realized gain

     161,277,773   

Net unrealized appreciation

     1,843,707,905   
    $ 8,569,460,130   

Net Assets:

  

Class A

   $ 2,810,473,280   

Class B

   $ 27,855,001   

Class C

   $ 181,678,557   

Class R

   $ 102,126,066   

Class Y

   $ 3,118,318,723   

Class R5

   $ 1,953,559,383   

Class R6

   $ 375,449,120   

Shares outstanding, $0.001 par value per share,
with an unlimited number of shares authorized:

   

Class A

     82,079,392   

Class B

     883,866   

Class C

     5,758,873   

Class R

     3,019,063   

Class Y

     90,736,763   

Class R5

     56,141,319   

Class R6

     10,789,280   

Class A:

  

Net asset value per share

   $ 34.24   

Maximum offering price per share

  

(Net asset value of $34.24 ¸ 94.50%)

   $ 36.23   

Class B:

  

Net asset value and offering price per share

   $ 31.51   

Class C:

  

Net asset value and offering price per share

   $ 31.55   

Class R:

  

Net asset value and offering price per share

   $ 33.83   

Class Y:

  

Net asset value and offering price per share

   $ 34.37   

Class R5

  

Net asset value and offering price per share

   $ 34.80   

Class R6:

  

Net asset value and offering price per share

   $ 34.80   
 

 

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

 

11                         Invesco International Growth Fund

Statement of Operations

For the year ended October 31, 2014

 

Investment income:

  

Dividends (net of foreign withholding taxes of $14,142,048)

   $ 207,069,779   

Dividends from affiliated money market funds

     229,234   

Total investment income

     207,299,013   

Expenses:

  

Advisory fees

     65,817,995   

Administrative services fees

     715,531   

Custodian fees

     2,550,535   

Distribution fees:

  

Class A

     6,865,420   

Class B

     341,475   

Class C

     1,715,529   

Class R

     523,456   

Transfer agent fees — A, B, C, R and Y

     9,861,008   

Transfer agent fees — R5

     1,551,274   

Transfer agent fees — R6

     13,068   

Trustees’ and officers’ fees and benefits

     197,877   

Other

     1,603,018   

Total expenses

     91,756,186   

Less: Fees waived and expense offset arrangement(s)

     (827,139 ) 

Net expenses

     90,929,047   

Net investment income

     116,369,966   

Realized and unrealized gain (loss) from:

  

Net realized gain (loss) from:

  

Investment securities

     338,114,316   

Foreign currencies

     (3,319,258 ) 
      334,795,058   

Change in net unrealized appreciation (depreciation) of:

  

Investment securities (net of foreign taxes on holdings of $4,079,975)

     (148,524,224 ) 

Foreign currencies

     (1,316,735 ) 
      (149,840,959 ) 

Net realized and unrealized gain

     184,954,099   

Net increase in net assets resulting from operations

   $ 301,324,065   

 

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

 

12                         Invesco International Growth Fund

Statement of Changes in Net Assets

For the years ended October 31, 2014 and 2013

 

     2014      2013  

Operations:

  

   

Net investment income

   $ 116,369,966       $ 64,402,286   

Net realized gain

     334,795,058         127,776,516   

Change in net unrealized appreciation (depreciation)

     (149,840,959 )       996,385,376   

Net increase in net assets resulting from operations

     301,324,065         1,188,564,178   

Distributions to shareholders from net investment income:

     

Class A

     (28,925,253 )       (21,975,533 ) 

Class B

     (183,328 )       (188,836 ) 

Class C

     (759,542 )       (568,367 ) 

Class R

     (917,629 )       (724,598 ) 

Class Y

     (29,609,780 )       (18,141,196 ) 

Class R5

     (25,890,985 )       (17,685,492 ) 

Class R6

     (4,443,470 )       (3,042,814 ) 

Total distributions from net investment income

     (90,729,987 )       (62,326,836 ) 

Share transactions–net:

     

Class A

     64,799,488         109,823,580   

Class B

     (12,079,618 )       (13,117,436 ) 

Class C

     23,298,435         (3,624,211 ) 

Class R

     (5,603,811 )       (856,318 ) 

Class Y

     870,882,591         397,523,737   

Class R5

     1,071,720         330,067,322   

Class R6

     67,677,716         26,805,828   

Net increase in net assets resulting from share transactions

     1,010,046,521         846,622,502   

Net increase in net assets

     1,220,640,599         1,972,859,844   

Net assets:

     

Beginning of year

     7,348,819,531         5,375,959,687   

End of year (includes undistributed net investment income of $85,515,588 and $58,778,653, respectively)

   $ 8,569,460,130       $ 7,348,819,531   

Notes to Financial Statements

October 31, 2014

NOTE 1—Significant Accounting Policies

Invesco International Growth Fund (the “Fund”) is a series portfolio of AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of eight separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.

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

The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.

The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.

A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based

 

13                         Invesco International Growth Fund

on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and ask prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

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 of the Fund’s investments.

Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

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

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

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

C. Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

 

14                         Invesco International Growth Fund

D. Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.
E. Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

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

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

F. Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
G. Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
H. Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
I. Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.

The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.

J. Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis or through forward foreign currency contracts to manage or minimize currency or exchange rate risk.

The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.

A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.

 

15                         Invesco International Growth Fund

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:

 

Average Daily Net Assets   Rate

First $250 million

     0 .935%   

Next $250 million

     0 .91%   

Next $500 million

     0 .885%   

Next $1.5 billion

     0 .86%   

Next $2.5 billion

     0 .835%   

Next $2.5 billion

     0 .81%   

Next $2.5 billion

     0 .785%   

Over $10 billion

     0 .76%     

For the year ended October 31, 2014, the effective advisory fee incurred by the Fund was 0.84%.

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

The Adviser has contractually agreed, through at least June 30, 2015, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 2.25%, 3.00%, 3.00%, 2.50%, 2.00%, 2.00% and 2.00%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee 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, 2015. The fee waiver agreement cannot be terminated during its term. The Adviser did not waive fees and/or reimburse expenses under this expense limitation.

Further, the Adviser has contractually agreed, through at least June 30, 2016, 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 year ended October 31, 2014, the Adviser waived advisory fees of $819,626.

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 year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.

The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the year ended October 31, 2014, 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 year ended October 31, 2014, IDI advised the Fund that IDI retained $868,280 in front-end sales commissions from the sale of Class A shares and $19,258, $13,187 and $7,554 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.

Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.

 

16                         Invesco International Growth Fund

NOTE 3—Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.
  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of October 31, 2014. 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.

During the year ended October 31, 2014, there were transfers from Level 1 to Level 2 of $970,809,253 and from Level 2 to Level 1 of $320,996,693, due to foreign fair value adjustments.

 

     Level 1        Level 2        Level 3        Total  

Australia

   $ —         $ 319,395,762         $ —         $ 319,395,762   

Belgium

     —           128,260,051           —           128,260,051   

Brazil

     374,241,079           —           —           374,241,079   

Canada

     684,585,431           —           —           684,585,431   

China

     360,410,998           38,311,246           —           398,722,244   

Denmark

     115,141,713           77,025,214           —           192,166,927   

France

     —           320,275,910           —           320,275,910   

Germany

     547,302,902           79,419,414           —           626,722,316   

Hong Kong

     282,207,091           —           —           282,207,091   

Ireland

     74,230,398           —           —           74,230,398   

Israel

     190,403,118           —           —           190,403,118   

Japan

     —           697,005,272           —           697,005,272   

Mexico

     161,468,554           —           —           161,468,554   

Singapore

     152,998,358           229,131,408           —           382,129,766   

South Korea

     —           227,681,947           —           227,681,947   

Spain

     —           82,223,046           —           82,223,046   

Sweden

     118,724,280           85,396,928           —           204,121,208   

Switzerland

     —           655,036,423           —           655,036,423   

Taiwan

     —           153,733,878           —           153,733,878   

Thailand

     —           106,344,878           —           106,344,878   

Turkey

     97,025,967           —           —           97,025,967   

United Kingdom

     212,636,737           1,406,023,812           —           1,618,660,549   

United States

     569,554,021           —           —           569,554,021   

Total Investments

   $ 3,940,930,647         $ 4,605,265,189         $ —         $ 8,546,195,836   

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 year ended October 31, 2014, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $7,513.

 

17                         Invesco International Growth 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 State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.

NOTE 7—Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2014 and 2013:

 

     2014        2013  

Ordinary income

   $ 90,729,987         $ 62,326,836   

Tax Components of Net Assets at Period-End:

 

     2014  

Undistributed ordinary income

   $ 128,038,652   

Undistributed long-term gain

     279,280,055   

Net unrealized appreciation — investments

     1,800,691,066   

Net unrealized appreciation (depreciation) — other investments

     (1,181,728 ) 

Temporary book/tax differences

     (824,872 ) 

Capital loss carryforward

     (115,501,907 ) 

Shares of beneficial interest

     6,478,958,864   

Total net assets

   $ 8,569,460,130   

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and passive foreign investment companies.

The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund utilized $54,266,521 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of October 31, 2014, which expires as follows:

 

Capital Loss Carryforward*  
Expiration   Short-Term        Long-Term        Total  

October 31, 2017

   $ 115,501,907         $ —         $ 115,501,907   

 

* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization.

 

18                         Invesco International Growth Fund

NOTE 8—Investment Securities

The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2014 was $2,331,183,691 and $1,351,642,515, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis  

Aggregate unrealized appreciation of investment securities

   $ 1,916,299,341   

Aggregate unrealized (depreciation) of investment securities

     (115,608,275 ) 

Net unrealized appreciation of investment securities

   $ 1,800,691,066   

Cost of investments for tax purposes is $6,745,504,770.

NOTE 9—Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of foreign currency transactions, excise taxes and passive foreign investment companies, on October 31, 2014, undistributed net investment income was increased by $1,096,956, undistributed net realized gain was decreased by $769,992 and shares of beneficial interest was decreased by $326,964. This reclassification had no effect on the net assets of the Fund.

NOTE 10—Share Information

 

     Summary of Share Activity  
    Years ended October 31,  
    2014(a)      2013  
     Shares      Amount      Shares      Amount  

Sold:

           

Class A

     21,118,637       $ 715,917,487         19,383,355       $ 583,441,582   

Class B

     42,381         1,324,067         57,203         1,594,247   

Class C

     1,693,544         53,355,080         941,432         26,514,706   

Class R

     925,708         31,167,250         1,097,072         32,445,830   

Class Y

     35,298,165         1,216,254,016         25,383,682         765,865,426   

Class R5

     14,241,254         494,487,034         20,803,776         634,081,306   

Class R6

     2,543,360         89,182,543         3,109,748         95,344,081   

Issued as reinvestment of dividends:

           

Class A

     783,877         25,272,200         761,301         21,575,264   

Class B

     5,818         173,790         7,035         184,937   

Class C

     23,015         688,159         20,481         539,064   

Class R

     28,368         905,491         25,521         716,367   

Class Y

     739,626         23,870,700         514,305         14,595,975   

Class R5

     650,436         21,261,697         544,290         15,626,551   

Class R6

     136,136         4,443,470         106,058         3,042,814   

Automatic conversion of Class B shares to Class A shares:

           

Class A

     243,713         8,352,444         235,973         7,101,209   

Class B

     (263,944 )       (8,352,444 )       (255,211 )       (7,101,209 ) 

Reacquired:

           

Class A

     (20,030,040 )       (684,742,643 )       (16,687,815 )       (502,294,475 ) 

Class B

     (166,496 )       (5,225,031 )       (281,625 )       (7,795,411 ) 

Class C

     (980,619 )       (30,744,804 )       (1,107,919 )       (30,677,981 ) 

Class R

     (1,116,632 )       (37,676,552 )       (1,150,554 )       (34,018,515 ) 

Class Y

     (10,793,562 )       (369,242,125 )       (12,615,179 )       (382,937,664 ) 

Class R5

     (14,870,829 )       (514,677,011 )       (10,518,958 )       (319,640,535 ) 

Class R6

     (752,292 )       (25,948,297 )       (2,326,358 )       (71,581,067 ) 

Net increase in share activity

     29,499,624       $ 1,010,046,521         28,047,613       $ 846,622,502   

 

(a)  There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 45% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially.

 

19                         Invesco International Growth Fund

NOTE 11—Financial Highlights

The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.

