Invesco Perpetual Select Trust plc ANNUAL FINANCIAL REPORT YEAR ENDED 31 MAY 2020 The Company in Brief Nature of the Company Invesco Perpetual Select Trust plc (the ‘Company’) is a public listed Investment Company whose shares are traded on the London Stock Exchange. The business of the Company is to invest shareholders’ funds with the aim of spreading investment risk and generating returns for shareholders. The Company has an indefinite life and is intended as a long-term investment vehicle. The Company provides shareholders with a choice of investment policies and objectives, each intended to generate attractive risk-adjusted returns from segregated portfolios. The Company’s share capital comprises the following four Share classes, each of which has its own separate Portfolio of assets and liabilities: • UK Equity Share Portfolio www.invesco.co.uk/selectuk • Global Equity Income Share Portfolio www.invesco.co.uk/selectglobal • Balanced Risk Allocation Share Portfolio www.invesco.co.uk/selectbr • Managed Liquidity Share Portfolio www.invesco.co.uk/selectml Investment Policy The Company’s Investment Policy, which includes objectives, policies, risks and investment limits for the Company and the separate Portfolios, is disclosed in full on pages 32 to 35. Borrowings and Gearing The two equity portfolios may use bank borrowings, the proceeds from which can be invested, gearing up exposure to the stock market with the aim of enhancing returns to shareholders. The Balanced Risk Allocation portfolio is geared by means of the financial derivative instruments used to implement its investment policy. Business Model The Company has contracted with an external investment manager, Invesco Fund Managers Limited (the ‘Manager’), to manage its investments and for the Company’s general administration. Other administrative functions are contracted to external service providers. The Company has a Board of non-executive directors who oversee and monitor the activities of the Manager and other service providers on behalf of shareholders and ensure that the investment policy is adhered to. The Company has no employees. Share Class Conversion The Company enables shareholders to alter their asset allocation to reflect their views of prevailing markets through the opportunity to convert between Share classes every three months, on or around 1 February, 1 May, 1 August and 1 November each year. Notice from a shareholder to convert any class of Share on any conversion date will be accepted up to ten days prior to the relevant conversion date. Forms for conversion are available on the web pages of all the Share classes on the Manager’s website (see above) and from the Company Secretary. Conversion from one class of Shares into another will be on the basis of a ratio derived from the prevailing underlying net asset value of each class of relevant Share, calculated shortly before the date of conversion. The Directors have been advised that conversion of one class of Share into another will not be treated as a disposal for the purposes of UK Capital Gains Tax. The Company’s four Share classes are each eligible for investment in an ISA and qualify to be considered as mainstream investment products suitable for promotion to retail investors. Front Cover: Close up of Mica Crystals IP Select_pp01_31.qxp 03/08/2020 11:50 Page 01

Contents

02 Financial Performance 03 Chairman’s Statement 06 Market and Economic Background 07 UK Equity Share Portfolio: 07 Performance Record 08 Manager’s Report 12 List of Investments 13 Income Statement UK EQUITY 13 Summary of Net Assets 13 Summary of Changes in Net Assets 14 Global Equity Income Share Portfolio: 14 Performance Record 15 Manager’s Report 19 List of Investments

INCOME 20 Income Statement 20 Summary of Net Assets GLOBAL EQUITY 20 Summary of Changes in Net Assets 21 Balanced Risk Allocation Share Portfolio:

STRATEGY 21 Performance Record 22 Manager’s Report 25 List of Derivative Instruments 26 List of Investments 27 Income Statement ALLOCATION

BALANCED RISK 27 Summary of Net Assets 27 Summary of Changes in Net Assets 28 Managed Liquidity Share Portfolio: 28 Performance Record 29 Manager’s Report 31 List of Investments 31 Income Statement 31 Summary of Net Assets 31 Summary of Changes in Net Assets MANAGED LIQUIDITY 32 Business Review

46 Directors 47 The Company’s Governance Framework 48 Corporate Governance Statement 49 Audit Committee Report 52 Directors’ Report 62 Statement of Directors’ Responsibilities

GOVERNANCE 63 Directors’ Remuneration Report

66 Independent Auditor’s Report 74 Income Statement 75 Statement of Changes in Equity 76 Balance Sheet

FINANCIAL 78 Cash Flow Statement 79 Notes to the Financial Statements

104 Notice of Annual General Meeting 109 Advisers and Principal Service Providers 110 Shareholder Information

FOR 111 Glossary of Terms and Alternative Performance Measures 115 Alternative Investment Fund Managers Directive Disclosures INFORMATION INFORMATION SHAREHOLDERS

If you have any queries about Invesco Perpetual Select Trust plc or any of the other specialist funds managed by Invesco, please contact the Invesco Client Services team on: ☎ 0800 085 8677 www.invesco.co.uk/investmenttrusts

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STRATEGY

FINANCIAL PERFORMANCE

CUMULATIVE TOTAL RETURNS(1)(2) TO 31 MAY 2020 UK Equity Share Portfolio ONE THREE FIVE YEAR YEARS YEARS Net Asset Value –12.4% –15.7% 1.4% Share Price –16.2% –18.6% –2.5% FTSE All–Share Index –11.2% –8.4% 6.9%

Global Equity Income Share Portfolio ONE THREE FIVE YEAR YEARS YEARS Net Asset Value –6.4% –0.4% 28.3% Share Price –6.1% –0.8% 26.3% MSCI World Index (£) 8.9% 24.1% 64.0%

Balanced Risk Allocation Share Portfolio ONE THREE FIVE YEAR YEARS YEARS Net Asset Value –3.1% 0.3% 9.7% Share Price –6.9% –3.4% 6.0% Merrill Lynch 3 month LIBOR plus 5% per annum 5.9% 17.1% 28.2%

Managed Liquidity Share Portfolio ONE THREE FIVE YEAR YEARS YEARS Net Asset Value 1.1% 2.7% 2.7% Share Price 1.6% 1.6% 1.2%

YEAR END NET ASSET VALUE, SHARE PRICE AND DISCOUNT NET ASSET SHARE VALUE PRICE SHARE CLASS (PENCE) (PENCE) DISCOUNT UK Equity 145.8 139.5 (4.3)% Global Equity Income 178.5 176.5 (1.1)% Balanced Risk Allocation 135.1 129.0 (4.5)% Managed Liquidity 104.4 101.5 (2.8)%

(1) Alternative Performance Measure (APM). See Glossary of Terms and Alternative Performance Measures on pages 111 to 114 of the financial report for details of the explanation and reconciliations of APMs. (2) Source: Refinitiv.

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STRATEGY

CHAIRMAN’S STATEMENT

The Company The Company’s investment objective is to provide shareholders with a choice of investment strategies and policies, each intended to generate attractive risk-adjusted returns. The Company’s share capital comprises four Share classes: UK Equity Shares, Global Equity Income Shares, Balanced Risk Allocation Shares and Managed Liquidity Shares, each of which has its own separate portfolio of assets and attributable liabilities. The investment objectives and policies of all of the Portfolios are set out on pages 32 to 35. The Company enables shareholders to adjust their asset allocation to reflect their views of prevailing market conditions. As set out on the inside of the front cover, shareholders have the opportunity to convert between Share classes, free of UK capital gains tax, every three months. Performance The NAV total return of the UK Equity Share Portfolio over the year was –12.4%, which compares with the total return from its benchmark, the FTSE All-Share Index, of –11.2%. The share price total return was –16.2%. The NAV total return of the Global Equity Income Share Portfolio over the year was –6.4%, which compares with the total return from its benchmark, the MSCI World Index (£), of +8.9%. The share price total return was –6.1%. The NAV total return of the Balanced Risk Allocation Share Portfolio was –3.1%, which compares with its benchmark, Merrill Lynch 3 months LIBOR plus 5%, return of +5.9%. The share price total return was –6.9%. The NAV total return of the Managed Liquidity Share Portfolio was +1.1%. The share price total return was +1.6%. It is extremely disappointing, both for the Board and for shareholders, to report on another year in which all three Portfolios based on risk assets underperformed their benchmarks. The Board is very aware that performance has been decidedly unsatisfactory over an extended period. Our Manager has taken steps to address the situation with some personnel changes and other initiatives and we will be closely monitoring the outcomes. At the half year the UK Equity Portfolio was performing well, but this trend reversed in the second half of the financial year as equity markets fell in response to the Covid-19 pandemic. The sell-off impacted almost every stock, but domestically orientated companies, in which the Portfolio was overweight, were hit particularly hard. The negative returns were exacerbated by the gearing employed during this period. The Global Equity Income Portfolio was also impacted by the level of gearing during the sell-off. The Portfolio was particularly affected by the underweight exposure, relative to the benchmark MSCI World Index, to the US market, which continued to outperform markets in the UK, Europe and Asia. As I reported in my interim statement, investment management responsibility for the Global Equity Income Portfolio moved to Stephen Anness in January of this year. Although the underweight position in the US is now less pronounced, it has still impacted returns. The lockdowns across the world in response to the Covid-19 pandemic led to a significant decline in economic activity. As a result demand for oil and other commodities fell sharply, and prices dropped. The decline in commodity prices, along with the collapse in equity markets, resulted in a negative return from the Balanced Risk Allocation Portfolio. These declines in equities and commodities were only partially offset by the strong return from government bonds during the period. Performance of the Managed Liquidity Portfolio was positive, despite the low interest rate environment. The underlying portfolio of the principal investment is primarily invested in short dated bonds and, therefore, this Share class has a lower risk profile than the Company’s other three Share classes. Nevertheless, this is not a cash fund, and as such is not without risk to capital. Outlook In my interim statement I suggested we should expect a period of consolidation in equity and bond markets following a decade of stellar returns. At the time, I also noted that the Covid-19 outbreak seemed to have been contained in Asia. Little did I anticipate that the virus would spread rapidly

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STRATEGY

CHAIRMAN’S STATEMENT continued

throughout the world, resulting in an unprecedented collapse in economic activity, and equity markets. Although there has been some recovery in equity prices, most markets are still somewhat below the highs reached earlier this year. Markets have moved up in response to government stimulus packages and in anticipation of economies recovering as lockdown conditions ease in Europe and North America. Nevertheless, considerable uncertainty remains as to how quickly GDP will return to pre-Covid-19 levels. Likewise, some areas of the global economy, such as travel, leisure and hospitality, could be impacted for a significant period of time. The ways people work, shop and enjoy leisure time are likely to change, even when the pandemic has passed. In such periods of social and economic dislocation, there will be ‘winners’ and ‘losers’ and business models will have to adapt rapidly. It is incumbent on our portfolio managers to analyse these trends and construct portfolios which will outperform in these changed circumstances. Since the inception of the Company, the various Portfolios have produced positive returns. However, in recent years the portfolios investing in risk assets have all underperformed their respective benchmarks over the industry standard reporting periods of one, three and five years. To some extent this outcome reflects the continued outperformance of growth stocks over the value stocks which our equity portfolio managers have favoured. Although the impact of this investment style on performance is understandable, the Board remains concerned about the returns being generated. Invesco has recently restructured its Henley investment centre and the Board will be monitoring the impact of these changes on the management of the Portfolios. It is important to see an improvement in performance and the Board will update shareholders in due course. The impact of the Covid-19 pandemic has been profound in many ways and the implications for societies, economies and markets are very uncertain. It would be foolhardy to make bold predictions as to what changes will happen as a result of this dislocation. Nevertheless, societies and economies will adjust, GDP growth will resume and, in the longer term, markets will recover. The Company offers a unique mix of strategies and its structure, with opportunities to switch between Share classes, makes it ideal for investors who want enhanced control of their investments. The Board We attempted to recruit a new non-executive director last year, but although we identified a very strong candidate she was ultimately unable to accept the position. Resumption of the recruitment process has been postponed for the time being because of the difficulty of conducting interviews in lockdown conditions. However, we intend for the process to resume later this year. In the meantime, Alan Clifton, who will be the next Director to retire, has agreed to remain on the Board until a new Director is appointed. Dividends We have continued to apply the dividend policy adopted five years ago, and supported by shareholder advisory votes, whereby for both UK Equity and Global Equity Income Shares, dividends are paid by way of three equal interim dividends declared in July, October and January with a ‘wrap-up’ fourth interim declared in April. For the year under review the first three dividends declared for the UK Equity Shares were each 1.5p per share and for the Global Equity Income Shares 1.55p per share. The fourth dividends were 2.1p per share for the UK Equity Shares, bringing the total to 6.6p per share for the year, and 2.4p per share for the Global Equity Income Shares, bringing that total to 7.05p per share for the year. There were a number of dividend cuts in the last quarter of the Company’s financial year, because of Covid-19, meaning a greater contribution from capital was required for the Company’s dividends this year to meet the Board’s target level. For the Global Equity Income Shares a contribution from capital of approximately 0.4p per share was required to achieve the dividend level (2019: nil), with another 1.2p per share coming from brought forward revenue reserve, and for the UK Equity Shares a contribution from capital of approximately 2.5p per share was required (2019: 0.9p). We intend to continue with the current policy and investors are again being given advisory votes on it. However, whereas in recent years we have set a target of at least maintaining the dividend level from year to year for each of the equity Portfolios, with the current uncertainty of future income flows because of Covid-19 the Directors have not set dividend targets for the year to 31 May 2021. The first interim dividends declared in respect of the year to May 2021, which will be paid on 17 August 2020 to shareholders on the register on 24 July 2020, were 1.50p per share for UK Equity and 1.55p per share for Global Equity Income.

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STRATEGY

It continues to be the case that in order to maximise the capital return on the Balanced Risk Allocation Shares, the Directors only intend to declare dividends on them to the extent required, having taken into account the dividends paid on the other Share classes, to maintain the Company’s status as an investment trust. No dividends have been paid on the Balanced Risk Allocation Shares. I am pleased to report that notwithstanding the continued low interest rate environment the Managed Liquidity Portfolio generated sufficient net revenue in the past year for the Board to declare a dividend of 0.8p per Managed Liquidity Share, which was paid on 15 May 2020. It remains the Directors’ intention to distribute substantially all net revenues earned by the Portfolio going forward. Given the quantum involved it is unlikely that such payments will be more frequent than annually and may indeed be less frequent. Discount Policy The Company adopted a discount control policy for all four Share classes in January 2013, whereby the Company offers to issue or buy back Shares of all classes with a view to maintaining the prices of the Shares at close to their respective net asset values. The policy has been successful to date. The continued implementation of this policy is dependent upon the Company’s authority to buy back Shares and the Directors’ authority to issue Shares for cash on a non-preemptive basis being renewed at general meetings of the Company. Share Capital Movements During the year to 31 May 2020, the Company bought back and placed in treasury 1,460,772 UK Equity Shares, 3,213,136 Global Equity Income Shares, 164,000 Balanced Risk Allocation Shares and 875,893 Managed Liquidity Shares. Other than as an artefact of the share conversion process, no Shares were issued or sold from treasury and no treasury shares were cancelled. Since the year end a further 1,698,000 UK Equity Shares and 1,311,000 Global Equity Income Shares have been bought back into treasury. The Board intends to use the Company’s buy back and issuance authorities when this will benefit existing shareholders as a whole and to operate the discount control policy mentioned above, and will ask shareholders to renew the authorities as and when appropriate. Share Class Conversions The Company enables shareholders to adjust their asset allocation to reflect their views of prevailing market conditions. Shareholders have the opportunity to convert their holdings of Shares into any other class of Share without incurring any tax charge (under current legislation). The conversion dates for the forthcoming year are as follows: 3 August 2020; 2 November 2020; 1 February 2021; and 4 May 2021. Should you wish to convert Shares at any of these dates, conversion forms, which are available on the Manager’s website at www.invesco.co.uk/investmenttrusts, or CREST instructions must be received at least 10 days before the relevant conversion date. Annual General Meeting (‘AGM’) The business of the AGM is summarised in the Directors’ Report on pages 59 to 61. The AGM will be held at 43-45 Portman Square, London W1H 6LY at 11.30am on 6 October 2020. It is hoped that by that date restrictions due to Covid-19 will have eased sufficiently for the AGM to be held in the usual way and, if so, shareholders are encouraged to attend. However, should this not be the case the AGM may have to be held as a closed meeting. In this eventuality, or if shareholders are reticent about using public transport to reach the meeting venue, it is recommended that shareholders exercise their votes by means of registering them with the Company’s registrar ahead of the meeting, online or by completing paper proxy forms, and appoint the Chairman of the meeting as their proxy. Recognising the potential for shareholders to be unable to attend and ask questions, the Board invites anyone with questions on the business of the meeting, or otherwise, to address them to the Company Secretary, by email to [email protected] or, by letter, to 43-45 Portman Square, London W1H 6LY. Questions will be relayed to the Board and responses provided. The Board recommends that shareholders vote in favour of all resolutions as each of the Directors intends to do in respect of their own shares.

Graham Kitchen Chairman 31 July 2020

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STRATEGY

STRATEGIC REPORT MARKET AND ECONOMIC BACKGROUND

Global equity markets have been impacted by a range of issues over the last 12 months, from political issues, to fears of recession and trade wars, but these were all surpassed by Covid-19. This challenge has been unique in our lifetimes and it is perhaps a surprise that global equity markets have been so resilient. The period started on a cautious note. Through the summer of 2019 markets were weak as the global economy showed signs of a modest slowdown, especially in manufacturing sectors. This was reflected in a further decline in bond yields in many markets and yield curve inversion in the US and UK, a sign to many market participants of impending recession. In the late summer central banks, in particular the US Federal Reserve, once again stepped in with interest rate cuts and measures to improve liquidity in order to ensure the record-breaking global expansion would continue into 2020. These measures, together with signs of a modest rapprochement between the US and China on trade and a Brexit deal that promised to avoid a UK exit from the European Union on World Trade Organisation terms, further encouraged optimism for corporate earnings in the year ahead. Common to all global equity markets was the persistent theme of stocks offering secular growth, or positive correlation to bond markets, performing well, whilst stocks and sectors more sensitive to the global economy or with more volatile earnings streams generally underperformed, almost regardless of valuation. And so to 2020. While US-China trade relations, Brexit and domestic politics were known uncertainties in 2019, 2020 has delivered the market shock that no one could have foreseen. Global markets made new highs in February, despite news of a highly infectious virus in China and the severe lockdown imposed in some regions of the country. We had all lived through SARS in 2004, H1N1 in 2010 and MERS in 2012, none of which had a material impact on markets outside Asia. This time it was different. Markets were affected globally as news of the extent of the spread of Covid-19 to Europe and the resulting lockdowns and travel restrictions were absorbed. The eruption of an oil price war between Saudi Arabia and Russia was also unhelpful for markets. The UK equity market fell by over 25% in the quarter to 31 March 2020, posting its biggest quarterly drop for more than three decades as the global economic costs of the Covid-19 pandemic continued to mount. Between 23 January 2020, the date that the World Health Organisation first met in Geneva to discuss the gathering crisis, and the low point on 23 March, the FTSE All-Share Index fell by 34.1%. Extreme levels of volatility were witnessed with large swings in prices on an intraday basis. This was reflected globally. Equity markets fell 35% in the four weeks to mid-March. The impact was especially acute in those sectors most exposed, such as travel and leisure, banks and energy. Although, in contrast, a range of e-commerce and certain healthcare stocks were bolstered by the perception that they would benefit from the lockdown and increased healthcare spending. In April and May, equity markets staged something of a recovery, on fresh stimulus measures and hopes that economies were on the mend as lockdowns eased. In June, the UK market was within around 16% of its level in February before the Covid-19 correction and the MSCI World Index, in sterling terms, was all the way back to that level. In large part this can be attributed to the expected impact of a dramatic easing of fiscal and monetary policies in all the major economies. Investors seem to have pinned their hopes on a swift economic rebound, but some have been left wondering if this market rally has come too far, too fast. Investors have seemingly shrugged off the economic cost of the pandemic, which is likely to be significant. The UK is expected to face a severe recession and gross domestic product (GDP) is estimated to fall by around 16% in the second quarter, and by 8% for the year (Bloomberg consensus as at 29 May 2020). However, the strength and depth of the measures announced in the UK by the Chancellor and the Bank of England should provide material support to employment, income and bank lending to the real economy, that will be of great benefit in enabling many businesses to navigate through to the recovery phase. Overall, the financial response from central banks and governments around the world was well coordinated and powerful, unique in our opinion outside of wartime. Through late March, April and May investors were reassured of both the stability of the financial system and the path to eventual economic recovery. Share prices recovered sharply, recovering much lost ground, particularly in the US, Japan and Asia. However, many stocks and sectors within retail and travel and leisure, whose prospects are seen to be permanently impaired or their survival threatened, still trade at less than half the value they did but four short months ago.

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STRATEGY UK EQUITY

STRATEGIC REPORT UK EQUITY SHARE PORTFOLIO PERFORMANCE RECORD

Total Return For the year ended 31 May

2020 2019 2018 2017 2016 Net Asset Value –12.4% –4.9% 1.1% 22.0% –1.4% Share Price –16.2% –3.1% 0.3% 22.5% –2.2% FTSE All-Share Index –11.2% –3.2% 6.5% 24.5% –6.3% Source: Refinitiv.

Revenue return per share 4.12p 5.73p 5.49p 5.38p 5.81p Dividend 6.60p 6.60p 6.45p 6.25p 6.15p

Ten Year Total Return Rebased to 100 at 31 May 2010

340 Net Asset Value Share Price 310 FTSE All-Share Index

280

250

220

190

160

130

100

70 May-10 May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18 May-19 May-20 Source: Refinitiv.

Five Year Dividend History

6.6p

6.5p

6.4p

6.3p

6.2p

6.1p

6.0p 2016 2017 2018 2019 2020

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STRATEGY UK EQUITY

STRATEGIC REPORT UK EQUITY SHARE PORTFOLIO MANAGER’S REPORT

Investment Objective The investment objective of the UK Equity Portfolio is to provide shareholders with an attractive real long-term total return by investing primarily in UK quoted equities. Portfolio Review The Portfolio modestly underperformed its benchmark over the year to 31 May 2020, with a net asset value total return of –12.4% compared with –11.2% for the FTSE All-Share Index, having been ahead by a similar margin before the Covid-19 related market disruption.

12-month Performance (Total Return) 120 Invesco Perpetual Select Trust UK Equity Portfolio NAV FTSE All-Share Index

110

100

90

80

70

60

31/05/19 30/06/19 31/07/19 31/08/19 30/09/19 31/10/19 30/11/19 31/12/19 31/01/20 29/02/20 31/03/20 30/04/20 31/05/20

Source: Refinitiv. Performance rebased to 100. At the sector level, the largest source of positive performance was the Portfolio’s exposure to the basic materials sector. The Portfolio has a large overweight exposure to basic materials (relative to the FTSE All-Share Index), almost entirely represented by holdings in four North American gold mining companies, namely Barrick Gold, Newmont, Wheaton Precious Metals and Agnico Eagle Mines. In times of crisis, equities tend to fall, and gold goes up, and this pattern has been borne out in recent months. As a perceived ‘safe-haven’ asset class, gold mining companies are a good portfolio diversifier in that they are inversely correlated with the broader market. The shock to global economies resulting from the global pandemic has served to accelerate the conditions favouring gold and, since gold miners are geared to the gold price, their share prices have performed very strongly. Each of these companies is at the low end of the cost curve, has a conservative balance sheet, a strong management team and a very clear capital allocation framework. Media group Future and veterinary services firm CVS were also strong performers. Future has continued to grow both organically and via acquisition, with its full year results in November showing a near trebling of profits. More recently the company has seen an acceleration of audience growth as a result of Covid-19, which has helped offset the significant slowdown in magazine sales as high-street and travel-hub retailers have been closed. The recently completed acquisition of TI Media should deliver significant synergies and help to underpin the outlook for earnings. The performance of veterinary business CVS improved markedly under new management, resulting in a strong year for the shares, but the impact of Covid-19 lead to a reduction in both small animal billable visits and revenue. As a result, the decision was taken to temporarily close half of their small animal practices during the lockdown and cash management became the priority. More recently restrictions on vet appointments have been eased and trading is beginning to normalise. The company should emerge from the crisis relatively unscathed.

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STRATEGY UK EQUITY

Other notable contributors to performance included retailers JD Sports Fashion and Tesco. JD Sports Fashion has benefited from the casualisation of fashion and the growth in ‘athleisure’ clothing in recent years. Since the advent of Covid-19, with its stores closed, the company took swift action to control its cost base and to maintain its capability to fulfil online orders, which have been extremely strong. There appears to be significant opportunity for the company to leverage its relationships with key brand partners and take market share in both online and offline sales. Meanwhile, Tesco reported a boost in sales on the back of panic buying in the early days of the pandemic and has benefited from its strong online presence, but the impact of additional payroll costs as a result of recruitment to replace self-isolating employees, distribution costs and store expenses is not insignificant. The company believes that if customer behaviour returns to normal by August it is likely that the additional cost headwinds will largely be offset by the benefits of food volume increases and business rates relief. Their dividend was maintained. Fevertree Drinks, which produces soft drinks and mixers, was another strong performer. Against the challenging backdrop of recent months, sales benefited from the initial buying ahead of lockdown and subsequent ‘at-home’ consumption has remained robust, mitigating lost sales from shuttered pubs, bars and restaurants. The firm appears to be well positioned to manage its way through the current situation. It is a global business with revenue diversified across regions, channels and customers and has a strong cash position. The long-term trend towards premium spirits and premium long mixed drinks continues and the Group will be well placed when the disruption and uncertainty abate. Conversely, the Portfolio’s holding in floorings manufacturer Victoria proved to be disappointing over the 12 months. Whilst short term trading has been affected by the impact of Covid-19, the long-term outlook appears positive. The wide geographic spread of both its manufacturing operations and its customers means that the virus’s impact on Group revenue (and its subsequent recovery) is likely to occur at varying times and not simultaneously. In the meantime, Victoria enjoys comparatively low operational gearing across its business and, whilst the balance sheet does carry debt, it has sufficient cash on hand to support the business and management is taking every precaution to protect the liquidity of the Group. Bushveld Minerals, which mines and processes vanadium, detracted from performance over the period. The share price weakened during 2019, in tandem with the price of vanadium, and then fell sharply as the company shut down production in accordance with the South African Government’s lockdown instructions. The company is well capitalised, operates at the low end of the cost curve and is now ramping production back up to normal levels. Demand for and the price of vanadium should be underpinned as end-markets for steel recover and may benefit in coming years if the nascent market in grid-scale vanadium redox flow batteries develops further. Coats, which manufactures thread, zips and trim, was also among the larger detractors from performance. For the period from 1 January 2020 to 30 April 2020, sales declined 17% year-on-year, with the month of April down around 50% due to demand and supply impacts from the pandemic. The company had 15 manufacturing sites under enforced government closure. All but one of these have now reopened and cost mitigating actions taken by management should help in the months ahead. Importantly, the company’s balance sheet remains strong with comfortable levels of liquidity and from its starting position as clear global leader it looks set to take further market share. In terms of sector exposure, the Portfolio’s holdings of banks (Barclays, Secure Trust Bank, Royal Bank of Scotland) were negative for performance over the 12 months, mitigated in relative terms by not holding HSBC or Lloyds. The portfolio’s limited exposure to health care (specifically not holding AstraZeneca or GlaxoSmithKline) was also a detractor to relative performance given that health care was the strongest performing sector over the 12 month period. At the beginning of 2020 gearing was around 6% and edged upwards slightly towards 8% as Covid-19 disruption gradually unfolded. As the extent of the threat from Covid-19 became apparent exposure to some of the stocks and sectors that looked likely to be most heavily impacted was reduced, with that capital deployed into businesses that looked more resilient. As the UK market recovered gearing was increased, ending the period at around 10%. Looking at the period overall the deployment of the gearing was not helpful to performance, but in more recent months, as the FTSE All-Share has recovered and performance has improved, gearing has made a positive contribution.

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STRATEGY UK EQUITY

STRATEGIC REPORT UK EQUITY SHARE PORTFOLIO MANAGER’S REPORT continued

Indicative Performance Attribution for the year to 31 May 2020 Portfolio Average Over/ Portfolio Sector Under Weight Relative Returns Relative to Impact on Relative to the Benchmark Benchmark Returns† Performance

–16 –8 0 8 16 –80 –40 0 40 80 –8 –4 0 4 8 Basic Materials Consumer Goods Consumer Services Financials Health Care Industrials Oil & Gas Technology Telecommunications Utilities Cash* * Cash reflects gearing effect from borrowing. † Relative returns can sometimes appear anomalous because of timing effects, particularly when portfolio allocation changes coincide with sector volatility. Outlook Economies and markets remain in the grip of perhaps the greatest global crisis since the late 1920s. In the face of human tragedy from Covid-19, the response from governments around the world was to shut down swathes of the global economy. With the gradual easing of these restrictions now underway, we await the evidence from lagged economic data (expected to include millions of job losses and many thousands of insolvencies) as well as company earnings to judge the full impact. Meanwhile, equity markets have made up much of the lost ground and implicitly are relying on a sharp recovery. Estimates of second quarter UK GDP range from around -20% to -40% and economists are sparring over whether forthcoming quarters will resemble a V, a U, a back-to-front or an L, as well as the timing. There is risk on all sides; risk of further downside should this evolve into a multi-year rolling lockdown, but also upside risk if government priorities shift to restarting the economy or should a medical breakthrough appear. Whilst my approach is centred around traditional, bottom up ‘stock picking’ and would therefore normally place less emphasis on the macro outlook, there are from time to time major turning points at which macro events take on greater significance and lead to meaningful changes in the investment environment. Covid-19 is clearly one of these turning points. With no reliable insight into public policy or medical innovations, I have positioned the portfolio as best I can for the various possible scenarios. The changes made since February have de-risked the portfolio by reducing direct exposure to the worst affected sectors of the economy in favour of those that should prove resilient, but not to such an extent that the Portfolio would be left behind on the emergence of better news. In making these changes I have stuck rigidly to my valuation-based philosophy and only sold riskier shares at attractive relative prices and purchased their more defensive replacements at appealing absolute valuations. This will not change. In the midst of all this uncertainty, there is one issue on which I have strong conviction. The fiscal and monetary response has been emphatic and has represented an intervention by the authorities on an historic scale. However, this support comes at a cost. Both in the UK and elsewhere, these programmes have been funded by an expansion of central banks’ balance sheets on a hitherto unprecedented scale. In the US in particular, the pace of expansion (from below US$4 trillion to almost US$7 trillion) and the broadening of the assets that qualify for purchase has been breath- taking. As we await deteriorating economic data, governments’ tax bases have been dramatically reduced whilst their spending commitments have significantly increased. I believe that announcements of further stimulus are therefore inevitable. There will be more of the same, but we should also be prepared for various flavours of Modern Monetary Theory, be that something akin to Ben Bernanke’s famous helicopter money or direct monetisation of ballooning fiscal deficits on an ever-larger scale.

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The banks enter this crisis in a far stronger position to absorb the coming losses and are therefore more likely to lend to the real economy as it recovers. The US monetary base is already growing at twice the pace it did in 2009-2011 and four times the pace Japan’s has done during three decades of monetary experiment. There is no doubt that the environment today is deflationary and that is the direction for economic data in the near-term. But the ‘whatever-it-takes response’ has sown the seeds for that impending deflation to turn to inflation that will be very difficult to control at a desirable level. We have been used to monetary policy that has resembled fine tuning. This is closer to filling a hole in the ground by tipping soil from a 20 tonne truck: the hole will get filled but it will be impossible not to leave a large mound of soil where the hole used to be. I have long believed the US fiscal position, and therefore the dollar’s reserve currency status, to be unsustainable. The economic impact of the virus has brought forward the inevitable and condensed what might have taken several years into what is likely to be several quarters. We have just witnessed the effective unification of the US Treasury and the US Federal Reserve into a single force to fight deflation, to monetise government deficits and to lay the ground for recovery. It may very well succeed, but will in my view prove to be inflationary. Inflationary forces that were already in play from tariffs and the rolling back of globalisation will also remain once economies stabilise and recover. Real interest rates can be expected to be in significantly negative territory for an extended period as all this new debt is inflated away. The one currency that cannot be diluted in this way is gold. The portfolio’s four North American gold mining company holdings have performed their protective role admirably during this market rout and now represent around 15% of the portfolio. At the current gold price their valuations remain extremely attractive and if things develop as I anticipate, gold has further gains to make. These stocks continue to play a critical role and I intend to maintain the position at or around its current weighting for the foreseeable future. As the recovery has continued, I have maintained gearing at around 10%. This is in part a reflection of my view that equity markets will be buoyed in the near term by the fiscal and monetary stimulus that has been unleashed. It also reflects my confidence in the positioning of the portfolio and the prospects of the companies held. The outcome I expect will also be good for equities in general, certainly relative to (non-index-linked) bonds and cash. Within equities, inflation and negative real interest rates should prove helpful to the Value style relative to other investment styles. In the meantime, the recent changes I have made to increase the defensive allocation should offer protection as we face the potential of a deflationary shock. As the full impact of fiscal and monetary policy is felt in the coming years, changes may be required, but at this stage I believe that the portfolio is well balanced to mitigate risk and to generate attractive returns in such uncertain times.