 

     Net asset
value,
beginning
of period		     Net
investment
income(a)		     Net gains
(losses)
on securities
(both
realized and
unrealized)		     Total from
investment
operations		     Dividends
from net
investment
income		     Net asset
value, end
of  period(b)		     Total
return(c)		     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(d)		  

Class A

                        

Year ended 10/31/14

   $ 33.30      $ 0.45      $ 0.85      $ 1.30      $ (0.36 )    $ 34.24        3.98 %    $ 2,810,473        1.32 %(e)      1.33 %(e)      1.32 %(e)      18 % 

Year ended 10/31/13

     27.96        0.26        5.37        5.63        (0.29 )      33.30        20.31        2,662,962        1.33        1.34        0.87        21   

Year ended 10/31/12

     26.43        0.26        1.59        1.85        (0.32 )      27.96        7.13        2,132,503        1.37        1.38        0.99        21   

Year ended 10/31/11

     26.99        0.36        (0.65 )      (0.29 )      (0.27 )      26.43        (1.10 )      2,056,979        1.38        1.39        1.29        25   

Year ended 10/31/10

     23.41        0.21        3.66        3.87        (0.29 )      26.99        16.68        1,958,940        1.43        1.44        0.85        25   

Class B

                        

Year ended 10/31/14

     30.69        0.17        0.80        0.97        (0.15 )      31.51        3.18        27,855        2.07 (e)      2.08 (e)      0.57 (e)      18   

Year ended 10/31/13

     25.81        0.03        4.96        4.99        (0.11 )      30.69        19.41        38,858        2.08        2.09        0.12        21   

Year ended 10/31/12

     24.41        0.06        1.47        1.53        (0.13 )      25.81        6.31        44,873        2.12        2.13        0.24        21   

Year ended 10/31/11

     24.95        0.14        (0.60 )      (0.46 )      (0.08 )      24.41        (1.85 )      57,683        2.13        2.14        0.54        25   

Year ended 10/31/10

     21.68        0.02        3.40        3.42        (0.15 )      24.95        15.83        51,950        2.18        2.19        0.10        25   

Class C

                        

Year ended 10/31/14

     30.72        0.18        0.80        0.98        (0.15 )      31.55        3.21        181,679        2.07 (e)      2.08 (e)      0.57 (e)      18   

Year ended 10/31/13

     25.83        0.03        4.97        5.00        (0.11 )      30.72        19.44        154,313        2.08        2.09        0.12        21   

Year ended 10/31/12

     24.43        0.06        1.47        1.53        (0.13 )      25.83        6.31        133,529        2.12        2.13        0.24        21   

Year ended 10/31/11

     24.97        0.14        (0.60 )      (0.46 )      (0.08 )      24.43        (1.85 )      145,944        2.13        2.14        0.54        25   

Year ended 10/31/10

     21.70        0.02        3.40        3.42        (0.15 )      24.97        15.81        142,898        2.18        2.19        0.10        25   

Class R

                        

Year ended 10/31/14

     32.91        0.36        0.85        1.21        (0.29 )      33.83        3.73        102,126        1.57 (e)      1.58 (e)      1.07 (e)      18   

Year ended 10/31/13

     27.64        0.19        5.31        5.50        (0.23 )      32.91        20.03        104,712        1.58        1.59        0.62        21   

Year ended 10/31/12

     26.13        0.20        1.57        1.77        (0.26 )      27.64        6.85        88,726        1.62        1.63        0.74        21   

Year ended 10/31/11

     26.70        0.28        (0.64 )      (0.36 )      (0.21 )      26.13        (1.38 )      112,091        1.63        1.64        1.04        25   

Year ended 10/31/10

     23.18        0.15        3.62        3.77        (0.25 )      26.70        16.36        115,237        1.68        1.69        0.60        25   

Class Y

                        

Year ended 10/31/14

     33.42        0.54        0.85        1.39        (0.44 )      34.37        4.25        3,118,319        1.07 (e)      1.08 (e)      1.57 (e)      18   

Year ended 10/31/13

     28.05        0.34        5.37        5.71        (0.34 )      33.42        20.59        2,188,960        1.08        1.09        1.12        21   

Year ended 10/31/12

     26.53        0.33        1.59        1.92        (0.40 )      28.05        7.39        1,464,295        1.12        1.13        1.24        21   

Year ended 10/31/11

     27.08        0.42        (0.64 )      (0.22 )      (0.33 )      26.53        (0.83 )      741,428        1.13        1.14        1.54        25   

Year ended 10/31/10

     23.48        0.27        3.67        3.94        (0.34 )      27.08        16.94        173,313        1.18        1.19        1.10        25   

Class R5

                        

Year ended 10/31/14

     33.84        0.58        0.86        1.44        (0.48 )      34.80        4.34        1,953,559        0.97 (e)      0.98 (e)      1.67 (e)      18   

Year ended 10/31/13

     28.39        0.38        5.44        5.82        (0.37 )      33.84        20.74        1,899,117        0.97        0.98        1.23        21   

Year ended 10/31/12

     26.86        0.37        1.61        1.98        (0.45 )      28.39        7.52        1,285,743        0.99        1.00        1.37        21   

Year ended 10/31/11

     27.41        0.48        (0.66 )      (0.18 )      (0.37 )      26.86        (0.68 )      1,457,494        0.97        0.98        1.70        25   

Year ended 10/31/10

     23.77        0.31        3.72        4.03        (0.39 )      27.41        17.12        1,228,916        1.02        1.03        1.26        25   

Class R6

                        

Year ended 10/31/14

     33.84        0.60        0.86        1.46        (0.50 )      34.80        4.42        375,449        0.90 (e)      0.91 (e)      1.74 (e)      18   

Year ended 10/31/13

     28.38        0.40        5.45        5.85        (0.39 )      33.84        20.85        299,898        0.90        0.91        1.30        21   

Year ended 10/31/12(f)

     28.83        0.04        (0.49 )      (0.45 )      —        28.38        (1.56 )      226,291        0.92 (g)      0.93 (g)      1.44 (g)      21   

 

(a)  Calculated using average shares outstanding.
(b)  Includes redemption fees added to shares of beneficial interest for Class A, Class B, Class C, Class R, Class Y and Class R5 shares, which were less than $0.005 per share for the fiscal years ended October 31, 2012 and prior.
(c)  Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.
(d)  Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the period ended October 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $60,712,747 and sold of $131,009,072 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Van Kampen International Growth Advantage Fund and Invesco Van Kampen International Growth Fund into the Fund.
(e)  Ratios are based on average daily net assets (000’s omitted) of $2,746,168, $34,147, $171,553, $104,691, $2,549,839 $1,905,739 and $338,881 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.
(f)  Commencement date of September 24, 2012 for Class R6 shares.
(g)  Annualized.

 

20                         Invesco International Growth Fund

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of AIM International Mutual Funds (Invesco International Mutual Funds)

and Shareholders of Invesco International Growth Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco International Growth Fund (one of the funds constituting AIM International Mutual Funds (Invesco International Mutual Funds), hereafter referred to as the “Fund”) at October 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2014 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

December 23, 2014

Houston, Texas

 

21                         Invesco International Growth Fund

Calculating your ongoing Fund expenses

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2014 through October 31, 2014.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

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

 

Class   Beginning
Account Value
(05/01/14)		     ACTUAL    

HYPOTHETICAL

(5% annual return before

expenses)

     Annualized
Expense
Ratio		  
    Ending
Account Value
(10/31/14)1		     Expenses
Paid During
Period2		     Ending
Account Value
(10/31/14)		     Expenses
Paid During
Period2		    

A

   $ 1,000.00      $ 990.50      $ 6.57      $ 1,018.60      $ 6.67        1.31 % 

B

     1,000.00        987.20        10.32        1,014.82        10.46        2.06   

C

     1,000.00        986.90        10.32        1,014.82        10.46        2.06   

R

     1,000.00        989.50        7.82        1,017.34        7.93        1.56   

Y

     1,000.00        991.90        5.32        1,019.86        5.40        1.06   

R5

     1,000.00        992.30        4.82        1,020.37        4.89        0.96   
R6     1,000.00        992.90        4.47        1,020.72        4.53        0.89   

 

1  The actual ending account value is based on the actual total return of the Fund for the period May 1, 2014 through October 31, 2014, 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.

 

22                         Invesco International Growth Fund

Approval of Investment Advisory and Sub-Advisory Contracts

 

The Board of Trustees (the Board) of AIM International Mutual Funds (Invesco International Mutual Funds) is required under the Investment Company Act of 1940, as amended, to approve annually the renewal of Invesco International Growth Fund’s (the Fund) investment advisory agreements. During contract renewal meetings held on June 16-17, 2014, the Board as a whole, and the disinterested or “independent” Trustees, who comprise over 75% of the Board, voting separately, approved the continuance for the Fund of the 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 Australia 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, 2014.

In evaluating the fairness and reasonableness of compensation under the Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board determined that the continuation of the Fund’s investment advisory agreement and the sub-advisory contracts are in the best interest of the Fund and its shareholders and that the compensation payable to Invesco Advisers and the Affiliated Sub-Advisers under the agreements is fair and reasonable.

The Board’s Fund Evaluation Process

The Board’s Investments Committee has established three Sub-Committees, each of which is primarily responsible for overseeing the management of a number of the funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet throughout the year to review the performance of their assigned Invesco Funds, including reviewing materials prepared under the direction of the independent Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review the performance, investment objective(s), policies, strategies, limitations and investment risks of these funds. The Sub-Committees meet regularly and at designated contract renewal meetings each year to conduct a review of the performance, fees, expenses and other matters related to their assigned Invesco Funds. Each Sub-Committee recommends to the Investments Committee, which in turn recommends to the full Board, whether and on what terms to approve the continuance of each Invesco Fund’s investment advisory agreement and sub-advisory contracts for another year.

During the contract renewal process, the Trustees receive comparative performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Lipper Inc. (Lipper), an independent provider of investment company data. The Trustees also receive 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 addition to meetings with Invesco Advisers and fund counsel, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

The Trustees recognized that the advisory fee rates for the Invesco Funds are, in many cases, the result of years of review and negotiation. The Trustees’ deliberations and conclusions in a particular year may be based in part on their deliberations and conclusions regarding these arrangements throughout the year and in prior years. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.

The discussion below serves as the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. Unless otherwise stated, this information is current as of June 17, 2014, and may not reflect consideration of factors that became known to the Board after that date.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

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

The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers, with whom the Sub-Committees met during the year. The Board’s review of the qualifications of Invesco Advisers to provide advisory services included the Board’s consideration of Invesco Advisers’ investment process oversight, independent credit analysis and investment risk management. The Board also

considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, equity and fixed income trading operations, internal audit, distribution and legal and compliance.

In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship and the greater uncertainty that may be associated with entering into a new relationship. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s investment advisory agreement.

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 that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, 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 benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s sub-advisory contracts.

B. Fund Performance

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

The Board compared the Fund’s performance during the past one, three and five calendar years to the performance of funds in the Lipper performance universe and against the Lipper International Large-Cap Growth Funds Index. The Board noted that performance of Class A shares of the Fund was in the third quintile of the 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, three and five year periods. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.

 

 

23                         Invesco International Growth Fund

C. Advisory and Sub-Advisory Fees

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Lipper expense group at a common asset level. 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 the expense group. The Board noted that the term “contractual management fee” may include both advisory and certain administrative services fees, but that Lipper does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco does not charge the Invesco Funds for the administrative services included in the term as defined by Lipper. The Board also reviewed the methodology used by Lipper in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group.

The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund through at least June 30, 2015 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 compared the Fund’s effective advisory fee rate (the advisory fee rate after advisory fee waivers and before other expense limitations/waivers) to the effective advisory fee rates of other mutual funds advised by Invesco Advisers and its affiliates that are managed using an investment process substantially similar to the investment process used for the Fund. The Board noted that Invesco Advisers advises two other off-shore funds and sub-advises mutual funds sponsored by third parties using a similar investment process; however, the effective advisory fee rates and sub-adviser effective fee rates are not comparable to rate for U.S. mutual funds.

The Board also considered the fees charged by Invesco Advisers and the Affiliated Sub-Advisers to other client accounts that are managed using an investment process substantially similar to the investment process used for the Fund. The Board noted that Invesco Advisers or the Affiliated Sub-Advisers may charge lower fees to large institutional clients. Invesco Advisers reviewed with the Board the significantly greater scope of services it provides to the Invesco Funds relative to certain other client accounts. These additional services include provision of administrative services, officers and office space, oversight of service providers, preparation of annual registration statement updates and financial information and regulatory compliance under the Investment Company Act of 1940, as amended. Invesco Advisers also reviewed generally the higher frequency of shareholder purchases and redemptions in the Invesco Funds relative to the flow of assets for other client accounts. Invesco Advisers advised the Board that advance notice of

redemptions is often provided to Invesco Advisers by institutional clients. The Board did note that sub-advisory fee rates charged by the Affiliated Sub-Advisers to manage the Invesco Funds and to manage other client accounts tended to be more comparable, reflecting a more comparable scope of services. The Board concluded that the aggregate services provided to the Invesco Funds were sufficiently different from those provided to institutional clients to support the differences in fees.