James Goldstone Portfolio Manager 31 July 2020

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STRATEGIC REPORT UK EQUITY SHARE PORTFOLIO LIST OF INVESTMENTS AT 31 MAY 2020 Ordinary shares listed in the UK unless stated otherwise MARKET VALUE % OF COMPANY SECTOR † £’000 PORTFOLIO Barrick Gold – Canadian Listed Mining 2,852 5.5 British American Tobacco Tobacco 2,478 4.8 Barclays Banks 2,131 4.1 Tesco Food & Drug Retailers 2,080 4.0 SSE Electricity 1,857 3.6 BP Oil & Gas Producers 1,837 3.5 Newmont – US Listed Mining 1,814 3.5 Babcock International Aerospace & Defence 1,571 3.0 JD Sports Fashion General Retailers 1,542 3.0 Next General Retailers 1,536 2.9 Agnico Eagle Mines – Canadian Listed Mining 1,389 2.7 Future Media 1,296 2.5 Wheaton Precious Metals – Canadian Listed Mining 1,251 2.4 Royal Dutch Shell – B shares Oil & Gas Producers 987 1.9 Ultra Electronics Aerospace & Defence 985 1.9 Compass Travel & Leisure 984 1.9 Fevertree DrinksAIM Beverages 971 1.9 RELX Media 967 1.8 PureTech Health Pharmaceuticals & Biotechnology 884 1.7 CVSAIM General Retailers 856 1.6 Ashtead Support Services 853 1.6 Coats General Industrials 828 1.6 Johnson ServiceAIM Support Services 818 1.6 Phoenix Spree Deutschland Real Estate Investment & Services 814 1.6 Sigma CapitalAIM Financial Services 799 1.5 Chesnara Life Insurance 785 1.5 XPS Pensions Financial Services 772 1.5 MJ Gleeson Household Goods & Home Construction 747 1.4 National Grid Gas, Water & Multiutilities 725 1.4 Vodafone Mobile Telecommunications 712 1.4 PRS REIT Real Estate Investment Trusts 702 1.3 HomeServe General Retailers 681 1.3 Barratt Developments Household Goods & Home Construction 656 1.2 Bushveld MineralsAIM Mining 585 1.1 Pennon Gas, Water & Multiutilities 583 1.1 Royal Bank of Scotland Banks 575 1.1 Secure Trust Bank Banks 574 1.1 easyJet Travel & Leisure 529 1.0 DS Smith General Industrials 523 1.0 Essentra Support Services 506 1.0 Harworth Real Estate Investment & Services 498 1.0 Experian Support Services 485 0.9 Urban Logistics REIT Real Estate Investment Trusts 482 0.9 Burford CapitalAIM Financial Services 481 0.9 United Utilities Gas, Water & Multiutilities 475 0.9 McBride Household Goods & Home Construction 473 0.9 VictoriaAIM Household Goods & Home Construction 458 0.9 Legal & General Life Insurance 454 0.9 Countryside Household Goods & Home Construction 447 0.8 Sirius Real Estate Real Estate Investment & Services 438 0.8 Hays Support Services 412 0.8 DFS Furniture General Retailers 409 0.8 On the Beach Travel & Leisure 343 0.7 Pearson Media 317 0.6 Elementis Chemicals 288 0.6 IAG Travel & Leisure 264 0.5 TungstenAIM Financial Services 253 0.5 Sherborne Investors (Guernsey) C Financial Services 252 0.5 Safestyle UKAIM General Retailers 252 0.5 Alfa Financial Software Software & Computer Services 234 0.4 Hadrian’s Wall Secured Investments Equity Investment Instruments 146 0.3 Distribution Finance CapitalAIM Financial Services 141 0.3 Amigo Financial Services 49 0.1 N Brown General Retailers 20 – TruFinAIM Financial Services 15 –

Total Holdings 65 (2019: 63) 52,121 100.0

AIM Investments quoted on AIM † FTSE Industry Classification Benchmark.

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STRATEGIC REPORT UK EQUITY SHARE PORTFOLIO INCOME STATEMENT FOR THE YEAR ENDED 31 MAY 2020 2019 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL £’000 £’000 £’000 £’000 £’000 £’000 Losses on investments held at fair value – (7,847) (7,847) – (4,976) (4,976) (Losses)/gains on foreign exchange – (4) (4) – 4 4 Income 1,656 48 1,704 2,343 21 2,364 Investment management fees (88) (206) (294) (98) (228) (326) Other expenses (197) (3) (200) (199) (1) (200)

Net return before finance costs and taxation 1,371 (8,012) (6,641) 2,046 (5,180) (3,134) Finance costs (16) (40) (56) (55) (127) (182)

Return before taxation 1,355 (8,052) (6,697) 1,991 (5,307) (3,316) Tax (15) – (15) (9) – (9)

Return after taxation for the financial year 1,340 (8,052) (6,712) 1,982 (5,307) (3,325)

Return per ordinary share – note 7 4.12p (24.75)p (20.63)p 5.73p (15.34)p (9.61)p

SUMMARY OF NET ASSETS AT 31 MAY 2020 2019 £’000 £’000 Fixed assets 52,121 61,250 Current assets 236 4,056 Creditors falling due within one year, excluding borrowings (938) (670) Bank overdraft (2) – Bank loan (4,800) (7,350)

Net assets 46,617 57,286

Net asset value per share 145.8p 173.1p

Gearing: – gross 10.3% 12.8% – net 10.3% 12.0%

SUMMARY OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 MAY 2020 2019 £’000 £’000 Net assets brought forward 57,286 68,008 Shares bought back and held in treasury (2,463) (4,056) Share conversions 651 (1,062) Return after taxation for the financial year (6,712) (3,325) Dividend paid (2,145) (2,279)

Net assets at the year end 46,617 57,286

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STRATEGIC REPORT GLOBAL EQUITY INCOME SHARE PORTFOLIO PERFORMANCE RECORD

Total Return For the year ended 31 May 2020 2019 2018 2017 2016 Net Asset Value –6.4% –1.3% 7.8% 29.2% –0.2% Share Price –6.1% –0.1% 5.7% 31.1% –2.8% MSCI World Index (£) 8.9% 5.3% 8.2% 31.3% 0.7% Source: Refinitiv.

Revenue return per share 5.39p 6.90p 6.50p 5.62p 5.51p Dividend 7.05p 6.90p 6.70p 6.40p 6.00p

Ten Year Total Return Rebased to 100 at 30 November 2011 (change to current Global Equity Income investment policy)

310 Net Asset Value Share Price 280 MSCI World Index (£)

250

30 November 2011 220

190

160

130

100

70 May-10 May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18 May-19 May-20 Source: Refinitiv.

Five Year Dividend History

7.5p

7.0p

6.5p

6.0p

5.5p

5.0p 2016 2017 2018 2019 2020

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STRATEGIC REPORT GLOBAL EQUITY INCOME SHARE PORTFOLIO MANAGER’S REPORT

Investment Objective The investment objective of the Global Equity Income Share Portfolio is to provide an attractive and growing level of income return and capital appreciation over the long term, predominantly through investment in a diversified portfolio of equities worldwide. Portfolio Manager Change As announced by the Board in January, from the beginning of 2020 Stephen Anness became the designated manager of the Global Equity Income Portfolio, taking over from the global equity income group, which was chaired by Nick Mustoe. Based in Henley, Stephen joined Invesco in 2002 to work in the UK equities team and moved on to manage global equity portfolios in 2012. Stephen now leads the dedicated Global Equity team, which takes responsibility for research, portfolio construction and communications. Additional idea generation and market insights are provided by regional equity market specialists in the Henley Investment Centre. Portfolio Review The portfolio underperformed its reference benchmark in the 12 months to the end of May 2020. On a total return basis, the Portfolio’s net asset value fell by 6.4% over the 12 months to the end of May 2020 compared to a rise of 8.9% in the MSCI World Index (£, total return, net of withholding tax). 12-month Performance (Total Return) 120 Invesco Perpetual Select Trust Global Equity Income Portfolio NAV MSCI World Index (£)

110

100

90

80

70

31/05/19 30/06/19 31/07/19 31/08/19 30/09/19 31/10/19 30/11/19 31/12/19 31/01/20 29/02/20 31/03/20 30/04/20 31/05/20 Source: Refinitiv. Performance rebased to 100. Our investment process focusses on stocks that are attractively valued versus their history and the market, but which also pay attractive and growing dividends. Our valuation driven approach has been out of favour with the consensus for several years, but the last few months have been especially difficult. The early part of the period, through the summer of 2019, was dominated by concerns of a new global recession and an end to globalisation due to US-Sino trade conflicts. The collapse in bond yields around the world and yield curve inversions in the US and UK were additional harbingers of gloom and encouraged a further stampede into equities perceived to have low volatility of earnings and secular, bond-like characteristics, almost regardless of valuation. By the end of August, global equity markets were at record levels of bifurcation in terms of valuation spread between the most expensive and the cheapest stocks in the market. Our relative performance recovered somewhat through the autumn as evidence emerged of a stabilising global economy and renewed support from central banks. Several of our holdings in the banking sector, hitherto very much at the lower end of the valuation spectrum, such as BNP Paribas, JPMorgan Chase and Citigroup, performed strongly as financial results generally beat expectations and

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economic optimism improved. Other more economically sensitive stocks in the portfolio, unloved by consensus, such as Williams Sonoma, a US retailer, and Next in the UK, performed well, though the latter was also supported by some (temporary) resolution to the Brexit issue and a decisive election result in December 2019. We have, for a number of years, been overweight in the energy sector due to the relatively low valuation upon which the sector has traded and the high level of dividends it offered. We felt the scope for cost cutting had been underestimated and the market was overly pessimistic about the long term trajectory for oil and gas demand. Whilst we feel vindicated on the cost cutting and valuation issue, we must acknowledge that the supply of oil and gas has exceeded our expectations and this, together with ongoing reluctance of many investors to engage with the industry due to environmental concerns, has meant the sector has performed poorly. In January we made the decision to materially reduce our exposure as we did not see an attractive risk reward profile in the medium term to justify such a large overweight position. We disposed of our holdings in Chevron, Royal Dutch Shell and Equinor. We still have exposure to the sector through BP, Total and Lundin Energy, a low cost medium sized Swedish oil producer. As to the broader environmental challenges posed by the sector, we believe it appropriate for us to own and engage with these companies with the aim of shifting their emphasis over time to less carbon intensive energy exposures and to mitigate their carbon footprint today. As much as we may wish fossil fuels away, they will remain an important component of our economic well-being for some decades to come.

Indicative Performance Attribution for the year to 31 May 2020 Portfolio Average Over/ Portfolio Sector Under Weight Relative Returns Relative to Impact on Relative to the Benchmark Benchmark Returns† Performance –15 –10 –5 0 5 10 15 –80–400 40 80 –4 –2 0 2 4 Communication Services Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Real Estate Utilities Cash*

* Cash reflects gearing effect from borrowing. † Relative returns can sometimes appear anomalous because of timing effects, particularly when portfolio allocation changes coincide with sector volatility. As we entered 2020, we undertook a full portfolio review and decided to make some material changes in order to reduce risks that had dominated portfolio performance in previous years, such as over sensitivity to the oil price and interest rates. Whilst we acknowledge that the US market looks expensive in aggregate, we feel it contains many high quality cash generative businesses, not all of which are overvalued, and we have reduced the underweight to this market. Overall, we have sought to increase stock specific risks rather than exposure to global macro economic and geopolitical factors. As already discussed, we reduced exposure to the energy sector, also to European banks, which after strong performance in late 2019 no longer looked particularly attractively valued. We added a range of new holdings to the portfolio through January and February. In Asia, we added NetEase, a Chinese computer gaming company listed in the US. Our colleagues in the Asian team have known this business for many years and, in our view, it has a great roster of gaming titles, is well managed, has a very strong balance sheet and plays to what is still a secular growth trend, with ever more time spent on computers and mobile phones. Purchases of Tencent, perhaps best thought of as a ‘Chinese WhatsApp’, Facebook, Amazon and Activision Blizzard also play to that theme. Purchases in the US included Home Depot, the leading home improvement retailer, and Analog Devices, the semiconductor chip manufacturer, and exposure was increased to companies such as Microsoft and

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Texas Instruments. We also saw attractive risk reward situations in some older, more cyclical, industries such as Ashtead, a UK listed plant and equipment hire company with very substantial US interests, Volkswagen and Delta Airlines. Global equity markets performed well in the early part of 2020, the MSCI World Index making new all-time highs in mid-February as optimism around the outlook for economic growth, and hence corporate earnings, continued to improve. A new virus in a remote part of China was not seen as a problem. Previous outbreaks such as H1N1, SARS and MERS over the past two decades barely caused a ripple in equity markets outside Asia. However, all that changed towards the end of February as lockdowns and travel restrictions started to be implemented across Europe and the global scale of the pandemic became evident. Global equity markets fell 35% in five weeks, the most rapid decline in history. The portfolio underperformed the benchmark index during this turmoil. The level of gearing in place was modest, at around 7%; nevertheless it magnified the extent of the underperformance somewhat. Whilst many of the newer holdings and the large healthcare holdings, such as Roche and Bristol- Myers Squibb, performed well, they were insufficient to offset underperformance in a few specific areas; foremost, travel and leisure. We had two relatively small positions in Delta Airlines and easyJet, and a larger position in Rolls-Royce, the civil aerospace engine manufacturer. With the collapse in air travel, these companies underperformed substantially. Holdings in other economically sensitive sectors such as banks (JPMorgan Chase, Wells Fargo and Erste) and automotive (Volkswagen) also underperformed. Our holdings in the energy sector (BP, Lundin Energy and Total) were also negative contributors, given concurrent geopolitical issues involving OPEC and Russia and the subsequent fall in the oil price. Markets began to stabilise in late March 2020 as central banks around the world began to aggressively intervene to provide liquidity and to finance the huge increase in government spending needed to support the global economy. The recovery in equity markets through April and May was remarkable; although concentrated in those stocks and sectors that had already been resilient in the downturn. Confidence in a broad based economic recovery is elusive. We took opportunities where we saw them to improve the quality of the portfolio, buying good businesses when they were on sale, for example, Amadeus, the Spanish listed airline passenger management software company, and increasing our holding in Ashtead. We sold out of positions such as Delta Airlines where we saw risk of equity dilution and a slow recovery from the crisis. We expect the portfolio gearing being employed, which had a detrimental impact as the market fell sharply in March, will benefit the portfolio as confidence, earnings and dividends become more assured.

Indicative Performance Attribution Portfolio Average Over/ Portfolio Regional Under Weight Relative Returns Relative to Impact on Relative to the Benchmark Benchmark Returns† Performance –30 –15 0 15 30 –40 –20 0 20 40 –6 –3 0 3 6 North America UK Europe ex UK Japan Asia Pacific ex Japan Latin America Emerging Europe Middle East & Africa Cash*

* Cash reflects gearing effect from borrowing. † Relative returns can sometimes appear anomalous because of timing effects, particularly when portfolio allocation changes coincide with sector volatility. Outlook It seems that in many parts of the world life is starting to normalise and economies to open for business once more. We would caution that the pace of recovery may be slower than we would like,

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given stubbornly high infection rates in the US and many emerging markets and potential changes in consumer behaviour. Government schemes in many geographies to minimise unemployment and preserve consumer spending power will be withdrawn in coming months. That notwithstanding, we expect a significant increase in economic activity in the second half of 2020. There is material pent up demand from consumers and we feel certain that governments will continue to spend on a range of infrastructure projects designed to stimulate economic activity – they can borrow at virtually zero interest rates. Given the rapid recovery of markets from the March lows, and with the continued uncertainties around a potential second wave of infections, we believe the balance of risk and reward potential in a range of stocks we have recently analysed is more even. Consequently, we wish to maintain a degree of balance in the portfolio between companies with some defensive predictable earnings, for example in the Healthcare sector, and companies with more substantial upside if economies were to normalise more rapidly, for example Inditex and Rolls-Royce. One area where we see substantial valuation asymmetry is the financial sector, where we continue to be overweight. This incorporates our positions in banks and insurance businesses. We believe that the market has discounted both sectors based on an outlook that is too pessimistic; indeed, in terms of insurance, we believe we are beginning to see early evidence of a hardening rate cycle (improving prices), while we believe banks will demonstrate a greater level of resilience than many believe. They are trading at extremely low relative valuations compared to the broader market. Since the beginning of the Covid-19 crisis we have suffered a number of dividend cuts in the portfolio. These were principally in the most affected areas we described earlier, such as travel, and also certain industrials, including Rolls-Royce and Melrose Industries. Our US banks have continued to pay dividends. However, Standard Chartered has been asked (along with all other UK domiciled banks) to suspend their dividends until further clarity emerges later this year as to the likely scale of disruption caused by Covid-19. We are disappointed in some businesses such as Inditex, the owner of brands such as Zara, which deferred a dividend it can clearly afford to pay. We continue to expect dividend cuts globally for 2020 of around 25% to 30%, with restoration of many of those dividends in 2021. Our overriding sense, however, is that Covid-19 has accelerated trends already present in economics and politics around the world; the support for austerity by policy makers around the world is zero and we may well have entered a new policy regime with far greater emphasis on fiscal policy and redistribution. Implications of this could be profound within global equity markets in the years to come.

Stephen Anness Portfolio Manager 31 July 2020

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STRATEGIC REPORT GLOBAL EQUITY INCOME SHARE PORTFOLIO LIST OF INVESTMENTS AT 31 MAY 2020 Ordinary shares unless stated otherwise. MARKET VALUE % OF COMPANY INDUSTRY GROUP† COUNTRY £’000 PORTFOLIO Texas Instruments Semiconductors & Semiconductor Equipment United States 2,761 4.9 Microsoft Software & Services United States 2,735 4.9 Taiwan Semiconductor Semiconductors & Semiconductor Equipment Taiwan 2,372 4.3 Manufacturing Ashtead Capital Goods United Kingdom 2,149 3.9 JPMorgan Chase Banks United States 2,013 3.7 Analog Devices Semiconductors & Semiconductor Equipment United States 1,952 3.5 Samsung Electronics Technology Hardware & Equipment South Korea 1,911 3.4 – preference shares Novartis Pharmaceuticals, Biotechnology & Life Sciences Switzerland 1,826 3.3 Zurich Insurance Switzerland 1,777 3.2 Alphabet Media & Entertainment United States 1,661 3.0 Home Depot Retailing United States 1,618 2.9 Bayer Pharmaceuticals, Biotechnology & Life Sciences Germany 1,559 2.8 Wells Fargo Banks United States 1,549 2.8 American Express Diversified Financials United States 1,525 2.7 Bristol-Myers Squibb Pharmaceuticals, Biotechnology & Life Sciences United States 1,468 2.6 Roche Pharmaceuticals, Biotechnology & Life Sciences Switzerland 1,463 2.6 Automatic Data Processing Software & Services United States 1,418 2.5 Amadeus Software & Services Spain 1,409 2.5 Lundin Energy Energy Sweden 1,395 2.5 Inditex Retailing Spain 1,157 2.1 Berkeley Consumer Durables & Apparel United Kingdom 1,157 2.1 Mastercard Software & Services United States 1,150 2.1 TencentR Media & Entertainment China 1,126 2.0 Allianz Insurance Germany 1,125 2.0 Colgate-Palmolive Household & Personal Products United States 1,066 1.9 NetEase – ADR Media & Entertainment China 1,050 1.9 Volkswagen Automobiles & Components Germany 996 1.8 – preference shares Next Retailing United Kingdom 960 1.7 Rolls-Royce Capital Goods United Kingdom 953 1.7 Sony Consumer Durables & Apparel Japan 952 1.7 Citigroup Banks United States 923 1.7 Standard Chartered Banks United Kingdom 902 1.6 Sberbank – ADR Banks Russia 888 1.6 Melrose Industries Capital Goods United Kingdom 862 1.5 Total Energy France 825 1.5 BP Energy United Kingdom 750 1.3 easyJet Transportation United Kingdom 709 1.3 Pepsico Food, Beverage & Tobacco United States 667 1.2 Activision Blizzard Media & Entertainment United States 610 1.1 Diageo Food, Beverage & Tobacco United Kingdom 601 1.1 AIA Insurance Hong Kong 524 0.9 Accenture – A Shares Software & Services United States 523 0.9 Reckitt Benckiser Household & Personal Products United Kingdom 302 0.5 Las Vegas Sands Consumer Services United States 286 0.5 Cummins Capital Goods United States 153 0.3

Total Holdings 45 (2019: 52) 55,778 100.0 † MSCI and Standard & Poor’s Global Industry Classification Standard. ADR American Depositary Receipts – are certificates that represent shares in the relevant stock and are issued by a US bank. They are denominated and pay dividends in US dollars. R Red Chip Holdings – holdings in companies incorporated outside the PRC, listed on the Hong Kong Stock Exchange, and controlled by PRC entities by way of direct or indirect shareholding and/or representation on the board.

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STRATEGIC REPORT GLOBAL EQUITY INCOME SHARE PORTFOLIO INCOME STATEMENT FOR THE YEAR ENDED 31 MAY 2020 2019 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL £’000 £’000 £’000 £’000 £’000 £’000 Losses on investments held at fair value – (4,784) (4,784) – (2,875) (2,875) Losses on foreign exchange – (8) (8) – (3) (3) Income 2,204 32 2,236 2,814 – 2,814 Investment management fees (97) (227) (324) (107) (250) (357) Other expenses (217) (5) (222) (214) (1) (215)

Net return before finance costs and taxation 1,890 (4,992) (3,102) 2,493 (3,129) (636) Finance costs (21) (48) (69) (22) (52) (74)

Return before taxation 1,869 (5,040) (3,171) 2,471 (3,181) (710) Tax (230) – (230) (237) – (237)

Return after taxation for the financial year 1,639 (5,040) (3,401) 2,234 (3,181) (947)

Return per ordinary share – note 7 5.39p (16.58)p (11.19)p 6.90p (9.82)p (2.92)p

SUMMARY OF NET ASSETS AT 31 MAY 2020 2019 £’000 £’000 Fixed assets 55,778 67,040 Current assets 2,753 763 Creditors falling due within one year, excluding borrowings (2,179) (334) Bank loan (4,980) (4,880)

Net assets 51,372 62,589

Net asset value per share 178.5p 197.6p

Gearing: – gross 9.7% 7.8% – net 9.4% 7.4%

SUMMARY OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 MAY 2020 2019 £’000 £’000 Net assets brought forward 62,589 69,057 Shares bought back and held in treasury (6,402) (4,865) Share conversions 724 1,576 Return after taxation for the financial year (3,401) (947) Dividend paid (2,138) (2,232)

Net assets at the year end 51,372 62,589

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STRATEGIC REPORT BALANCED RISK ALLOCATION SHARE PORTFOLIO PERFORMANCE RECORD

Total Return For the year ended 31 May 2020 2019 2018 2017 2016 Net Asset Value –3.1% –2.7% 6.4% 9.8% –0.3% Share Price –6.9% –0.7% 4.5% 11.9% –2.1% Merrill Lynch 3 month LIBOR 5.9% 5.8% 5.4% 5.5% 5.6% plus 5% per annum Source: Refinitiv.

Ten Year Total Return Rebased to 100 at 29 February 2012 (implementation of Balanced Risk Allocation strategy)

160 Net Asset Value

Share Price 150 Merrill Lynch 3 month LIBOR plus 5% per annum 140 29 February 2012 130

120

110

100

90

80 May-10 May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18 May-19 May-20 Source: Refinitiv.

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STRATEGY BALANCED RISK ALLOCATION

STRATEGIC REPORT BALANCED RISK ALLOCATION SHARE PORTFOLIO MANAGER’S REPORT

Investment Objective The investment objective of the Balanced Risk Allocation Portfolio is to provide shareholders with an attractive total return in differing economic and inflationary environments, and with low correlation to equity and bond market indices by gaining exposure to three asset classes: debt securities, equities, and commodities. Portfolio Review The Balanced Risk Allocation Portfolio NAV total return posted a negative return for the year of –3.1% in the year under review. 12-month Performance (Total Return) 110 Invesco Perpetual Select Trust Balanced Risk Allocation Portfolio NAV Merrill Lynch 3 month LIBOR plus 5% per annum

105

100

95

90

85

80

31/05/19 30/06/19 31/07/19 31/08/19 30/09/19 31/10/19 30/11/19 31/12/19 31/01/20 29/02/20 31/03/20 30/04/20 31/05/20 Source: Refinitiv. Rebased to 100. The Balanced Risk Allocation strategy seeks to achieve returns through balancing risk exposure between three asset classes: developed market equities, global government bonds and commodities. The asset class weightings are determined using a proprietary investment process, with assets being selected according to three key criteria: a correlation matrix to ensure diversification; the ability to generate excess returns relative to cash; and specific liquidity and transparency criteria. Exposure to the asset classes is principally obtained through highly liquid and transparently priced exchange-traded futures contracts, with cash and cash equivalents being held as collateral. For the year to 31 May 2020 strategic exposure to bonds was a positive contributor to performance, whereas strategic exposure to both equities and commodities detracted from performance.

Contributions to Gross Return for Year to 31 May 2020 6

4

2

0

–2

–4

–6

–8

Cash Bonds Equities

Commodities Tactical Over/ Underweights Source: Invesco

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Strategic exposure to government bond markets aided results for the fiscal year, as yields fell across all four markets in which the strategy was invested. Bond markets started the period in positive territory. A combination of accommodative central bank policy, uncertainty about global economic activity and trade tensions helped push bond prices higher early in the period. Prices temporarily retreated later in 2019 as the apparent thawing of trade tensions between the US and China dampened enthusiasm for bonds. However, a flight-to-safety was quickly ignited in the first quarter of 2020, with uncertainty and fear about the Covid-19 health crisis fuelling a sharp sell-off in risk assets and bolstering safe-haven returns. While returns were positive through the sharp downturn in risk assets, the path there was anything but. During the height of the cash crunch in March, bonds became a source of liquidity, sending prices lower and volatility higher. Massive intervention by central banks in March to thaw frozen credit markets and exhaustion of selling pressure combined to buoy bond prices back up. Results in the asset class were led by the US, followed by Canada, Australia and finally the UK. Strategic exposure to equities detracted from performance as the asset class suffered serious setbacks during the fiscal year. Equity results were generally positive in the earlier half of the period with many markets in which the strategy invests benefiting from accommodative central bank policy and trade deal optimism. However, in the first quarter of 2020 equity markets almost universally entered bear market territory with prices dropping off sharply. The main issue pushing prices lower was fear over the global spread of Covid-19 and concerns over the impact of containment efforts on manufacturing activity and global supply chains. Equity markets managed to snap back in the final two months of the period, on hopes that central bank intervention and the reopening of economies would lead to a rapid recovery. Hong Kong equities were the top detractor over the period followed by the UK. Hong Kong equities suffered declines as they were doubly hit by local unrest during the period. UK equities struggled with unpredictability around Brexit and were also hit hard in the late period sell-off, partially due to the UK index’s high energy weight. Strategic exposure to commodities represented the largest drag on results during the fiscal year, with the energy complex being by far the hardest hit. Energy commodities were generally positive in the earlier parts of the period, but suffered a large setback in the first quarter of 2020 on demand fears created by efforts to contain the spread of Covid-19 and a supply shock in early March coming from the eruption of an oil price war between Saudi Arabia and Russia. Industrial metals also detracted from performance as prices for aluminium and copper fell on demand fears from the economic shutdown and the ensuing drop in global manufacturing activity. Agricultural prices declined in aggregate, with all but wheat and cocoa posting negative results for the period. Precious metals was the only positive contributor from a commodity complex perspective, benefiting from the low-rate environment and as nervous investors sought safe havens amid volatility in risk assets. Prices for both gold and silver jumped-up late in the period as investors assessed the potential for future inflation and potential currency debasement as global central banks massively expanded their balance sheets. Tactical shifts helped results during the period, as gains from defensive positioning in commodities outweighed losses from overweight positioning in equities. The overall impact of tactical positioning in bonds was flat for the period. Outlook Up to this point, the recovery from the economic damage caused by Covid-19 containment efforts has gone about as well as anyone could expect. Economic activity across several fronts is approaching levels seen just prior to the lockdowns. However, the easy part of the recovery is likely behind us. The continued recovery from here is apt to be lumpy as pockets of infections resurge, which could cause a rollback of earlier containment efforts. Additionally, several prognosticators are suggesting that a full recapture of pre-Covid-19 economic activity levels won’t be seen until 2022 at the earliest. With this in mind, investors may be best served by taking a balanced approach to a broader set of economic outcomes that allow for fits and starts along the road to recovery. Tactical positioning for June was overweight all equity markets, except for Hong Kong, which was carried at neutral. In fixed income, the strategy overweighted Australia, Canada, the UK and US, while Germany and Japan were excluded. Positioning in commodities was underweight agriculture,

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STRATEGIC REPORT BALANCED RISK ALLOCATION SHARE PORTFOLIO MANAGER’S REPORT continued

overweight metals and overweight energy, except for natural gas and gas oil (diesel), which were underweight. For July all equity markets have been overweighted. In fixed income Australia, Canada and the US continue to be overweighted, with both Germany and the UK being excluded. Across commodities, the strategy continues to underweight most agricultural exposures, except for cocoa, lean hogs and live cattle, which are carried at neutral. Exposure to energy is neutral crudes and unleaded petrol, but underweight gas oil, natural gas and heating oil. Within metals, the strategy is overweight gold, silver and copper, but underweight aluminium.

Scott Wolle Portfolio Manager 31 July 2020

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STRATEGIC REPORT BALANCED RISK ALLOCATION SHARE PORTFOLIO LIST OF DERIVATIVE INSTRUMENTS AT 31 MAY 2020 NOTIONAL NOTIONAL EXPOSURE EXPOSURE AS % OF £’000 NET ASSETS Government Bond Futures: Australia 2,410 34.1 US 867 12.3 Canada 814 11.5 UK 412 5.8 Total Bond Futures (4) 4,503 63.7 Equity Futures: Japan 470 6.6 US small cap 448 6.3 UK 363 5.1 Europe 362 5.1 Hong Kong 358 5.1 US large cap 245 3.5 Total Equity Futures (6) 2,246 31.7 Commodity Futures: Agriculture Cotton 161 2.3 Soybean meal 138 2.0 Soybean 137 1.9 Sugar 84 1.2 Wheat 42 0.6 Soybean oil 40 0.6 Corn 39 0.6 Coffee 29 0.4 Precious Metals Gold 427 6.0 Silver 150 2.1 Energy Gasoline 210 3.0 Brent crude 183 2.6 WTI crude 57 0.8 Low sulphur gasoline 53 0.7 New York Harbor ultra-low sulphur diesel 38 0.5 Natural gas 22 0.3 Industrial Metals Copper 217 3.1 Aluminium 94 1.3 Total Commodity Futures (18) 2,121 30.0 Total Derivative Instruments (28) 8,870 125.4

TARGET ANNUALISED RISK The targeted annualised risk (volatility of monthly returns) for the portfolio as listed above is analysed as follows: ASSET CLASS RISK CONTRIBUTION Equities 3.8% 42.2% Fixed Income 3.5% 38.3% Commodities 1.8% 19.5% 9.1% 100.0%

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STRATEGIC REPORT BALANCED RISK ALLOCATION SHARE PORTFOLIO LIST OF INVESTMENTS AT 31 MAY 2020 MARKET % YIELD VALUE OF % £’000 PORTFOLIO Short Term Investments Invesco Liquidity Funds plc - Sterling 0.35 2,330 36.7 UK Treasury Bill 0% 16 Nov 2020 0.13 1,517 23.9 UK Treasury Bill 0% 09 Nov 2020 0.14 750 11.8 UK Treasury Bill 0% 03 Aug 2020 0.68 550 8.7 UK Treasury Bill 0% 06 Jul 2020 0.74 450 7.1 UK Treasury Bill 0% 02 Nov 2020 0.19 300 4.7 UK Treasury Bill 0% 17 Aug 2020 0.12 282 4.5 UK Treasury Bill 0% 26 Oct 2020 0.15 150 2.4

Total Short Term Investments 6,329 99.8 Hedge Funds(1) Harbinger Class PE Holdings 15 0.2 Harbinger Class L Holdings 3 –

Total Hedge Funds 18 0.2 Total Fixed Asset Investments 6,347 100.0

(1) The hedge fund investments are residual holdings of the previous investment strategy, which are awaiting realisation of underlying investments. Derivative instruments held in the Balanced Risk Allocation Share Portfolio are shown on the previous page. At the year end all the derivative instruments held in the Balanced Risk Allocation Share Portfolio were exchange traded futures contracts. Holdings in futures contracts that are not exchange traded are permitted as explained in the investment policy on page 34.

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STRATEGIC REPORT BALANCED RISK ALLOCATION SHARE PORTFOLIO INCOME STATEMENT FOR THE YEAR ENDED 31 MAY 2020 2019 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL £’000 £’000 £’000 £’000 £’000 £’000 (Losses)/gains on investments held at fair value – (2) (2) – 12 12 Losses on derivative instruments 2 (159) (157) 28 (268) (240) (Losses)/gains on foreign exchange – (10) (10) – 8 8 Income 54 – 54 55 – 55 Investment management fees (17) (40) (57) (18) (42) (60) Other expenses (40) (1) (41) (40) – (40)

Return before taxation (1) (212) (213) 25 (290) (265) Tax – – – – – –

Return after taxation for the financial year (1) (212) (213) 25 (290) (265)

Return per ordinary share – note 7 (0.02)p (3.88)p (3.90)p 0.42p (4.86)p (4.44)p

SUMMARY OF NET ASSETS AT 31 MAY 2020 2019 £’000 £’000 Fixed assets 6,347 7,385 Derivative assets held at fair value though profit or loss 401 175 Current assets 499 565 Derivative liabilities held at fair value though profit or loss (151) (223) Creditors falling due within one year, excluding borrowings (23) (65)

Net assets 7,073 7,837

Net asset value per share 135.1p 139.5p

Notional exposure of derivative instruments as % of net assets 125.4% 158.2%

SUMMARY OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 MAY 2020 2019 £’000 £’000 Net assets brought forward 7,837 9,287 Shares bought back and held in treasury (228) (522) Share conversions (323) (663) Return after taxation for the financial year (213) (265)

Net assets at the year end 7,073 7,837

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STRATEGIC REPORT MANAGED LIQUIDITY SHARE PORTFOLIO PERFORMANCE RECORD

Total Return For the year ended 31 May 2020 2019 2018 2017 2016 Net Asset Value 1.1% 1.3% 0.3% 0.0% –0.1% Share Price 1.6% –0.5% 0.5% 0.5% –0.9%

Source: Refinitiv.

Revenue return per share 0.65p 0.59p 0.24p (0.04)p (0.14)p Dividend 0.80p 0.80p nil nil nil

Ten Year Total Return Rebased to 100 at 31 May 2010

106 Net Asset Value Share Price

104

102

100

98 May-10 May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18 May-19 May-20

Source: Refinitiv.

Five Year Dividend History

1.0p

0.5p

0.0p 2016 2017 2018 2019 2020

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STRATEGIC REPORT MANAGED LIQUIDITY SHARE PORTFOLIO MANAGER’S REPORT

Investment Objective The investment objective of the Managed Liquidity Share Portfolio is to produce an appropriate level of income return combined with a high degree of security. Portfolio Review The Managed Liquidity Portfolio NAV total return for the year ended 31 May 2020 was 1.1%. 12-month Performance (Total Return) 104 Invesco Perpetual Select Trust Managed Liquidity Portfolio NAV

102

100

98

96

31/05/19 30/06/19 31/07/19 31/08/19 30/09/19 31/10/19 30/11/19 31/12/19 31/01/20 29/02/20 31/03/20 30/04/20 31/05/20 Source: Refinitiv. Rebased to 100. This Portfolio is invested principally in the PIMCO Sterling Short Maturity Source UCITS ETF, which is managed by PIMCO. In addition, since from time to time it is necessary to be able to realise assets quickly to meet short term payment obligations, a small proportion of the Portfolio’s assets is invested in the Sterling Liquidity Portfolio of Invesco Liquidity Funds plc (formerly Short-Term Investments Company (Global Series) plc), which is a money market fund managed by Invesco. The underlying investments of the ETF carry greater risks than is typical for a money market fund and accordingly the Portfolio value may rise or fall. The PIMCO Sterling Short Maturity Source UCITS ETF seeks to maximise current income consistent with the preservation of capital and a high degree of liquidity. The Fund is actively managed by PIMCO and has a diversified portfolio of UK sterling-denominated fixed income securities, including government bonds, corporate debt securities and unleveraged mortgage or other asset-backed securities. The Fund’s weighted average maturity is not expected to exceed three years and its average portfolio duration will be up to one year, based on PIMCO’s forecast for interest rates. The Fund invests only in investment grade securities that are rated at least Baa3 by Moody’s or BBB- by S&P or equivalently rated by Fitch (or, if unrated, determined by PIMCO to be of comparable quality). The Sterling Liquidity Portfolio of Invesco Liquidity Funds plc is a sterling denominated, short-term low volatility net asset value money market fund. It invests in repurchase agreements, time deposits, commercial paper, certificates of deposit, medium-term notes and floating rate notes rated A-1/P-1 or better. At 31 May 2020 the Sterling Liquidity Portfolio was rated AAAm by Standard and Poor’s and AAAmmf by Fitch Ratings. As reported at in the Company’s half year report, although the UK election had removed much of the near-term Brexit uncertainty, PIMCO expected weakness in the global economy because of trade tensions and political uncertainty. In the second half of the Company’s year, financial securities markets suffered significant falls due primarily to concerns around the impact of Covid-19 on the global economy. Both of the abovementioned funds were affected, albeit not to a scale comparable with equities.

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STRATEGIC REPORT MANAGED LIQUIDITY SHARE PORTFOLIO MANAGER’S REPORT continued

During a special meeting on 10 March 2020, the Bank of England (BoE) Monetary Policy Committee decided to cut the Bank interest rate down from 0.75% to 0.25% to counter the economic shock resulting from the Covid-19 outbreak and also introduced a new Term Funding Scheme. Then, on 19 March, the BoE followed in the footsteps of other central banks by announcing a further rate cut, to bring the Bank rate down to 0.10%, and a new round of QE worth £200 billion, which reduced stress in money markets. Outlook PIMCO expect the UK to have a deep but relatively short recession due to the Covid-19 pandemic, although the subsequent recovery is expected to be slow with activity remaining below pre-Covid-19 levels through 2021. The UK policy response has been prompt and coordinated, softening the fall and likely preventing the shock from creating lasting damage to the supply side of the economy. It appears that the Bank of England should remain a credible backstop for the sovereign balance sheet, keeping its policy rate at 0.1%, adding to existing asset purchases to broadly match the size of the fiscal deficit, and directly lending to the Treasury where appropriate.

Invesco 31 July 2020

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STRATEGIC REPORT MANAGED LIQUIDITY SHARE PORTFOLIO LIST OF INVESTMENTS AS AT 31 MAY 2020 2019 MARKET MARKET VALUE % OF VALUE % OF £’000 PORTFOLIO £’000 PORTFOLIO PIMCO Sterling Short Maturity Source UCITS ETF 2,642 98.5 4,490 95.3 Invesco Liquidity Funds plc – Sterling (formerly Short Term Investment Companies (Global Series) plc) 40 1.5 220 4.7

2,682 100.0 4,710 100.0

MANAGED LIQUIDITY SHARE PORTFOLIO INCOME STATEMENT FOR THE YEAR ENDED 31 MAY 2020 2019 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL £’000 £’000 £’000 £’000 £’000 £’000 Gains on investments held at fair value – 1 1 – 25 25 Income 36 – 36 46 – 46 Investment management fees (4) – (4) (6) – (6) Other expenses (9) – (9) (13) – (13)

Return before taxation 23 1 24 27 25 52 Tax – – – – – –

Return after taxation for the financial year 23 1 24 27 25 52

Return per ordinary share – note 7 0.65p 0.03p 0.68p 0.59p 0.54p 1.13p

SUMMARY OF NET ASSETS AT 31 MAY 2020 2019 £’000 £’000 Fixed assets 2,682 4,710 Current assets 65 16 Creditors falling due within one year, excluding borrowings (140) (143)

Net assets 2,607 4,583

Net asset value per share 104.4p 104.9p

SUMMARY OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 MAY 2020 2019 £’000 £’000 Net assets brought forward 4,583 4,864 Shares bought back and held in treasury (893) (482) Share conversions (1,052) 149 Return after taxation for the financial year 24 52 Dividend paid (55) –

Net assets at the end of the year 2,607 4,583

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STRATEGY

STRATEGIC REPORT

BUSINESS REVIEW Invesco Perpetual Select Trust plc is a UK investment company with four Share classes, each of which has separate investment objectives, as set out below, and is represented by a separate Portfolio. The Company’s purpose is to generate sustainable returns for its shareholders by providing a choice of investment strategies and the ability to switch between them, free of cost, according to their needs. The underlying strategies are each targeted at achieving returns corresponding with specified objectives through a disciplined investment process. The strategy the Board follows to achieve its overall objective and those of each Share class is to set investment policy and risk guidelines, together with investment limits, and to monitor how they are applied. These are also set out below. The business model the Company has adopted to achieve its objective has been to contract investment management and administration to appropriate external service providers. The Board has oversight of the Company’s service providers, and monitors them on a formal and regular basis. The Board has a collegiate culture and pursues its fiduciary responsibilities with independence, integrity and diligence, taking advice and outside views as appropriate and constructively challenging and interacting with service providers, including the Manager. The principal service provider is Invesco Fund Managers Limited (‘IFML’ or the ‘Manager’). In addition to managing the Portfolios in accordance with the Board’s strategy and under its oversight, the Manager is also responsible for providing company secretarial, marketing, accounting and general administration services. In practice, many of these services are performed under delegated authority by Invesco Asset Management Limited (IAML), a company related to IFML. References to the Manager in this annual financial report should consequently be considered to include both entities. All administrative support is provided by third parties under the oversight of the Board. In addition to the management and administrative functions of the Manager, the Company has contractual arrangements with Link Asset Services to act as registrar and The Bank of New York Mellon (International) Limited (BNYMIL) as depositary and custodian. Investment Policy The Company’s and respective Share classes’ investment objectives, investment policies and risk and investment limits combine to form the ‘Investment Policy’ of the Company. The Company Investment Objective and Policy The Company’s investment objective is to provide shareholders with a choice of investment strategies and policies, each intended to generate attractive risk-adjusted returns. The Company’s share capital comprises four Share classes: UK Equity Shares, Global Equity Income Shares, Balanced Risk Allocation Shares and Managed Liquidity Shares, each of which has its own separate portfolio of assets and attributable liabilities. The investment objectives, policies and risks and limits of the Portfolios for these Share classes follow. With the exception of borrowings, the limits for the Company and the four Share classes are measured at the point of acquisition of investments, unless otherwise stated.

Investment Limits of the Company The Board has prescribed limits on the Investment Policy of the Company, which include the following: – no more than 15% of the gross assets of the Company may be invested in a single investment; and – no more than 10% of the gross assets of the Company may be invested in other listed investment companies (excluding property companies structured as REITs).

UK Equity Share Portfolio Investment Objective The investment objective of the UK Equity Portfolio is to provide shareholders with an attractive real long-term total return by investing primarily in UK quoted equities.

Investment Policy and Risk The UK Equity Portfolio is invested primarily in UK equities and equity-related securities of UK companies across all market sectors. The Portfolio will not invest in companies which are not listed,

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quoted or traded at the time of investment, although it may have exposure to such companies where, following investment, the relevant securities cease to be listed, quoted or traded. The Manager invests the UK Equity Portfolio so as to maximise exposure to the most attractive sectors and securities, within a portfolio structure that reflects the Manager’s view of the macroeconomic environment. The Manager does not set out to manage the risk characteristics of the UK Equity Portfolio relative to the FTSE All-Share Index (the ‘benchmark index’) and the investment process may result in potentially very significant over or underweight positions in individual sectors versus the benchmark. The size of weightings will reflect the Manager’s view of the attractiveness of a security and the degree of conviction held. If a security is not considered to be a good investment, it will not be held in the UK Equity Portfolio, irrespective of its weight in the benchmark index. The Manager controls the stock-specific risk of individual securities by ensuring that the UK Equity Portfolio is always diversified across market sectors. In-depth and continual analysis of the fundamentals of investee companies allows the Manager to assess the financial risks associated with any particular security. It is expected that, typically, the Portfolio will hold between 45 and 80 securities. The Directors believe that the use of borrowings can enhance returns to shareholders and the UK Equity Portfolio will generally use borrowings in pursuing its investment objective.

Investment Limits The Board has prescribed limits on the investment policy of the UK Equity Portfolio, which include the following: – no more than 12% of the gross assets of the UK Equity Portfolio may be held in a single investment; – no more than 10% of the gross assets of the UK Equity Portfolio may be held in other listed investment companies (excluding REITs); – no more than 20% of the gross assets of the UK Equity Portfolio may be held in overseas assets; and – borrowings may be used to raise equity exposure up to a maximum of 25% of the net assets of the UK Equity Portfolio when it is considered appropriate.

Global Equity Income Share Portfolio Investment Objective The investment objective of the Global Equity Income Portfolio is to provide an attractive and growing level of income return and capital appreciation over the long term, predominantly through investment in a diversified portfolio of equities worldwide. Investment Policy and Risk The Portfolio will be invested predominantly in a portfolio of listed, quoted or traded equities worldwide, but may also hold other securities from time to time including, inter alia, fixed interest securities, preference shares, convertible securities and depositary receipts. Investment may also be made in regulated or authorised collective investment schemes. The Portfolio will not invest in companies which are not listed, quoted or traded at the time of investment, although it may have exposure to such companies where, following investment, the relevant securities cease to be listed, quoted or traded. The Manager will at all times invest and manage the Portfolio’s assets in a manner that is consistent with spreading investment risk, but there will be no rigid industry, sector, region or country restrictions. The Portfolio may utilise derivative instruments including index-linked notes, contracts for differences, covered options and other equity-related derivative instruments for efficient portfolio management and investment purposes. Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Portfolio’s direct investments, as described above. It is expected that, typically, the Portfolio will hold between 40 and 55 securities (this guidance was changed by the Board, and announced to the market, on 20 April 2020. The previous guidance as to the typical range was 45 to 80 stocks). The Directors believe that the use of borrowings can enhance returns to shareholders, and the Global Equity Income Portfolio may use borrowings in pursuing its investment objective. The Company’s foreign currency investments will not be hedged to sterling as a matter of general policy. However, the Manager may employ currency hedging, either back to sterling or between currencies (i.e. cross hedging of portfolio investments).

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STRATEGIC REPORT continued

Investment Limits The Board has prescribed the following limits on the investment policy of the Global Equity Income Portfolio: – no more than 20% of the gross assets of the Global Equity Income Portfolio may be invested in fixed interest securities; – no more than 10% of the gross assets of the Global Equity Income Portfolio may be held in a single investment; – no more than 10% of the gross assets of the Global Equity Income Portfolio may be held in other listed investment companies (excluding REITs); and – borrowings may be used to raise equity exposure up to a maximum of 20% of the net assets of the Global Equity Income Portfolio, when it is considered appropriate. Balanced Risk Allocation Share Portfolio Investment Objective The investment objective of the Balanced Risk Allocation Portfolio is to provide shareholders with an attractive total return in differing economic and inflationary environments, and with low correlation to equity and bond market indices by gaining exposure to three asset classes: debt securities, equities and commodities. Investment Policy and Risk The Portfolio utilises two main strategies: the first seeks to balance the risk contribution from each of three asset classes (equities, bonds and commodities), with the aim of reducing the probability, magnitude and duration of capital losses, and the second seeks to shift tactically the allocation among the assets with the aim of improving expected returns. The Portfolio is constructed so as to achieve appropriate diversity and to balance risk by asset class (bonds, equities and commodities) and by asset within each asset class. Neutral risk weighting is achieved when each asset class contributes an equal proportion of the total Portfolio risk and each asset contributes an equal proportion of the total risk for its respective asset class. The Manager is permitted to actively vary asset class weightings, subject to a maximum of 150% and a minimum of 50% of each asset class’s neutral weight. The Manager is also permitted to actively vary individual asset weightings, provided the asset class guidelines are not violated. Asset weights may not be less than zero (short) and will not exceed twice the neutral weight. For the purposes of the maximum weighting only, commodity exposures are aggregated and measured by commodity complex rather than by individual assets. The Portfolio will be mainly invested directly in highly liquid and transparently priced exchange-traded futures contracts, with cash and cash equivalents being held as collateral. However, the Portfolio may also be invested in equities, equity-related securities and debt securities (including floating rate notes). Financial derivative instruments (including but not limited to futures and total return swaps) are used only to achieve long exposure to the three asset classes. The Portfolio may also use financial derivative instruments, including currency futures and forwards, for efficient portfolio management, hedging and investment purposes. Financial derivative instruments will not be used to create net short positions in any asset class. The derivatives portfolio will typically comprise between 20 and 33 investment positions. It is expected that the Portfolio’s investments will mainly be denominated in sterling. Any non-sterling derivative investments may be hedged back into sterling at the discretion of the Manager when it is economic to do so. Investment Limit The Board has prescribed the following limits on the investment policy of the Balanced Risk Allocation Portfolio: – the aggregate notional amount of financial derivative instruments positions may not exceed 250% of the net assets of the Balanced Risk Allocation Portfolio; and – no more than 10% of the gross assets of the Balanced Risk Allocation Portfolio may be held in other listed investment companies. Managed Liquidity Share Portfolio Investment Objective The investment objective of the Managed Liquidity Portfolio is to produce an appropriate level of income return combined with a high degree of security.

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Investment Policy and Risk The Managed Liquidity Portfolio invests mainly in a range of sterling-based or related high quality debt securities and similar assets (which may include transferable securities, money market instruments, warrants, collective investment schemes and deposits), either directly or indirectly through authorised funds investing in such instruments, including funds managed by Invesco. The Managed Liquidity Portfolio generally invests in funds authorised as UCITS schemes (Undertakings for Collective Investments in Transferable Securities, being open ended retail investment funds in the EU), which are required under governing regulations to provide a prudent spread of risk. In the event that the Managed Liquidity Portfolio is invested directly in securities and instruments, the Manager will observe investment restrictions and risk diversification policies that are consistent with UCITS regulations.

Investment Limits The Board has prescribed limits on the investment policy of the Managed Liquidity Portfolio, which include the following: – no more than 10% of the gross assets of the Managed Liquidity Portfolio may be held in a single investment, other than authorised funds or high quality sovereign debt securities; and – no more than 5% of the gross assets of the Managed Liquidity Portfolio may be held in unquoted investments, other than authorised funds. Investors should note that the Managed Liquidity Shares are not designed to replicate the returns or other characteristics of a bank or building society deposit or money market fund. In particular, the Portfolio will typically contain some assets with a greater residual maturity, and as a whole will have greater weighted average maturity, than is prescribed by regulation governing money market funds. Key Performance Indicators The Board reviews the performance of the Company by reference to a number of Key Performance Indicators, at either a Company or Portfolio level, which include the following: • Investment Performance • Revenue and Dividends • Discount/Premium • Ongoing Charges

Investment Performance To assess investment performance the Board monitors the net asset value (NAV) performance of the individual Share classes relative to that of benchmark indices it considers to be appropriate. However, given the requirements and constraints of the investment objectives and policies followed, no index can be expected to fully represent the performance that might reasonably be expected from any one or all of the Company’s Share classes. The NAV total return performance of each of the Portfolios over the year to 31 May 2020 and of relevant benchmark indices were as follows:

UK Equity Portfolio –12.4% FTSE All-Share Index –11.2%

Global Equity Income Portfolio –6.4% MSCI World Index (£) 8.9%

Balanced Risk Allocation Portfolio –3.1% Merrill Lynch 3 month LIBOR plus 5% per annum 5.9%

Managed Liquidity Portfolio 1.1% Source: Refinitiv. Other performance periods, together with share price total returns, are shown on pages 7, 14, 21 and 28.

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STRATEGIC REPORT continued

Revenue and Dividends The Directors review revenue estimates and prospective dividend levels at each Board meeting. For the equity Share classes the Directors have become more focused on total return since sanctioning contributions to dividends from capital, but dividends paid continue to be mostly constituted from revenue and revenue is an important element of overall Portfolio returns.

UK Equity Shares Revenue earnings per Share for the UK Equity Share Portfolio was 4.12p (2019: 5.73p), based on net revenue for the year of £1,340,000 (2019: £1,982,000), which included receipts of £61,000 (2019: £96,000) of non-recurring special dividends, equivalent to 0.19p (2019: 0.28p). Dividend Policy: It is the Board’s policy that the Directors will declare four dividends in respect of each accounting year (with payment in the month following) comprising of three equal interim dividends, declared in July, October and January, and a ‘wrap-up’ fourth interim dividend, declared in April. Depending on the level of income received in each quarter, and in the year, these four dividends may be enhanced with contributions from capital profits to achieve the Board’s target level. In recent years the Directors have set a target of at least maintaining, in the absence of unforeseen circumstances, the level of annual UK Equity dividends per share from year to year. The impact of Covid-19 constitutes unforeseen circumstances in this context and, given the current uncertainty of future income flows, the Directors have not set dividend targets for the year to 31 May 2021. Dividends Declared: The Directors have declared and paid four interim dividends for the year ended 31 May 2020 totalling 6.60p per UK Equity Share (2019: 6.60p) of which 4.12p was met from revenue earned in the year. The aggregate of dividends paid in respect of the year was £2,145,000 (2019: £2,279,000) – the decrease reflects the reduction of shares in issue following conversions and buybacks in the year. A first interim dividend for the year to 31 May 2021 of 1.50p was declared on 16 July 2020. In the absence of unforeseen circumstances, and in accordance with the dividend policy set out above, the Board intends for this to set the level for the next two quarterly dividends.

Global Equity Income Shares Revenue earnings per Share for the Global Equity Income Share Portfolio was 5.39p (2019: 6.90p), based on net revenue for the year of £1,639,000 (2019: £2,234,000), which included £49,000 (2019: £38,000) of special dividends. Dividend Policy: It is the Board’s policy that the Directors will declare four dividends in respect of each accounting year (with payment in the month following) comprising of three equal interim dividends, declared in July, October and January, and a ‘wrap-up’ fourth interim dividend, declared in April. Depending on the level of income received in each quarter, and in the year, these four dividends may be enhanced with contributions from capital profits to achieve the Board’s target level. In recent years the Directors have set a target of at least maintaining, in the absence of unforeseen circumstances, the level of annual UK Equity dividends per share from year to year. The impact of Covid-19 constitutes unforeseen circumstances in this context and, given the current uncertainty of future income flows, the Directors have not set dividend targets for the year to 31 May 2021. Dividends Declared: The Directors have declared and paid four interim dividends for the year ended 31 May 2020 totalling 7.05p (2019: 6.90p) per Global Equity Income Share, of which 5.39p was met from revenue earned in the year. The aggregate of dividends paid in respect of the year was £2,138,000 (2019: £2,232,000) – the decrease reflects the reduction of shares in issue following conversions and buybacks in the year. A first interim dividend for the year to 31 May 2021 of 1.55p was declared on 16 July 2020. In the absence of unforeseen circumstances, and in accordance with the dividend policy set out above, the Board intends for this to set the level for the next two quarterly dividends.

Balanced Risk Allocation Shares In order to maximise the capital return on the Balanced Risk Allocation Shares, the Directors only intend to declare dividends on the Balanced Risk Allocation Shares to the extent required, having

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taken into account the dividends paid on the other Share classes, to maintain the Company’s status as an investment trust under section 1158 of the Corporation Tax Act 2010. The Portfolio recorded a net revenue loss of £1,000 in the year (2019: £25,000 net profit). No dividends are required to be declared or paid for the year to retain investment trust status.

Managed Liquidity Shares The Board intends to declare dividends on the Managed Liquidity Share Portfolio when the level of income available allows. The Managed Liquidity Portfolio recorded a net revenue profit for the year of £23,000 (2019: £27,000). An interim dividend of 0.8p per Managed Liquidity Share was declared on 15 April 2020 in respect of the year ended 31 May 2020 (2019: 0.8p), of which 0.65p was met from revenue earned in the year. It currently appears unlikely, given the quantum of revenue being earned, that future dividends will be more frequent than annual and they could be less frequent.

Discount/(Premium) The Company has a discount control policy in place for all four Share classes, whereby the Company offers to issue or buy back Shares of all classes with a view to maintaining the market price of the shares at close to their respective net asset values and, by so doing, avoid significant overhangs or shortages in the market. It is the Board’s policy to buy back shares and to sell shares from treasury on terms that do not dilute the net asset value attributable to existing shareholders at the time of the transaction. The operation of this policy is dependent upon the authorities to buy back and issue shares being renewed by shareholders. Notwithstanding the intended effect of this policy, there can be no guarantee that the Company’s shares will trade at close to their respective net asset values. Shareholders should also be aware that there is a risk that this discount policy may lead to a reduction in the size of the Company over time. The Board and the Manager closely monitor movements in the Company’s share prices and dealings in the Company’s shares. Share movements in the year are summarised on page 39. At 31 May 2020, the share prices, net asset values (NAV) and the discounts of the four Share classes were as follows: 2020 2019 NET ASSET SHARE NET ASSET SHARE VALUE PRICE VALUE PRICE PREMIUM/ SHARE CLASS (PENCE) (PENCE) DISCOUNT (PENCE) (PENCE) (DISCOUNT) UK Equity 145.8 139.5 (4.3)% 173.1 173.5 0.2% Global Equity Income 178.5 176.5 (1.1)% 197.6 195.0 (1.3)% Balanced Risk Allocation 135.1 129.0 (4.5)% 139.5 138.5 (0.7)% Managed Liquidity 104.4 101.5 (2.8)% 104.9 101.5 (3.2)%

The following charts show the premium/(discount) at which the Shares traded over the two years to 31 May 2020. As can be seen, the Shares of all four Portfolios generally traded in a range of 0% to 4% discount, but with the severity and speed of market moves during the height of the Covid-19 volatility prices became dislocated from NAVs and extreme levels of premium and discount were seen, particularly for the UK Equity and Global Equity Income Shares. 16 16 UK Equity Portfolio Global Equity Income Portfolio

12 12

8 8

4 4

0 0

–4 -4 ount)/Premium % (Dis c ount)/Premium ount)/Premium % (Dis c ount)/Premium –8 -8

–12 -12

–16 -16

Feb 19 Feb 20 Feb 19 Feb 20 May 18 Aug 18 Nov 18 May 19 Aug 19 Nov 19 May 20 May 18 Aug 18 Nov 18 May 19 Aug 19 Nov 19 May 20

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STRATEGIC REPORT continued

16 Balanced Risk Allocation Portfolio 16 Managed Liquidity Portfolio

12 12

8 8

4 4

0 0

–4 –4 ount)/Premium % (Dis c ount)/Premium ount)/Premium % (Dis c ount)/Premium –8 –8

–12 –12

–16 –16

Feb 19 Feb 20 Feb 19 Feb 20 May 18 Aug 18 Nov 18 May 19 Aug 19 Nov 19 May 20 May 18 Aug 18 Nov 18 May 19 Aug 19 Nov 19 May 20 Source: Refinitiv.

Ongoing Charges The expenses of managing the Company are reviewed by the Board at every meeting. The Board aims to minimise the ongoing charges figure which provides a guide to the effect on performance of all annual operating costs of the Company. The ongoing charges figure is calculated by dividing the annualised ongoing charges, including those charged to capital, by the average daily net asset value during the year, expressed as a percentage. At the year end the ongoing charges figure of the Company and that for the different Share classes were as follows: GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY 2020 0.90% 0.89% 0.88% 1.25% 0.35% 2019 0.87% 0.86% 0.86% 1.21% 0.38% The above excludes rebates received by the Managed Liquidity Portfolio and, since neither the UK Equity nor Global Equity Income Portfolios outperformed their benchmarks over the past two years, there is no performance fee impact. In addition to inflationary effects, shrinkage from buybacks in connection with the discount control policy will tend to cause the ongoing charge percentages to gradually increase. Financial Position Assets and Liabilities The Company’s balance sheet on page 76 shows the assets and liabilities at the year end. Details of the Company’s borrowing facility are shown in note 12(b) of the financial statements on page 90, with interest paid (finance costs) in note 5. Owing to the readily realisable nature of the Company’s assets, cash flow does not have the same significance as for an industrial or commercial company. The Company’s principal cash flows arise from the purchases and sales of investments and the income from investments against which must be set the costs of borrowing and management expenses.

Borrowing Policy Borrowing policy is under the control of the Board, which has established effective parameters for the Portfolios. Borrowing levels are regularly reviewed. As part of the Company’s Investment Policy, the approved borrowing limits are 25% of the net assets of the UK Equity Portfolio and 20% of net assets of the Global Equity Income Portfolio. The Balanced Risk Allocation Portfolio does not use borrowings, but is geared by means of the derivative instruments used to implement its investment policy. The Managed Liquidity Portfolio does not use borrowings.

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Issued Share Capital All Share classes have a nominal value of 1 penny per Share. The following table summarises the Company’s share capital at the year end and movements during the year. GLOBAL BALANCED UK EQUITY RISK MANAGED NUMBER OF SHARES EQUITY INCOME ALLOCATION LIQUIDITY Shares in issue at the year end: – excluding treasury 31,977,941 28,786,800 5,236,886 2,497,032 – held in treasury 11,977,812 10,514,159 5,321,218 8,681,678 Movements during the year: Increase/(decrease) arising from conversions 350,118 331,702 (217,542) (997,436) Shares bought back into treasury (1,460,772) (3,213,136) (164,000) (875,893) Average price thereon 167.4p 197.8p 138.2p 101.3p

Since the year end another 1,698,000 UK Equity Shares and 1,311,000 Global Equity Income Shares have been bought into treasury at average prices of 141.2p and 178.0p, respectively. Further details on net changes in issued share capital are set out in note 13 to the financial statements on pages 90 and 91. No treasury shares were cancelled during the year. Current and Future Developments As part of the Company’s overall strategy, the Company seeks to manage its affairs so as to maximise returns for shareholders. The Board also has a longer-term objective to increase the size of the Company in the belief that increasing the assets of the Company in this way will make the Company’s Shares more attractive to investors and improve the liquidity of the Shares. Details of trends and factors likely to affect the future development, performance and position of the Company’s business can be found in the Chairman’s Statement and the portfolio managers’ reports. Further details as to the risks affecting the Company are set out under ‘Principal Risks and Uncertainties’ below. Principal Risks and Uncertainties The Audit Committee regularly undertakes a robust assessment of the risks the Company faces, including those that would threaten its business model, future performance, solvency, reputation or liquidity and emerging risks, on behalf of the Board (see Audit Committee Report on pages 49 to 51). The following are considered to be the most significant risks to the Company and to shareholders in relation to their investments in the Company. Further details of risks and risk management policies as they relate to the financial assets and liabilities of the Company are detailed in note 16 to the financial statements.

Investment Objectives and Attractiveness to Investors There is no guarantee that the Investment Policy of the Company and of each Portfolio will provide the returns sought by the Company. There can be no guarantee, therefore, that the Company will achieve its investment objectives or that the Shares will continue to meet investors’ needs. The Board monitors the share registers and the performance of the Company and each Portfolio. It has established a structure offering a range of options for investors and has set guidelines to ensure that the Investment Policy of the Company and each Portfolio is pursued by the Manager.