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. The Board also noted that the sub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers.

D. Economies of Scale and Breakpoints

The Board considered the extent to which there are economies of scale in the provision of advisory services to the Fund. The Board also considered whether the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule and was assisted in this review by a report from the Senior Officer. The Board also noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds and other clients advised by Invesco Advisers.

E. Profitability and Financial Resources

The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the profitability of Invesco Advisers and its affiliates in providing these services for the year ended December 31, 2013. The Board received information from Invesco Advisers about the methodology used to prepare the profitability information. The Board considered the profitability of Invesco Advisers in managing the Fund and the Invesco Funds. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its subsidiaries provide to the Invesco Funds and the Fund. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund to be excessive given the nature, quality and extent of the services provided to the Invesco Funds. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each Affiliated Sub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.

F. Collateral Benefits to Invesco Advisers and its Affiliates

The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for their provision of transfer agency and distribution services to the Fund. The

Board considered comparative information regarding fees charged for these services, including information provided by Lipper and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; that the services are required for the operation of the Fund; that Invesco Advisers and its affiliates can provide services, the nature and quality of which are at least equal to those provided by others offering the same or similar services; and that the fees for such services are fair and reasonable in light of the usual and customary charges by others for services of the same nature and quality.

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 shift the payment obligation for research services from Invesco Advisers and the Affiliated Sub-Advisers to the Invesco Funds and that the research received may be used with other clients of Invesco Advisers and may reduce Invesco Advisers’ and the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.

The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisors from the Fund’s investment of uninvested cash and cash collateral from any securities lending arrangements in the affiliated money market funds are fair and reasonable.

The Board also considered the Fund may use an affiliated broker to execute certain trades for the Fund to among other things, control information leakage, and were advised that such trades would be executed in compliance with rules under the Investment Company Act of 1940, as amended.

 

 

24                         Invesco International Growth Fund

Tax Information

Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2014:

 

Federal and State Income Tax

  

Qualified Dividend Income*

      100 % 

Corporate Dividends Received Deduction*

      0 % 

U.S. Treasury Obligations*

      0 % 

Foreign Tax Credit

    $ 0.0560  per share 

Foreign Source Income

    $ 0.8760  per share 

 

  * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

25                         Invesco International Growth Fund

Trustees and Officers

 

The address of each trustee and officer is AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Interested Persons                

Martin L. Flanagan1 — 1960

Trustee

   2007  

Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business

 

Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization).

   144   None

Philip A. Taylor2 — 1954

Trustee, President and Principal Executive Officer

   2006  

Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.

 

Formerly: Director and Chairman, Van Kampen Investor Services Inc.; Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company) and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships) and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.

   144   None

Wayne W. Whalen3 — 1939

Trustee

   2010   Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex   144   Director of the Mutual fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy

 

1  Mr. Flanagan is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer of the Adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the Adviser.
2  Mr. Taylor is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer and a director of the Adviser.
3  Mr. Whalen is retiring effective December 31, 2014. He has been deemed to be an interested person of the Trust because of his prior service as counsel to the predecessor funds of certain Invesco open-end funds and his affiliation with the law firm that served as counsel to such predecessor funds and the Invesco closed-end funds.

 

T-1                         Invesco International Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees                

Bruce L. Crockett — 1944

Trustee and Chair

   1992  

Chairman, Crockett Technologies Associates (technology consulting company)

 

Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer, COMSAT Corporation; Chairman, Board of Governors of INTELSAT (international communications company); ACE Limited (insurance company); and Investment Company Institute

   144   ALPS (Attorneys Liability Protection Society) (insurance company)

David C. Arch — 1945

Trustee

   2010   Chairman of Blistex Inc., a consumer health care products manufacturer   144   Board member of the Illinois Manufacturers’ Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan; Member of the Audit Committee of the Edward-Elmhurst Hospital

Frank S. Bayley — 1939

Trustee

   2001   Retired. Formerly: Director, Badgley Funds Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP   144   Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee, The Curtis Institute of Music

James T. Bunch — 1942

Trustee

   2003  

Managing Member, Grumman Hill Group LLC (family office private equity investments)

 

Formerly: Founder, Green Manning & Bunch Ltd. (investment banking firm) (1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation

   144   Chairman, Board of Governors, Western Golf Association; Chairman, Evans Scholars Foundation; and Director, Denver Film Society

Rodney F. Dammeyer — 1940

Trustee

   2010  

Chairman of CAC,LLC, (private company offering capital investment and management advisory services)

 

Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex

   144   Director of Quidel Corporation and Stericycle, Inc.

Albert R. Dowden — 1941

Trustee

   2000  

Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Nature’s Sunshine Products, Inc. and Reich & Tang Funds (5 portfolios) (registered investment company)

 

Formerly: Director, Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company); Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director, Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company)

   144   Director of: Nature’s Sunshine Products, Inc., Reich & Tang Funds, Homeowners of America Holding Corporation/ Homeowners of America Insurance Company, the Boss Group

Jack M. Fields — 1952

Trustee

   1997  

Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)

 

Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives

   144   Insperity, Inc. (formerly known as Administaff)

Prema Mathai-Davis — 1950

Trustee

   1998   Retired. Formerly: Chief Executive Officer, YWCA of the U.S.A.   144   None

Larry Soll — 1942

Trustee

   2003   Retired. Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company)   144   None

Hugo F. Sonnenschein — 1940

Trustee

   2010   President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to 2000, President of the University of Chicago   144   Trustee of the University of Rochester and a member of its investment committee; Member of the National Academy of Sciences and the American Philosophical Society; Fellow of the American Academy of Arts and Sciences

 

T-2                         Invesco International Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees—(continued)

Raymond Stickel, Jr. — 1944

Trustee

   2005   Retired. Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche   144   None

Suzanne H. Woolsey — 1941

Trustee

   2014   Chief Executive Officer of Woolsey Partners LLC   144   Emeritus Chair of the Board of Trustees of the Institute for Defense Analyses; Trustee of Colorado College; Trustee of California Institute of Technology; Prior to 2014, Director of Fluor Corp.; Prior to 2010, Trustee of the German Marshall Fund of the United States; Prior to 2010 Trustee of the Rocky Mountain Institute
Other Officers                

Russell C. Burk — 1958

Senior Vice President and Senior Officer

   2005   Senior Vice President and Senior Officer, The Invesco Funds   N/A   N/A

John M. Zerr — 1962

Senior Vice President, Chief Legal Officer and Secretary

   2006  

Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust; and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company)

   N/A   N/A

Sheri Morris — 1964

Vice President, Treasurer and Principal Financial Officer

   1999  

Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust

   N/A   N/A

 

T-3                         Invesco International Growth Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Other Officers—(continued)                

Karen Dunn Kelley — 1960

Vice President

   2004  

Senior Managing Director, Investments; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc. and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only)

 

Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only)

   N/A   N/A

Crissie M. Wisdom — 1969

Anti-Money Laundering Compliance Officer

   2013   Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc.   N/A   N/A

Todd L. Spillane — 1958

Chief Compliance Officer

   2006  

Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)

 

Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company

   N/A   N/A

The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.

 

Office of the Fund

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Investment Adviser

Invesco Advisers, Inc.

1555 Peachtree Street, N.E.

Atlanta, GA 30309

  

Distributor

Invesco Distributors, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Auditors

PricewaterhouseCoopers LLP

1000 Louisiana Street, Suite 5800

Houston, TX 77002-5678

     

Counsel to the Fund

Stradley Ronon Stevens & Young, LLP

2005 Market Street, Suite 2600

Philadelphia, PA 19103-7018

  

Counsel to the Independent Trustees

Goodwin Procter LLP

901 New York Avenue, N.W.

Washington, D.C. 20001

  

Transfer Agent

Invesco Investment Services, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Custodian

State Street Bank and Trust Company

225 Franklin Street

Boston, MA 02110-2801

 

T-4                         Invesco International Growth Fund

 

 

 

LOGO

 

 

Invesco mailing information

Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.

 

 

Important notice regarding delivery of security holder documents

To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.

 

 

Fund holdings and proxy voting information

The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms
N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.

    A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.

    Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.

    LOGO

SEC file numbers: 811-06463 and 033-44611                         IGR-AR-1                                              Invesco Distributors, Inc.

LOGO

 

Letters to Shareholders

 

 

 

LOGO

      Philip Taylor

    

Dear Shareholders:

This annual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Inside, your Fund’s portfolio managers discuss how they managed your Fund and the factors that affected its performance during the reporting period. I hope you find this report of interest.

    During the reporting period covered by this report, the US economy showed signs of continued improvement. After contracting in the first quarter of 2014, the economy expanded strongly in the second quarter and unemployment trended lower. Much of the credit for this improvement goes to the US Federal Reserve (the Fed), which undertook an extraordinary asset purchase program following the global financial crisis. The Fed’s goal was to jumpstart the economy by encouraging banks to lend more, businesses to hire more and consumers to spend more. Signs of a stronger US economy prompted the Fed to reduce, or “taper,” its

asset purchase program. Despite this, interest rates remained near historical low levels due largely to heavy investor demand for bonds. While signs of economic improvement were evident in the US, European economies showed signs of weakening. That, together with geopolitical uncertainty and worries about the first diagnosed cases of Ebola outside of Africa, caused increased volatility in US and European equities.

    Extended periods of market strength can lull investors into complacency – just as prolonged periods of market weakness or volatility can discourage investors from initiating long-term investment plans. That’s why Invesco has always encouraged investors to work with a professional financial adviser who can stress the importance of starting to save and invest early and the importance of adhering to a disciplined investment plan – when times are good and when they’re uncertain. A financial adviser who knows your unique financial situation, investment goals and risk tolerance can be an invaluable partner as you seek to achieve your financial goals. He or she can offer a long-term perspective when markets are volatile and time-tested advice and guidance when your financial situation or investment goals change.

Timely information when and where you want it

Invesco’s efforts to help investors achieve their financial objectives include providing individual investors and financial professionals with timely information about the markets, the economy and investing – whenever and wherever they want it.

    Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including prices, performance, holdings and portfolio manager commentaries. You can access information about your individual Invesco account whenever it’s convenient for you; just complete a simple, secure online registration. Use the “Log In” box on our home page to get started.

    Invesco’s mobile app for iPad® (available free from the App StoreSM) allows you to obtain the same detailed information about your Fund and the same investment insights from our investment leaders, market strategists, economists and retirement experts on the go. You also can watch portfolio manager videos and have instant access to Invesco news and updates wherever you may be.

    In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.

Have questions?

For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.

    All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.

Sincerely,

 

LOGO

Philip Taylor

Senior Managing Director, Invesco Ltd.

iPad is a trademark of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.

 

 

2                             Invesco Select Opportunities Fund

 

 

 

LOGO

      Bruce Crockett

    

Dear Fellow Shareholders:

There are a variety of factors that can impact investment performance, many of which are uncontrollable by us as investors. These factors can include various economic trends and geopolitical developments.

    While the members of the Invesco Funds Board, which I chair, can’t dictate the performance of the Invesco funds, be assured that your Board works diligently throughout the year to focus on how your investments are managed. Our job is to represent you and your interests on a variety of fund management-related matters. We regularly monitor how the portfolio management teams of the Invesco funds are performing in light of ever-changing and often unpredictable economic and market conditions. We review the investment strategies and investment process employed by each fund’s management team as explained in the fund’s prospectus.

    Perhaps our most significant responsibility is conducting the annual review of the funds’

advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information from Invesco that allows us to evaluate the quality of its services and the reasonableness of its fees. We also use information from a variety of independent sources, including materials provided by the independent senior officer of the Invesco funds, who reports directly to the independent trustees on the Board. Additionally, we meet with legal counsel and review performance and fee data prepared for us by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.

    After a careful review, the members of the Invesco Funds Board approved the continuation of advisory and sub-advisory contracts with Invesco Advisers and its affiliates. Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.

    As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.

Sincerely,

 

LOGO

Bruce L. Crockett

Independent Chair

Invesco Funds Board of Trustees

 

3                             Invesco Select Opportunities Fund

 

Management’s Discussion of Fund Performance

 

Performance summary

For the fiscal year ended October 31, 2014, Invesco Select Opportunities Fund, at net asset value (NAV), outperformed its style-specific and peer group indexes but underperformed its broad market benchmark.

    Drivers of performance were largely stock specific. We attribute the Fund’s outperformance mainly to above-market returns from select investments in the information technology (IT) sector. Alternatively, select holdings in the consumer discretionary and energy sectors were the largest detractors from performance during the fiscal year.

    Your Fund’s long-term performance appears later in this report.

 

Fund vs. Indexes

Total returns, 10/31/13 to 10/31/14, 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       7.71 %    
Class C Shares       6.83      
Class R Shares       7.52      
Class Y Shares       7.88      
Class R5 Shares       7.96      
Class R6 Shares       7.96      
MSCI World Index‚ (Broad Market Index)       8.67      
MSCI World Small Cap Index‚ (Style-Specific Index)       5.14      
Lipper Global Small/Mid-Cap Funds Classification Averagen (Peer Group)       3.68      

 

Source(s): ‚FactSet Research Systems Inc.; nLipper Inc.

      

 

 

 

Market conditions and your Fund

Global equity markets generally rose during the fiscal year ended October 31, 2014, on signs that economic growth was accelerating as a result of the loose monetary policies of many developed countries’ central banks. While 2014 began on an optimistic note, global equity markets pulled back at various points in reaction to economic and geopolitical concerns.

    Corporate earnings were generally resilient throughout the fiscal year, driven by strong profitability across many sectors; however investors worried about political developments in Ukraine and signs of economic sluggishness in China.

.

Toward the end of the reporting period, a sharp drop in global oil prices, evidence of economic stagnation in Europe and concern about the first cases of Ebola in the US increased market volatility.

    Before we discuss the Fund’s results during the fiscal year, it is helpful to briefly explain how we manage the Fund for shareholders. We view ourselves as business people buying businesses, and we consider the purchase of a stock as an ownership interest in a business. We strive to develop a proprietary view of a business through in-depth, fundamental research that includes careful financial statement analysis and meetings with company management. We then seek to purchase businesses whose stock prices

 

are below what we have calculated to be the true value of the company based on its future free cash flows.

    Our investment approach focuses on individual businesses rather than market sectors. Therefore, your Fund shares little in common with sector and regional weightings of various market indexes. However, if we were to broadly categorize businesses with which we had the most success during the reporting period, our investments in select IT stocks were the largest contributors to performance. Select holdings in the consumer discretionary and energy sectors were the largest detractors. From a regional perspective, we had the most success in North American and Asia Pacific investments and the least success in the European region. Our cash position hurt the Fund’s performance relative to its benchmarks in a rising market environment.

    Booz Allen Hamilton was the largest contributor to Fund performance during the fiscal year. Booz Allen Hamilton provides high-end IT consulting services to the military and has a long-standing reputation as “the Mercedes” of the government IT consulting industry. We are attracted to the company’s unique culture, in which every partner is paid the same regardless of his or her individual performance. This has resulted in a company run by individuals who row in the same direction; this creates an environment where the sum is greater than each of its parts. Booz Allen Hamilton has a long history of double-digit organic growth as a result of its culture. We were able to purchase the company’s shares a couple of years ago at depressed levels due to investor concern about the impact of potential reductions in government spending on the military due to budget

 
Portfolio Composition     

By sector

 

          
Information Technology       16.9 %
Industrials       11.2  
Energy       10.2  
Materials       9.1  
Financials       9.0  
Consumer Discretionary       8.1  
Health Care       6.6  
Money Market Funds
Plus Other Assets Less Liabilities		       28.9  

Top 10 Equity Holdings*

 

     

  1.  CETIP S.A. - Mercados

       Organizados

       4.4 %

  2.  Ultra Petroleum Corp.

       4.1  

  3.  Encore Capital Group, Inc.

       4.0  

  4.  Mitel Networks Corp.

       4.0  

  5.  Alere, Inc.

       3.8  

  6.  Alent PLC

       3.8  

  7.  Hollysys Automation

       Technologies Ltd

       3.6  

  8.  Aalberts Industries N.V.

       3.5  

  9.  SBM Offshore N.V.

       3.5  

10.  Performant Financial Corp.

       3.4  

Total Net Assets

     $ 49.0 million  

Total Number of Holdings*

       27  

The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.

* Excluding money market fund holdings.

 

 

4                             Invesco Select Opportunities Fund

constraints. Shares of the company rose during the fiscal year after reporting strong results led by a rebound in its defense segment and investor appreciation of the company’s leadership in cyber security consulting.

    International Rectifier was also a top contributor to Fund performance. International Rectifier has a 40-year history of leadership in making chips that reduce power consumption. The company specializes in semiconductors used in computers, as well as in energy-efficient appliances and automobiles. These semiconductors help reduce power consumption and improve both performance and efficiency. Toward the end of the fiscal year, the company’s share price rose after receiving a take-out offer from a competitor at a 51% premium to the previous day’s closing price. We sold our position in International Rectifier after the announcement.

    Among the largest detractors from Fund performance were Ipsos and ION Geophysical. Ipsos is a market research company with two main segments. One is customized research for business as it relates to issues such as brand loyalty, perception and customer behavior. The other is focused on advertising testing. Shares of Ipsos fell after management released operating results that were weaker than expected, largely due to a slowdown in its North American segment. We believe the company is trading at an inexpensive valuation, so we added to our position on this short-term share price weakness.

    ION Geophysical is a leader in small niches in offshore seismic activity for the oil and gas industry. The company is building its own library of seismic data in areas that are typically very difficult to explore (e.g., the Arctic), yet represent some of the largest areas of potential oil and gas on the planet. Shares of ION Geophysical have been depressed as large oil exploration companies have reduced their capital expenditures. We believe this is a cyclical issue, which eventually will turn around. We continue to believe in the long-term growth prospects of the business. At the same time, the company is trading at inexpensive valuations, and has a strong balance sheet to weather short-term headwinds.

    While the rising market environment made it difficult for us to find new investment opportunities, we did make some new investments and added to some of our existing holdings during periods of volatility. We also sold several holdings based on valuations and other factors. The Fund’s large cash position is a result of fund holdings being acquired,which generates cash because we have to sell them, and a lack of opportunities as markets continued to rise. We believe the cash should act as shock absorber in the next market correction, while providing us with the ability to invest in attractive opportunities as they present themselves.

    During the fiscal year, we focused on finding quality businesses trading at attractive values relative to what we believe are their long-term prospects. In contrast, the market is often driven by short-term events or outlooks in both good times and bad. Market volatility allows us to take advantage of investment opportunities we believe will benefit your Fund in the long term.

    While we can never predict future Fund performance, we pledge to you that we will adhere to our discipline of being business people who buy businesses. We will continually strive to upgrade the quality of your Fund’s portfolio.

    Thank you for your investment in Invesco Select Opportunities Fund and for sharing our long-term investment perspective.

The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

See important Fund and, if applicable, index disclosures later in this report.

LOGO   

Virginia Au

Chartered Financial

Analyst, Portfolio Manager, is lead

manager of Invesco

Select Opportunities

Fund. She joined Invesco in 2006. Ms. Au earned a Bachelor of Commerce degree in finance from The University of British Columbia.

 

LOGO   

Robert Mikalachki

Chartered Financial

Analyst, Portfolio

Manager, is manager

of Invesco Select

Opportunities Fund.

He joined Invesco in 1999. Mr. Mikalachki earned a business degree from Wilfrid Laurier University.

 

LOGO   

Jason Whiting

Chartered Financial

Analyst, Portfolio

Manager, is manager

of Invesco Select

Opportunities Fund.

He joined Invesco in 2003. Mr. Whiting earned a BBA from Wilfrid Laurier University.
 

 

5                             Invesco Select Opportunities Fund

 

Your Fund’s Long-Term Performance

 

 

Results of a $10,000 Investment – Oldest Share Class(es) since Inception

Fund data from 8/3/12; index data from 7/31/12

 

LOGO

 

Past performance cannot guarantee comparable future results.

    The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including

management fees. Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s)

does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.

 

 

 

continued from page 8

n   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.

 

 

Other information

n   The returns shown in management’s discussion of Fund performance are based on net asset values (NAVs) calculated for shareholder transactions. Generally accepted accounting principles
 

require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the NAVs for shareholder transactions and the returns based on those NAVs may differ from the NAVs and returns reported in the Financial Highlights.

n   Industry 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.

 

 

 

6                             Invesco Select Opportunities Fund

 

 

Average Annual Total Returns

  

As of 10/31/14, including maximum applicable sales charges

    

   

  

Class A Shares        
Inception (8/3/12)     16.73 % 
  1 Year     1.77   
Class C Shares        
Inception (8/3/12)     18.85 % 
  1 Year     5.83   
Class R Shares        
Inception (8/3/12)     19.44 % 
  1 Year     7.52   
Class Y Shares        
Inception (8/3/12)     19.99 % 
  1 Year     7.88   
Class R5 Shares        
Inception (8/3/12)     20.02 % 
  1 Year     7.96   
Class R6 Shares        
Inception     19.99 % 
  1 Year     7.96   

Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.

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

    The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares was 1.52%, 2.27%, 1.77%, 1.27%, 1.27% and 1.27%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares was 6.22%, 6.97%, 6.47%, 5.97%, 5.95% and 5.94%, respectively. The expense ratios presented

Average Annual Total Returns

  

As of 9/30/14, the most recent calendar quarter end, including maximum applicable sales charges    
Class A Shares        
Inception (8/3/12)     16.92 % 
  1 Year     3.50   
Class C Shares        
Inception (8/3/12)     19.20 % 
  1 Year     7.82   
Class R Shares        
Inception (8/3/12)     19.78 % 
  1 Year     9.44   
Class Y Shares        
Inception (8/3/12)     20.31 % 
  1 Year     9.89   
Class R5 Shares        
Inception (8/3/12)     20.35 % 
  1 Year     9.88   
Class R6 Shares        
Inception     20.31 % 
  1 Year     9.89   

above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

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

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

    Had the adviser not waived fees and/or reimbursed expenses, performance would have been lower.

 

1 Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least June 30, 2016. See current prospectus for more information.
2 Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least February 29, 2016. See current prospectus for more information.

 

 

 

7                             Invesco Select Opportunities Fund

 

Invesco Select Opportunities Fund’s investment objective is long-term growth of capital.

n   Unless otherwise stated, information presented in this report is as of October 31, 2014, and is based on total net assets.
n   Unless otherwise noted, all data provided by Invesco.
n   To access your Fund’s reports/prospectus, visit invesco.com/fundreports.

 

 

About share classes

n   Class R shares are generally available only to employer sponsored retirement and benefit plans. Please see the prospectus for more information.
n   Class Y shares are available only to certain investors. Please see the prospectus for more information.
n   Class R5 shares and Class R6 shares are primarily intended for employer sponsored retirement and benefit plans that meet certain standards and for institutional investors. Please see the prospectus for more information.

 

 

Principal risks of investing in the Fund

n   Cash/cash equivalents risk. Holding cash or cash equivalents may negatively affect performance.
n   Convertible securities risk. The Fund may own convertible securities, the value of which may be affected by market interest rates, the risk that the issuer will default, the value of the underlying stock or the right of the issuer to buy back the convertible securities.
n   Debt securities risk. The Fund may invest in debt securities that are affected by changing interest rates and changes in their effective maturities and credit quality.
n   Depositary receipts risk. Depositary receipts involve many of the same risks as those associated with direct investment in foreign securities. In addition, the underlying issuers of certain depositary receipts, particularly unsponsored or unregistered depositary receipts, are under no obligation to distribute shareholder communications to the holders of such receipts or to pass through to them any voting rights with respect to the deposited securities.
n   Developing/emerging markets securities risk. The prices of securities issued by foreign companies and governments located in developing/emerging market countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction
 

costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries.

n   Foreign securities risk. The Fund’s foreign investments may be affected by changes in a foreign country’s exchange rates, political and social instability, changes in economic or taxation policies, difficulties when enforcing obligations, decreased liquidity, and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies.
n   Management risk. The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results.
n   Market risk. The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment, general economic and market conditions, regional or global instability, and currency and interest rate fluctuations.
n   Non-diversification risk. The Fund is non-diversified and can invest a greater portion of its assets in a small number of issuers or a single issuer. A change in the value of the issuer could affect the value of the Fund more than if it was a diversified fund.
n   Preferred securities risk. Preferred securities may include provisions that permit the issuer, in its discretion, to defer or omit distributions for a certain period of time. If the Fund owns a security that is deferring or omitting its distributions, the Fund may be required to report the distribution on its tax returns, even though it may not have received this income. Further, preferred securities may lose substantial value due to the omission or deferment of dividend payments.
n   Small- and mid-capitalization risks. Stocks of small- and mid-sized companies
   

tend to be more vulnerable to adverse developments and may have little or no operating history or track record of success, and limited product lines, markets, management and financial resources. The securities of small- and mid-sized companies may be more volatile due to less market interest and less publicly available information about the issuer. They also may be illiquid or restricted as to resale, or may trade less frequently and in smaller volumes, all of which may cause difficulty when establishing or closing a position at a desirable price.

n   US government obligations risk. The Fund may invest in obligations issued by US government agencies and instrumentalities that may receive varying levels of support from the government, which could affect the Fund’s ability to recover should they default.
n   Warrants risk. Warrants may be significantly less valuable on their relevant expiration date resulting in a loss of money or they may expire worthless resulting in a total loss of the investment. Warrants may also be postponed or terminated early resulting in a partial or total loss of the investment. Warrants may also be subject to illiquidity.