Market Movements and Portfolio Performance Individual Portfolio performance is substantially dependent on the performance of the securities (including derivative instruments) held within the Portfolio. The prices of these securities are influenced by many factors including the general health of regional and worldwide economies; interest rates; inflation; government policies; industry conditions; political and diplomatic events; tax laws; environmental laws; and by the demand from investors. The Manager strives to maximise the total return from Portfolios, but the investments held are influenced by market conditions and the Board

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STRATEGIC REPORT continued

acknowledges the external influences on the performance of each Portfolio. Further risks specifically applicable to the Balanced Risk Allocation Shares are set out on page 42. The extreme market volatility experienced in February and March 2020 from the market reaction to Covid-19, and the continuing effects, exemplify the risks from external influences. All of the Company’s Portfolios, except for Managed Liquidity, were, and are still being, considerably affected. There is an ongoing risk to global economies from the measures taken in response to Covid-19, many companies are at risk from the effects of the imposed lockdowns on their production and revenues and this has a consequential effect on the availability of investment income. The performance of the Manager is carefully monitored by the Board and the Chairman has brought attention to the Board’s concerns about recent performance on page 3. The continuation of the Manager’s mandates is reviewed each year. The Board has established guidelines to ensure that the investment policies of each class of Share are pursued by the Manager. For a fuller discussion of the economic and market conditions facing the Company and the current and future performance of the different Portfolios of the Company, please see both the Chairman’s Statement on pages 3 to 5 and the portfolio managers’ reports starting on page 8.

Risks Applicable to the Company’s Shares Shares in the Company are designed to be held over the long-term and may not be suitable as short-term investments. There can be no guarantee that any appreciation in the value of the Company’s Shares will occur and investors may not get back the full value of their investments. Owing to the potential difference between the mid-market price of the Shares and the prices at which they are sold, there is no guarantee that their realisable value will reflect their mid-market price. The market value of a Share, as well as being affected by its net asset value (NAV), is also influenced by investor demand, its dividend yield, where applicable, and prevailing interest rates, amongst other factors. As such, the market value of a Share can fluctuate and may not reflect its underlying NAV. Shares may therefore trade at discounts to their NAVs. However, the Board has adopted a discount control policy that applies to all Share classes and the Board and the Manager monitor the market rating of each Share class. Past performance of the Company’s Shares is not necessarily indicative of future performance. While it is the intention of the Directors to pay dividends to holders of the UK Equity, Global Equity Income and Managed Liquidity Shares, this will be affected by the returns achieved by the respective Portfolios and the dividend policy adopted by the Board. Accordingly, the amount of dividends paid to shareholders may fluctuate. Any change in the tax or accounting treatment of dividends received or other returns may also affect the level of dividend paid on the Shares in future years. The Directors have resolved, in the absence of unforeseen circumstances, to supplement revenue with capital profits in order to pay equity Portfolio dividends at target levels set by the Board (see page 36).

Viability and Compulsory Conversion of a Class of Share It is possible that through poor performance, market sentiment, or otherwise, lack of demand for one of the Company’s Share classes could result in the relevant Portfolio becoming too small to be viable. The Board monitors share conversions and Portfolio sizes and liaises with the Manager on the continued viability of each Share class. The Board has received assurances from the Manager that the size of the portfolios is not critical to the Manager being able to continue to offer its investment management services in respect of any of the Company’s four portfolio strategies. The continued listing on the Official List of each class of Share is dependent on at least 25% of the Shares in that class being held in public hands. This means that if more than 75% of the Shares of any class were held by, inter alia, the Directors, persons connected with Directors or persons interested in 5% or more of the relevant Shares, the listing of that class of Share might be suspended or cancelled. The Listing Rules state that the FCA may allow a reasonable period of time for the Company to restore the appropriate percentage if this rule is breached, but in the event that the listing of any class of Shares were cancelled the Company would lose its investment trust status. Accordingly, if at any time the Board considers that the listing of any class of Share on the Official List is likely to be cancelled and the loss of such listing would mean that the Company would no longer be able to qualify for approval as an investment trust under section 1158 of the Corporation Tax

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Act 2010, the Board may serve written notice on the holders of the relevant Shares requiring them to convert their Shares into another Share class.

Liability of a Portfolio for the Liabilities of Another Portfolio The Directors intend that, in the absence of unforeseen circumstances, each Portfolio will effectively operate as if it were a stand-alone company. However, investors should be aware of the following factors: • As a matter of law, the Company is a single entity. Therefore, in the event that any of the Portfolios has insufficient funds or assets to meet all of its liabilities, on a winding-up or otherwise, such a shortfall would become a liability of the other Portfolios and would be payable out of the assets of the other Portfolios in such proportions as the Board may determine; and • The Companies Act 2006 prohibits the Directors from declaring dividends in circumstances where, following the distribution, the Company’s assets would represent less than one and a half times the aggregate of its liabilities or the amount of net assets would be less than the aggregate of its share capital and undistributable reserves. If the Company were to incur material liabilities in the future, a significant fall in the value of the Company’s assets as a whole may affect the Company’s ability to pay dividends on a particular class of Share, even though there are distributable profits attributable to the relevant Portfolio. Gearing Performance may be geared by use of the £20 million 364 day multicurrency revolving credit facility. The Company also has an uncommitted overdraft facility of up to 10% of net assets. There is no guarantee that these facilities will be renewed at maturity or on terms acceptable to the Company. If it were not possible to renew these facilities or replace them with one from another lender, the amounts owing by the Company would need to be funded by the sale of securities. This facility stood at £25 million over most of the financial year and, although the covenant attached to the facility was not in danger of being breached during the height of the Covid-19 market volatility, this risk was further mitigated by reducing the facility, together with the covenant, at its renewal in May this year. The Balanced Risk Allocation Portfolio may also be geared (by up to 250%, according to the investment policy set out on page 34) by means of the derivative instruments in which it invests. This is discussed separately below, under the heading: Additional Risks Applicable to Balanced Risk Allocation Shares. Gearing levels of the different Portfolios will change from time to time in accordance with the respective portfolio managers’ assessments of risk and reward. Where market exposure is geared, any reduction in the value of the geared Portfolio’s investments may lead to a correspondingly greater percentage reduction in its NAV (which is likely to affect Share prices adversely). Any reduction in the number of Shares in issue (for example, as a result of buy backs) will, in the absence of a corresponding reduction in borrowings, result in an increase in a Portfolio’s gearing. Whilst the use of borrowings by the Company should enhance the total return on a particular class of Share where the return on the underlying securities is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is falling, further reducing the total return on that Share class. Similarly, the use of gearing by investment companies or funds in which the Company invests increases the volatility of those investments.

Hedging The Company may use derivatives to hedge its exposure to currency or other risks and for the purpose of efficient portfolio management. There may be a correlation between price movements in the underlying securities, currency or index, on the one hand, and price movements in the investments, which are the subject of the hedge, on the other hand. In addition, an active market may not exist for a particular hedging derivative instrument at any particular time.

Regulatory and Tax Related The Company is subject to various laws and regulations by virtue of its status as a public limited investment company registered under the Companies Act 2006, its status as an investment trust and its listing on the London Stock Exchange. Loss of investment trust status could lead to the Company being subject to UK Capital Gains Tax on the sale of its investments. A serious breach of other regulatory rules could lead to suspension from the London Stock Exchange, a fine or a qualified Audit Report. Other control failures, either by the Manager or any other of the Company’s service providers, could result in operational or reputational problems, erroneous disclosures or loss of assets through fraud, as well as breaches of regulations.

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STRATEGIC REPORT continued

The Manager reviews the level of compliance with the Corporation Tax Act 2010 and other financial regulatory requirements on a daily basis. All transactions, income and expenditure are reported to the Board. The Board regularly considers the risks to which the Company is exposed, the measures in place to control them and the potential for other risks to arise. The Board ensures that satisfactory assurances are received from service providers. The depositary and the Manager’s compliance and internal audit officers report regularly to the Company’s Audit Committee. The risks and risk management policies and procedures as they relate to the financial assets and liabilities of the Company are also detailed in note 16 to the financial statements.

Additional Risks Applicable to Balanced Risk Allocation Shares The use of financial derivative instruments forms part of the investment policy and strategy of the Balanced Risk Allocation Portfolio. The Portfolio’s ability to use these instruments may be limited by market conditions, regulatory limits and tax considerations. The absence of a liquid market for any particular instrument at any particular time may inhibit the ability of the Manager to liquidate a financial derivative instrument at an advantageous price. However, the Manager actively seeks the most liquid means of obtaining the required exposures. The financial derivative instruments used for the strategy are geared instruments and the aggregate notional exposure will usually exceed the net asset value of the Portfolio. Whilst this could result in greater fluctuations in the net asset value, and consequently the share price, the use of leverage is normally necessary to achieve the target volatility required to meet the return objective. The degree of leverage inherent in futures trading potentially means that a relatively small price movement in a futures contract may result in an immediate and substantial loss and it would be necessary to increase the collateral held at the clearing broker to cover such loss. This is mitigated by the Company not using financial derivative instruments to create net short positions in any asset class combined with holding cash balances sufficient to meet collateral requirements.

Reliance on Third Party Service Providers The Company has no employees and the Directors have all been appointed on a non-executive basis. The Company is therefore reliant upon the performance of third party service providers for its executive function. In particular, the Manager performs services that are integral to the operation of the Company and the custodian appointed by the depositary holds assets on its behalf. Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to successfully pursue its Investment Policy. The Manager may be exposed to reputational risks. In particular, the Manager may be exposed to the risk that litigation, misconduct, operational failures, negative publicity and press speculation, whether or not it is valid, will harm its reputation. Any damage to the reputation of the Manager could result in potential counterparties and third parties being unwilling to deal with the Manager and by extension the Company. This could have an adverse impact on the ability of the Company to successfully pursue its Investment Policy. The Directors continue to monitor the Covid-19 situation closely, together with the Manager and third-party service providers. A range of actions have been implemented to ensure that the Company and its service providers are able to continue to operate as normal, even in the event of prolonged disruption. The Manager’s business continuity plans are reviewed on an ongoing basis and the Directors are satisfied that the Manager has in place robust plans and infrastructure to minimise the impact on its operations so that the Company can continue to trade, meet regulatory obligations, report and meet shareholder requirements. The Manager has mandated work from home arrangements and split team working will be implemented when business premises reopen. Any meetings are being held virtually or via conference calls. The Company’s other service providers have similar working arrangements in place. Viability Statement The Company is an investment company which operates as a collective investment vehicle, designed and managed for long term investment. The Board considers long term for this purpose to be at least three years and so has assessed the Company’s viability over this period. However, the life of the Company is not intended to be limited to that or any other period.

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In assessing the viability of the Company the Board considered the principal risks to which it is exposed, as set out on pages 39 to 42, together with mitigating factors. The risks of failure to meet the Company’s and the Portfolios’ investment objectives, contributory market and investment risks and the challenges of lack of scale were considered to be of particular importance. The Board also took into account the capabilities of the Manager and the varying market conditions already experienced by the Company since its launch in 2006, including from Covid-19 this year. Despite the disruption to markets from Covid-19 and the impact on global economies, the Directors remain confident that the Company’s investment strategies will continue to serve shareholders well over the longer term. On the question of scale, the Board has concluded that if an individual Portfolio became too small it should not cause the Company itself to be unviable. In terms of financial risks to viability, materially all of the investments comprising the portfolios are readily realisable. The equity portfolios also produce a stream of dividend income, which may fluctuate but which the Board expects to continue. The Company has no long term liabilities and the total value of the portfolios is a multiple of the value of the Company’s short term liabilities and annual operating costs. Consequently, there appears little to no prospect of the Company not being able to meet its financial obligations as they fall due in the next three years. Based on the above, the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment. Audit Committee Report The extended audit committee report required by the UK Corporate Governance Code is set out on pages 49 to 51. There are no areas of concern in relation to the financial statements to bring to the attention of shareholders. Board’s Duty to Promote the Success of the Company As set out in the Directors’ Report on page 52 the Directors have a statutory duty to promote the success of the Company, whilst also having regard to certain broader matters, including the need to engage with employees, suppliers, customers and others, and to have regard to their interests (s172 Companies Act 2006). However, the Company has no employees and no customers in the traditional sense. In fulfilling these duties, and in accordance with the Company’s nature as an investment trust, the Board’s principal concern has been, and continues to be, the interests of the Company’s shareholders taken as a whole. Notwithstanding this, the Board has a responsible governance culture and also has due regard for broader matters so far as they apply. In particular, the Board engages with the Manager at every Board meeting and reviews the Company’s relationships with other service providers, such as the registrar, depositary and custodian, at least annually. During the year the most significant engagement was with the Manager and, in particular the individual portfolio managers. Matters engaged upon included the change in the designated manager of the Global Equity Income Portfolio and the guidance on the number of holdings typically held in that portfolio, both of which were announced to the market and are covered elsewhere in this report. As would be expected, there was also engagement with service providers generally in connection with the lockdown conditions due to Covid-19, all of which were able to report business as usual capability. The Board is committed to maintaining high standards of Corporate Governance. The Corporate Governance Statement required by the UKLA Listing Rules is set out on page 48. Environment, Social and Governance considerations are dealt with in a separate section of this Strategic Report on pages 44 and 45. Shareholder relations are given high priority by the Board and the Manager. The prime means by which the Company communicates with shareholders are the annual and half-yearly financial reports, which aim to provide shareholders with a full understanding of the Company’s activities and its results. This information is supplemented by daily publication of the NAVs of the Company’s shares via the London Stock Exchange, ad hoc regulatory announcements, monthly factsheets and other information on the Manager’s website, including pre-investment information, key information document (KID), shareholder circulars, Portfolio disclosures, conversion forms and instructions, Stock Exchange announcements, schedule of matters reserved for the Board, terms of reference of Board Committees, Directors’ letters of appointment, the Company’s share price and proxy voting results.

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STRATEGIC REPORT continued

The Chairman and Directors welcome contact with shareholders, although this has been difficult recently with the Covid-19 situation. There is a regular dialogue between the Manager and individual major shareholders to discuss aspects of investment performance, governance and strategy and to listen to shareholder views in order to help develop a balanced understanding of their issues and concerns. The Company’s corporate broker, Investec Bank plc, is also consulted. General presentations to institutional shareholders and analysts take place throughout the year. All meetings between the Manager and institutional shareholders are reported to the Board. It is the intention of the Board that the annual financial report and the notice of the AGM be issued to shareholders so as to provide at least twenty working days’ notice of the AGM. Shareholders wishing to lodge questions in advance of the AGM are invited to do so, either on the reverse of the proxy card or in writing to the Company Secretary at the address given on page 109. There is a clear channel of communication between the Board and the Company’s shareholders via the Company Secretary. The Company Secretary has no express authority to respond to enquiries addressed to the Board and all such communication, other than junk mail, is redirected to the Chairman or Senior Independent Director as appropriate. Shareholders normally have the opportunity to communicate directly with the Directors at the AGM. It is hoped that by the date of this year’s AGM on 6 October 2020 restrictions due to Covid-19 will have eased and, if so, shareholders are encouraged to attend the AGM. However, should this not be the case the AGM may have to be held as a closed meeting. In this eventuality it is recommended that shareholders exercise their votes by means of registering them with the Company’s registrar ahead of the meeting, online or by completing paper proxy forms, and appoint the Chairman of the meeting as their proxy. Questions, on the business of the meeting or otherwise, may be addressed to the Company Secretary, by email to [email protected] or, by letter, to 43-45 Portman Square, London W1H 6LY. Board Diversity The Company’s policy on diversity is set out on page 55. At the year end the Board comprised three male and one female non-executive Directors resulting in female representation of 25%. A recruitment process last year was ultimately unsuccessful, as described on page 54, and its resumption has been postponed because of the difficulty of conducting it in lockdown conditions. The Board has reaffirmed that when the recruitment process for a new Director recommences later this year, it has a strong preference for the appointee to be female. If an appropriate female appointee is identified, female representation on the Board will become 40%, or 50% on the presumption that Alan Clifton would retire from the Board shortly thereafter (see page 54). Summary biographical details of all the current Directors are set out on page 46. The Company has no employees. Environment, Social and Governance (ESG) Matters As an investment company with no employees, property or activities outside investment, environmental policy has limited application. A greenhouse gas emissions statement is included in the Directors’ Report on page 57. In relation to the portfolios, the Company has delegated the management of the Company’s investments to the Manager, who has an ESG Guiding Framework which sets out a number of principles that are intended to be considered in the context of its responsibility to manage investments in the financial interests of shareholders. The Manager is committed to being a responsible investor and applies, and is a signatory to, the United Nations Principles for Responsible Investment, which demonstrates its extensive efforts in terms of ESG integration, active ownership, investor collaboration and transparency. The Manager is also a signatory to the FRC Stewardship Code 2012, which seeks to improve the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities. The equity investment teams incorporate ESG considerations in their investment processes as part of the evaluation of new opportunities, with identified ESG concerns feeding into the final investment decision and assessment of relative value. The portfolio managers make their own conclusions about the ESG characteristics of each investment held and about the overall ESG characteristics of the portfolio, although third party ESG ratings may inform their view. Additionally, the Manager’s ESG team provides formalised ESG portfolio monitoring. This is a rigorous semi-annual process where the portfolios are reviewed from an ESG perspective.

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Regarding stewardship, the Board considers that the Company has a responsibility as a shareholder towards ensuring that high standards of corporate governance are maintained in the companies in which it invests. To achieve this, the Board does not seek to intervene in daily management decisions, but aims to support high standards of governance and, where necessary, will take the initiative to ensure those standards are met. The principal means of putting shareholder responsibility into practice is through the exercise of voting rights. The Company’s voting rights are exercised on an informed and independent basis. The Company’s stewardship functions have been delegated to the Manager, which has adopted a clear and considered policy towards its responsibility as a shareholder on behalf of the Company. As part of this policy, the Manager takes steps to satisfy itself about the extent to which the companies in which it invests look after shareholders’ value and comply with local recommendations and practices, such as the UK Corporate Governance Code. A copy of the current Manager’s Stewardship Policy, which is updated annually, can be found at www.invesco.co.uk/investmenttrusts. As an investment vehicle the Company does not provide goods or services in the normal course of business, and does not have customers. Accordingly, the Directors consider that the Company is not within the scope of the Modern Slavery Act 2015.

This Strategic Report was approved by the Board on 31 July 2020.

Invesco Asset Management Limited Company Secretary

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DIRECTORS

Graham Kitchen Craig Cleland Chairman of the Board Chairman of the Audit and Nomination Committee Committee Mr Cleland was Mr Kitchen was appointed as a Director appointed as a Director with effect from on 1 June 2018 and 1 November 2016 and became the Chairman became Chairman of of the Company on the Audit Committee 3 October 2019. He was on 31 July 2017. He is Global Head of Equities at Janus Henderson Head of Corporate Development: Investment Investors until March 2018, having joined in 2005. Trusts, at CQS (UK) LLP. He is also a He was briefly at Threadneedle Investments before non-executive director of BlackRock Latin that, having previously spent 13 years at Invesco American Investment Trust plc. He was previously as a UK Fund Manager and Co-Head of at JPMorgan Asset Management (UK) Limited, Investment. He is a non-executive director of The latterly as Managing Director, and led their Mercantile Investment Trust plc, AVI Global Trust technical groups in the investment trust business. plc and Places for People and is a member of the Prior to that he was a Director and senior Investment Committee of the charity Independent company secretary at Fleming Investment Trust Age. Management, transferring to JPMorgan Asset Management after Chase Manhattan Bank acquired Robert Fleming Holdings Limited.

Victoria Muir Alan Clifton Chairman of the Senior Independent Marketing Committee Director and Chairman Ms Muir was appointed of the Management as a Director with effect Engagement Committee from 1 July 2015. She is Mr Clifton was a Chartered Director and appointed as a Director a Fellow of the Institute on 10 January 2008. He of Directors. She is a is a former managing distribution specialist partner of the and has worked in financial services, with a focus stockbrokers, Kitcat & Aitken, and from 1990 until on asset management, for over 25 years. She was 2001 was the managing director of Morley Fund Global Head of Investor Relations at BlueBay Asset Management (now Aviva Investors), the asset Management and Head of Client Account management arm of Aviva plc, the UK’s largest Management at Royal London Asset insurance group. He is a past chairman of a Management, where she held four executive number of investment trusts and remains a directorships. She is a non-executive director of director of Macau Property Opportunities Fund Ltd. Christie Group plc, Schroder Income Growth Fund plc, Premier Global Infrastructure Trust plc and its subsidiary PGIT Securities 2020 plc, Smith & Williamson Fund Administration Limited and State Street Trustees Limited. Ms Muir is also chair of State Street Managed Accounts Services Ltd. Ms Muir holds no executive positions.

All Directors are, in the opinion of the Board, independent of the management company. All Directors are non-executive.

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THE COMPANY’S GOVERNANCE FRAMEWORK AT 31 MAY 2020

The Board and Committees Responsibility for good governance lies with the Board. The governance framework of the Company reflects the fact that as an Investment Company it has no employees and outsources investment management to the Manager and administration to the Manager and other external service providers.

The Board Four non-executive directors (NEDs) Chairman – Graham Kitchen Key responsibilities: – to set strategy, values and standards; – to provide leadership within a framework of prudent effective controls which enable risk to be assessed and managed; and – to appoint service providers and to challenge constructively and scrutinise their performance.

Nomination Management Audit Remuneration Marketing Committee Engagement Committee Committee Committee Committee Function (page 55) (page 55) (pages 49 to 51) (page 52) (page 55)

All NEDs All NEDs All NEDs except The Board as a whole Craig Cleland, Alan Company Chairman performs this function Clifton, Victoria Muir Chairman – Chairman – Chairman – Chair – Graham Kitchen Alan Clifton Craig Cleland Victoria Muir

Key responsibilities: Key responsibilities: Key responsibilities: Key responsibility: Key responsibility: – to review regularly – to review the – to oversee – to set the – to oversee the Board’s performance of financial remuneration marketing and structure and the Manager; and reporting, risk policy of the investor relations. composition; and – to review other assessment and Company. – to make any new service providers. the control appointments. environment; and – to manage the relationship with the external auditor, including fees and any non audit services.

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CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 MAY 2020

The Board is committed to maintaining high standards of Corporate Governance and is accountable to shareholders for the governance of the Company’s affairs. The Directors have considered the principles and provisions of the latest AIC Code of Corporate Governance (AIC Code). The AIC Code addresses all the principles and provisions set out in the UK Corporate Governance Code (UK Code), as well as setting out additional principles and recommendations on issues that are of specific relevance to investment companies. The AIC code is available from the Association of Investment Companies website (www.theaic.co.uk). The UK code is available from the Financial Reporting Council website (www.frc.org.uk). The Company has complied with the 2019 AIC Code, and hence has met its obligations under the 2018 UK Code, except the provisions relating to: • the role of the chief executive; • executive directors’ remuneration; and • the need for an internal audit function. For the reasons set out in the AIC Code, the Board considers these provisions are not relevant to the position of Invesco Perpetual Select Trust plc, being an externally managed investment company with no executive employees and, in relation to the third, in view of the Manager having an internal audit function. Information on how the Company has applied the principles of the 2019 AIC Code follows: The Company’s purpose, overall strategy and the Board’s culture are set out on page 32. The investment objectives and policies of the Company’s four Portfolios are set out on pages 32 to 35. A statement on how s172 of the Companies Act has been applied is set out on pages 43 and 44. The composition and operation of the Board and its committees are summarised on pages 52 to 55 and, in respect of the Audit Committee, on pages 49 to 51. The Directors biographies on page 46 set out their other directorships and further factors pertinent to potential conflicts of interest are set out on page 52. Tenure, succession, evaluation and appointment of Directors are summarised on pages 53 and 54. The Board’s policy on diversity is set out on page 55. The Company’s approach to internal control and risk management is summarised in the Audit Committee Report on pages 49 to 51. The principal risks and uncertainties are set out on pages 39 to 42. Statements supporting preparation of the financial statements on a going concern basis and in respect of the Company’s longer term viability are set out on pages 56 and 42 to 43, respectively. The contractual arrangements with, and assessment of, the Manager are summarised on pages 56 and 57. The Company’s capital structure and voting rights are summarised on pages 57 and 58. The most substantial shareholders in the Company are listed on pages 58 and 59. The rules concerning the appointment and replacement of directors are contained in the Company’s Articles of Association and are discussed on page 54. There are no agreements between the Company and its Directors concerning compensation for loss of office. Powers to issue or buy back the Company’s shares, which are sought annually, and any amendment of the Company’s Articles of Association require approval by shareholders.

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AUDIT COMMITTEE REPORT FOR THE YEAR ENDED 31 MAY 2020

The Audit Committee comprises all of the Directors on the Board except the Chairman of the Company. The Committee members consider that collectively they are appropriately experienced to fulfil the role required, including with respect to financial knowledge and knowledge about the investment trusts sector. A separate risk committee has not been established. Review of the Company’s internal control and risk management fall within the terms of reference of the Audit Committee. Audit Committee Responsibilities The responsibilities of the Audit Committee include: – reviewing the systems of internal control and the management of financial risks; – consideration of the Manager’s internal audit programme and the results reported therefrom; also monitoring the effectiveness of the Manager’s internal audit function and the adequacy of its resources; – review of the performance fee calculations; – reviewing each aspect of the financial reporting process, the annual and half-yearly financial reports and announcements of the Company and ensuring compliance with relevant statutory and listing requirements; – management of the relationship with the external auditor, including their appointment and remuneration, and the scope, effectiveness, independence and objectivity of their audit; and – advising the board on whether the Committee believes the annual financial report taken as a whole is fair, balanced and understandable and provides the necessary information for shareholders to assess the Company’s position and performance, business model and strategy. The Audit Committee meets at least three times each year to review the internal financial and non-financial controls, to approve the contents of the draft annual and half-yearly financial reports to shareholders, to review the Company’s accounting policies and to approve the audit plan. In addition, the Audit Committee reviews the auditor’s independence, objectivity and effectiveness; the service organisation controls of the service providers to the Company; the effectiveness of the audit process; and, together with the Manager, reviews the Company’s compliance with financial reporting and regulatory requirements. The Manager’s internal audit and compliance teams report to the Committee at least twice each year and the depositary reports at least annually. Representatives of Grant Thornton UK LLP, the Company’s auditor, attended the Audit Committee meeting at which the draft annual financial report was reviewed and were given the opportunity to speak to Committee members without the presence of representatives of the Manager. The audit plan is agreed with the auditor in advance of the financial year end. At this stage, matters for audit focus are discussed and agreed. These matters are given particular attention during the audit process and, among other matters, are reported on by the auditor in their audit results report to the Committee. This report is considered by the Committee and discussed with the auditor and the Manager prior to the approval and signing of the financial statements. Accounting Matters and Significant Areas For the year end the accounting matters that were subject to specific consideration by the Committee and consultation with the auditor, where necessary, were as follows: SIGNIFICANT AREA HOW ADDRESSED Portfolio Ownership The investments are held on behalf of the Company by the Company’s and Valuation custodian. The Manager confirmed to the Committee that the Company’s records, both throughout the year and at the year end, had been agreed to the custodian’s records. The depositary also undertook an independent monthly reconciliation to custodian records, including at the balance sheet date. Actively traded listed investments are valued using stock exchange prices provided by third party pricing vendors. Investments that are unlisted or not actively traded are valued as set out in the accounting policy 1(b)(v), and any such valuations are reviewed by the Manager’s pricing committee and the Audit Committee.

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AUDIT COMMITTEE REPORT FOR THE YEAR ENDED 31 MAY 2020 continued

SIGNIFICANT AREA HOW ADDRESSED Income Recognition The Manager confirmed to the Committee that each stock line had been reviewed to ensure that those marked ex-dividend in the year were included in the income statement and that any special dividends were appropriately attributed to revenue or capital. Performance Fees The UK Equity and Global Equity Income year end performance fee calculations were prepared and reviewed by the Manager and reviewed in depth by the Committee, all with reference to the investment management agreement. These matters were discussed with the Manager and the auditor in pre year end audit planning, and were satisfactorily addressed as described above and through consideration of reports provided by, and discussed with, the Manager and the auditor at the conclusion of the audit process. Following a thorough review of the 2020 annual financial report, the Audit Committee is satisfied that taken as a whole the report is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. As Audit Committee Chairman I, Craig Cleland, intend to be present at the AGM to deal with questions relating to the financial statements. Auditor Grant Thornton UK LLP was selected to be the Company’s external auditor following a tender exercise in 2016 and was appointed by shareholders on 4 October 2016. This year’s audit of the Company’s annual financial report was the fourth performed by Grant Thornton UK LLP. Marcus Swales has served as the audit partner responsible for the Company’s audit since appointment. The Committee assessed the effectiveness of the external audit process, having reviewed the audit plan, its execution and reporting, through discussions with the Manager and the auditor and consideration of review points raised. In addition, the Committee considered the independence of the external auditor and the objectivity of the audit process and is satisfied that Grant Thornton UK LLP has fulfilled its obligations to shareholders as independent auditor to the Company. It is the Company’s policy not to seek substantial non-audit services from its auditor. No non-audit services were provided during the year. All non-audit services require approval in advance by the Audit Committee. Prior to any engagement, the Committee would consider whether the particular skills and experience of the audit firm would make them a suitable supplier of those services and ensure that there would be no threat to the objectivity and independence in the conduct of the audit arising as a result. Internal Controls and Risk Management The Committee has established an ongoing process for identifying, evaluating and managing the major risks faced by the Company, including emerging risks, and this forms the basis of the Board’s robust assessment of the risks to which the Company is exposed. Risks are reviewed by means of a risk control summary (RCS), which sets out mitigating controls and the information flow to the Committee and Directors. The assessed ratings of the mitigated risks, in the form of a risk heat map, allow the Directors to concentrate on those risks that they gauge to be most significant to the Company’s operations. These are reflected in the list of principal risks and uncertainties brought to the attention of investors in the Strategic Report on pages 39 to 42. The Audit Committee, on behalf of the Board, is responsible for ensuring that the Company maintains a sound system of internal control to mitigate risk and safeguard shareholders’ investments and the Company’s assets. The Company relies on external service providers for all of its operations and on the controls they operate on behalf of the Company. Consequently these are integral to the effectiveness of the Company’s system of internal controls. The Committee receives and considers at least annually, together with representatives of the Manager, service organisation control reports from the relevant service provider in relation to the operational controls of the investment manager, company secretary, accounting administrator, custodian and registrar. These each include an independent auditor’s opinion on the fairness of the presentation of the description, the suitability of the design and the operating effectiveness of the controls to achieve the related control objectives stated in that description, based on their examination.

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The Committee ensures that appropriate action is taken to remedy any significant failings or weaknesses identified from its reviews. No significant items were identified in the year. The Audit Committee also receives regular reports from the depositary and the Manager’s internal audit and compliance teams, as discussed earlier in this report. The risk management and internal control system have been in place throughout the year and up to the date of this report. The Committee has reviewed and accepted the Manager’s ‘Whistleblowing’ policy under which staff of Invesco Fund Managers Limited can, in confidence, raise concerns about possible improprieties or irregularities in matters affecting the Company. Internal Audit Due to the nature of the Company, being an externally managed investment company with no executive employees, and in view of the Manager having an internal audit function, the Company does not have its own internal audit function.

Craig Cleland Chairman of the Audit Committee 31 July 2020

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DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MAY 2020

Business and Status The Company was incorporated and registered in England and Wales on 25 August 2006 as a public limited company, registered number 5916642. It is an investment company as defined by section 833 of the Companies Act 2006 and operates as an investment trust within the meaning of the Corporation Tax Act 2010 (CTA) and the Investment Trusts (Approved Company) (Tax) Regulations 2011. HM Revenue & Customs has approved the Company’s status as an investment trust and, in the opinion of the Directors, the Company has conducted its affairs so as to enable it to maintain such approval. The Board The Company has a Board of four non-executive directors who oversee and monitor the activities of the Manager and other service providers on behalf of shareholders and ensure that the investment policy is adhered to. Details of the Board’s responsibilities, the information it relies upon and the number of meetings it holds follow. Certain aspects of the Company’s affairs are dealt with by the Directors sitting as Committees of the Board, descriptions of which also follow. The Board has resolved that a remuneration committee is not appropriate for a company of this nature with a Board of this size. Remuneration is therefore regarded as part of the Board’s responsibilities. For information on the Directors’ remuneration please refer to the Directors’ Remuneration Report on pages 63 to 65. The Board considers that all of the Directors are wholly independent of the Company’s Manager. For the avoidance of doubt, the Board does not consider Mr Kitchen’s past employment by the Manager, which he left in 2004, to impair his independence. Also, the Board is satisfied that Mr Clifton, who has served on the Board for more than nine years, remains independent in character and judgement from the Company’s Manager. The Directors have a range of business, financial and asset management skills as well as experience relevant to the direction and control of the Company. Brief biographical details of the members of the Board are shown on page 46.