 

 

About indexes used in this report

n   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.
n   The MSCI World Small Cap Index is an unmanaged index considered representative of small-cap stocks of global developed markets. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
n   The Lipper Global Small/Mid-Cap Funds Classification Average represents an average of all funds in the Lipper Global Small/Mid-Cap Funds classification.
n   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).

continued on page 6

 

 

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

 

8                             Invesco Select Opportunities Fund

Schedule of Investments

October 31, 2014

 

     Shares      Value  

Common Stocks–71.07%

  

Brazil–4.44%   

CETIP S.A.–Mercados Organizados

     171,594       $ 2,174,355   
Canada–2.91%   

Martinrea International Inc.

     134,283         1,423,979   
China–3.56%   

Hollysys Automation Technologies Ltd.(a)

     71,193         1,746,364   
France–5.08%   

Euler Hermes Group

     1,153         113,043   

Ipsos

     38,993         1,011,202   

Vicat S.A.

     19,935         1,362,939   
         2,487,184   
Hong Kong–0.93%   

Fairwood Holdings Ltd.

     203,000         457,562   
Ireland–4.98%   

DCC PLC

     18,645         1,043,885   

UDG Healthcare PLC

     265,056         1,395,928   
         2,439,813   
Netherlands–9.53%   

Aalberts Industries N.V.

     64,101         1,708,936   

Kendrion N.V.

     45,519         1,271,882   

SBM Offshore N.V.(a)

     134,901         1,691,223   
         4,672,041   
Norway–2.17%   

Prosafe S.E.

     232,254         1,063,885   
United Kingdom–4.07%   

Alent PLC

     339,591         1,836,278   
     Shares      Value  
United Kingdom–(continued)   

Charles Taylor PLC

     39,867       $ 156,259   
         1,992,537   
United States–33.40%   

Alere, Inc.(a)

     46,144         1,844,376   

Alliance Data Systems Corp.(a)

     2,721         770,995   

American Public Education Inc.(a)

     34,296         1,062,833   

Booz Allen Hamilton Holding Corp.

     52,189         1,375,180   

Cubic Corp.

     21,939         1,058,337   

Encore Capital Group, Inc.(a)

     43,203         1,966,169   

Global Payments Inc.

     11,515         926,958   

ION Geophysical Corp.(a)

     82,113         229,916   

Mitel Networks Corp.(a)

     210,324         1,961,581   

Performant Financial Corp.(a)

     194,600         1,679,398   

Rovi Corp.(a)

     71,853         1,500,291   

Ultra Petroleum Corp.(a)

     87,323         1,990,964   
               16,366,998   

Total Common Stocks
(Cost $33,833,328)

   

      34,824,718   

Money Market Funds–31.10%

  

Liquid Assets Portfolio–Institutional Class(b)

     7,620,838         7,620,838   

Premier Portfolio–Institutional Class(b)

     7,620,839         7,620,839   

Total Money Market Funds
(Cost $15,241,677)

              15,241,677   

TOTAL INVESTMENTS–102.17%
(Cost $49,075,005)

   

      50,066,395   

OTHER ASSETS LESS LIABILITIES–(2.17)%

  

      (1,062,551 ) 

NET ASSETS–100.00%

  

    $ 49,003,844   
 

 

Notes to Schedule of Investments:

 

(a)  Non-income producing security.
(b)  The money market fund and the Fund are affiliated by having the same investment adviser.

 

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

 

9                         Invesco Select Opportunities Fund

Statement of Assets and Liabilities

October 31, 2014

 

Assets:

  

Investments, at value (Cost $33,833,328)

   $ 34,824,718   

Investments in affiliated money market funds, at value and cost

     15,241,677   

Total investments, at value (Cost $49,075,005)

     50,066,395   

Foreign currencies, at value (Cost $407,875)

     402,351   

Receivable for:

  

Fund shares sold

     1,065,332   

Dividends

     6,089   

Investment for trustee deferred compensation and retirement plans

     8,896   

Other assets

     31,007   

Total assets

     51,580,070   

Liabilities:

  

Payable for:

  

Investments purchased

     2,168,726   

Fund shares reacquired

     317,588   

Accrued fees to affiliates

     29,891   

Accrued trustees’ and officers’ fees and benefits

     1,787   

Accrued other operating expenses

     49,338   

Trustee deferred compensation and retirement plans

     8,896   

Total liabilities

     2,576,226   

Net assets applicable to shares outstanding

   $ 49,003,844   

Net assets consist of:

  

Shares of beneficial interest

   $ 47,025,758   

Undistributed net investment income

     (7,290 ) 

Undistributed net realized gain

     990,560   

Net unrealized appreciation

     994,816   
    $ 49,003,844   

Net Assets:

  

Class A

   $ 21,651,870   

Class C

   $ 4,331,123   

Class R

   $ 123,680   

Class Y

   $ 22,869,014   

Class R5

   $ 14,631   

Class R6

   $ 13,526   

Shares outstanding, $0.001 par value per share,
with an unlimited number of shares authorized:

   

Class A

     1,488,517   

Class C

     301,809   

Class R

     8,538   

Class Y

     1,565,375   

Class R5

     1,001   

Class R6

     926   

Class A:

  

Net asset value per share

   $ 14.55   

Maximum offering price per share

  

(Net asset value of $14.55 ¸ 94.50%)

   $ 15.40   

Class C:

  

Net asset value and offering price per share

   $ 14.35   

Class R:

  

Net asset value and offering price per share

   $ 14.49   

Class Y:

  

Net asset value and offering price per share

   $ 14.61   

Class R5:

  

Net asset value and offering price per share

   $ 14.62   

Class R6:

  

Net asset value and offering price per share

   $ 14.61   
 

 

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

 

10                         Invesco Select Opportunities Fund

Statement of Operations

For the year ended October 31, 2014

 

Investment income:

  

Dividends (net of foreign withholding taxes of $15,618)

    $ 382,572   

Dividends from affiliated money market funds

      2,702   

Total investment income

      385,274   

Expenses:

   

Advisory fees

      195,511   

Administrative services fees

      50,000   

Custodian fees

      10,974   

Distribution fees:

   

Class A

      37,306   

Class C

      29,262   

Class R

      605   

Transfer agent fees — A, C, R and Y

      54,055   

Transfer agent fees — R5

      38   

Transfer agent fees — R6

      7   

Trustees’ and officers’ fees and benefits

      22,832   

Registration and filing fees

      75,698   

Professional services fees

      52,732   

Other

      25,614   

Total expenses

      554,634   

Less: Fees waived, expenses reimbursed and expense offset arrangement(s)

      (188,850 ) 

Net expenses

      365,784   

Net investment income

      19,490   

Realized and unrealized gain (loss) from:

   

Net realized gain (loss) from:

   

Investment securities

      993,769   

Foreign currencies

      (22,462 ) 
       971,307   

Change in net unrealized appreciation (depreciation) of:

   

Investment securities

      (315,091 ) 

Foreign currencies

      3,607   
       (311,484 ) 

Net realized and unrealized gain

      659,823   

Net increase in net assets resulting from operations

    $ 679,313   

 

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

 

11                         Invesco Select Opportunities Fund

Statement of Changes in Net Assets

For the years ended October 31, 2014 and 2013

 

     2014      2013  

Operations:

  

   

Net investment income

   $ 19,490       $ 49,867   

Net realized gain

     971,307         87,467   

Change in net unrealized appreciation (depreciation)

     (311,484 )       1,191,989   

Net increase in net assets resulting from operations

     679,313         1,329,323   

Distributions to shareholders from net investment income:

     

Class A

     (27,341 )       (9,673 ) 

Class C

     (2,287 )       (244 ) 

Class R

     (332 )       (76 ) 

Class Y

     (23,626 )       (7,928 ) 

Class R5

     (283 )       (78 ) 

Class R6

     (77 )       (73 ) 

Total distributions from net investment income

     (53,946 )       (18,072 ) 

Distributions to shareholders from net realized gains:

     

Class A

     (46,698 )       (11,089 ) 

Class C

     (6,231 )       (296 ) 

Class R

     (652 )       (88 ) 

Class Y

     (32,687 )       (8,938 ) 

Class R5

     (391 )       (89 ) 

Class R6

     (107 )       (82 ) 

Total distributions from net realized gains

     (86,766 )       (20,582 ) 

Share transactions–net:

     

Class A

     16,685,377         3,169,496   

Class C

     3,922,532         395,832   

Class R

     50,865         48,911   

Class Y

     18,560,282         1,993,912   

Class R5

     (37,228 )       28,137   

Net increase in net assets resulting from share transactions

     39,181,828         5,636,288   

Net increase in net assets

     39,720,429         6,926,957   

Net assets:

     

Beginning of year

     9,283,415         2,356,458   

End of year (includes undistributed net investment income of $(7,290) and $46,400, respectively)

   $ 49,003,844       $ 9,283,415   

Notes to Financial Statements

October 31, 2014

NOTE 1—Significant Accounting Policies

Invesco Select Opportunities Fund (the “Fund”) is a series portfolio of AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of eight separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.

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

The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value.

The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.

A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.

A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a

 

12                         Invesco Select Opportunities Fund

particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).

Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.

Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.

Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and ask prices is used to value debt obligations, including corporate loans.

Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.

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 of the Fund’s investments.

Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.

B. Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.

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

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

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

C.

Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets,

 

13                         Invesco Select Opportunities Fund

 

the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted.

D. Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes.
E. Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.

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

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

F. Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets.
G. Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
H. Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote.
I. Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.

The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.

J. Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis or through forward foreign currency contracts to manage or minimize currency or exchange rate risk.

The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.

A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.

 

14                         Invesco Select Opportunities Fund

NOTE 2—Advisory Fees and Other Fees Paid to Affiliates

The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:

 

Average Daily Net Assets   Rate  

First $250 million

     0.80%   

Next $250 million

     0.78%   

Next $500 million

     0.76%   

Next $1.5 billion

     0.74%   

Next $2.5 billion

     0.72%   

Next $2.5 billion

     0.70%   

Next $2.5 billion

     0.68%   

Over $10 billion

     0.66%   

For the year ended October 31, 2014, the effective advisory fees incurred by the Fund was 0.80%.

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

The Adviser has contractually agreed, through at least February 29, 2016, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.51%, 2.26%, 1.76%, 1.26%, 1.26% and 1.26%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, 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 February 29, 2016. The fee waiver agreement cannot be terminated during its term.

Further, the Adviser has contractually agreed, through at least June 30, 2016, 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 year ended October 31, 2014, the Adviser waived advisory fees and reimbursed fund level expenses of $134,749 and reimbursed class level expenses of $32,924, $6,456, $267, $14,161, $38 and $7 of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.

The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.

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 year ended October 31, 2014, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.

The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. 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 year ended October 31, 2014, 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 year ended October 31, 2014, IDI advised the Fund that IDI retained $17,934 in front-end sales commissions from the sale of Class A shares and $13 and $488 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.

Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.

 

15                         Invesco Select Opportunities Fund

NOTE 3—Additional Valuation Information

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:

  Level 1 — Prices are determined using quoted prices in an active market for identical assets.
  Level 2 — Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
  Level 3 — Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.

The following is a summary of the tiered valuation input levels, as of October 31, 2014. 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.

During the year ended October 31, 2014, there were transfers from Level 1 to Level 2 of $2,428,810 and from Level 2 to Level 1 of $156,259, due to foreign fair value adjustments.

 

     Level 1        Level 2        Level 3        Total  

Brazil

   $ 2,174,355         $ —         $ —         $ 2,174,355   

Canada

     1,423,979           —           —           1,423,979   

China

     1,746,364           —           —           1,746,364   

France

     2,374,141           113,043           —           2,487,184   

Hong Kong

     457,562           —           —           457,562   

Ireland

     1,395,928           1,043,885           —           2,439,813   

Netherlands

     —           4,672,041           —           4,672,041   

Norway

     1,063,885           —           —           1,063,885   

United Kingdom

     1,992,537           —           —           1,992,537   

United States

     31,608,675           —           —           31,608,675   

Total Investments

   $ 44,237,426         $ 5,828,969         $ —         $ 50,066,395   

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 year ended October 31, 2014, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $248.

NOTE 5—Trustees’ and Officers’ Fees and Benefits

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

NOTE 6—Cash Balances

The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.

 

16                         Invesco Select Opportunities Fund

NOTE 7—Distributions to Shareholders and Tax Components of Net Assets

Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended October 31, 2014 and 2013:

 

     2014        2013  

Ordinary income

   $ 140,712         $ 38,654   

Tax Components of Net Assets at Period-End:

 

     2014  

Undistributed ordinary income

   $ 355,264   

Undistributed long-term gain

     635,296   

Net unrealized appreciation — investments

     991,390   

Net unrealized appreciation — other investments

     3,426   

Temporary book/tax differences

     (7,290 ) 

Shares of beneficial interest

     47,025,758   

Total net assets

   $ 49,003,844   

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes.

The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.

Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.

The Fund does not have a capital loss carryforward as of October 31, 2014.

NOTE 8—Investment Securities

The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended October 31, 2014 was $29,885,125 and $2,298,671, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.

 

Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis  

Aggregate unrealized appreciation of investment securities

   $ 2,595,070   

Aggregate unrealized (depreciation) of investment securities

     (1,603,680 ) 

Net unrealized appreciation of investment securities

   $ 991,390   

Investments have the same cost for tax and financial statement purposes.

NOTE 9—Reclassification of Permanent Differences

Primarily as a result of differing book/tax treatment of foreign currency transactions, on October 31, 2014, undistributed net investment income was decreased by $19,234, undistributed net realized gain was increased by $19,338 and shares of beneficial interest was decreased by $104. This reclassification had no effect on the net assets of the Fund.

 

17                         Invesco Select Opportunities Fund

NOTE 10—Share Information

 

     Summary of Share Activity  
    Years ended October 31,  
    2014(a)      2013  
     Shares      Amount      Shares      Amount  

Sold:

           

Class A

     2,278,339       $ 33,917,373         294,065       $ 3,669,108   

Class C

     393,488         5,821,391         40,288         508,655   

Class R

     6,700         97,143         4,190         52,101   

Class Y

     1,422,323         20,348,671         178,443         2,176,694   

Class R5

     —         —         2,374         28,137   

Issued as reinvestment of dividends:

           

Class A

     3,856         52,562         321         3,496   

Class C

     496         6,719         35         379   

Class R

     60         809         —         —   

Class Y

     707         9,666         38         416   

Class R5

     35         474         —         —   

Reacquired:

           

Class A

     (1,160,142 )       (17,284,558 )       (39,476 )       (503,108 ) 

Class C

     (130,981 )       (1,905,578 )       (9,979 )       (113,202 ) 

Class R

     (3,175 )       (47,087 )       (238 )       (3,190 ) 

Class Y

     (120,481 )       (1,798,055 )       (14,293 )       (183,198 ) 

Class R5

     (2,409 )       (37,702 )       —         —   

Net increase in share activity

     2,688,816       $ 39,181,828         455,768       $ 5,636,288   

 

(a)  There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 51% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially.

 

18                         Invesco Select Opportunities Fund

NOTE 11—Financial Highlights

The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.

 

     Net asset
value,
beginning
of period		   Net
investment
income
(loss)(a)		   Net gains
(losses)
on securities
(both
realized and
unrealized)		   Total from
investment
operations		   Dividends
from net
investment
income		   Distributions
from net
realized
gains		   Total
distributions		   Net asset
value, end
of period		   Total
return(b)		   Net assets,
end of period
(000’s omitted)		   Ratio of
expenses
to average
net assets
with fee waivers
and/or  expenses
absorbed		   Ratio of
expenses
to average net
assets without
fee waivers
and/or expenses
absorbed		   Ratio of net
investment
income (loss)
to average
net assets		   Portfolio
turnover(c)

Class A

                                                        

Year ended 10/31/14

     $ 13.70       $ 0.02       $ 1.02       $ 1.04       $ (0.07 )     $ (0.12 )     $ (0.19 )     $ 14.55         7.64 %     $ 21,652         1.47 %(e)       2.24 %(e)       0.11 %(e)       13 %

Year ended 10/31/13

       10.63         0.11 (d)       3.13         3.24         (0.08 )       (0.09 )       (0.17 )       13.70         30.84         5,019         1.47         6.17         0.84 (d)       10  

Year ended 10/31/12(f)

       10.00         (0.00 )       0.63         0.63         —         —         —         10.63         6.30         1,186         1.48 (g)       15.54 (g)       (0.07 )(g)       7  

Class C

                                                        

Year ended 10/31/14

       13.59         (0.10 )       1.02         0.92         (0.04 )       (0.12 )       (0.16 )       14.35         6.83         4,331         2.22 (e)       2.99 (e)       (0.64 )(e)       13 %

Year ended 10/31/13

       10.62         0.01 (d)       3.12         3.13         (0.07 )       (0.09 )       (0.16 )       13.59         29.87         527         2.22         6.92         0.09 (d)       10  

Year ended 10/31/12(f)

       10.00         (0.02 )       0.64         0.62         —         —         —         10.62         6.20         90         2.23 (g)       16.29 (g)       (0.82 )(g)       7  

Class R

                                                        

Year ended 10/31/14

       13.66         (0.02 )       1.02         1.00         (0.05 )       (0.12 )       (0.17 )       14.49         7.44         124         1.72 (e)       2.49 (e)       (0.14 )(e)       13 %

Year ended 10/31/13

       10.63         0.07 (d)       3.12         3.19         (0.07 )       (0.09 )       (0.16 )       13.66         30.44         68         1.72         6.42         0.59 (d)       10  

Year ended 10/31/12(f)

       10.00         (0.01 )       0.64         0.63         —         —         —         10.63         6.30         11         1.73 (g)       15.79 (g)       (0.32 )(g)       7  

Class Y

                                                        

Year ended 10/31/14

       13.74         0.05         1.02         1.07         (0.08 )       (0.12 )       (0.20 )       14.61         7.88         22,869         1.22 (e)       1.99 (e)       0.36 (e)       13 %

Year ended 10/31/13

       10.64         0.14 (d)       3.13         3.27         (0.08 )       (0.09 )       (0.17 )       13.74         31.11         3,610         1.22         5.92         1.09 (d)       10  

Year ended 10/31/12(f)

       10.00         0.00         0.64         0.64         —         —         —         10.64         6.40         1,049         1.23 (g)       15.29 (g)       0.18 (g)       7  

Class R5

                                                        

Year ended 10/31/14

       13.74         0.05         1.03         1.08         (0.08 )       (0.12 )       (0.20 )       14.62         7.96         15         1.22 (e)       1.87 (e)       0.36 (e)       13 %

Year ended 10/31/13

       10.64         0.14 (d)       3.13         3.27         (0.08 )       (0.09 )       (0.17 )       13.74         31.12         46         1.22         5.90         1.09 (d)       10  

Year ended 10/31/12(f)

       10.00         0.00         0.64         0.64         —         —         —         10.64         6.40         11         1.23 (g)       15.35 (g)       0.18 (g)       7  

Class R6

                                                        

Year ended 10/31/14

       13.73         0.05         1.03         1.08         (0.08 )       (0.12 )       (0.20 )       14.61         7.96         14         1.22 (e)       1.83 (e)       0.36 (e)       13 %

Year ended 10/31/13

       10.64         0.13 (d)       3.13         3.26         (0.08 )       (0.09 )       (0.17 )       13.73         31.02         13         1.22         5.89         1.09 (d)       10  

Year ended 10/31/12(f)

       10.80         0.00         (0.16 )       (0.16 )       —         —         —         10.64         (1.48 )       10         1.23 (g)       11.37 (g)       0.18 (g)       7  

 

(a)  Calculated using average shares outstanding.
(b)  Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable.
(c)  Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
(d)  Net investment income (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 $(0.04) and (0.37)%, $(0.14) and (1.12)%, $(0.08) and (0.62)%, $(0.01) and (0.12)%, $(0.01) and (0.12)%, $(0.02) and (0.12)%, for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.
(e)  Ratios are based on average daily net assets (000’s omitted) of $14,922, $2,926, $121, $6,418, $38 and $14 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.
(f)  Commencement date of August 3, 2012 for Class A, Class C, Class R, Class Y, Class R5 shares and September 24, 2012 for Class R6, respectively.
(g)  Annualized.

 

19                         Invesco Select Opportunities Fund

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of AIM International Mutual Funds (Invesco International Mutual Funds)

and Shareholders of Invesco Select Opportunities Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco Select Opportunities Fund (one of the funds constituting AIM International Mutual Funds (Invesco International Mutual Funds), hereafter referred to as the “Fund”) at October 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period August 3, 2012 (commencement of operations) through October 31, 2012, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2014 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where confirmations of security purchases have not been received, provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

December 23, 2014

Houston, Texas

 

20                         Invesco Select 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, 2014 through October 31, 2014.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

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

 

Class  

Beginning

Account Value

(05/01/14)

     ACTUAL    

HYPOTHETICAL

(5% annual return before

expenses)

     

Annualized

Expense

Ratio

  
   

Ending

Account Value

(10/31/14)1

    

Expenses

Paid During

Period2

    

Ending

Account Value

(10/31/14)

     

Expenses

Paid During

Period2

     
A   $ 1,000.00      $ 970.60      $ 7.30      $ 1,017.80       $ 7.48         1.47 % 
C     1,000.00        967.00        11.01        1,014.01         11.27         2.22   
R     1,000.00        969.90        8.54        1,016.53         8.74         1.72   
Y     1,000.00        971.40        6.06        1,019.06         6.21         1.22   
R5     1,000.00        972.10        6.06        1,019.06         6.21         1.22   
R6     1,000.00        972.10        6.06        1,019.06         6.21         1.22   

 

1  The actual ending account value is based on the actual total return of the Fund for the period May 1, 2014 through October 31, 2014, 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.

 

21                         Invesco Select Opportunities Fund

Approval of Investment Advisory and Sub-Advisory Contracts

 

The Board of Trustees (the Board) of AIM International Mutual Funds (Invesco International Mutual Funds) is required under the Investment Company Act of 1940, as amended, to approve annually the renewal of Invesco Select Opportunities Fund’s (the Fund) investment advisory agreements. During contract renewal meetings held on June 16-17, 2014, the Board as a whole, and the disinterested or “independent” Trustees, who comprise over 75% of the Board, voting separately, approved the continuance for the Fund of the 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 Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc., Invesco Canada Ltd. and Invesco PowerShares Capital Management LLC (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2014.

In evaluating the fairness and reasonableness of compensation under the Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board determined that continuation of the Fund’s investment advisory agreement and the sub-advisory contracts are in the best interest of the Fund and its shareholders and that the compensation payable to Invesco Advisers and the Affiliated Sub-Advisers under the agreements is fair and reasonable.

The Board’s Fund Evaluation Process

The Board’s Investments Committee has established three Sub-Committees, each of which is primarily responsible for overseeing the management of a number of the funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet throughout the year to review the performance of their assigned Invesco Funds, including reviewing materials prepared under the direction of the independent Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review the performance, investment objective(s), policies, strategies, limitations and investment risks of these funds. The Sub-Committees meet regularly and at designated contract renewal meetings each year to conduct a review of the performance, fees, expenses and other matters related to their assigned Invesco Funds. Each Sub-Committee recommends to the Investments Committee, which in turn recommends to the

full Board, whether and on what terms to approve the continuance of each Invesco Fund’s investment advisory agreement and sub-advisory contracts for another year.

During the contract renewal process, the Trustees receive comparative performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Lipper Inc. (Lipper), an independent provider of investment company data. The Trustees also receive 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 addition to meetings with Invesco Advisers and fund counsel, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.

The Trustees recognized that the advisory fee rates for the Invesco Funds are, in many cases, the result of years of review and negotiation. The Trustees’ deliberations and conclusions in a particular year may be based in part on their deliberations and conclusions regarding these same arrangements throughout the year and in prior years. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.