Chairman The Chairman is responsible for the leadership of the Board and ensuring its effectiveness. The Chairman is Graham Kitchen, who is a non-executive and independent Director with no conflicting relationships.

Senior Independent Director and Chief Executive Officer Alan Clifton is the Senior Independent Director. He is available to shareholders if they have concerns which contact through the normal channels of Chairman, Manager or Company Secretary have failed to resolve or for which such contact may be inappropriate. Since all Directors are non-executive and day-to-day management responsibilities are subcontracted to the Manager, the Company does not have a Chief Executive Officer.

Board Responsibilities The Directors have a duty to promote the success of the Company taking into consideration the likely consequences of any decision in the long-term; the need to foster the Company’s business relationships with its Manager; the impact of the Company’s operations on the community and the environment; the desire for the Company to maintain a reputation for high standards of business conduct; and the need to act fairly between stakeholders of the Company. The Board directs the Company in accordance with these duties and ensures that it operates within a framework of effective controls which enable risk to be assessed and managed. A formal schedule of matters reserved for the Board has been established. The schedule of matters is reviewed annually to ensure compliance with latest best practice and the AIC Code and is available for inspection at the AGM, at the registered office of the Company, and on the Manager’s website. The main responsibilities of the Board include: setting policies and standards; ensuring that the Company’s obligations to shareholders and others are understood and complied with; approving accounting and dividend policies; managing the capital structure; setting long-term objectives and strategy; assessing risk; reviewing investment performance; approving loans and borrowing; approving recommendations presented by the Company’s respective Board Committees; controlling risks; and the ongoing assessment of the Manager. The Board also seeks to ensure that shareholders are provided with sufficient information in order to understand the risk/reward balance to which they are exposed by holding their Shares, through the Portfolio details given in the annual and half-yearly financial reports, and regulatory information service announcements, including daily NAV disclosures.

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The Board is committed to the prevention of corruption in the conduct of the Company’s affairs and, taking account of the nature of the Company’s business and operations, has put in place procedures that the Board considers adequate to prevent persons associated with it from engaging in bribery for and on behalf of the Company. The Board has a zero tolerance approach towards the facilitation of tax evasion. As stated above, the Board as a whole periodically undertakes the responsibilities which would otherwise be assumed by a remuneration committee.

Supply of Information To enable the members of the Board to fulfil their roles, the Manager and Company Secretary ensure that Directors have timely access to all relevant management, financial and regulatory information. The Board meets on a regular basis at least five times each year and additional meetings are arranged as necessary. Regular contact is maintained between the Manager, Company Secretary and the Board outside formal meetings. Board meetings follow a formal agenda, which includes a review of each Portfolio with a report from the respective portfolio manager on the current investment position and outlook; strategic direction; performance against relevant indices and the Portfolio’s peer group (where appropriate); asset allocation; gearing policy; cash management; revenue forecasts for the financial year; marketing and shareholder relations; corporate governance; and industry and other issues. On being appointed to the Board, Directors are fully briefed as to their responsibilities and are continually updated throughout their term in office on industry and regulatory matters. The Company Secretary and the Board have formulated a programme of induction training for newly appointed Directors. The Directors take responsibility for their own training needs while in office, but also receive briefings from key members of the Manager’s staff in order that Directors can keep up to date with new legislation and changing risks.

Committees of the Board The Board has delegated certain of its responsibilities to Nomination, Management Engagement, Audit and Marketing committees. As the Company is considered small for the purposes of the AIC Code, all Directors are members of the Nomination and Management Engagement committees. Each committee has written terms of reference which clearly define its responsibilities and duties, are in line with best practice and the AIC Code, and are reviewed annually. The terms of reference for each committee are available on the Manager’s website, at www.invesco.co.uk/investmenttrusts, and on request from the Company Secretary using the contact details on page 109. In addition, the Board has appointed standing committees of at least one Director to approve the quarterly share conversions and dividend declarations and may appoint committees on an ad hoc basis to deal with other matters.

Board, Committee and Directors’ Performance Appraisals The Directors recognise the importance of the AIC Code, particularly in terms of evaluating the performance of the Board as a whole, the respective Committees and individual Directors. Performance of the Board, Committees and Directors has been assessed during the year, amongst other things, in terms of: • attendance at Board and Committee meetings; • the independence of individual Directors; • the ability of Directors to make an effective contribution to the Board and Committees due to the diversity of skills and experience each Director brings to the meetings; and • the Board’s ability to challenge the Manager and debate the future strategy of the Company. Alan Clifton was responsible for the performance evaluation of the Chairman, taking into account the views of the other Directors. The Board conducted its performance evaluation through questionnaires and discussion between the Directors and the Chairman. The review concluded that the Board and its Committees collectively, and the Directors individually, continue to be effective and that the Directors demonstrate commitment to the role.

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DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MAY 2020 continued

Attendance at Board and Committee Meetings The number of meetings held during the year to 31 May 2020 and the attendance of individual Directors are shown in the table below: MANAGEMENT SCHEDULED AUDIT NOMINATION ENGAGEMENT MARKETING BOARD COMMITTEE COMMITTEE COMMITTEE COMMITTEE OTHER MEETINGS MEETINGS MEETINGS MEETINGS MEETINGS MEETINGS Number of Meetings: 6 3 1 1 1 6 Attendance Graham Kitchen 6 3* 1 1 1** 6 Craig Cleland 6 3 1 1 1 4 Alan Clifton 6 3 1 1 1 6 Victoria Muir 6 3 1 1 1 5 Patrick Gifford† 3 1** — 1 1** — * Attended 2 as a guest. ** Attended as a guest. † Retired 3 October 2019. The Other Meetings column above records ad-hoc Board and Committee meetings held by telephone conference to deal with time sensitive matters, including share conversions and dividend declarations. The Directors additionally met to conduct director candidate interviews.

Appointment, Re-election and Tenure of Directors New Directors are appointed by the Board, following recommendation by the Nomination Committee. Provided the timing of initial appointment is such that a resolution can be included in the Notice of the Meeting, new Directors are then subject to election by shareholders at the first Annual General Meeting (AGM) following their appointment, failing which election by shareholders will be deferred to the following AGM. No Director has a contract of employment with the Company. Directors’ terms and conditions of appointment are set out in letters of appointment, copies of which are on the Manager’s website. The tenure of the Chairman shall normally be limited to nine years as Chairman and up to 12 years including any time served as a Director before becoming Chairman, since the Board considers that the continuity and accumulated experience and knowledge of chairmen are of considerable value to the Company. All other Directors shall normally have tenure limited to nine years from first appointment to the Board. However, in each case, there is flexibility for the Board to determine that this be extended where it is considered that the continued participation on the Board of an individual Director, or the Chairman, is in the best interests of the Company and its shareholders. This is also subject to the Director’s re-election by shareholders. In accordance with the AIC Code of Corporate Governance, subject to any Directors not seeking to continue in office, all Directors will offer themselves for re-election annually at the AGM. The Board considers that this policy provides both for adequate continuity and encourages regular refreshment, which is conducive to fostering diversity of its constituents. The Board is in the midst of a phased refreshment. A Director recruitment process was conducted in 2019, with the assistance of Cornforth Consulting, an independent consultancy. However, the candidate chosen was ultimately unable to accept the position due to her primary employer deeming it a conflict of interest. Resumption of the process has been postponed for the time being because of the difficulty of conducting interviews in lockdown conditions. It is currently intended that the process will resume later this year. In the meantime, Mr Clifton, who will be the next Director to retire, has agreed to remain on the Board until a new Director is appointed. The Board confirms that all of the Directors continue to perform effectively and to demonstrate commitment to their roles and recommends that shareholders vote in favour of resolutions 4 to 7, for their re-election. Notwithstanding his length of service, the Board considers that Alan Clifton remains independent in character and judgement from the Company’s Manager, a view which has been demonstrated by his actions on behalf of the Company.

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Nomination Committee The chairman is Graham Kitchen. The main responsibilities of the Nomination Committee are to review the size, structure, skills and diversity of the Board and to make recommendations to the Board with regard to any changes considered necessary or new appointments. The Board’s policy on diversity is that the Board seeks to ensure that its structure, size and composition, including the skills, knowledge, diversity (including gender) and experience of directors, is sufficient for the effective direction and control of the Company. The Board has not set any measurable objectives in respect of this policy. The Board has formulated a formal, rigorous and transparent procedure for the selection and appointment of new directors to the Board. The Nomination Committee carries out the procedure with a view to making recommendations to the Board. The Nomination Committee may consider using an executive search consultancy or open advertising when seeking new candidates for appointment, or may alternatively decide that candidates found from sources within the Company and through its advisers are of a sufficiently high quality. An independent consultancy, Cornforth Consulting Limited, was engaged to assist with recruitment in 2019. Management Engagement Committee (MEC) The chairman of the Committee is Alan Clifton. The MEC meets at least once a year to review the Management Agreement and the performance and quality of service provided by the Manager and other service providers. Marketing Committee The Marketing Committee has been established to oversee investor relations and efforts to refresh and expand the Company’s shareholder base. The Committee aims to meet at least twice each year. It is chaired by Victoria Muir and its other members are Craig Cleland and Alan Clifton. Audit Committee and Audit Information The composition and activities of the Audit Committee are summarised in the Audit Committee Report on pages 49 to 51, which is included in this Directors’ Report by reference. Similarly, the Directors representations required by the Companies Act 2006 on audit information, which are included with other representations in the Statement of Directors’ Responsibilities on page 62, are also included in this Directors’ Report by reference. Directors Conflicts of Interest A Director must avoid a situation where he has, or can have, a direct or indirect interest that conflicts, or has the potential to conflict with the Company’s interests. The Articles of Association of the Company give the Directors authority to authorise potential conflicts of interest and there are safeguards that apply when Directors decide whether to do so. First, only Directors who have no interest in the matter being considered will be able to take the relevant decision, and second, in taking the decision the Directors must act in a way they consider, in good faith, is most likely to promote the Company’s success. The Directors are able to impose limits or conditions when giving authorisation if they think this is appropriate. The Directors have declared any potential conflicts of interest to the Company. These are entered into the Company’s Register of Potential Conflicts, which is reviewed regularly by the Board. This Register is kept at the registered office of the Company. The Directors are obliged to advise the Company Secretary and/or Chairman as soon as they become aware of any potential conflicts of interest. Directors will not participate in Board decisions on issues where they may be conflicted.

Disclosable Interests The Directors’ interests in the ordinary share capital of the Company are disclosed in the Directors’ Remuneration Report on page 64. No Director was a party to, or had any interests in, any contract or arrangement with the Company at any time during the year or at the year end other than in respect of indemnification and insurance as set out below.

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DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MAY 2020 continued

Directors’ Indemnification and Insurance The Company maintains a Directors’ and Officers’ liability insurance policy. A Deed of Indemnity has been executed by the Company under the terms of which, to the extent permitted by law and the Company’s Articles of Association, the Company will indemnify the Directors against liabilities incurred in connection with their office as Directors of the Company and fund reasonable expenditure incurred by them in defending proceedings brought against them in connection with their position as Directors of the Company. The indemnity does not apply in certain circumstances, including to the extent that the costs are recoverable under the Directors’ and Officers’ liability insurance policy maintained by the Company or from any other insurance maintained by the Director. Going Concern The financial statements have been prepared on a going concern basis. The Directors consider this to be appropriate as the Company has adequate resources to continue in operational existence for the foreseeable future, taken as 12 months from the signing of the balance sheet for this purpose. This conclusion is consistent with the longer term viability statement on pages 42 to 43 and in reaching it the Directors took into account the value of net assets; the Company’s Investment Policy; its risk management policies; the diversified portfolio of readily realisable securities which can be used to meet funding commitments; the credit facility and the overdraft which can be used for short-term funding requirements; the liquidity of the investments which could be used to repay the credit facility in the event that the facility could not be renewed or replaced; its revenue; the uncertain economic outlook in the wake of the Covid-19 pandemic; and the ability of the Company in the light of these factors to meet all of its liabilities and ongoing expenses. The Manager Invesco Fund Managers Limited (IFML or the Manager) is the Company’s alternative investment fund manager (AIFM). It is responsible for the management of the Company’s investment portfolio and for providing administration and company secretarial services to the Company.

Investment Management Agreement (IMA) The Manager’s services are provided under the terms of an IMA, dated 22 July 2014 and subsequently amended, that can be terminated by either party giving six months’ notice or, in certain limited circumstances, without notice. As explained in the Strategic Report on page 32 Invesco Asset Management Limited (IAML), a company related to IFML provides many of the services under the agreement on delegated authority from IFML. References to the Manager should consequently be considered to include both entities. The Manager is entitled to a basic fee (payable quarterly) in respect of each Portfolio as follows: 0.55% per annum of net assets in the case of UK Equity and Global Equity Income, 0.75% per annum for Balanced Risk Allocation and 0.12% per annum of net assets in the case of Managed Liquidity. The IMA provides for the basic fee to be reduced by any fee payable separately to the Manager on any investments in other funds managed by the Manager. The Manager is also entitled to receive performance fees in respect of the UK Equity and Global Equity Income Portfolios of 12.5% of the increase in net assets per relevant Share in excess of a hurdle of the relevant benchmark plus 1% per annum. The amount of the performance fee that can be paid in any one year has been capped at 0.55% of the net assets of the relevant Portfolio and payment is subject to a high water mark. If a performance fee is earned in any year, but the net asset value per share does not meet the high water mark at the year end, the amount of fee up to the cap for that year is carried forward as a creditor and will be paid when the high water mark and cap allow – such deferred fees have been accrued as a creditor of £531,000 in the financial statements (2019: £531,000). Additionally, a provision for performance fee arises when the amount earned exceeds the cap for fees payable in any one year. Such provision is carried forward to be paid in future periods or offset against future underperformance. So far as the cap allows, the provision, less any amounts offset, will become payable in any future year in which the closing net asset value is greater than the high water mark. No performance fee can be earned until any past underperformance is offset. No performance fees were earned in the year.

The Manager’s Responsibilities The Manager is responsible for the day-to-day investment management activities of the Company, seeking and evaluating investment opportunities and analysing the results of investee companies and

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funds. The individual portfolio managers have full discretion to manage the assets of the respective Portfolios in accordance with the Company’s stated Investment Policy as determined from time to time by the Board and approved by shareholders. The portfolio managers have discretion to make purchases and sales, make and withdraw cash deposits and exercise all rights over the investment portfolio. The portfolio managers also have discretion to utilise borrowings, within limits set by the Board. The Manager is also responsible for the provision of company secretarial and administration services to the Company, ensuring that the Company complies with all legal, regulatory and corporate governance requirements and attending on the Directors at Board meetings and shareholders’ meetings. The Manager additionally maintains records of the Company’s investment transactions, portfolio and all monetary transactions, from which the annual and half-yearly financial reports and various statistical reports and information are prepared on behalf of the Company.

Assessment of the Manager The performance of the Manager is subject both to continual review by the Board and regular annual reviews of the management contract by the Management Engagement Committee. The individual portfolio managers determine stock and fund selection and asset allocation with a view to achieving the Company’s and Portfolios’ Investment Policies and meeting shareholder expectations. The Board has reviewed the Manager’s service provision and, taking into account the performance of the individual Portfolios and strategies being followed, the other services provided by the Manager and the risk and governance environment in which the Company operates, the Board considers that the continuation of the appointment of the Manager on the current terms is in the best interests of shareholders. Company Secretary The Board has direct access to the advice and services of the company secretary, Invesco Asset Management Limited (acting under delegated authority from Invesco Fund Managers Limited), which is responsible for ensuring that the Board and Committee procedures are followed and that applicable rules and regulations are complied with. The company secretary is also responsible for advising the Board through the Chairman on all governance matters. The company secretary ensures that all correspondence addressed to the Company, other than junk mail, is reported to the Board and dealt with in a timely manner. The appointment and ongoing assessment and review of the company secretary are matters for the Board as a whole. Corporate Governance The Corporate Governance Statement set out on page 48 is included in this Directors’ Report by reference. Performance and Dividends Details of the Company’s and its Portfolio’s performance, prospects and dividends are included in the Strategic Report, on pages 36 to 39, and incorporated in this Directors’ Report by reference. Greenhouse Gas Emissions The Company has no employees or property, it does not combust any fuel or operate any facility. The Company does not purchase electricity, heat, steam or cooling for its own use. Accordingly, the quantifiable amount of carbon dioxide produced by the Company annually is zero tonnes. Capital Structure The Company’s share capital comprises four classes of Share, each represented by a separate Portfolio. Movements in share capital over the course of the year are set out in note 13 to the financial statements on pages 90 and 91.

Rights Attaching to Shares The rights attached to the Shares, in addition to those conferred on their holders by law, are set out in the Company’s Articles of Association (Articles). The Articles may only be changed by the shareholders by special resolution. The holders of each class of Shares have the right to receive the revenue profits of the Company (including accumulated revenue reserves) attributable to the Portfolio established for that class and available for distribution.

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On a return of assets on a liquidation or otherwise, the surplus assets of the Company in each Portfolio, after satisfaction of all liabilities, shall be paid to the holders of the class of Shares for which the relevant Portfolio was established (and distributed amongst such holders rateably according to the amounts paid up on the Shares of the relevant class). The holders of each class of Shares have the right to receive notice of and to attend, speak and vote at any general meeting of the Company, except that the holders of any class of Shares do not have the right to vote on any resolution relating to the payment of a dividend on any other class of Shares. Details of the voting rights attaching to the different classes of Shares are given in note 11 to the Notice of Meeting on page 108. Shares are convertible at the option of holders into any other class of Shares on or around 1 February, 1 May, 1 August and 1 November each year.

Restrictions on Shares Subject to statute, market rules and the requirements of the UK Listing Authority the Directors may, in certain circumstances including where it is in favour of more than four persons jointly, refuse to register a transfer of Shares. The Directors may also restrict voting powers, dividends and transfers where shareholders fail to provide information with respect to interests in voting rights when so requested. The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities or voting rights.

Substantial Shareholdings As far as the Company was aware, the holdings of 3% and over of each class of the Company’s issued share capital were: AT 30 JUNE 2020 AT 31 MAY 2020 UK EQUITY SHARES HOLDINGS % HOLDINGS % D Price Estate 3,497,927 11.3 3,497,927 10.9 Julius Baer Private Banking 2,802,029 9.1 3,652,029 11.4 P Radburn 2,001,285 6.5 2,001,285 6.3 Rathbone Investment Management 1,346,695 4.4 1,581,095 4.9 Schroder & Co 1,327,755 4.3 1,393,571 4.4 N Bachop 1,294,880 4.2 1,294,880 4.0 Hargreaves Lansdown 1,243,189 4.0 1,280,097 4.0 Investec Wealth & Investment 1,223,508 4.0 1,223,508 3.8 Perkins Echo Trust 1,157,196 3.8 1,157,196 3.6 Close Brothers Asset Management 1,124,089 3.6 1,124,089 3.5 Interactive Investor 997,971 3.2 997,459 3.1

AT 30 JUNE 2020 AT 31 MAY 2020 GLOBAL EQUITY INCOME SHARES HOLDINGS % HOLDINGS % Brewin Dolphin 1,590,820 5.7 1,593,467 5.5 D Price Estate 1,588,588 5.7 1,588,588 5.5 Hargreaves Lansdown 1,508,209 5.4 1,540,423 5.4 P Davidson 1,367,965 4.9 1,367,965 4.8 Schroder & Co 1,178,830 4.2 1,178,830 4.1 Halifax Share Dealing 1,147,530 4.1 1,146,681 4.0 Interactive Investor 1,095,156 3.9 1,153,605 4.0 Smith & Williamson 1,092,841 3.9 1,092,841 3.8 Charles Stanley 1,031,901 3.7 1,054,511 3.7 Rathbone Investment Management 1,028,614 3.7 1,207,530 4.2 P Radburn 1,005,289 3.6 1,005,289 3.5 Investec Wealth & Investment 868,255 3.1 880,386 3.1 Julius Baer Private Banking 712,860 2.5 1,312,860 4.6

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AT 30 JUNE 2020 AT 31 MAY 2020 BALANCED RISK ALLOCATION SHARES HOLDINGS % HOLDINGS % Schroder & Co 902,759 17.2 902,759 17.2 P Davidson 774,594 14.8 774,594 14.8 Investec Wealth & Investment 517,703 9.9 517,703 9.9 J Pfeil 407,279 7.8 407,279 7.8 C Jackson 270,000 5.2 270,000 5.2 Halifax Share Dealing 259,394 5.0 261,874 5.0 Hargreaves Lansdown 257,752 4.9 257,752 4.9

AT 30 JUNE 2020 AT 31 MAY 2020 MANAGED LIQUIDITY SHARES HOLDINGS % HOLDINGS % PSigma Investment Management 290,000 11.6 310,000 12.4 Smith & Williamson 247,385 9.9 247,385 9.9 HSBC Private Bank 165,510 6.6 165,510 6.6 Charles Stanley 154,633 6.2 154,633 6.2 P Stormonth Darking Estate 150,000 6.0 150,000 6.0 S Sexton 130,777 5.2 130,777 5.2 J Sexton 100,000 4.0 100,000 4.0 Rathbone Investment Management 100,000 4.0 100,000 4.0 Schroder & Co 87,786 3.5 87,786 3.5 Disclosure Required by Listing Rule 9.8.4 The above rule requires listed companies to report certain information in a single identifiable section of their annual financial reports. No disclosures are required under the rule for the year to 31 May 2020. Annual General Meeting (AGM) The following summarises the business of the forthcoming AGM of the Company, which is to be held at 43-45 Portman Square, London W1H 6LY at 11.30am on 6 October 2020. This venue has wheelchair access. It is hoped that by the date of the AGM restrictions due to Covid-19 will have eased and, if so, shareholders are encouraged to attend the AGM. However, should this not be the case the AGM may have to be held as a closed meeting. In this eventuality it is recommended that shareholders exercise their votes by means of registering them with the Company’s registrar ahead of the meeting, online or by completing paper proxy forms, and appoint the Chairman of the meeting as their proxy. Questions, on the business of the meeting or otherwise, may be addressed to the Company Secretary, by email to [email protected] or, by letter, to 43-45 Portman Square, London W1H 6LY. The Notice of the AGM and related notes can be found on pages 104 to 108. Resolution 1 is for members to receive this Annual Financial Report, including the financial statements and Auditor’s Report. Resolution 2 is to approve the Directors’ Remuneration Policy. It is now a requirement for the Directors’ Remuneration Policy to be approved by shareholders at least every three years. The Board has taken the decision to submit the policy for approval annually. This vote is binding. The Directors’ Remuneration Policy is set out on page 63 of this Annual Financial Report. Resolution 3 is to approve the Annual Statement and Report on Remuneration. It is mandatory for listed companies to put their Annual Statement and Report on Remuneration to an advisory shareholder vote. The Annual Statement and Report on Remuneration are set out on pages 63 to 65 of this Annual Financial Report. Resolutions 4 to 7 are for the re-election of Directors. The Board has confirmed that all of these Directors perform effectively and demonstrate independence and commitment to their roles and consequently recommends their re-election. Brief biographical details are set out on page 46 and particular qualities that each Director seeking re-election brings to the Board, as required by the 2018 UK Corporate Governance Code, are set out below. Resolution 4 is to re-elect Craig Cleland as a Director of the Company. Mr Cleland is an able chair of the Audit Committee. He is an asset management executive working in the promotion and running of investment companies and liaises with a number of brokers, auditors and regulators, which

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DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MAY 2020 continued

contributes towards keeping his extensive industry knowledge up to date. He also meets regularly with both institutional and retail investors in the sector to discuss industry issues. All of which allows him to make an important contribution to the Company. Resolution 5 is to re-elect Alan Clifton as a Director of the Company. Mr Clifton has over 40 years’ experience of investment markets, including being a past member of The Stock Exchange, London, and the managing director of one of the UK’s leading asset managers. He is a past non-executive director and chairman of several investment trust companies and this knowledge and experience is of substantial benefit to the Company. Resolution 6 is to re-elect Graham Kitchen as a Director of the Company. Mr Kitchen was an equity fund manager for over 25 years and therefore has an excellent understanding of investment markets and stock analysis. As a former Global Head of equities he had oversight of the investment risk process and therefore provides detailed knowledge of portfolio construction and an understanding of differing investment styles. During his career Mr Kitchen also managed three investment trusts and is currently a director of two others, providing him with strong knowledge of the sector. Resolution 7 is to re-elect Victoria Muir as a Director of the Company. Ms Muir has over 25 years’ experience in financial services, with a particular focus on the distribution of investment products in the asset management industry. Ms Muir brings extensive marketing knowledge to the chairmanship of the Marketing Committee of the Company. She is a Chartered Director, contributing a strong governance perspective. Resolution 8 is to re-appoint Grant Thornton UK LLP as auditor and to authorise the Audit Committee to determine the auditor’s remuneration. Resolution 9 is to renew the Directors’ authority to allot shares. Your Directors are asking for authority to allot new ordinary shares up to an aggregate nominal value of £1,000,000 for each of the four Share classes in issue. This will allow Directors to issue shares within the prescribed limits should any favourable opportunities arise to the advantage of shareholders. The powers authorised will not be exercised at a price below NAV of the relevant Share class so that the interests of existing shareholders are not diluted. This authority will expire at the AGM in 2021. Resolution 10 is to renew the authority to disapply pre-emption rights. Your Directors are asking for the usual authority to issue new Shares for cash in each share class, either pursuant to a rights issue or otherwise, up to an aggregate nominal amount of £30,279 of UK Equity Shares, £27,475 of Global Equity Income Shares, £5,236 of Balanced Risk Allocation Shares and £2,497 of Managed Liquidity Shares (10% of the issued share capital of each Share class, excluding treasury shares) disapplying pre-emption rights. This will allow Shares to be issued to new shareholders without them having to be offered to existing shareholders first, thus broadening the shareholder base of the Company. This authority will expire at the AGM in 2021. Resolution 11 is to renew the authority for the Company to purchase its own shares. Your Directors are seeking to renew the authority to buy back up to 14.99% of the shares in circulation of each Share class, being approximately 4,538,963 UK Equity Shares, 4,118,622 Global Equity Income Shares, 785,009 Balanced Risk Allocation Shares and 374,305 Managed Liquidity Shares, subject to the restrictions referred to in the notice of the AGM. This authority will expire at the AGM in 2021. Your Directors are proposing that Shares bought back by the Company either be cancelled or, alternatively, be held as treasury shares with a view to their resale, if appropriate, or later cancellation. Any resale of treasury shares will only take place on terms that are in the best interests of shareholders as a whole. Resolution 12 is to permit the Company to hold general meetings (other than annual general meetings) on 14 days notice, which is the minimum notice period permitted by the Companies Act 2006. The EU Shareholder Rights Directive increases the minimum notice period to 21 days unless two conditions are met. The first condition is that the company offers facilities for shareholders to vote by electronic means. The second condition is that there is an annual resolution of shareholders approving the reduction in the minimum notice period from 21 days to 14 days, hence this resolution being proposed. It is intended that this flexibility will be used only where the Board believes it is in the interests of shareholders as a whole. Resolutions 13 and 14 are to approve the dividend policies, which are set out on pages 36 and 37, that apply to the UK Equity and Global Equity Income Share Portfolios. Only holders of Shares in those

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Portfolios may vote on these resolutions, which are advisory and not binding. Shareholders normally only have the opportunity to vote on final dividends and, since all dividends are declared as interim dividends in accordance with the timeframe dictated by the quarterly share conversion opportunities, these resolutions are being proposed to give shareholders the opportunity to vote on the policies applied. By order of the Board

Invesco Asset Management Limited Company Secretary 31 July 2020

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STATEMENT OF DIRECTORS’ RESPONSIBILITIES in respect of the preparation of the annual financial report

The Directors are responsible for preparing the annual financial report in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under the law the Directors have elected to prepare financial statements in accordance with UK Accounting Standards, including FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland.’ Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and which enable them to ensure that the financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, a Directors’ Report, which includes a Corporate Governance Statement, and a Directors’ Remuneration Report that comply with that law and those regulations. The Directors confirm that: • in so far as they are aware, there is no relevant audit information of which the Company’s Auditor is unaware; and • each Director has taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company’s Auditor is aware of that information. The Directors of the Company each confirm to the best of their knowledge that: • the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position, net return and cash flows of the Company; and • this annual financial report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that it faces. The Directors consider that this annual financial report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. Signed on behalf of the Board of Directors

Graham Kitchen Chairman 31 July 2020 Electronic Publication The annual financial report is published on the Manager’s website www.invesco.co.uk/investmenttrusts. The work carried out by the auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

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DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 31 MAY 2020

This Remuneration Report has been prepared in accordance with The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (the ‘Regulations’) and the Listing Rules of the Financial Conduct Authority. Ordinary resolutions for the approval of the Directors’ Remuneration Policy (binding) and the Chairman’s Annual Statement and Report on Remuneration (advisory) will be put to shareholders at the Annual General Meeting. The Company’s auditor is required to audit certain of the disclosures provided in this report. Where disclosures have been audited, they are indicated in this report. The independent auditor’s opinion is included on pages 66 to 73. Remuneration Responsibilities The Board has resolved that a remuneration committee is not appropriate for a company of this nature with a Board of this size. Remuneration is therefore regarded as part of the Board’s responsibilities, to be addressed regularly. All Directors are non-executive and all participate in meetings of the Board at which Directors’ remuneration is considered. Directors’ Remuneration Policy The Board’s policy is that the remuneration of non-executive directors should be fair and reasonable in relation to the time commitment and responsibilities of the directors. Fees for directors are determined by the Board within the limit stated in the Company’s Articles of Association (Articles). The Articles limit the aggregate fees to £200,000 per annum and any change to this limit requires shareholder approval. Directors do not have service contracts. Directors are appointed under letters of appointment, copies of which are available for inspection at the registered office of the Company, at its correspondence address (see page 109), and on the Manager’s website. Directors are entitled to be reimbursed for any reasonable expenses properly incurred by them in connection with the performance of their duties and attendance at board and general meetings and committees. Directors are not eligible for bonuses, pension benefits, share options or other incentives or benefits. Directors may, in the furtherance of their duties, take legal advice at the Company’s expense up to an initial outlay of £10,000 per Director, having first consulted with the Chairman. There are no agreements between the Company and its Directors concerning compensation for loss of office. The Directors’ fees are subject to regular review by the Board having regard to the above factors and fee trends in the investment company sector. The same principles apply to any new appointments. Notwithstanding the above, the Company’s Articles also provide that additional discretionary payments can be made for services which in the opinion of the Board are outside the scope of the ordinary duties of a Director. Any such payment would reflect the Board’s assessment of the value to the Company of such services. This Directors’ Remuneration Policy is the same as that approved by shareholders at the last AGM. This Policy is intended to take effect immediately upon its approval by shareholders. The Company has no employees and consequently has no policy on the remuneration of employees. The Board will consider, where raised, shareholders’ views on Directors’ remuneration. Annual Statement on Directors’ Remuneration For the year to 31 May 2020 the Chairman of the Company was paid fees at the rate of £36,000 per annum, the Chairman of the Audit Committee was paid fees at the rate of £30,000 per annum, the Senior Independent Director was paid fees at the rate of £28,000 per annum and the other Directors were paid fees at the rate of £25,000 per annum. No additional discretionary payments were made in the year, or in the previous year. The Board reviewed the level of Directors’ fees during the year and concluded that the current level of fees remains appropriate.

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DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 31 MAY 2020 continued

Report on Remuneration for the Year Ended 31 May 2020 The Company’s Performance The Regulations require that a performance graph be included with the Directors’ Remuneration Report which compares the total return to each class of shareholder to a notional total return of a broad market index. The Directors do not consider that a single graph for the Company’s Portfolios would be meaningful. However, graphs for each of the Portfolios are shown on pages 7, 14, 21 and 28.

Single Total Figure of Remuneration for the year (Audited) The single total figure of remuneration for each Director is detailed below, together with the prior year comparative: 2020 2019 TAXABLE(1) TAXABLE(1) FEES BENEFITS TOTAL FEES BENEFITS TOTAL £ £ £ £ £ £ Graham Kitchen (appointed Chairman 3 October 2019) 32,273 338 32,611 25,000 587 25,587 Craig Cleland (Chairman of the Audit Committee) 30,000 1,294 31,294 30,000 411 30,411 Alan Clifton (Senior Independent Director) 28,000 1,951 29,951 28,000 2,044 30,044 Victoria Muir 25,000 764 25,764 25,000 233 25,233 Patrick Gifford (retired 3 October 2019) 12,295 1,076 13,371 36,000 2,323 38,323 Sir Michael Bunbury (retired 4 October 2018) – – – 8,630 128 8,758

Total 127,568 5,423 132,991 152,630 5,726 158,356

(1) Taxable benefits relate to grossed up costs of travel.

Directors’ Shareholdings and Share Interests (Audited) The beneficial interests of the Directors in the ordinary share capital of the Company at 31 May 2020 and 31 May 2019 are set out below: GLOBAL BALANCED UK EQUITY RISK MANAGED EQUITY INCOME ALLOCATION LIQUIDITY 31 May 2020 Graham Kitchen† 5,445 9,800 7,215 – Craig Cleland 20,000 20,000 10,000 – Alan Clifton 25,000 25,000 25,000 – Victoria Muir 2,500 2,500 2,500 2,500 GLOBAL BALANCED UK EQUITY RISK MANAGED EQUITY INCOME ALLOCATION LIQUIDITY 31 May 2019 Graham Kitchen† 3,945 7,800 5,215 – Craig Cleland 10,000 10,000 10,000 – Alan Clifton 25,000 25,000 25,000 – Victoria Muir 2,500 2,500 2,500 2,500 Patrick Gifford* 9,050 – – –

†Graham Kitchen had non-beneficial interests in 6,300 UK Equity Shares, 3,515 Global Equity Income Shares and 8,400 Balanced Risk Allocation Shares at 31 May 2019 and at 31 May 2020 in addition to the beneficial interests shown in the above tables. *Patrick Gifford also had non-beneficial interests at 31 May 2019 in 9,577 UK Equity Shares, 73,518 Global Equity Income Shares and 128,173 Balanced Risk Allocation Shares.

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Save as aforesaid, no Director had any interests, beneficial or otherwise, in the securities of the Company during the year or since, up to the date of this report. Directors hold shares in the Company at their discretion. Share ownership is encouraged, but no guidelines have been set.

Relative Importance of Spend on Pay The following table compares the remuneration paid to the Directors with aggregate distributions to shareholders (all Share classes combined) in the year to 31 May 2020 and the prior year. 2020 2019 CHANGE £’000 £’000 £’000 Total Directors’ Remuneration 133 158 –25 Total Dividends Paid to Shareholders 4,338 4,511 –173 Total Cost of Shares Bought Back 9,986 9,925 61

Voting at Last Annual General Meeting At the Annual General Meeting of the Company held on 3 October 2019 resolutions were put to shareholders to approve the Directors’ Remuneration Policy (binding) and the Annual Statement and Report on Remuneration (advisory). These were both passed. The results of the polls in respect of these resolutions were as follows: VOTES VOTES VOTES FOR % AGAINST % WITHHELD Directors’ Remuneration Policy 14,161,910 99.3 100,642 0.7 184 Annual Statement and Report on Remuneration 14,162,408 99.3 100,143 0.7 184 Approval The Directors’ Remuneration Report was approved by the Board of Directors on 31 July 2020.

Signed on behalf of the Board of Directors Graham Kitchen Chairman

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INDEPENDENT AUDITOR’S REPORT to the members of Invesco Perpetual Select Trust plc

Opinion Our opinion on the financial statements is unmodified We have audited the financial statements of Invesco Perpetual Select Trust plc (the ‘Company’) for the year ended 31 May 2020, which comprise the Income Statement, the Statement of Changes in Equity, the Balance Sheet, the Cash Flow Statement and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice). In our opinion, the financial statements: • give a true and fair view of the state of the Company’s affairs as at 31 May 2020 and of its return for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements’ section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. The impact of macro-economic uncertainties on our audit Our audit of the financial statements requires us to obtain an understanding of all relevant uncertainties, including those arising as a consequence of the effects of macro-economic uncertainties such as Covid-19 and Brexit. All audits assess and challenge the reasonableness of estimates made by the Directors and the related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the Company’s future prospects and performance. Covid-19 and Brexit are amongst the most significant economic events currently faced by the UK, and at the date of this report their effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts unknown. We applied a standardised firm-wide approach in response to these uncertainties when assessing the company’s future prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future implications for a company associated with these particular events. Conclusions relating to principal risks, going concern and viability statement We have nothing to report in respect of the following information in the annual report in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to: • the disclosures in the annual financial report set out on pages 39 to 42 that describe the principal risks, procedures to identify emerging risks and an explanation of how they are being managed or mitigated (including the impact of Brexit and Covid-19); • the Directors’ confirmation, set out on page 39 of the annual financial report, that they have carried out a robust assessment of the principal and emerging risks facing the Company (including the impact of Brexit and Covid-19), including those that would threaten its business model, future performance, solvency or liquidity; • the Directors’ statement, set out on page 56 of the financial statements, about whether the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements and the directors’ identification of any material uncertainties to the Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;

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• whether the Directors’ statements relating to going concern and the prospects of the Company required under the Listing Rules in accordance with Listing Rule 9.8.6R(3) are materially inconsistent with our knowledge obtained in the audit; or • the Directors’ explanation, set out on pages 42 to 43 of the annual financial report, as to how they have assessed the prospects of the Company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. In our evaluation of the Directors’ conclusions, we considered the risks associated with the Company’s business model, including effects arising from macro-economic uncertainties such as Covid-19 and Brexit, and analysed how those risks might affect the Company’s financial resources or ability to continue operations over the period of at least twelve months from the date when the financial statements are authorised for issue. In accordance with the above, we have nothing to report in these respects. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor’s report is not a guarantee that the company will continue in operation. Overview of our audit approach • Overall materiality: £1,077,000, which represents 1% of the Company’s net assets value; • Key audit matters were identified as valuation, existence and ownership of quoted investments; accuracy, occurrence and completeness of investment income; and, accuracy and completeness of performance fees; and • Our audit approach was a risk-based audit focused on investments at the year end and investment income recognised during the year. There is no change in audit scope from prior year. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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INDEPENDENT AUDITOR’S REPORT continued

Key Audit Matters How the matter was addressed in the audit

Valuation, existence and ownership of Our audit work included, but was not restricted to: investments • assessing whether the Company’s accounting policy for The Company’s business objective is to provide the valuation of investments is in accordance with shareholders with a choice of investment United Kingdom Generally Accepted Accounting strategies and policies, each intended to Practice and the Statement of Recommended Practice generate attractive risk-adjusted returns. The ‘Financial Statements of Investment Trust Companies investment portfolio at £116,928,000 is a and Venture Capital Trusts’ (the ‘SORP’); significant material balance in the balance sheet • testing management’s application of the accounting at year-end and the main driver of the policy by independently pricing 100% of the listed Company’s total return performance. equity portfolio by obtaining the bid prices from an independent market source, calculating the total Investments might not be valued appropriately valuation based on the Company’s investment holdings, or might not exist or be owned by the Company. which was agreed to the Company’s accounting records We therefore identified valuation, existence and maintained by the administrator; ownership of quoted investments as a significant risk, which was one of the most significant • confirming the existence and the ownership of listed assessed risks of material misstatement. equity investments by agreeing the holdings listed in the portfolio at year end to an independent confirmation we received directly from the Company’s custodian; • extracting a report of trading volumes in the five trading days before and after year end from an independent market source for the equity investments held to test that investments are actively traded. The Company’s accounting policy on financial instruments, including their valuation, is shown in note 1(b) to the financial statements and related disclosures are included in note 9. The Audit Committee identified portfolio valuation and ownership as a significant area in its report on page 49 where the Committee also described how it has addressed this area. Key observations Our audit work did not identify any material misstatements concerning the valuation, existence and ownership of investments.

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Key Audit Matters How the matter was addressed in the audit

Accuracy, occurrence and completeness of Our audit work included, but was not restricted to: investment income • assessing whether the Company’s accounting policy for Investment income from dividends is the revenue recognition is in accordance with United Kingdom company’s major source of revenue and a Generally Accepted Accounting Practice and the SORP; significant material balance in the income • testing that the dividend income recorded had actually statement. Investment income might be occurred by selecting a sample of dividend income items incomplete or inaccurate. recorded in the income ledger and agreeing the relevant income receivable for those quoted equities to the Under ISA (UK) 240 ‘The Auditor's respective dividend rate entitlements from an independent Responsibilities Relating to Fraud in an Audit of source and agreeing the investments held to the Financial Statements' there is a presumption that Company’s accounting records maintained by the there are risks of fraud in revenue recognition. administrator; We have not rebutted this presumed risk. There is a risk of fraud in revenue recognition within • developing an expectation of dividend income based on the dividend income revenue stream as dividend investment holdings and checking this against the income may not be earned or may not be dividend income recorded in the Company's accounting complete. records maintained by the administrator; • agreeing the receipt of the dividend income net of We therefore identified accuracy, occurrence and withholding taxes to bank statements; and completeness of investment income as a significant risk, which was one of the most • performing, on a sample basis, a search for special significant assessed risks of material dividends on the equity investments held during the year misstatement. to check whether dividend income attributable to those investments has been properly recognised. We checked the categorisation of special dividends as either revenue or capital receipts. The Company’s accounting policy on income is shown in note 1(e) to the financial statements and related disclosures are included in note 2. The Audit Committee identified income recognition as a significant issue in its report on page 50, where the Committee also described how it has addressed this area. Key observations Our audit work did not identify any material misstatements concerning the accuracy, occurrence and completeness of investment income.

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INDEPENDENT AUDITOR’S REPORT continued

Key Audit Matters How the matter was addressed in the audit

Accuracy and completeness of performance Our audit work included, but was not restricted to: fees • obtaining an understanding of the basis for the Performance fees are applicable to the UK Equity performance fees calculation by obtaining and reading the and Global Equity Income Portfolios’ Investment Management Agreement (IMA) with the outperformance over their relative benchmarks. Manager; There is a risk that performance fees are not • checking the inputs into the performance fees calculation properly calculated due to complexity in and that these were in accordance with the IMA; and calculations. We therefore identified accuracy • recalculating the performance fees in accordance with the and completeness of performance fees as a IMA and confirming that performance fees were not significant risk, which was one of the most earned by the UK Equity and Global Equity Income significant assessed risks of material Portfolios for the current year due to underperformance misstatement. against their relative benchmarks. The Company’s accounting policy on expenses and finance cost is shown on note 1(f) to the financial statements and related disclosures are included in note 3. The Audit Committee identified performance fees as a significant area in its report on page 50 where the Committee also described the action that it has taken to address this area. Key observations Our audit work did not identify any material misstatements concerning the accuracy and completeness of performance fees.

Our application of materiality We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our work and in evaluating the results of that work. We determined materiality for the audit of the financial statements as a whole to be £1,077,000, which is 1% of the Company’s net assets value. This benchmark is considered the most appropriate because net assets which is primarily composed of the Company’s investment portfolio is considered to be the key driver of the Company’s total return performance. Materiality for the current year is lower than the level that we determined for the year ended 31 May 2019 to reflect the decrease in the Company’s net assets in the current year. We use a different level of materiality, performance materiality, to drive the extent of our testing and this was set at 75% of financial statement materiality. The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected misstatements. Overall materiality

25% Tolerance for potential uncorrected misstatements

Performance materiality

75%

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We also determine a lower level of specific materiality for certain areas such as investment income, performance fees and management fees for each portfolio. We determined the threshold at which we will communicate misstatements to the Audit Committee to be £54,000. In addition we will communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.(1) An overview of the scope of our audit Our audit approach was a risk-based approach founded on a thorough understanding of the company’s business, its environment and risk profile and in particular included: • obtaining an understanding of relevant internal controls at both the Company and third-party service providers. This included obtaining and reading internal control reports prepared by a third-party auditor detailing the description, design and operating effectiveness of internal controls implemented by the administrator and at other relevant third-party service providers; and • performing substantive testing by obtaining direct confirmations on valuation, existence and ownership of the quoted investments and agreeing the investment income to an independent source and bank for accuracy, occurrence and completeness. Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud The objectives of our audit are to identify and assess the risks of material misstatement of the financial statements due to fraud or error; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud or error; and to respond appropriately to those risks. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following: • We obtained an understanding of the legal and regulatory frameworks applicable to the company and the industry in which it operates. We determined that the following laws and regulations were most significant: FRS102, Companies Act 2006, UK Corporate Governance Code, the SORP and HMRC’s regulations applicable to an investment trust company. • We obtained an understanding of how the Company is complying with those legal and regulatory frameworks by making inquiries of management. We corroborated our inquiries through our review of board minutes and papers provided to the Audit Committee. • We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included: – challenging assumptions and judgments made by management in its significant accounting estimates; – identifying and testing journal entries, in particular any journal entries posted with unusual account combinations; – assessing the extent of compliance with the relevant laws and regulations as part of our procedures on the related financial statement item. • We did not identify any key audit matters relating to irregularities, including fraud. Other information The Directors are responsible for the other information. The other information comprises the information included in the annual financial report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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INDEPENDENT AUDITOR’S REPORT continued

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions: • Fair, balanced and understandable set out on page 50 – statement given by the Directors that they consider the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or • Audit committee reporting set out on page 49 – the section describing the work of the audit committee does not appropriately address matters communicated by us to the audit committee; or • Directors’ statement of compliance with the UK Corporate Governance Code set out on page 48 – the parts of the directors’ statement required under the Listing Rules relating to the company’s compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code. Our opinions on other matters prescribed by the Companies Act 2006 are unmodified In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. Matter on which we are required to report under the Companies Act 2006 In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or • the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit.

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Responsibilities of Directors for the financial statements As explained more fully in the Statement of Directors' Responsibilities set out on page 62, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Other matters which we are required to address We were appointed by the Audit Committee on 4 October 2016. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 4 years. The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the company and we remain independent of the company in conducting our audit. Our audit opinion is consistent with the additional report to the Audit Committee. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Marcus Swales Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants London 31 July 2020

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INCOME STATEMENT FOR THE YEAR ENDED 31 MAY

2020 2019 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL NOTES £’000 £’000 £’000 £’000 £’000 £’000 Losses on investments held at fair value 9 – (12,632) (12,632) – (7,814) (7,814) Gains/(losses) on derivative instruments 10 2 (159) (157) 28 (268) (240) (Losses)/gains on foreign exchange – (22) (22) – 9 9 Income 2 3,950 80 4,030 5,258 21 5,279 Investment management fees 3 (206) (473) (679) (229) (520) (749) Other expenses 4 (463) (9) (472) (466) (2) (468)

Net return before finance costs and taxation 3,283 (13,215) (9,932) 4,591 (8,574) (3,983) Finance costs 5 (37) (88) (125) (77) (179) (256)

Return before taxation 3,246 (13,303) (10,057) 4,514 (8,753) (4,239) Tax 6 (245) – (245) (246) – (246)

Return after taxation for the financial year 3,001 (13,303) (10,302) 4,268 (8,753) (4,485)

Return per ordinary share: 7 – UK Equity Share Portfolio 4.12p (24.75)p (20.63)p 5.73p (15.34)p (9.61)p – Global Equity Income Share Portfolio 5.39p (16.58)p (11.19)p 6.90p (9.82)p (2.92)p – Balanced Risk Allocation Share Portfolio (0.02)p (3.88)p (3.90)p 0.42p (4.86)p (4.44)p – Managed Liquidity Share Portfolio 0.65p 0.03p 0.68p 0.59p 0.54p 1.13p

The total column of this statement represents the Company’s profit and loss account, prepared in accordance with UK Accounting Standards. The return after taxation is the total comprehensive income and therefore no additional statement of other comprehensive income is presented. The supplementary revenue and capital columns are presented for information purposes in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies. All items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the year. Income Statements for the different Share classes are shown on pages 13, 20, 27 and 31 for the UK Equity, Global Equity Income, Balanced Risk Allocation and Managed Liquidity Share Portfolios respectively.

The accompanying notes are an integral part of this statement.

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STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MAY

CAPITAL SHARE SHARE SPECIAL REDEMPTION CAPITAL REVENUE CAPITAL PREMIUM RESERVE RESERVE RESERVE RESERVE TOTAL £’000 £’000 £’000 £’000 £’000 £’000 £’000 At 31 May 2018 1,057 1,290 76,594 351 71,624 300 151,216

Cancellation of deferred shares – – (2) 2 – – – Shares bought back and held in treasury – – (9,925) – – – (9,925) Share conversions (2) – 2 – – – – Return after taxation per the income statement – – – – (8,753) 4,268 (4,485) Dividends paid – note 8 – – (297) – – (4,214) (4,511)

As at 31 May 2019 1,055 1,290 66,372 353 62,871 354 132,295

Cancellation of deferred shares – – (6) 6 – – – Shares bought back and held in treasury – – (9,986) – – – (9,986) Share conversions (5) – 5 – – – – Return after taxation per the income statement – – – – (13,303) 3,001 (10,302) Dividends paid - note 8 – – (931) – – (3,407) (4,338)

As at 31 May 2020 1,050 1,290 55,454 359 49,568 (52) 107,669

The accompanying notes are an integral part of this statement.

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BALANCE SHEET AS AT 31 MAY 2020

GLOBAL BALANCED UK EQUITY RISK MANAGED EQUITY INCOME ALLOCATION LIQUIDITY TOTAL NOTES £’000 £’000 £’000 £’000 £’000 Fixed assets Investments held at fair value through profit or loss 9 52,121 55,778 6,347 2,682 116,928 Current assets Derivative assets held at fair value through profit or loss 10 – – 401 – 401 Debtors 11 236 2,607 248 15 3,106 Cash and cash equivalents – 146 251 50 447

236 2,753 900 65 3,954 Creditors: amounts falling due within one year Derivative liabilities held at fair value through profit or loss 10 – – (151) – (151) Other creditors 12(a) (938) (2,179) (23) (140) (3,280) Bank overdraft 12(b) (2) – – – (2) Bank loan 12(b) (4,800) (4,980) – – (9,780)

(5,740) (7,159) (174) (140) (13,213)

Net current (liabilities)/assets (5,504) (4,406) 726 (75) (9,259)

Net assets 46,617 51,372 7,073 2,607 107,669

Capital and reserves Share capital 13(a) 439 393 106 112 1,050 Share premium 14 – – 1,290 – 1,290 Special reserve 14 25,931 24,926 2,556 2,041 55,454 Capital redemption reserve 14 74 78 27 180 359 Capital reserve 14 20,173 25,975 3,151 269 49,568 Revenue reserve 14 – – (57) 5 (52)

Shareholders' funds 46,617 51,372 7,073 2,607 107,669

Net asset value per ordinary share 15 145.8p 178.5p 135.1p 104.4p

The financial statements were approved and authorised for issue by the Board of Directors on 31 July 2020.

Signed on behalf of the Board of Directors Graham Kitchen Chairman

The accompanying notes are an integral part of this statement.

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BALANCE SHEET AS AT 31 MAY 2019

GLOBAL BALANCED UK EQUITY RISK MANAGED EQUITY INCOME ALLOCATION LIQUIDITY TOTAL NOTES £’000 £’000 £’000 £’000 £’000 Fixed assets Investments held at fair value through profit or loss 9 61,250 67,040 7,385 4,710 140,385 Current assets Derivative assets held at fair value through profit or loss 10 – – 175 – 175 Debtors 11 3,580 518 412 6 4,516 Cash and cash equivalents 476 245 153 10 884

4,056 763 740 16 5,575 Creditors: amounts falling due within one year Derivative liabilities held at fair value through profit or loss 10 – – (223) – (223) Other creditors 12(a) (670) (334) (65) (143) (1,212) Bank loan 12(b) (7,350) (4,880) – – (12,230)

(8,020) (5,214) (288) (143) (13,665)

Net current (liabilities)/assets (3,964) (4,451) 452 (127) (8,090)

Net assets 57,286 62,589 7,837 4,583 132,295

Capital and reserves Share capital 13(a) 436 389 108 122 1,055 Share premium 14 – – 1,290 – 1,290 Special reserve 14 28,551 30,734 3,106 3,981 66,372 Capital redemption reserve 14 74 78 26 175 353 Capital reserve 14 28,225 31,015 3,363 268 62,871 Revenue reserve 14 – 373 (56) 37 354

Shareholders' funds 57,286 62,589 7,837 4,583 132,295

Net asset value per ordinary share 15 173.1p 197.6p 139.5p 104.9p

The accompanying notes are an integral part of this statement.

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CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MAY

2020 2019 NOTE £’000 £’000 Cash flows from operating activities Net return before finance costs and taxation (9,932) (3,983) Tax on overseas income (245) (246) Adjustments for: Purchase of investments (97,439) (48,892) Sale of investments 110,920 63,997 Sale of futures (455) 35 13,026 15,140 Scrip dividends (57) (53) Losses on investments 12,632 7,814 Losses on derivatives 157 240 Decrease/(increase) in debtors 463 (152) Decrease in creditors and provision (20) (4)

Net cash inflow from operating activities 16,024 18,756

Cash flows from financing activities Interest paid on bank borrowings (124) (256) Decrease in bank borrowings (2,448) (5,346) Share buy back costs (9,551) (9,717) Equity dividends paid 8 (4,338) (4,511)

Net cash outflow from financing activities (16,461) (19,830)

Net decrease in cash and cash equivalents (437) (1,074) Cash and cash equivalents at the start of the year 884 1,958

Cash and cash equivalents at the end of the year 447 884

Cash flow from operating activities includes: Interest received 3 88 Dividends received 3,876 4,871

AT AT 1 JUNE 2019 CASH FLOWS 31 MAY 2020 £’000 £’000 £’000 Analysis of changes in net debt Cash and cash equivalents 884 (437) 447 Bank overdraft – (2) (2) Bank loans (12,230) 2,450 (9,780)

Total (11,346) 2,011 (9,335)

The accompanying notes are an integral part of this statement.

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NOTES TO THE FINANCIAL STATEMENTS

1. Accounting policies Accounting policies describe the Company’s approach to recognising and measuring transactions during the year and the position of the Company at the year end. The principal accounting policies are set out below:

(a) Basis of preparation (i) Accounting Standards applied The financial statements have been prepared in accordance with applicable United Kingdom Accounting Standards, including FRS 102 ‘the Financial Reporting Standard applicable in the UK and Republic of Ireland’, and applicable law (UK Generally Accepted Accounting Practice (UK GAAP)) and with the Statement of Recommended Practice Financial Statements of Investment Trust Companies and Venture Capital Trusts, issued by the Association of Investment Companies (AIC) in October 2019. The financial statements are issued on a going concern basis as disclosed on page 56. The revised SORP issued in October 2019 is applicable for accounting periods beginning on or after 1 January 2019. As a result, the presentation of gains and losses arising from disposals of investments and gains and losses on revaluation of investments have now been combined, as shown in note 9 with no impact to the net asset value or profit/(loss) reported for both the current or prior year. No other accounting policies or disclosures have changed as a result of the revised SORP. The accounting policies applied to these financial statements are consistent with those applied for the preceding year. (ii) Definitions used in the financial statements ‘Portfolio’ the UK Equity Share Portfolio, the Global Equity Income Share Portfolio, the Balanced Risk Allocation Share Portfolio and/or the Managed Liquidity Share Portfolio (as the case may be). Each comprises, or may include, an investment portfolio, derivative instruments, cash, loans, debtors and other creditors, which together make up the net assets as shown in the balance sheet. ‘Share’ UK Equity Share, Global Equity Income Share, Balanced Risk Allocation Share, Managed Liquidity Share and/or Deferred Share (as the case may be). The UK Equity, Global Equity Income, Balanced Risk Allocation and Managed Liquidity Share Portfolios’ income statements and summaries of net assets (shown on pages 13, 20, 27 and 31) do not represent statutory accounts, are not required under UK Generally Accepted Accounting Practice and the auditor does not express an opinion on each individual portfolio. These have been disclosed to assist shareholders’ understanding of the assets and liabilities, and income and expenses of the different Share classes. In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the income statement between items of a revenue and capital nature has been presented alongside the income statement. (iii) Functional and presentational currency The Company’s investments are made in several currencies, however, the financial statements are presented in sterling, which is the Company’s functional currency. In arriving at this conclusion, the Directors considered that the Company’s shares are listed and traded on the London Stock Exchange, the shareholder base is predominantly in the United Kingdom and the Company pays dividends and expenses in sterling. (iv) Transactions and balances Transactions in foreign currency, whether of a revenue or capital nature, are translated to sterling at the rates of exchange ruling on the dates of such transactions. Foreign currency assets and liabilities are translated to sterling at the rates of exchange ruling at the balance sheet date. Any gains or losses, whether realised or unrealised, are taken to the capital reserve or to the revenue account, depending on whether the gain or loss is of a capital or revenue nature. All gains and losses are recognised in the income statement.

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NOTES TO THE FINANCIAL STATEMENTS continued

1. Accounting policies (continued) (a) Basis of preparation (continued) (v) Significant Accounting Estimates and Judgements The preparation of the financial statements may require the Directors to make estimations where uncertainty exists. It also requires the Directors to make judgements, estimates and assumptions, in the process of applying the accounting policies. There have been no significant judgements, estimates or assumptions for the current or preceding year.

(b) Financial instruments The Company has chosen to apply the provisions of Sections 11 and 12 of FRS 102 in full in respect of the financial instruments, which is explained below. (i) Recognition of financial assets and financial liabilities The Company recognises financial assets and financial liabilities when the Company becomes a party to the contractual provisions of the instrument. The Company will offset financial assets and financial liabilities if the Company has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis. (ii) Derecognition of financial assets The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire or it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in the transferred financial asset that is created or retained by the Company is recognised as an asset. (iii) Derecognition of financial liabilities The Company derecognises financial liabilities when its obligations are discharged, cancelled or expire. (iv) Trade date accounting Purchases and sales of financial assets are recognised on trade date, being the date on which the Company commits to purchase or sell the assets. (v) Classification and measurement of financial assets and financial liabilities Financial assets The Company’s investments, including financial derivative instruments, are classified as held at fair value through profit or loss. Financial assets held at fair value through profit or loss are initially recognised at fair value, which is taken to be their cost, with transaction costs expensed in the income statement, and are subsequently valued at fair value. Fair value for investments, including financial derivative instruments, that are actively traded in organised financial markets is determined by reference to stock exchange quoted bid prices at the balance sheet date. For investments that are not actively traded or where active stock exchange quoted bid prices are not available, fair value is determined by reference to a variety of valuation techniques including broker quotes and price modelling. Where there is no active market, unlisted/illiquid investments are valued by the Directors at fair value with regard to the International Private Equity and Venture Capital Valuation Guidelines and on recommendations from Invesco’s Pricing Committee, both of which use valuation techniques such as earnings multiples, recent arm’s length transactions and net assets. Financial liabilities Financial liabilities, excluding financial derivative instruments but including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method. (c) Derivatives and hedging Derivative instruments are valued at fair value in the balance sheet. Derivative instruments may be capital or revenue in nature and, accordingly, changes in their fair value are recognised in revenue or capital in the income statement as appropriate. Forward currency contracts entered into for hedging purposes are valued at the appropriate forward exchange rate ruling at the balance sheet date. Profits or losses on the closure or revaluation of positions are included in capital reserves.

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Futures contracts may be entered into for hedging purposes and any profits and losses on the closure or revaluation of positions are included in capital reserves. Where futures contracts are used for investment exposure any income element arising on bond futures is recognised as a gain on derivative instruments in the income statement and shown in revenue. (d) Cash and cash equivalents Cash and cash equivalents may comprise cash (including short term deposits which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value) as well as cash equivalents, including money market funds. Investments are regarded as cash equivalents if they meet all of the following criteria: highly liquid investments held in the Company’s base currency that are readily convertible to a known amount of cash, are subject to an insignificant risk of change in value, have a maturity of less than three months at date of origination and provide a return no greater than the rate of a three-month high quality government bond. For the Balanced Risk Allocation and Managed Liquidity Portfolios, cash and cash equivalents do not include investments in Invesco Liquidity Funds plc – Sterling (formerly Short Term Investment Companies (Global Series) plc) as this forms part of those Portfolio’s fixed assets.

(e) Income Dividend income from investments is recognised when the shareholders’ right to receive payment has been established, normally the ex-dividend date. UK dividends are stated net of related tax credits. Interest income arising from cash is recognised on an accruals basis and underwriting commission is recognised as earned. Special dividends are taken to revenue unless they arise from a return of capital, when they are allocated to capital in the income statement. Income from fixed income securities is recognised in the income statement using the effective interest method.

(f) Expenses and finance costs All expenses are accounted for on an accruals basis. Expenses are charged to the income statement and shown in revenue except where expenses are presented as capital items when a connection with the maintenance or enhancement of the value of the investments held can be demonstrated and thus management fees and finance costs are charged to revenue and capital to reflect the Directors’ expected long-term view of the nature of the investment returns of each Portfolio. Expenses charged to the Company in relation to a specific Portfolio are charged directly to that Portfolio. Expenses charged to the Company that are common to more than one Portfolio are allocated between those Portfolios in the same proportions as the net assets of each Portfolio at the latest conversion date. Finance costs are accounted for on an accruals basis using the effective interest rate method. The management fees and finance costs are charged in accordance with the Board’s expected split of long-term returns, in the form of capital gains and income, to the applicable Portfolio as follows: REVENUE CAPITAL PORTFOLIO RESERVE RESERVE UK Equity 30% 70% Global Equity Income 30% 70% Balanced Risk Allocation 30% 70% Managed Liquidity 100% – Any entitlement to any investment performance fee which is attributable to the UK Equity and/or the Global Equity Income Portfolio is allocated 100% to capital as it is principally attributable to the capital performance of the investments in that Portfolio.

(g) Dividends Dividends are accrued in the financial statements when there is an obligation to pay the dividends at the balance sheet date.

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NOTES TO THE FINANCIAL STATEMENTS continued

1. Accounting policies (continued) (h) Taxation Tax expense represents the sum of tax currently payable and deferred tax. Any tax payable is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the income statement because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. For the Company, any allocation of tax relief to capital is based on the marginal basis, such that tax allowable capital expenses are offset against taxable income. Where individual Portfolios have extra tax capacity arising from unused tax allowable expenses which can be used by a different Portfolio, this extra tax capacity is transferred between the Portfolios at a valuation of 1% of the amount transferred. Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax or a right to pay less tax in the future have occurred. Timing differences are differences between the Company’s taxable profits and its results as stated in the financial statements. Deferred taxation assets are recognised where, in the opinion of the Directors, it is more likely than not that these amounts will be realised in future periods. A deferred tax asset has not been recognised in respect of surplus management expenses as the Company is unlikely to have sufficient future taxable revenue to offset against these. Investment trusts which have approval under the appropriate tax regulations are not liable for taxation on capital gains. 2. Income This note shows the income generated from the portfolios (investment assets) of the Company and income received from any other source. GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL 2020 £’000 £’000 £’000 £’000 £’000 Income from investments UK dividends: – ordinary dividends 1,401 361 – – 1,762 – special dividends 61 29 – – 90 – Scrip dividends 50 7 – – 57

1,512 397 – – 1,909 Overseas dividends: – ordinary dividends 133 1,787 13 23 1,956 – special dividends – 20 – – 20 Unfranked investment income 11 – – – 11 Interest from Treasury bills – – 38 – 38

1,656 2,204 51 23 3,934 Other income Deposit interest – – 3 – 3 Rebates of management fee – – – 13 13

Total income 1,656 2,204 54 36 3,950

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GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL 2019 £’000 £’000 £’000 £’000 £’000 Income from investments UK dividends: – ordinary dividends 2,058 463 – – 2,521 – special dividends 96 38 – – 134 – Scrip dividends 36 17 – – 53

2,190 518 – – 2,708 Overseas dividends: – ordinary dividends 108 2,295 11 14 2,428 Unfranked investment income 44 – – 9 53 Interest from Treasury bills – – 39 – 39

2,342 2,813 50 23 5,228 Other income Deposit interest 1 1 5 – 7 Rebates of management fee – – – 23 23

Total income 2,343 2,814 55 46 5,258

Special dividends of £32,000 in respect of the Global Equity Income Portfolio and £48,000 in respect of the UK Equity Portfolio were recognised in capital during the year (2019: £21,000 in respect of the UK Equity Portfolio). 3. Investment management and performance fees This note shows the fees paid to the Manager. These are made up of the individual Portfolio investment management fees calculated quarterly on the basis of their net asset values and the performance fees of the UK Equity and Global Equity Income Portfolios. GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL 2020 £’000 £’000 £’000 £’000 £’000 Investment management fee: – charged to revenue 88 97 17 4 206 – charged to capital 206 227 40 – 473

Total investment management fee 294 324 57 4 679

2019 Investment management fee: – charged to revenue 98 107 18 6 229 – charged to capital 228 250 42 – 520

Total investment management fee 326 357 60 6 749

Details of the investment management agreement are given on page 56 in the Directors’ Report. No performance fee was earned on the UK Equity and Global Equity Income Portfolios for the current or previous year and therefore no performance fee provision has been made in either year. Any under-performance must be fully offset by over-performance before any performance fee can be paid. Movements on the UK Equity and Global Equity Income Portfolios’ under-performance carried forward follow:

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NOTES TO THE FINANCIAL STATEMENTS continued

3. Investment management and performance fees (continued) GLOBAL GLOBAL UK EQUITY UK EQUITY EQUITY INCOME EQUITY INCOME 2020 2020 2019 2019 £’000 £’000 £’000 £’000 Under-performance brought forward (768) (1,491) (540) (893) Under-performance in the year (142) (1,096) (228) (598)

Under-performance carried forward (910) (2,587) (768) (1,491)

4. Other expenses The other expenses of the Company, including those paid to Directors and the auditor, are presented below; those paid to the Directors and the auditor are separately identified. GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL 2020 £’000 £’000 £’000 £’000 £’000 Charged to revenue: Directors’ remuneration (i) 58 64 8 3 133 Auditor’s fees (ii): – for the audit of the Company’s financial statements 17 20 3 1 41 Other expenses (iii) 122 133 29 5 289

197 217 40 9 463 Charged to capital: Custodian transaction charges 3 5 1 – 9

Total 200 222 41 9 472

GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL 2019 £’000 £’000 £’000 £’000 £’000 Charged to revenue: Directors’ remuneration (i) 70 74 9 5 158 Auditor’s fees (ii): – for the audit of the Company’s financial statements 14 15 2 1 32 Other expenses (iii) 115 125 29 7 276

199 214 40 13 466 Charged to capital: Custodian transaction charges 1 1 – – 2

Total 200 215 40 13 468

(i) The Director’s Remuneration Report provides information on Directors’ fees. Included within other expenses is £12,000 (2019: £14,000) of employer’s national insurance payable on Directors’ remuneration. As at 31 May 2020, the amounts outstanding on Directors’ fees and employer’s national insurance was £22,000 (2019: £27,000). (ii) The Auditor’s fees shown include out of pocket expenses, but exclude VAT, which is included in other expenses. (iii) Includes fees for depositary, broker and registrar, and also printing, postage and listing costs.