The discussion below serves as the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. Unless otherwise stated, this information is current as of June 17, 2014, and may not reflect consideration of factors that became known to the Board after that date.

Factors and Conclusions and Summary of Independent Written Fee Evaluation

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

The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services,

including the Fund’s portfolio manager or managers, with whom the Sub-Committees met during the year. The Board’s review of the qualifications of Invesco Advisers to provide advisory services included the Board’s consideration of Invesco Advisers’ investment process oversight, independent credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, equity and fixed income trading operations, internal audit, distribution and legal and compliance.

In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship and the greater uncertainty that may be associated with entering into a new relationship. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s investment advisory agreement.

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 that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, 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 benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory and consistent with the terms of the Fund’s sub-advisory contracts.

B. Fund Performance

The Board considered Fund performance as a relevant factor in considering whether to approve the investment advisory agreement as well as the sub-advisory contracts for the Fund, as Invesco Canada Ltd. currently manages assets of the Fund.

The Board noted that the Fund recently began operations and that comparative performance data for only the past calendar year was available. The Board compared the Fund’s performance during the past calendar year to the performance of funds in the Lipper performance universe and against the Lipper Global Small/Mid-Cap Funds Index. The Board

 

 

22                         Invesco Select Opportunities Fund

noted that performance of Class A shares of the Fund was in the fourth quintile of its performance universe for the one year period (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that the Fund’s performance was above the performance of the Index for the one year period. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.

C. Advisory and Sub-Advisory Fees

The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Lipper expense group at a common asset level. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in the expense group. The Board noted that the term “contractual management fee” may include both advisory and certain administrative services fees, but that Lipper does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not charge the Invesco Funds for the administrative services included in the term as defined by Lipper. The Board also reviewed the methodology used by Lipper in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group.

The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund through at least February 28, 2015 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 compared the Fund’s effective advisory fee rate (the advisory fee rate after advisory fee waivers and before other expense limitations/waivers) to the effective advisory fee rates of other mutual funds advised by Invesco Advisers and its affiliates that are managed using an investment process substantially similar to the investment process used for the Fund. The Board noted that the Fund’s rate was above the rate of one such mutual fund advised by Invesco Advisers using a similar investment process. The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other client accounts using an investment process substantially similar to the investment process used by the Fund.

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. The Board noted that Invesco Advisers retains overall responsibility for, and provides services to, sub-advised

Invesco Funds, including oversight of the Affiliated Sub-Advisers as well as the additional services described herein other than day-to-day portfolio management. The Board also noted that the sub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers.

D. Economies of Scale and Breakpoints

The Board considered the extent to which there are economies of scale in the provision of advisory services to the Fund. The Board also considered whether the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule and was assisted in this review by a report from the Senior Officer. The Board also noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds and other clients advised by Invesco Advisers.

E. Profitability and Financial Resources

The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the profitability of Invesco Advisers and its affiliates in providing these services for the year ended December 31, 2013. The Board received information from Invesco Advisers about the methodology used to prepare the profitability information. The Board considered the profitability of Invesco Advisers in managing the Fund and the Invesco Funds. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its subsidiaries provide to the Invesco Funds. The Board noted that Invesco Advisers and its subsidiaries did not make a profit from managing the Fund as a result of fee and expense waivers. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each Affiliated Sub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.

F. Collateral Benefits to Invesco Advisers and its Affiliates

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

nature and quality of which are at least equal to those provided by others offering the same or similar services; and that the fees for such services are fair and reasonable in light of the usual and customary charges by others for services of the same nature and quality.

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 shift the payment obligation for research services from Invesco Advisers and the Affiliated Sub-Advisers to the Invesco Funds and that the research received may be used with other clients of Invesco Advisers and may reduce Invesco Advisers’ and the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.

The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisors from the Fund’s investment of uninvested cash and cash collateral from any securities lending arrangements in the affiliated money market funds are fair and reasonable.

The Board also considered the Fund may use an affiliated broker to execute certain trades for the Fund to among other things, control information leakage, and were advised that such trades would be executed in compliance with rules under the Investment Company Act of 1940, as amended.

 

 

23                         Invesco Select Opportunities Fund

Tax Information

Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.

The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.

The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended October 31, 2014:

 

Federal and State Income Tax

  

Qualified Dividend Income*

     98.08 % 

Corporate Dividends Received Deduction*

     3.73 % 

U.S. Treasury Obligations*

     0.00 % 

 

  * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.

 

Non-Resident Alien Shareholders

  

Qualified Short-Term Gains

   $ 89,728   

 

24                         Invesco Select Opportunities Fund

Trustees and Officers

 

The address of each trustee and officer is AIM International Mutual Funds (Invesco International Mutual Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Interested Persons                

Martin L. Flanagan1 — 1960

Trustee

   2007  

Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business

 

Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization).

   144   None

Philip A. Taylor2 — 1954

Trustee, President and Principal Executive Officer

   2006  

Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.

 

Formerly: Director and Chairman, Van Kampen Investor Services Inc.; Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company) and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships) and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.

   144   None

Wayne W. Whalen3 — 1939

Trustee

   2010   Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex   144   Director of the Mutual fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy

 

1  Mr. Flanagan is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer of the Adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the Adviser.
2  Mr. Taylor is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of the Trust because he is an officer and a director of the Adviser.
3  Mr. Whalen is retiring effective December 31, 2014. He has been deemed to be an interested person of the Trust because of his prior service as counsel to the predecessor funds of certain Invesco open-end funds and his affiliation with the law firm that served as counsel to such predecessor funds and the Invesco closed-end funds.

 

T-1                         Invesco Select Opportunities Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees                

Bruce L. Crockett — 1944

Trustee and Chair

   1992  

Chairman, Crockett Technologies Associates (technology consulting company)

 

Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer, COMSAT Corporation; Chairman, Board of Governors of INTELSAT (international communications company); ACE Limited (insurance company); and Investment Company Institute

   144   ALPS (Attorneys Liability Protection Society) (insurance company)

David C. Arch — 1945

Trustee

   2010   Chairman of Blistex Inc., a consumer health care products manufacturer   144   Board member of the Illinois Manufacturers’ Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan; Member of the Audit Committee of the Edward-Elmhurst Hospital

Frank S. Bayley — 1939

Trustee

   2001   Retired. Formerly: Director, Badgley Funds Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP   144   Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee, The Curtis Institute of Music

James T. Bunch — 1942

Trustee

   2003  

Managing Member, Grumman Hill Group LLC (family office private equity investments)

 

Formerly: Founder, Green Manning & Bunch Ltd. (investment banking firm) (1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation

   144   Chairman, Board of Governors, Western Golf Association; Chairman, Evans Scholars Foundation; and Director, Denver Film Society

Rodney F. Dammeyer — 1940

Trustee

   2010  

Chairman of CAC,LLC, (private company offering capital investment and management advisory services)

 

Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex

   144   Director of Quidel Corporation and Stericycle, Inc.

Albert R. Dowden — 1941

Trustee

   2000  

Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Nature’s Sunshine Products, Inc. and Reich & Tang Funds (5 portfolios) (registered investment company)

 

Formerly: Director, Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company); Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director, Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company)

   144   Director of: Nature’s Sunshine Products, Inc., Reich & Tang Funds, Homeowners of America Holding Corporation/ Homeowners of America Insurance Company, the Boss Group

Jack M. Fields — 1952

Trustee

   1997  

Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)

 

Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives

   144   Insperity, Inc. (formerly known as Administaff)

Prema Mathai-Davis — 1950

Trustee

   1998   Retired. Formerly: Chief Executive Officer, YWCA of the U.S.A.   144   None

Larry Soll — 1942

Trustee

   2003   Retired. Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company)   144   None

Hugo F. Sonnenschein — 1940

Trustee

   2010   President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to 2000, President of the University of Chicago   144   Trustee of the University of Rochester and a member of its investment committee; Member of the National Academy of Sciences and the American Philosophical Society; Fellow of the American Academy of Arts and Sciences

 

T-2                         Invesco Select Opportunities Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Independent Trustees—(continued)

Raymond Stickel, Jr. — 1944

Trustee

   2005   Retired. Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche   144   None

Suzanne H. Woolsey — 1941

Trustee

   2014   Chief Executive Officer of Woolsey Partners LLC   144   Emeritus Chair of the Board of Trustees of the Institute for Defense Analyses; Trustee of Colorado College; Trustee of California Institute of Technology; Prior to 2014, Director of Fluor Corp.; Prior to 2010, Trustee of the German Marshall Fund of the United States; Prior to 2010 Trustee of the Rocky Mountain Institute
Other Officers                

Russell C. Burk — 1958

Senior Vice President and Senior Officer

   2005   Senior Vice President and Senior Officer, The Invesco Funds   N/A   N/A

John M. Zerr — 1962

Senior Vice President, Chief Legal Officer and Secretary

   2006  

Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust; and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company)

   N/A   N/A

Sheri Morris — 1964

Vice President, Treasurer and Principal Financial Officer

   1999  

Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust

 

Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust

   N/A   N/A

 

T-3                         Invesco Select Opportunities Fund

Trustees and Officers—(continued)

 

Name, Year of Birth and

Position(s) Held with the Trust

  

Trustee and/

or Officer Since

  

Principal Occupation(s)

During Past 5 Years

  

Number of

Funds in Fund

Complex

Overseen by
Trustee

  

Other Directorship(s)
Held by Trustee During

Past 5 Years

Other Officers—(continued)                

Karen Dunn Kelley — 1960

Vice President

   2004  

Senior Managing Director, Investments; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc. and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only)

 

Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), and Short-Term Investments Trust only)

   N/A   N/A

Crissie M. Wisdom — 1969

Anti-Money Laundering Compliance Officer

   2013   Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Commodity Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc.   N/A   N/A

Todd L. Spillane — 1958

Chief Compliance Officer

   2006  

Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)

 

Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company

   N/A   N/A

The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.

 

Office of the Fund

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Investment Adviser

Invesco Advisers, Inc.

1555 Peachtree Street, N.E.

Atlanta, GA 30309

  

Distributor

Invesco Distributors, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Auditors

PricewaterhouseCoopers LLP

1000 Louisiana Street, Suite 5800

Houston, TX 77002-5678

     

Counsel to the Fund

Stradley Ronon Stevens & Young, LLP

2005 Market Street, Suite 2600

Philadelphia, PA 19103-7018

  

Counsel to the Independent Trustees

Goodwin Procter LLP

901 New York Avenue, N.W.

Washington, D.C. 20001

  

Transfer Agent

Invesco Investment Services, Inc.

11 Greenway Plaza, Suite 1000

Houston, TX 77046-1173

  

Custodian

State Street Bank and Trust Company

225 Franklin Street

Boston, MA 02110-2801

 

T-4                         Invesco Select Opportunities Fund

 

 

 

LOGO

 

 

Invesco mailing information

Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.

 

 

Important notice regarding delivery of security holder documents

To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.

 

 

Fund holdings and proxy voting information

The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.

    A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.

    Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.

    Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.

   LOGO

SEC file numbers: 811-06463 and 033-44611                         SOPP-AR-1                                         Invesco Distributors, Inc.

ITEM 2. CODE OF ETHICS.

There were no amendments to the Code of Ethics (the “Code”) that applies to the Registrant’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”) during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report.

 

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

The Board of Trustees has determined that the Registrant has at least one audit committee financial expert serving on its Audit Committee. The Audit Committee financial expert is Raymond Stickel, Jr. Mr. Stickel is “independent” within the meaning of that term as used in Form N-CSR.

 

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a) to (d)

Fees Billed by PWC Related to the Registrant

PWC billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as follows:

 

     Fees Billed for
Services Rendered to
the Registrant for
fiscal year end 2014		      (e)(2)
Percentage of Fees
Billed Applicable to
Non-Audit Services
Provided for fiscal
year end 2014
Pursuant to Waiver of
Pre-Approval
Requirement(1)		     Fees Billed for
Services Rendered to
the Registrant for
fiscal year end 2013		      (e)(2)
Percentage of Fees
Billed Applicable to
Non-Audit Services
Provided for fiscal
year end 2013
Pursuant to Waiver of
Pre-Approval
Requirement(1)		  

Audit Fees

    $ 251,900         N/A      $ 266,250         N/A   

Audit-Related Fees

    $ 0         0 %    $ 0         0 % 

Tax Fees(2)

    $ 176,346         0 %    $ 165,182         0 % 

All Other Fees

    $ 0         0 %    $ 0         0 % 
  

 

 

       

 

 

     

Total Fees

    $ 428,246         0 %    $ 431,432         0 % 

(g) PWC billed the Registrant aggregate non-audit fees of $176,346 for the fiscal year ended 2014, and $165,182 for the fiscal year ended 2013, for non-audit services rendered to the Registrant.