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5. Finance costs Finance costs arise on any borrowing the Company has utilised in the year. The Company has a committed £20 million revolving credit facility (see note 12(b) for further details). GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL 2020 £’000 £’000 £’000 £’000 £’000 Interest payable on borrowings repayable within one year as follows: Charged to revenue 16 21 – – 37 Charged to capital 40 48 – – 88

Total 56 69 – – 125

2019 Interest payable on borrowings repayable within one year as follows: Charged to revenue 55 22 – – 77 Charged to capital 127 52 – – 179

Total 182 74 – – 256

6. Tax As an investment trust, the Company pays no tax on capital gains. However, the Company suffers tax on certain overseas dividends that is irrecoverable and this note shows details of the tax charge. In addition, this note clarifies the basis for the Company having no deferred tax asset or liability. (a) Tax charge GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL 2020 £’000 £’000 £’000 £’000 £’000 Overseas tax 15 230 – – 245

2019 Overseas tax 9 237 – – 246

The accounting policy for taxation is disclosed in note 1(h). (b) Reconciliation of tax charge GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL 2020 £’000 £’000 £’000 £’000 £’000 Return before taxation (6,697) (3,171) (213) 24 (10,057)

Theoretical tax at the current UK Corporation Tax rate of 19.00% (2019: 19.00%) (1,273) (602) (41) 5 (1,911) Effect of: – Non-taxable losses on investments and derivatives 1,491 909 31 – 2,431 – Non-taxable losses on foreign exchange 1 1 2 – 4 – Non-taxable scrip dividends (19) (1) – – (20) – Non-taxable UK dividends (265) (69) – – (334) – Non-taxable UK special dividends (12) (16) – – (28) – Non-taxable overseas dividends (25) (335) – – (360) – Overseas tax 15 230 – – 245 – Disallowable expenses 1 1 – – 2 – Accrued income taxable on receipt – 7 – – 7 – Excess of allowable expenses over taxable income 101 105 8 (5) 209

Tax charge for the year 15 230 – – 245

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NOTES TO THE FINANCIAL STATEMENTS continued

6. Tax (continued) (b) Reconciliation of tax charge (continued) GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL 2019 £’000 £’000 £’000 £’000 £’000 Return before taxation (3,316) (710) (265) 52 (4,239)

Theoretical tax at the current UK Corporation Tax rate of 19.00% (2018: 19.00%) (630) (135) (50) 10 (805) Effect of: – Non-taxable losses/(gains) on investments and derivatives 945 546 49 (5) 1,535 – Non-taxable (gains)/losses on foreign exchange (1) 1 (2) – (2) – Non-taxable scrip dividends (7) (3) – – (10) – Non-taxable UK dividends (385) (88) – – (473) – Non-taxable UK special dividends (22) (7) – – (29) – Non-taxable overseas dividends (20) (427) – – (447) – Overseas tax 9 237 – – 246 – Accrued income taxable on receipt – (8) – – (8) – Excess of allowable expenses over taxable income 115 121 3 – 239 Transfer of expenses between Portfolios: – revenue 5 – – (5) –

Tax charge for the year 9 237 – – 246

Given the Company’s status as an investment trust, and the intention to continue meeting the conditions required to retain such status for the foreseeable future, the Company has not provided any UK corporation tax on any realised or unrealised capital gains or losses arising on investments. (c) Factors that may affect future tax charges The Company has excess management expenses and loan relationship deficits of £14,735,000 (2019: £13,595,000) that are available to offset future taxable revenue. A deferred tax asset of £2,800,000 (2019: £2,311,000), measured at the standard corporation tax substantively enacted rate of 19% (2019: 17%) has not been recognised in respect of these expenses since the Directors believe that there will be no taxable profits in the future against which the deferred tax assets can be offset. On 11 March 2020 it was announced (and substantively enacted on 17 March 2020) that the UK corporation tax rate would remain at 19% and not reduce to 17% (the previously enacted rate) from 1 April 2020. 7. Return per Ordinary Share Return per share is the amount of profit (or loss) generated for each share class in the financial year divided by the weighted average number of the shares in issue. Revenue, capital and total return per ordinary share is based on each of the returns after taxation shown by the income statement for the applicable Share class and on the following numbers of Shares being the weighted average number of Shares in issue throughout the year for each Share class: AVERAGE NUMBER OF SHARES SHARE 2020 2019 UK Equity 32,530,315 34,607,613 Global Equity Income 30,394,232 32,378,620 Balanced Risk Allocation 5,465,560 5,966,462 Managed Liquidity 3,551,612 4,597,944

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8. Dividends Dividends are distributions of Portfolio returns to shareholders. These are determined by the Directors and paid four times a year. Dividends paid for each applicable Share class, which represent distributions for the purpose of s1159 of the Corporation Tax Act 2010, follows: 2020 2019 NUMBER DIVIDEND TOTAL NUMBER DIVIDEND TOTAL OF SHARES RATE (PENCE) £’000 OF SHARES RATE (PENCE) £’000 UK Equity First interim 33,048,823 1.50 496 35,536,971 1.50 534 Second interim 32,549,709 1.50 488 34,757,443 1.50 521 Third interim 32,334,465 1.50 485 34,732,059 1.50 521 Fourth interim 32,203,602 2.10 676 33,490,968 2.10 703

6.60 2,145 6.60 2,279

Global Equity Income First interim 31,466,468 1.55 488 32,756,219 1.50 492 Second interim 31,189,234 1.55 483 32,410,667 1.50 486 Third interim 29,900,843 1.55 463 32,604,620 1.50 489 Fourth interim 29,334,234 2.40 704 31,888,951 2.40 765

7.05 2,138 6.90 2,232

Managed Liquidity Prior year interim 4,370,361 0.80 35 – – – Current year interim 2,492,814 0.80 20 – – –

1.60 55 – –

Total paid in the year 4,338 4,511

No dividends have been paid to Balanced Risk Allocation shareholders during the year (2019: nil). The Company’s dividend policy permits the payment of dividends by the UK Equity, Global Equity Income and Managed Liquidity Portfolios from capital. An analysis of dividends paid in the year from revenue and capital follows. GLOBAL UK EQUITY MANAGED COMPANY EQUITY INCOME LIQUIDITY TOTAL 2020 £’000 £’000 £’000 £’000 Dividends paid in the year: From revenue – current year 1,340 1,639 23 3,002 From revenue – reserves brought forward – 373 32 405

From revenue 1,340 2,012 55 3,407 From capital 805 126 – 931

2,145 2,138 55 4,338

GLOBAL UK EQUITY MANAGED COMPANY EQUITY INCOME LIQUIDITY TOTAL 2019 £’000 £’000 £’000 £’000 Dividends paid in the year: From revenue 1,982 2,232 – 4,214 From capital 297 – – 297

2,279 2,232 – 4,511

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NOTES TO THE FINANCIAL STATEMENTS continued

9. Investments held at fair value The portfolio is made up of investments which are listed, i.e. traded on a regulated stock exchange, and a small proportion of investments which are valued by the Directors as they are unlisted or not regularly traded. Gains and losses are either: • realised, usually arising when investments are sold; or • unrealised, being the difference from cost of those investments still held at the year end.

(a) Analysis of investments by listing status 2020 2019 £’000 £’000 UK listed investments 58,159 68,122 Overseas listed investments(i) 58,751 72,248 Unquoted hedge fund investments 18 15

116,928 140,385

(i) Includes the Invesco Liquidity Funds plc – Sterling, money market fund (formerly Short-Term Investments Company (Global Series) plc) positions held by the Balanced Risk Allocation Portfolio of £2,330,000 (2019: £1,735,000) and Managed Liquidity Portfolio of £40,000 (2019: £220,000).

(b) Analysis of investment gains 2020 2019 £’000 £’000 Opening valuation 140,385 166,605 Movements in year: Purchases at cost 99,149 48,735 Sales proceeds (109,974) (67,141) Losses on investments in the year (12,632) (7,814)*

Closing valuation 116,928 140,385

Closing book cost 123,110 129,931 Closing investment holding (losses)/gains (6,182) 10,454

Closing valuation 116,928 140,385

The Company received £109,974,000 (2019: £67,141,000) from investments sold in the year. The book cost of these investments when they were purchased was £105,970,000 (2019: £64,033,000) realising a profit of £4,004,000 (2019: £3,108,000). These investments have been revalued over time and until they were sold any unrealised profits/losses were included in the fair value of the investments. * Due to adoption of the revised SORP issued in October 2019 (see Note 1(a)(i)). The losses on investments figure of £7,814,000 for the year ended 31 May 2019 is as follows: 2019 £’000 Net realised profit on sales 3,108 Investment holding losses in the year (10,922)

Losses on investments (7,814)

(c) Transaction costs Transaction costs were £158,000 (2019: £88,000) on purchases and £49,000 (2019: £42,000) on sales.

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10. Derivative instruments Derivative instruments are contracts whose price is derived from the value of other securities or indices. The Balanced Risk Allocation Portfolio uses futures, which represent agreements to buy or sell commodities or financial instruments at a pre-determined price in the future. Excluding forward currency contracts used for currency hedging purposes. 2020 2019 £’000 £’000 Opening derivative assets held at fair value through profit or loss 175 281 Opening derivative liabilities held at fair value through profit or loss (223) (54)

Opening net derivative (liabilities)/assets held at fair value shown in the balance sheet (48) 227

Closing derivative assets held at fair value through profit or loss 401 175 Closing derivative liabilities held at fair value through profit or loss (151) (223)

Closing net derivative assets/(liabilities) held at fair value shown in balance sheet 250 (48)

Movement in derivative holding assets/liabilities 298 (275) Net realised (losses)/gains on derivative instruments (457) 7

Net capital losses on derivative instruments as shown in the income statement (159) (268) Net income arising on derivatives 2 28

Total losses on derivative instruments (157) (240)

The derivative assets/liabilities shown in the balance sheet are the unrealised gains/losses arising from the revaluation to fair value of futures contracts held in the Balanced Risk Allocation Share Portfolio, as shown on page 25. 11. Debtors Debtors are amounts due to the Company, such as monies due from brokers for investments sold and income which has been earned (accrued) but not yet received. 2020 2019 £’000 £’000 Amounts due from brokers 2,300 3,246 Collateral pledged for futures contracts 244 398 Tax recoverable 223 271 Prepayments and accrued income 339 601

3,106 4,516

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NOTES TO THE FINANCIAL STATEMENTS continued

12(a). Other creditors Creditors are amounts owed by the Company and include amounts due to brokers for the purchase of investments and amounts owed to suppliers, such as the Manager and auditor. 2020 2019 £’000 £’000 Shares bought back 653 218 Tax payable 137 137 Amounts due to brokers 1,653 – Performance fee accrued 531 531 Accruals 306 326

Other payables 3,280 1,212

12(b). Bank overdraft and loans At the year end the Company had a £20 million (2019: £25 million) committed 364 day multicurrency revolving credit facility, which is due for renewal on 14 May 2021 (2019: 15 May 2020). In addition, an overdraft facility for the purpose of short term settlement is also available. Both facilities are with The Bank of New York Mellon. For amounts drawn on the credit facility interest is payable based on LIBOR plus a margin. Additionally, there is a 0.15% commitment fee on the facility amount not utilised. Under the facility’s covenants, the Company’s total indebtedness must not exceed 30% of total assets (excluding any Balanced Risk Allocation Portfolio assets) and the total assets must not be less than £60 million (2019: £75 million). 13. Share capital Share capital represents the total number of shares in issue, including treasury shares. All shares have a nominal value of 1 penny.

(a) Movements in Share Capital during the Year Issued and fully paid: GLOBAL BALANCED TOTAL UK EQUITY RISK MANAGED SHARE EQUITY INCOME ALLOCATION LIQUIDITY CAPITAL ORDINARY SHARES (NUMBER) At 31 May 2019 33,088,595 31,668,234 5,618,428 4,370,361 74,745,618 Shares bought back into treasury (1,460,772) (3,213,136) (164,000) (875,893) (5,713,801) Arising on share conversion: – August 2019 886 (234) (578) (240) (166) – November 2019 62,756 (61,021) 6,067 6,238 14,040 – February 2020 279,137 403,391 (225,335) (1,007,652) (550,459) – May 2020 7,339 (10,434) 2,304 4,218 3,427

At 31 May 2020 31,977,941 28,786,800 5,236,886 2,497,032 68,498,659

TREASURY SHARES (NUMBER) At 31 May 2019 10,517,040 7,301,023 5,157,218 7,805,785 30,781,066 Shares bought back into treasury 1,460,772 3,213,136 164,000 875,893 5,713,801

At 31 May 2020 11,977,812 10,514,159 5,321,218 8,681,678 36,494,867

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GLOBAL BALANCED TOTAL UK EQUITY RISK MANAGED SHARE EQUITY INCOME ALLOCATION LIQUIDITY CAPITAL ORDINARY SHARES OF 1 PENNY EACH (£’000) At 31 May 2019 331 316 56 44 747 Shares bought back into treasury (15) (32) (2) (9) (58) Arising on share conversion: – November 2019 1 (1) – – – – February 2020 2 5 (2) (10) (5)

At 31 May 2020 319 288 52 25 684

TREASURY SHARES OF 1 PENNY EACH (£’000) At 31 May 2019 105 73 52 78 308 Shares bought back into treasury 15 32 2 9 58

At 31 May 2020 120 105 54 87 366

TOTAL SHARE CAPITAL (£’000) Ordinary share capital 319 288 52 25 684 Treasury share capital 120 105 54 87 366

At 31 May 2020 439 393 106 112 1,050

Average buy back price 167.4p 197.8p 138.2p 101.3p

The total cost of share buy backs was £9,986,000 (2019: £9,925,000). As part of the conversion process 614,700 (2019: 238,918) deferred shares of 1p each were created and subsequently cancelled during the year. No deferred shares were in issue at the start or end of the year. No ordinary shares were issued from treasury during the year (2019: nil). (b) Movements in Share Capital after the Year End Since the year end, 1,698,000 UK Equity and 1,311,000 Global Equity Income shares have been bought back into treasury.

(c) Voting Rights Rights attaching to the Shares are described in the Directors’ Report on pages 57 and 58.

(d) Deferred Shares The Deferred shares do not carry any rights to participate in the Company’s profits, do not entitle the holder to any repayment of capital on a return of assets (except for the sum of 1p) and do not carry any right to receive notice of or attend or vote at any general meeting of the Company. Any Deferred shares that arise as a result of conversions of Shares are cancelled in the same reporting period.

(e) Future Convertibility of the Shares Shares are convertible at the option of the holder into any other class of Share. Further conversion details are given on the inside front cover and in the Shareholder Information on page 110. 14. Reserves This note explains the different reserves attributable to shareholders. The aggregate of the reserves and share capital (see previous note) make up total shareholders’ funds. The share premium comprises the net proceeds received by the Company following the issue of new shares, after deduction of the nominal amount of 1 penny and any applicable costs. The special reserve arose from the cancellation of the share premium account, in January 2007, and is available as distributable profits to be used for all purposes under the Companies Act 2006, including buy back of shares and payment of dividends. The capital redemption reserve arises from the nominal value of shares bought back and cancelled; this and the share premium are non-distributable. Capital investment gains and losses are shown in note 9(b), and form part of the capital reserve. The revenue reserve shows the net revenue retained after payments of any dividends. The capital and revenue reserves are distributable.

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15. Net asset value per Share The total net assets (total assets less total liabilities) attributable to a share class are often termed shareholders’ funds and are converted into net asset value per share by dividing by the number of shares in issue. The net asset value per Share and the net assets attributable at the year end were as follows: ORDINARY SHARES 2020 2019 NET ASSET NET ASSET VALUE PER NET ASSETS VALUE PER NET ASSETS SHARE ATTRIBUTABLE SHARE ATTRIBUTABLE PENCE £’000 PENCE £’000 UK Equity 145.8 46,617 173.1 57,286 Global Equity Income 178.5 51,372 197.6 62,589 Balanced Risk Allocation 135.1 7,073 139.5 7,837 Managed Liquidity 104.4 2,607 104.9 4,583

Net asset value per Share is based on net assets at the year end and on the number of Shares in issue (excluding Treasury Shares) for each Share class at the year end.

16. Financial instruments This note summarises the risks deriving from the financial instruments that comprise the Company’s assets and liabilities. The Company’s financial instruments comprise the following: – investments in equities, fixed interest securities and liquidity funds which are held in accordance with the Company’s investment objectives and the investment objectives of the four Portfolios; – short-term debtors, creditors and cash arising directly from operations; – short-term forward foreign currency and futures contracts; and – bank loans and short-term overdrafts, used to finance operations. The financial instruments held in each of the four investment portfolios are shown on pages 12, 19, 25, 26 and 31. The accounting policies in note 1 include criteria for the recognition and the basis of measurement applied for these financial instruments. Note 1 also includes the basis on which income and expenses arising from financial assets and liabilities are recognised and measured. The Company’s principal risks and uncertainties are outlined in the Strategic Report on pages 39 to 42. This note expands on risk areas in relation to the Company’s financial instruments. The portfolios are managed in accordance with the Company’s investment policies and objectives, which are set out on pages 32 to 35. The management process is subject to risk controls, which the Audit Committee reviews on behalf of the Board, as described on pages 50 and 51. The principal risks that an investment company faces in its portfolio management activities are set out below: Market risk – arising from fluctuations in the fair value or future cash flows of a financial instrument because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk: Currency risk – arising from fluctuations in the fair value or future cash flows of a financial instrument because of changes in foreign exchange rates; Interest rate risk – arising from fluctuations in the fair value or future cash flows of a financial instrument because of changes in market interest rates; and Other price risk – arising from fluctuations in the fair value or future cash flows of a financial instrument for reasons other than changes in foreign exchange rates or market interest rates, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

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Liquidity risk – arising from any difficulty in meeting obligations associated with financial liabilities. Credit risk, incorporating counterparty risk – arising from financial loss for a company where the other party to a financial instrument fails to discharge an obligation. Risk Management Policies and Procedures As an investment trust the Company invests in equities and other investments for the long-term in accordance with its investment policies so as to meet its investment objectives. In pursuing its objectives, the Company is exposed to a variety of risks that could result in a reduction in the Company’s net assets or a reduction of the profits available for dividends. The risks applicable to the Company and the Directors’ policies for managing these risks follow. These have not changed from those applying in the previous year. The Directors have delegated to the Manager the responsibility for the day-to-day investment activities of the Company as more fully described in the Directors’ Report. The main risk that the Company faces arising from its financial instruments is market risk – this risk is reviewed in detail below. Since the Company mainly invests in quoted investments and derivative instruments traded on recognised exchanges, liquidity risk and credit risk are significantly mitigated. 16.1 Market Risk Market risk arises from changes in the fair value or future cash flows of a financial instrument because of movements in market prices. Market risk comprises three types of risk: currency risk (16.1.1), interest rate risk (16.1.2) and other price risk (16.1.3). The Company’s portfolio managers assess the individual investment portfolio exposures when making each investment decision for their Portfolios, and monitor the overall level of market risk on the whole of their investment portfolio on an ongoing basis. The Board meets at least quarterly to assess risk and review investment performance for the four Portfolios and the Company, as disclosed in the Board Responsibilities section of the Directors’ Report on page 52. Borrowings can be used by the UK Equity and Global Equity Income Portfolios, which will increase the Company’s exposure to market risk and volatility. The borrowing limits for these Portfolios are 25% and 20% of attributable net assets, respectively. 16.1.1 Currency Risk A majority of the Global Equity Income Portfolio, derivative instruments in the Balanced Risk Allocation Portfolio and a small proportion of the UK Equity Portfolio consist of assets, liabilities and income denominated in currencies other than sterling. As a result, movements in exchange rates will affect the sterling value of those items. Management of Currency Risk The portfolio managers monitor the separate Portfolios’ exposure to foreign currencies on a daily basis and report to the Board on a regular basis. Forward foreign currency contracts can be used to limit the Company’s exposure to anticipated future changes in exchange rates and to achieve portfolio characteristics that assist the Company in meeting its investment objectives in line with its investment policies. All contracts are limited to currencies and amounts commensurate with the exposure to those currencies. No such contracts were in place at the current or preceding year end. Income denominated in foreign currencies is converted to sterling on receipt. The Company does not use financial instruments to mitigate the currency exposure in the period between the time that income is accrued and its receipt. Foreign Currency Exposure The fair value or amortised cost of the Company’s monetary items that have foreign currency exposure at 31 May are shown below. Where the Company’s equity investments (which are not monetary items) are priced in a foreign currency they have been included separately in the analysis in order to show the overall level of exposure.

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NOTES TO THE FINANCIAL STATEMENTS continued

16. Financial instruments (continued) 16.1 Market Risk (continued) 16.1.1 Currency Risk (continued) UK EQUITY PORTFOLIO: TOTAL INVESTMENTS FOREIGN AT FAIR DEBTORS CREDITORS CURRENCY VALUE (DUE FROM (DUE TO EXPOSURE THROUGH TOTAL NET BROKERS CASH/ BROKERS ON NET PROFIT OR FOREIGN AND (OVERDRAFT) AND MONETARY LOSS THAT CURRENCY DIVIDENDS) AT BANK ACCRUALS) ITEMS ARE EQUITIES EXPOSURE CURRENCY £’000 £’000 £’000 £’000 £’000 £’000 YEAR ENDED 31 MAY 2020 Canadian Dollar – – – – 2,852 2,852 Euro 2 – – 2 – 2 US Dollar 24 – – 24 4,454 4,478

26 – – 26 7,306 7,332

YEAR ENDED 31 MAY 2019 Canadian Dollar – – – – 1,591 1,591 Euro 34 – – 34 2,235 2,269 Swiss Franc 48 – – 48 – 48 US Dollar 4 – – 4 1,798 1,802

86 – – 86 5,624 5,710

GLOBAL EQUITY INCOME PORTFOLIO: TOTAL INVESTMENTS FOREIGN AT FAIR DEBTORS CREDITORS CURRENCY VALUE (DUE FROM (DUE TO EXPOSURE THROUGH TOTAL NET BROKERS CASH/ BROKERS ON NET PROFIT OR FOREIGN AND (OVERDRAFT) AND MONETARY LOSS THAT CURRENCY DIVIDENDS) AT BANK ACCRUALS) ITEMS ARE EQUITIES EXPOSURE CURRENCY £’000 £’000 £’000 £’000 £’000 £’000 YEAR ENDED 31 MAY 2020 Brazilian Real 7 – – 7 – 7 Canadian Dollar – 1 – 1 – 1 Euro 256 – – 256 7,071 7,327 Hong Kong Dollar 527 – (527) – 1,650 1,650 Japanese Yen 3 – – 3 952 955 Korean Won – – – – 1,911 1,911 Norwegian Krone 6 – – 6 – 6 Swedish Krona 4 – – 4 1,395 1,399 Swiss Franc 438 – (835) (397) 5,066 4,669 Taiwanese Dollar – – – – 2,372 2,372 US Dollar 826 – (159) 667 26,016 26,683

2,067 1 (1,521) 547 46,433 46,980

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TOTAL INVESTMENTS FOREIGN AT FAIR DEBTORS CREDITORS CURRENCY VALUE (DUE FROM (DUE TO EXPOSURE THROUGH TOTAL NET BROKERS CASH/ BROKERS ON NET PROFIT OR FOREIGN AND (OVERDRAFT) AND MONETARY LOSS THAT CURRENCY DIVIDENDS) AT BANK ACCRUALS) ITEMS ARE EQUITIES EXPOSURE CURRENCY £’000 £’000 £’000 £’000 £’000 £’000 YEAR ENDED 31 MAY 2019 Australian Dollar – – – – 1,515 1,515 Brazilian Real 55 – – 55 445 500 Canadian Dollar – 1 – 1 1,398 1,399 Euro 120 – – 120 18,631 18,751 Japanese Yen 22 – – 22 2,390 2,412 Korean Won – – – – 1,878 1,878 Norwegian Krone 6 – – 6 913 919 Swiss Franc 123 – – 123 4,243 4,366 Taiwanese Dollar – – – – 1,596 1,596 US Dollar 70 12 – 82 23,445 23,527

396 13 – 409 56,454 56,863

BALANCED RISK ALLOCATION PORTFOLIO:

DERIVATIVE DEBTORS DERIVATIVE TOTAL INVESTMENTS ASSETS DUE FROM/ LIABILITIES FOREIGN AT FAIR AT FAIR (CREDITORS AT FAIR CURRENCY VALUE VALUE DUE TO) VALUE EXPOSURE THROUGH TOTAL NET THROUGH BROKERS & CASH/ THROUGH ON NET PROFIT OR FOREIGN PROFIT DIVIDENDS/ (OVERDRAFT) PROFIT MONETARY LOSS THAT CURRENCY OR LOSS (ACCRUALS)* AT BANK OR LOSS ITEMS ARE EQUITIES EXPOSURE CURRENCY £’000 £’000 £’000 £’000 £’000 £’000 £’000 YEAR ENDED 31 MAY 2020 Australian Dollar – 80 32 (29) 83 – 83 Canadian Dollar – 20 19 (1) 38 – 38 Euro 76 (12) 53 – 117 – 117 Hong Kong Dollar – 42 25 (4) 63 – 63 Japanese Yen 57 (36) 23 – 44 – 44 US Dollar 207 170 70 (117) 330 18 348

340 264 222 (151) 675 18 693

YEAR ENDED 31 MAY 2019 Australian Dollar 98 (52) 35 – 81 – 81 Canadian Dollar 19 20 32 – 71 – 71 Euro 12 29 – – 41 – 41 Hong Kong Dollar – 35 2 (6) 31 – 31 Japanese Yen – 69 5 (58) 16 – 16 US Dollar 31 270 29 (159) 171 15 186

160 371 103 (223) 411 15 426

* Debtors includes collateral pledged for futures contracts. Foreign Currency Sensitivity The preceding exposure analysis is based on the Company’s monetary foreign currency financial instruments held at each balance sheet date and takes account of forward foreign exchange contracts, if used, that offset the effects of changes in currency exchange rates. The effect of strengthening or weakening of sterling against other currencies to which the Company is exposed is calculated by reference to the volatility of exchange rates during the year using the standard deviation of currency fluctuations against the mean, giving the following exchange rate fluctuations:

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NOTES TO THE FINANCIAL STATEMENTS continued

16. Financial instruments (continued) 16.1 Market Risk (continued) 16.1.1 Currency Risk (continued) 2020 2019 £/Australian Dollar +/– 3.6% +/– 2.0% £/Brazilian Real +/– 12.3% +/– 3.4% £/Canadian Dollar +/– 2.6% +/– 1.6% £/Euro +/– 2.7% +/– 1.6% £/Hong Kong Dollar +/– 2.9% +/– 1.6% £/Japanese Yen +/– 3.5% +/– 1.9% £/Norwegian Krone +/– 6.1% +/– 2.1% £/South Korean Won +/– 2.0% +/– 1.9% £/Swedish Krona +/– 2.5% +/– 2.5% £/Swiss Franc +/– 3.1% +/– 1.9% £/Taiwan Dollar +/– 2.7% +/– 1.2% £/US Dollar +/– 2.8% +/– 1.5%

The tables that follow illustrate the exchange rate sensitivity of revenue and capital returns arising from the Company’s financial non-sterling assets and liabilities for the year for the UK Equity, Global Equity Income and Balanced Risk Allocation Portfolios using the exchange rate fluctuations shown above. If sterling had strengthened against other currencies by the exchange rate fluctuations shown in the table above, this would have had the following after tax effect: UK EQUITY PORTFOLIO: 2020 2019 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL RETURN RETURN RETURN RETURN RETURN RETURN £’000 £’000 £’000 £’000 £’000 £’000 Canadian Dollar – (74) (74) – (25) (25) Euro (1) – (1) – (36) (36) US Dollar (5) (125) (130) – (27) (27)

(6) (199) (205) – (88) (88)

GLOBAL EQUITY INCOME PORTFOLIO: 2020 2019 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL RETURN RETURN RETURN RETURN RETURN RETURN £’000 £’000 £’000 £’000 £’000 £’000 Australian Dollar (1) – (1) (1) (30) (31) Brazilian Real – – – (2) (15) (17) Canadian Dollar (1) – (1) (1) (22) (23) Euro (12) (195) (207) (15) (298) (313) Hong Kong Dollar (15) (33) (48) (1) – (1) Japanese Yen (2) (33) (35) (2) (45) (47) Norwegian Krone (2) – (2) (1) (19) (20) South Korean Won (1) (38) (39) (1) (36) (37) Swedish Krona – (35) (35) – – – Swiss Franc (15) (131) (146) (3) (81) (84) Taiwan Dollar (2) (64) (66) (1) (19) (20) US Dollar 10 (775) (765) (9) (352) (361)

(41) (1,304) (1,345) (37) (917) (954)

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BALANCED RISK ALLOCATION PORTFOLIO: 2020 2019 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL RETURN RETURN RETURN RETURN RETURN RETURN £’000 £’000 £’000 £’000 £’000 £’000 Australian Dollar – (3) (3) – (2) (2) Canadian Dollar – (1) (1) – (1) (1) Euro – (3) (3) – (1) (1) Hong Kong Dollar – (2) (2) – – – Japanese Yen – (2) (2) – – – US Dollar – (10) (10) – (3) (3)

– (21) (21) – (7) (7)

If sterling had weakened to the same extent as the currencies above, the effect would have been the exact opposite. 16.1.2 Interest Rate Risk Interest rate movements may affect: – the fair value of the investments in fixed-interest rate securities; – the level of income receivable on cash deposits; and – the interest payable on variable rate borrowings. Management of interest rate risk The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account as part of the portfolio management and borrowings processes of the portfolio managers. The Board reviews on a regular basis the investment portfolio and borrowings. This encompasses the valuation of fixed-interest and floating rate securities and gearing levels. When the Company has cash balances, they are held in variable rate bank accounts yielding rates of interest dependent on the base rate of the custodian or deposit taker. The Company has a £20 million (2019: £25 million), 364 day multicurrency revolving credit facility which is due for renewal on 14 May 2021. The Company uses the facility when required at levels approved and monitored by the Board. Interest rate exposure The Company also has available an uncommitted overdraft facility for settlement purposes and interest is dependent on the base rate determined by the custodian. At 31 May the exposure of financial assets and financial liabilities to interest rate risk is shown by reference to: – floating interest rates (giving cash flow interest rate risk) – when the interest rate is due to be reset; and – fixed interest rates (giving fair value interest rate risk) – when the financial instrument is due for repayment.