 

(1) With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant to PWC during a fiscal year; and (iii) such services are promptly brought to the attention of the Registrant’s Audit Committee and approved by the Registrant’s Audit Committee prior to the completion of the audit.
(2) Tax fees for the fiscal year end 2014 include fees billed for reviewing tax returns. Tax fees for the fiscal year end 2013 includes fees billed for reviewing tax returns and consultation services.

Fees Billed by PWC Related to Invesco and Invesco Affiliates

PWC billed Invesco Advisers, Inc. (“Invesco”), the Registrant’s adviser, and any entity controlling, controlled by or under common control with Invesco that provides ongoing services to the Registrant (“Invesco Affiliates”) aggregate fees for pre-approved non-audit services rendered to Invesco and Invesco Affiliates for the last two fiscal years as follows:

 

     Fees Billed for Non-
Audit Services
Rendered to Invesco
and Invesco Affiliates
for fiscal year end
2014 That Were
Required
to be Pre-Approved
by the Registrant’s
Audit Committee		      (e)(2)
Percentage of Fees
Billed Applicable to
Non-Audit Services
Provided for fiscal year
end 2014 Pursuant to
Waiver of Pre-
Approval
Requirement(1)		     Fees Billed for Non-
Audit Services
Rendered to Invesco
and Invesco Affiliates
for fiscal year end
2013 That Were
Required
to be Pre-Approved
by the Registrant’s
Audit Committee		      (e)(2)
Percentage of Fees
Billed Applicable to
Non-Audit Services
Provided for fiscal year
end 2013 Pursuant to
Waiver of Pre-
Approval
Requirement(1)		  

Audit-Related Fees

    $ 574,000         0 %    $ 574,000         0 % 

Tax Fees

    $ 0         0 %    $ 0         0 % 

All Other Fees

    $ 0         0 %    $ 0         0 % 
  

 

 

       

 

 

     

Total Fees(2)

    $ 574,000         0 %    $ 574,000         0 % 

 

(1) With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant, Invesco and Invesco Affiliates to PWC during a fiscal year; and (iii) such services are promptly brought to the attention of the Registrant’s Audit Committee and approved by the Registrant’s Audit Committee prior to the completion of the audit.
(2) Audit-Related fees for the year end 2014 include fees billed related to reviewing controls at a service organization.

(g) Including the fees for services not required to be pre-approved by the registrant’s audit committee, PWC billed Invesco and Invesco Affiliates aggregate non-audit fees of $2,939,346 for the fiscal year ended 2014, and $1,248,475 for the fiscal year ended 2013, for non-audit services rendered to Invesco and Invesco Affiliates.

(h) The Audit Committee also has considered whether the provision of non-audit services that were rendered to Invesco and Invesco Affiliates that were not required to be pre-approved pursuant to SEC regulations, if any, is compatible with maintaining PWC’s independence. To the extent that such services were provided, the Audit Committee determined that the provision of such services is compatible with PWC maintaining independence with respect to the Registrant.

(f) Not applicable.

(e)(1)

PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES

POLICIES AND PROCEDURES

As adopted by the Audit Committees of

the Invesco Funds (the “Funds”)

Last Amended May 4, 2010

Statement of Principles

Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and Exchange Commission (“SEC”) (“Rules”), the Audit Committees of the Funds’ (the “Audit Committees”) Board of Trustees (the “Board”) are responsible for the appointment, compensation and oversight of the work of independent accountants (an “Auditor”). As part of this responsibility and to assure that the Auditor’s independence is not impaired, the Audit Committees pre-approve the audit and non-audit services provided to the Funds by each Auditor, as well as all non-audit services provided by the Auditor to the Funds’ investment adviser and to affiliates of the adviser that provide ongoing services to the Funds (“Service Affiliates”) if the services directly impact the Funds’ operations or financial reporting. The SEC Rules also specify the types of services that an Auditor may not provide to its audit client. The following policies and procedures comply with the requirements for pre-approval and provide a mechanism by which management of the Funds may request and secure pre-approval of audit and non-audit services in an orderly manner with minimal disruption to normal business operations.

Proposed services either may be pre-approved without consideration of specific case-by-case services by the Audit Committees (“general pre-approval”) or require the specific pre-approval of the Audit Committees (“specific pre-approval”). As set forth in these policies and procedures, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committees. Additionally, any fees exceeding 110% of estimated pre-approved fee levels provided at the time the service was pre-approved will also require specific approval by the Audit Committees before payment is made. The Audit Committees will also consider the impact of additional fees on the Auditor’s independence when determining whether to approve any additional fees for previously pre-approved services.

The Audit Committees will annually review and generally pre-approve the services that may be provided by each Auditor without obtaining specific pre-approval from the Audit Committee generally on an annual basis. The term of any general pre-approval runs from the date of such pre-approval through September 30th of the following year, unless the Audit Committees consider a different period and state otherwise. The Audit Committees will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.

The purpose of these policies and procedures is to set forth the guidelines to assist the Audit Committees in fulfilling their responsibilities.

Delegation

The Audit Committees may from time to time delegate pre-approval authority to one or more of its members who are Independent Trustees. All decisions to pre-approve a service by a delegated member shall be reported to the Audit Committees at the next quarterly meeting.

Audit Services

The annual audit services engagement terms will be subject to specific pre-approval of the Audit Committees. Audit services include the annual financial statement audit and other procedures such as tax provision work that is required to be performed by the independent auditor to be able to form an opinion on the Funds’ financial statements. The Audit Committees will obtain, review and consider sufficient information concerning the proposed Auditor to make a reasonable evaluation of the Auditor’s qualifications and independence.

In addition to the annual Audit services engagement, the Audit Committees may grant either general or specific pre-approval of other audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include services such as issuing consents for the inclusion of audited financial statements with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.

Non-Audit Services

The Audit Committees may provide either general or specific pre-approval of any non-audit services to the Funds and its Service Affiliates if the Audit Committees believe that the provision of the service will not impair the independence of the Auditor, is consistent with the SEC’s Rules on auditor independence, and otherwise conforms to the Audit Committees’ general principles and policies as set forth herein.

Audit-Related Services

“Audit-related services” are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements or that are traditionally performed by the independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; and agreed-upon procedures related to mergers, compliance with ratings agency requirements and interfund lending activities.

Tax Services

“Tax services” include, but are not limited to, the review and signing of the Funds’ federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committees will scrutinize carefully the retention of the Auditor in connection with a transaction initially recommended by the Auditor, the major business purpose of which may be tax avoidance or the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committees will consult with the Funds’ Treasurer (or his or her designee) and may consult with outside counsel or advisors as necessary to ensure the consistency of Tax services rendered by the Auditor with the foregoing policy.

No Auditor shall represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims.

Under rules adopted by the Public Company Accounting Oversight Board and approved by the SEC, in connection with seeking Audit Committees’ pre-approval of permissible Tax services, the Auditor shall:

 

  1. Describe in writing to the Audit Committees, which writing may be in the form of the proposed engagement letter:

 

  a. The scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the Fund, relating to the service; and

 

  b. Any compensation arrangement or other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the Auditor and any person (other than the Fund) with respect to the promoting, marketing, or recommending of a transaction covered by the service;

 

  2. Discuss with the Audit Committees the potential effects of the services on the independence of the Auditor; and

 

  3. Document the substance of its discussion with the Audit Committees.

All Other Auditor Services

The Audit Committees may pre-approve non-audit services classified as “All other services” that are not categorically prohibited by the SEC, as listed in Exhibit 1 to this policy.

Pre-Approval Fee Levels or Established Amounts

Pre-approval of estimated fees or established amounts for services to be provided by the Auditor under general or specific pre-approval policies will be set periodically by the Audit Committees. Any proposed fees exceeding 110% of the maximum estimated pre-approved fees or established amounts for pre-approved audit and non-audit services will be reported to the Audit Committees at the quarterly Audit Committees meeting and will require specific approval by the Audit Committees before payment is made. The Audit Committees will always factor in the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services and in determining whether to approve any additional fees exceeding 110% of the maximum pre-approved fees or established amounts for previously pre-approved services.

Procedures

Generally on an annual basis, Invesco Advisers, Inc. (“Invesco”) will submit to the Audit Committees for general pre-approval, a list of non-audit services that the Funds or Service Affiliates of the Funds may request from the Auditor. The list will describe the non-audit services in reasonable detail and will include an estimated range of fees and such other information as the Audit Committee may request.

Each request for services to be provided by the Auditor under the general pre-approval of the Audit Committees will be submitted to the Funds’ Treasurer (or his or her designee) and must include a detailed description of the services to be rendered. The Treasurer or his or her designee will ensure that such services are included within the list of services that have received the general pre-approval of the Audit Committees. The Audit Committees will be informed at the next quarterly scheduled Audit Committees meeting of any such services for which the Auditor rendered an invoice and whether such services and fees had been pre-approved and if so, by what means.

Each request to provide services that require specific approval by the Audit Committees shall be submitted to the Audit Committees jointly by the Fund’s Treasurer or his or her designee and the Auditor, and must include a joint statement that, in their view, such request is consistent with the policies and procedures and the SEC Rules.

Each request to provide tax services under either the general or specific pre-approval of the Audit Committees will describe in writing: (i) the scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the audit client, relating to the service; and (ii) any compensation arrangement or other agreement between the Auditor and any person (other than the audit client) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will discuss with the Audit Committees the potential effects of the services on the Auditor’s independence and will document the substance of the discussion.

Non-audit services pursuant to the de minimis exception provided by the SEC Rules will be promptly brought to the attention of the Audit Committees for approval, including documentation that each of the conditions for this exception, as set forth in the SEC Rules, has been satisfied.

On at least an annual basis, the Auditor will prepare a summary of all the services provided to any entity in the investment company complex as defined in section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of the engagement and the fees associated with those services.

The Audit Committees have designated the Funds’ Treasurer to monitor the performance of all services provided by the Auditor and to ensure such services are in compliance with these policies and procedures. The Funds’ Treasurer will report to the Audit Committees on a periodic basis as to the results of such monitoring. Both the Funds’ Treasurer and management of Invesco will immediately report to the chairman of the Audit Committees any breach of these policies and procedures that comes to the attention of the Funds’ Treasurer or senior management of Invesco.

Exhibit 1 to Pre-Approval of Audit and Non-Audit Services Policies and Procedures

Conditionally Prohibited Non-Audit Services (not prohibited if the Fund can reasonably conclude that the results of the service would not be subject to audit procedures in connection with the audit of the Fund’s financial statements)

 

  •   Bookkeeping or other services related to the accounting records or financial statements of the audit client

 

  •   Financial information systems design and implementation

 

  •   Appraisal or valuation services, fairness opinions, or contribution-in-kind reports

 

  •   Actuarial services

 

  •   Internal audit outsourcing services

Categorically Prohibited Non-Audit Services

 

  •   Management functions

 

  •   Human resources

 

  •   Broker-dealer, investment adviser, or investment banking services

 

  •   Legal services

 

  •   Expert services unrelated to the audit

 

  •   Any service or product provided for a contingent fee or a commission

 

  •   Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or aggressive tax position transactions, a significant purpose of which is tax avoidance

 

  •   Tax services for persons in financial reporting oversight roles at the Fund

 

  •   Any other service that the Public Company Oversight Board determines by regulation is impermissible.

 

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 November 21, 2014, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the PEO and PFO, to assess the effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of November 21, 2014, the Registrant’s disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure.

 

(b) There have been no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

ITEM 12. EXHIBITS.

 

12(a) (1) Code of Ethics.

 

12(a) (2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.

 

12(a) (3) Not applicable.

 

12(b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Registrant: AIM International Mutual Funds (Invesco International Mutual Funds)

 

By:   /s/ Philip A. Taylor
 

 

  Philip A. Taylor
  Principal Executive Officer
Date:   January 9, 2015

Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

By:   /s/ Philip A. Taylor
 

 

  Philip A. Taylor
  Principal Executive Officer
Date:   January 9, 2015

 

By:   /s/ Sheri Morris
 

 

  Sheri Morris
  Principal Financial Officer
Date:   January 9, 2015

EXHIBIT INDEX

 

12(a) (1)    Code of Ethics.
12(a) (2)    Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.
12(a) (3)    Not applicable.
12(b)    Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940.