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NOTES TO THE FINANCIAL STATEMENTS continued

16. Financial instruments (continued) 16.1 Market Risk (continued) 16.1.2 Interest Rate Risk (continued) The following table sets out the financial assets and financial liabilities exposure at the year end: GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL £’000 £’000 £’000 £’000 £’000 2020 Exposure to floating interest rates: Investments held at fair value through profit or loss(1) – – 2,330 2,682 5,012 Cash and cash equivalents – 146 251 50 447 Bank loans (4,800) (4,980) – – (9,780) Overdraft (2) – – – (2)

(4,802) (4,834) 2,581 2,732 (4,323) Exposure to fixed interest rates: Investments held at fair value through profit or loss including UK Treasury Bills – – 3,999 – 3,999

Net exposure to interest rates (4,802) (4,834) 6,580 2,732 (324)

GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL £’000 £’000 £’000 £’000 £’000 2019 Exposure to floating interest rates: Investments held at fair value through profit or loss(1) – – 1,735 4,710 6,445 Cash and cash equivalents 476 245 153 10 884 Bank loans (7,350) (4,880) – – (12,230)

(6,874) (4,635) 1,888 4,720 (4,901) Exposure to fixed interest rates: Investments held at fair value through profit or loss including UK Treasury Bills – – 5,635 – 5,635

Net exposure to interest rates (6,874) (4,635) 7,523 4,720 734

(1) Comprises holdings in PIMCO Sterling Short Maturity Source UCITS ETF and Invesco Liquidity Funds plc – Sterling (formerly Short Term Investment Companies (Global Series) plc). The income on the PIMCO Sterling Short Maturity Source UCITS ETF and Invesco Liquidity Funds plc – Sterling (formerly Short Term Investment Companies (Global Series) plc) investments is affected by interbank lending rates; the principal amount should normally remain stable regardless of interest rate movements.

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Interest rate sensitivity At the maximum possible borrowing level of £20 million (2019: £25 million), the maximum effect over one year of a 0.5% movement in interest rates would be a £100,000 (2019: £125,000) movement in the Company’s income and net assets. The maximum effect of a 1% movement in the interest rates on investments held at fair value through profit and loss would be a £12,000 (2019: £16,000) movement in the Company’s income and net assets. The above exposure and sensitivity analysis are not representative of the year as a whole, since the level of exposure changes frequently throughout the year. Other price risks (i.e. changes in market prices other than those arising from interest rate risk or currency risk) may affect the value of the equity investments, but it is the role of the portfolio managers to manage the Portfolios to achieve the best returns they can.

16.1.3 Other Price Risk Management of Other Price Risk The Directors monitor the market price risks inherent in the investment portfolios by meeting regularly to review performance. The Company’s investment portfolios are the product of the Manager’s investment processes and the application of the Portfolios' investment policies. Their value will move according to the performance of the shares held within them. However, the Portfolios do not replicate their respective benchmarks or the markets in which the Portfolios invest, so their performance may not correlate with them. Notwithstanding the issue of correlation, if the fixed asset value of an investment portfolio moved by 10% at the balance sheet date, the profit after tax and net assets for the year would increase/decrease by the following amounts: BALANCED GLOBAL EQUITY RISK MANAGED UK EQUITY INCOME ALLOCATION LIQUIDITY £’000 £’000 £’000 £’000 2020 Profit after tax increase/decrease due to rise/fall of 10% 5,212 5,578 635 268 2019 Profit after tax increase/decrease due to rise/fall of 10% 6,125 6,704 739 471

16.2 Liquidity Risk Management of liquidity risk Liquidity risk is mitigated by the investments held by the Company’s four portfolios being diversified and the majority being readily realisable securities which can be sold to meet funding commitments. If required, the Company’s borrowing facilities provide additional long-term and short-term flexibility. The Directors’ policy is that in normal market conditions short-term borrowings be used to manage short term liabilities and working capital requirements rather than realising investments. Liquidity risk The contractual maturities of financial liabilities at the year end, based on the earliest date on which payment can be required, are as follows:

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NOTES TO THE FINANCIAL STATEMENTS continued

16. Financial instruments (continued) 16.2 Liquidity Risk (continued) GLOBAL EQUITY BALANCED RISK MANAGED UK EQUITY INCOME ALLOCATION LIQUIDITY 3 MONTHS MORE THAN 3 MONTHS 3 MONTHS MORE THAN 3 MONTHS COMPANY OR LESS 3 MONTHS OR LESS OR LESS 3 MONTHS OR LESS TOTAL £’000 £’000 £’000 £’000 £’000 £’000 £’000 2020 Overdraft 2 – – – – – 2 Bank loans 4,800 – 4,980 – – – 9,780 Amounts due to brokers 132 – 1,521 – – – 1,653 Other creditors and accruals 275 – 658 23 – 140 1,096 Performance fee accrued – 531 – – – – 531 Derivative financial instruments – – – 95 56 – 151

5,209 531 7,159 118 56 140 13,213

GLOBAL EQUITY BALANCED RISK MANAGED UK EQUITY INCOME ALLOCATION LIQUIDITY 3 MONTHS MORE THAN 3 MONTHS 3 MONTHS MORE THAN 3 MONTHS COMPANY OR LESS 3 MONTHS OR LESS OR LESS 3 MONTHS OR LESS TOTAL £’000 £’000 £’000 £’000 £’000 £’000 £’000 2019 Bank loans 7,350 – 4,880 – – – 12,230 Other creditors and accruals 139 – 334 65 – 143 681 Performance fee accrued – 531 – – – – 531 Derivative financial instruments – – – 161 62 – 223

7,489 531 5,214 226 62 143 13,665

16.3 Credit Risk Credit risk is that the failure of the counterparty in a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. This risk is managed as follows: – investment transactions are carried out with a selection of brokers, approved by the Manager and settled on a delivery versus payment basis. Brokers’ credit ratings are regularly reviewed by the Manager, so as to minimise the risk of default to the Company; – the derivative financial instruments are all exchange traded and the exchange guarantees their settlement; – the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the daily review of failed trade reports and the use of daily stock and cash reconciliations. Only approved counterparties are used; – the Company’s ability to operate in the short-term may be adversely affected if the Company’s Manager, other outsource service providers, or their delegates suffer insolvency or other financial difficulties. The Board reviews annual controls reports from major service providers; – where an investment is made in a bond, corporate or otherwise, the credit rating of the issuer is taken into account so as to minimise the risk to the Company of default; and – cash balances are limited to a maximum of £2.5 million for each Portfolio with any one deposit taker (other than cash collateral on derivative instruments), with only deposit takers approved by the Manager being used. Cash held at brokers includes any cash collateral on futures contracts and during the year only one futures clearing broker, Merrill Lynch, was used.

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The following table sets out the maximum credit risk exposure at the year end: GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL £’000 £’000 £’000 £’000 £’000 2020 Bonds (UK Treasury bills) – – 3,999 – 3,999 Cash held as short-term investment(1) – – 2,330 40 2,370 Unquoted securities – – 18 – 18 Derivative financial instruments – – 250 – 250 Debtors(2) 236 2,607 248 15 3,106 Cash and cash equivalents – 146 251 50 447

236 2,753 7,096 105 10,190

GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL £’000 £’000 £’000 £’000 £’000 2019 Bonds (UK Treasury bills) – – 5,635 – 5,635 Cash held as short-term investment(1) – – 1,735 220 1,955 Unquoted securities – – 15 – 15 Derivative financial instruments – – (48) – (48) Debtors(2) 3,580 518 412 6 4,516 Cash and cash equivalents 476 245 153 10 884

4,056 763 7,902 236 12,957

(1) Invesco Liquidity Funds plc, money market fund (formerly Short-Term Investments Company (Global Series) plc.) (2) Cash collateral pledged for futures contracts of £244,000 is included in debtors (2019: £398,000). 17. Fair Values of Financial Assets and Financial Liabilities ‘Fair value’ in accounting terms is the amount at which an asset can be bought or sold in a transaction between willing parties, i.e. a market-based, independent measure of value. This note sets out the fair value hierarchy comprising three ‘levels’ and the aggregate amount of investments in each level. The financial assets and financial liabilities are either carried in the balance sheet at their fair value (investments and derivative instruments), or the balance sheet amount is a reasonable approximation of fair value. FRS 102 as amended for fair value hierarchy disclosures sets out three fair value levels. These are: Level 1 – The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date. Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly. Level 3 – Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability. Categorisation within the hierarchy is determined on the basis of the lowest level input that is significant to the fair value measurement of each relevant asset/liability.

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NOTES TO THE FINANCIAL STATEMENTS continued

17. Fair Values of Financial Assets and Financial Liabilities (continued) The valuation techniques used by the Company are explained in the accounting policies note. The majority of the Company’s investments are quoted equity investments and Treasury bills which are deemed to be Level 1. Level 2 comprises all other quoted fixed income investments, derivative instruments and liquidity funds held in the Balanced Risk Allocation and Managed Liquidity Portfolios. Level 3 investments comprise any unquoted securities and the remaining hedge fund investments of the Balanced Risk Allocation Portfolio.

GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL £’000 £’000 £’000 £’000 £’000 2020 Financial assets at fair value through profit or loss: Level 1 52,121 55,778 3,999 2,642 114,540 Level 2 – – 2,731 40 2,771 Level 3 – – 18 – 18

Total for financial assets 52,121 55,778 6,748 2,682 117,329

Financial liabilities: Level 2 – Derivative instruments – – 151 – 151

GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL £’000 £’000 £’000 £’000 £’000 2019 Financial assets at fair value through profit or loss: Level 1 61,250 67,040 5,635 4,490 138,415 Level 2 – – 1,910 220 2,130 Level 3 – – 15 – 15

Total for financial assets 61,250 67,040 7,560 4,710 140,560

Financial liabilities: Level 2 – Derivative instruments – – 223 – 223

18. Capital Management This note is designed to set out the Company’s objectives, policies and processes for managing its capital. The capital is funded from monies invested in the Company by shareholders (both initial investment and any retained amounts) and any borrowings by the Company. The Company’s total capital employed at 31 May 2020 was £117,449,000 (2019: £144,525,000) comprising borrowings of £9,780,000 (2019: £12,230,000) and equity share capital and other reserves of £107,669,000 (2019: £132,295,000). The Company’s total capital employed is managed to achieve the Company’s investment objective and policy as set out on pages 32 to 35, including that borrowings may be used to raise equity exposure up to a maximum of 25% of net assets. At the balance sheet date, maximum possible gross gearing was 18.6% (2019: 18.9%). The Company’s policies and processes for managing capital are unchanged from the preceding year.

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The main risks to the Company’s investments are shown in the Directors’ Report under the ‘Principal Risks and Uncertainties’ section on pages 39 to 42. These also explain that the Company has borrowing facilities which can be used in accordance with each Portfolio’s investment objectivity and policy and that this will amplify the effect on equity of changes in the value of each applicable portfolio. The Board can also manage the capital structure directly since it has taken the powers, which it is seeking to renew, to issue and buy back shares and it also determines dividend payments. The Company is subject to externally imposed capital requirements with respect to the obligation and ability to pay dividends by Corporation Tax Act 2010 and by the Companies Act 2006, respectively, and with respect to the availability of the overdraft facility, by the terms imposed by the lender. The Board regularly monitors, and has complied with, the externally imposed capital requirements. This is unchanged from the prior year. Borrowings comprise any drawings on the credit and/or overdraft facilities, details of which are given in note 12. 19. Contingencies, guarantees and financial commitments Any liabilities the Company is committed to honour but which are dependent on a future circumstance or event occurring would be disclosed in this note if any existed. There were no contingencies, guarantees or financial commitments of the Company at the year end (2019: £nil). 20. Related party transactions and transactions with the Manager A related party is a company or individual who has direct or indirect control or who has significant influence over the Company. Under accounting standards, the Manager is not a related party. Under UK GAAP, the Company has identified the Directors as related parties. The Directors’ remuneration and interests have been disclosed on pages 63 to 65 with additional disclosure in note 4. No other related parties have been identified. Details of the Manager’s services and fees are disclosed in the Director’s Report on page 56 and note 3.

21. Post Balance Sheet Events Any significant events that occurred after the Company’s financial year end but before the signing of the balance sheet will be shown here. There are no significant events after the end of the reporting period requiring disclosure. However, there continues to be potential for economic and market impacts from Covid-19, which may affect the Company’s investment portfolio. As at close of business on 30 July 2020 the NAV, price and discount of each class of the Company’s Shares were as follows: NET ASSET VALUE SHARE PRICE SHARE CLASS (PENCE) (PENCE) DISCOUNT UK Equity 143.2 142.0 (0.8)% Global Equity Income 183.1 181.5 (0.9)% Balanced Risk Allocation 141.4 133.5 (5.6)% Managed Liquidity 105.0 101.5 (3.3)%

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INFORMATION FOR SHAREHOLDERS

THIS NOTICE OF ANNUAL GENERAL MEETING IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action to take, you should consult your stockbroker, solicitor, accountant or other appropriate independent professional adviser authorised under the Financial Services and Markets Act 2000. If you have sold or otherwise transferred all your Shares in Invesco Perpetual Select Trust plc, please forward this document and the accompanying Form of Proxy to the person through whom the sale or transfer was effected, for transmission to the purchaser or transferee.

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS GIVEN that the Annual General Meeting (AGM) of Invesco Perpetual Select Trust plc will be held at 43-45 Portman Square, London W1H 6LY at 11.30am on 6 October 2020 for the following purposes: Ordinary Business of the Company 1. To receive the Annual Financial Report for the year ended 31 May 2020. 2. To approve the Directors’ Remuneration Policy. 3. To approve the Annual Statement and Report on Remuneration. 4. To re-elect Craig Cleland as a Director of the Company. 5. To re-elect Alan Clifton as a Director of the Company. 6. To re-elect Graham Kitchen as a Director of the Company. 7. To re-elect Victoria Muir as a Director of the Company. 8. To re-appoint Grant Thornton UK LLP as Auditor to the Company and authorise the Audit Committee to determine the Auditor’s remuneration. Special Business of the Company To consider and, if thought fit, to pass the following resolution which will be proposed as an Ordinary Resolution: 9. THAT: the Directors be and they are hereby generally and unconditionally authorised, for the purpose of section 551 of the Companies Act 2006 as amended from time to time prior to the date of passing this resolution (‘2006 Act’) to exercise all the powers of the Company to allot relevant securities (as defined in sections 551(3) and (6) of the 2006 Act) up to an aggregate nominal amount equal to £1,000,000 of UK Equity Shares, £1,000,000 of Global Equity Income Shares, £1,000,000 of Balanced Risk Allocation Shares and £1,000,000 of Managed Liquidity Shares, provided that this authority shall expire at the conclusion of the next AGM of the Company or the date falling 15 months after the passing of this resolution, whichever is the earlier, but so that such authority shall allow the Company to make offers or agreements before the expiry of this authority which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities in pursuance of such offers or agreements as if the power conferred hereby had not expired. To consider and, if thought fit, to pass the following resolutions which will be proposed as Special Resolutions: 10. THAT: the Directors be and they are hereby empowered, in accordance with sections 570 and 573 of the Companies Act 2006 as amended from time to time prior to the date of the passing of this resolution (‘2006 Act’) to allot Shares in each class (UK Equity, Global Equity Income, Balanced Risk Allocation and Managed Liquidity) for cash, either pursuant to the authority given by resolution 9 set out above or (if such allotment constitutes the sale of relevant Shares which, immediately before the sale, were held by the Company as treasury shares) otherwise, as if section 561 of the 2006 Act did not apply to any such allotment, provided that this power shall be limited: (a) to the allotment of Shares in connection with a rights issue in favour of all holders of a class of Share where the Shares attributable respectively to the interests of all holders of Shares of such class are either proportionate (as nearly as may be) to the respective numbers of relevant Shares held by them or are otherwise allotted in accordance with the

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rights attaching to such Shares (subject in either case to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of, any regulatory body or any stock exchange in any territory or otherwise); (b) to the allotment (otherwise than pursuant to a rights issue) of equity securities up to an aggregate nominal amount of £30,279 of UK Equity Shares, £27,475 of Global Equity Income Shares, £5,236 of Balanced Risk Allocation Shares and £2,497 of Managed Liquidity Shares; and (c) to the allotment of equity securities at a price of not less than the net asset value per Share as close as practicable to the allotment or sale and this power shall expire at the conclusion of the next AGM of the Company or the date 15 months after the passing of this resolution, whichever is the earlier, but so that this power shall allow the Company to make offers or agreements before the expiry of this power which would or might require equity securities to be allotted after such expiry as if the power conferred by this resolution had not expired; and so that words and expressions defined in or for the purposes of Part 17 of the 2006 Act shall bear the same meanings in this resolution. 11. THAT: the Company be generally and subject as hereinafter appears unconditionally authorised in accordance with section 701 of the Companies Act 2006 as amended from time to time prior to the date of passing this resolution (‘2006 Act’) to make market purchases (within the meaning of section 693(4) of the 2006 Act) of its issued Shares in each Share class (UK Equity, Global Equity Income, Balanced Risk Allocation and Managed Liquidity). PROVIDED ALWAYS THAT (i) the maximum number of Shares hereby authorised to be purchased shall be 14.99% of each class of the Company’s share capital at 6 October 2020, the date of the Annual General Meeting (equivalent, at 30 July 2020, to 4,538,963 UK Equity Shares, 4,118,622 Global Equity Income Shares, 785,009 Balanced Risk Allocation Shares and 374,305 Managed Liquidity Shares); (ii) the minimum price which may be paid for a Share shall be 1p; (iii) the maximum price which may be paid for a Share in each Share class must not be more than the higher of: (a) 5% above the average of the mid-market values of the Shares for the five business days before the purchase is made; and (b) the higher of the price of the last independent trade in the Shares and the highest then current independent bid for the Shares on the London Stock Exchange; (iv) any purchase of Shares will be made in the market for cash at prices below the prevailing net asset value per Share (as determined by the Directors); (v) the authority hereby conferred shall expire at the conclusion of the next AGM of the Company or, if earlier, on the expiry of 15 months from the passing of this resolution unless the authority is renewed at any other general meeting prior to such time; and (vi) the Company may make a contract to purchase Shares under the authority hereby conferred prior to the expiry of such authority which will be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to any such contract. 12. THAT: the period of notice required for general meetings of the Company (other than Annual General Meetings) shall be not less than 14 days. Ordinary Business of the UK Equity Share Class Only holders of UK Equity Shares may vote on this resolution, which will be proposed as an Ordinary Resolution: 13. To approve the UK Equity Share Class Portfolio dividend payment policy as set out on page 36 of the 2020 annual financial report.

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NOTICE OF ANNUAL GENERAL MEETING continued

Ordinary Business of the Global Equity Income Share Class Only holders of Global Equity Income Shares may vote on this resolution, which will be proposed as an Ordinary Resolution: 14. To approve the Global Equity Income Share Class Portfolio dividend payment policy as set out on page 36 of the 2020 annual financial report. All Resolutions are explained further in the Directors’ Report on pages 59 to 61.

Dated 31st July 2020 By order of the Board

Invesco Asset Management Limited Company Secretary

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Notes: 1. A form of appointment of proxy accompanies this annual financial report. A member entitled to attend and vote at the AGM is entitled to appoint one or more proxies to attend, speak and vote in his stead. Where more than one proxy is appointed, each proxy must be appointed to exercise the rights attached to a different Share or Shares. A proxy need not be a member of the Company. It is hoped that by the date of the AGM restrictions due to Covid-19 will have eased. However, should this not be the case the AGM may have to be held as a closed meeting. In this eventuality shareholders, their proxies and corporate representatives will not be admitted to the meeting and it is recommended that shareholders exercise their votes by means of registering them with the Company’s registrar ahead of the meeting, online or by completing paper proxy forms, and appoint the Chairman of the meeting as their proxy. In order to be valid an appointment of proxy must be returned by one of the following methods: • via the registrar’s website www.signalshares.com; or • in hard copy form by post, to the Company’s registrar, Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU; or • by hand or courier to Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU; or • in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out below. and in each case to be received by the Company not less than 48 hours before the time of the AGM. The appointment of a proxy (whether by completion of a form of appointment of proxy, or other instrument appointing a proxy or any CREST proxy instruction) does not prevent a member from attending and voting at the AGM. 2. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so by utilising the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s) who will be able to take the appropriate action on their behalf. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with CRESTCo’s specifications and must contain the information required for such instructions as described in the CREST Manual. The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA10) by the latest time for receipt of proxy appointments specified in this document. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that CRESTCo does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s), such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. 3. A person entered on the Register of Members at close of business on 4 October 2020 (a ‘member’) is entitled to attend and vote at the Meeting pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001. Any changes to the Register of Members after such time and date shall be disregarded in determining the rights of any person to attend and/or vote at the Meeting. If the Meeting is adjourned, entitlement to attend and vote at the adjourned meeting, and the number of votes which may be cast thereat, will be determined by reference to the Company’s register of members 48 hours before the time fixed for the adjourned meeting. 4. The Register of Directors’ interests; the schedule of matters reserved for the Board; the terms of reference of the Audit, Management Engagement and Nomination Committees; and the letters of appointment for Directors will be provided for inspection upon request to the Company Secretary.

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NOTICE OF ANNUAL GENERAL MEETING continued

5. The Articles of Association will be provided for inspection upon request to the Company Secretary. 6. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a shareholder provided that they do not do so in relation to the same shares. 7. Any person to whom this Notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information rights (a ‘Nominated Person’) may have a right, under an agreement between him/her and the shareholder by whom he/she was nominated, to be appointed (or to have someone else appointed) as a proxy for the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may have a right, under such an agreement, to give instructions to the shareholder as to the exercise of voting rights. The statement of the above rights of the shareholders in relation to the appointment of proxies in paragraph 1 above does not apply to Nominated Persons. Those rights can only be exercised by shareholders of the Company. 8. Any member attending the AGM has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the AGM but no such answer need be given if: (a) to do so would interfere unduly with the preparation for the AGM or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the AGM that the question be answered. 9. You may not use any electronic address (within the meaning of section 333(4) of the Companies Act 2006) provided in this Notice (or in any related documents including the proxy form) to communicate with the Company for any purposes other than those expressly stated. 10. As at 30 July 2020 (being the last practicable day prior to the publication of this Notice) the Company’s issued share capital consists of 30,279,941 UK Equity Shares, 27,475,800 Global Equity Income Shares, 5,236,886 Balanced Risk Allocation Shares and 2,497,032 Managed Liquidity Shares (all excluding shares held in treasury). 11. To the extent that any voting takes place on a show of hands, every member who is present in person or by proxy has a right to one vote (except that if a proxy’s instructions include votes for and against (in respect of different shares) the proxy has one vote for and one vote against on a show of hands). However, it is anticipated that the Chairman of the meeting will demand that the voting on all resolutions put to the AGM will be by poll. On a poll the number of votes per Share of each class will vary with the Net Asset Value (‘NAV’) of the respective underlying Portfolio and is determined in accordance with the following formula: V = A÷B WHERE: V is the number of votes for each Share of a particular class; A is the Portfolio NAV for the relevant Share class; and B is the number of Shares of the relevant class in issue (excluding treasury shares). The value of A÷B (the net asset value per Share) for each class is calculated and announced (expressed in pence) daily. For the purposes of the AGM, the number of votes which may be cast and the total voting rights will be determined by the number of Shares in issue and the NAV as at a date no more than ten business days prior to the date of the AGM. Notwithstanding the above, for resolutions restricted to a single class of share, the poll will be decided on the basis of one vote per share. 12. A copy of this notice (contained within the 2020 annual financial report), and other information required by section 311A of the Companies Act 2006, can be found at www.invesco.co.uk/investmenttrusts. 13. Shareholders should note that it is possible that, pursuant to requests made by members of the Company under section 527 of the Companies Act 2006 (‘2006 Act’), the Company may be required to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the AGM; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which the annual financial report was laid in accordance with section 437 of the 2006 Act (in each case) that the members propose to raise at the relevant Annual General Meeting. The Company may not require the members requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the 2006 Act. Where the Company is required to place a statement on a website under section 527 of the 2006 Act, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the AGM includes any statement that the Company has been required under section 527 of the 2006 Act to publish on a website.

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ADVISERS AND PRINCIPAL SERVICE PROVIDERS

Registered Office Registrar Perpetual Park, Link Asset Services Limited Perpetual Park Drive The Registry Henley-on-Thames 34 Beckenham Road Oxfordshire Beckenham RG9 1HH Kent BR3 4TU Company Number If your shares are held directly, rather than Registered in England and Wales through an ISA, SIP or dealing platform, and you Number 5916642 have queries relating to your shareholding, you should contact the Registrar on: Alternative Investment Fund Manager ☎ 0371 664 0300 from the UK, or (Manager) ☎ +44 371 664 0300 from overseas. Invesco Fund Managers Limited. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside Company Secretary the United Kingdom will be charged at the Invesco Asset Management Limited. applicable international rate. Lines are open from Company Secretarial contact: Paul Griggs 9.00am to 5.30pm, Monday to Friday (excluding Public Holidays in England and Wales). Correspondence Address Shareholders holding shares directly can also 43-45 Portman Square access their holding details via Link’s website: London W1H 6LY www.signalshares.com. ☎ 020 3753 1000 Link Asset Services provide an on-line and email: [email protected] telephone share dealing service to existing Auditor shareholders who are not seeking advice on buying or selling. This service is available at Grant Thornton UK LLP www.linksharedeal.com or ☎ 0371 664 0445 30 Finsbury Square London EC2A 1AG Calls are charged at the standard geographic Depositary and Custodian rate and will vary by provider. The Bank of New York Mellon (International) From outside the UK: +44 371 664 0445. Calls Limited from outside the UK will be charged at the 1 Canada Square applicable international rate. Lines are open from London E14 5AL 8.00am to 4.30pm, Monday to Friday (excluding Public Holidays in England and Wales). Invesco Client Services Link Asset Services is the business name of Invesco’s Client Services Team is available from Link Market Services Limited. 8.30am to 6pm Monday to Friday (excluding UK Bank Holidays). Corporate Broker Please note no investment advice can be given. Investec Bank plc ☎ 0800 085 8677 30 Gresham Street www.invesco.co.uk/investmenttrusts London EC2V 7QP

Be ScamSmart Avoid investment fraud Report a Scam 1 Reject cold calls If you suspect that you have been If you’ve received unsolicited contact about approached by fraudsters please tell the an investment opportunity, chances are FCA using the reporting form at Investment scams are it’s a high risk investment or a scam. You www.fca.org.uk/consumers/report- should treat the call with extreme caution. scam-unauthorised-firm. You can also call designed to look like The safest thing to do is to hang up. the FCA Consumer Helpline on genuine investments 2 Check the FCA Warning List 0800 111 6768 Spot the warning signs The FCA Warning List is a list of firms and If you have lost money to investment fraud, individuals we know are operating without you should report it to Action Fraud on Have you been: our authorisation. 0300 123 2040 or online at •contacted out of the blue 3 Get impartial advice www.actionfraud.police.uk •promised tempting returns Think about getting impartial financial and told the investment is safe advice before you hand over any money. Find out more at •called repeatedly, or Seek advice from someone unconnected to www.fca.org.uk/scamsmart •told the offer is only available the firm that has approached you. for a limited time? If so, you might have been contacted by fraudsters. Remember: if it sounds too good to be true, it probably is!

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SHAREHOLDER INFORMATION

The different Share classes of Invesco Perpetual Financial Calendar Select Trust plc (the ‘Company’) are quoted on the Annual Financial Results July 2020 London Stock Exchange. Interim Dividends Announced July 2020 † NAV Publication Share Conversion 3 August 2020 AGM 6 October 2020 Net asset values (NAVs) for all of the Share classes Interim Dividends Announced October 2020 are calculated by the Manager on a daily basis and Share Conversion† 2 November 2020 notified to the Stock Exchange on the next business Interim Dividends Announced January 2021 day. NAVs are published daily in the newspapers Half-Yearly Financial Results January 2021 detailed below. Share Conversion† 1 February 2021 Interim Dividends Announced April 2021 Share Price Listings Share Conversion† 4 May 2021 The price of your Shares can be found in Year End 31 May 2021 The Financial Times, Daily Telegraph and The Times. † In addition, Share price information can be Share conversion requests must be received not found under the following ticker codes: less than 10 days before the relevant conversion date. Forms and instructions are available online on UK Equity Shares IVPU the web pages for all the Share classes at Global Equity Income Shares IVPG www.invesco.co.uk/investmenttrusts and from the Balanced Risk Allocation Shares IVPB Company Secretary. Managed Liquidity Shares IVPM Manager’s Website Location of Annual General Meeting Information relating to the Company can be found The Annual General Meeting will be held at on the Manager’s website, 11.30am on 6 October 2020 at 43-45 Portman www.invesco.co.uk/investmenttrusts. Square, London W1H 6LY. Alternatively, direct links to the web pages R G E S T dedicated to the four share classes are: G E O

C L O S E www.invesco.co.uk/selectuk N B A P O R T M A K E R S E S T H A R D I N G www.invesco.co.uk/selectglobal T F I T Z

www.invesco.co.uk/selectbr S E Y M O U R M E S T www.invesco.co.uk/selectml U P P E R B E R K E L E Y PORTMAN W D U K E S S S T O R E SQUARE W I G M

The content of websites referred to in this T M E W S R D S O R C P O R E D W A J A

document or accessible from links within those M E S S T T M 43-45 PORTMAN H A

A SQUARE R D S N S T

websites are not incorporated into, nor do they T SELFRIDGES T T O N S form part of this annual financial report. B R Y A N S

MARBLE ARCH T BOND The Association of Investment O X F O R D S T R E E STREET Companies The Company is a member of the Association of Investment Companies. Contact details are as follows: ☎ 020 7282 5555. Email: [email protected] Website: www.theaic.co.uk General Data Protection Regulation (GDPR) GDPR is intended to improve controls over personal data and how it is used. The Company’s privacy notice, which can be found on the web page of each of the Company’s Share classes or can be requested from company secretary at the correspondence address shown on page 109, sets out what personal data is collected and how and why it is used.

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GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES

Alternative Performance Measure (APM) An APM is a measure of performance or financial position that is not defined in applicable accounting standards and cannot be directly derived from the financial statements. The calculations shown in the corresponding tables are for the years ended 31 May 2020 and 2019. The APMs listed here are widely used in reporting within the investment company sector and consequently aid comparability. Premium/(Discount) (APM) Discount is a measure of the amount by which the mid-market price of an investment company share is lower than the underlying net asset value (NAV) of that share. Conversely, Premium is a measure of the amount by which the mid-market price of an investment company share is higher than the underlying net asset value of that share. In this annual financial report the discount is expressed as a percentage of the net asset value per share and is calculated according to the formula set out below. If the shares are trading at a premium the result of the below calculation will be positive and if they are trading at a discount it will be negative. GLOBAL BALANCED UK EQUITY RISK MANAGED 2020 PAGE EQUITY INCOME ALLOCATION LIQUIDITY Share price 2 a 139.5p 176.5p 129.0p 101.5p Net asset value per share 76 b 145.8p 178.5p 135.1p 104.4p

Discount c = (a-b)/b (4.3)% (1.1)% (4.5)% (2.8)%

2019 Share price 37 a 173.5p 195.0p 138.5p 101.5p Net asset value per share 77 b 173.1p 197.6p 139.5p 104.9p

Premium/(Discount) c = (a-b)/b 0.2% (1.3)% (0.7)% (3.2)%

Gearing The gearing percentage reflects the amount of borrowings that a company has invested. This figure indicates the extra amount by which net assets, or shareholders’ funds, would move if the value of a company’s investments were to rise or fall. A positive percentage indicates the extent to which net assets are geared; a nil gearing percentage, or ‘nil’, shows a company is ungeared. A negative percentage indicates that a company is not fully invested and is holding net cash as described below. There are several methods of calculating gearing and the following has been used in this report:

Gross Gearing (APM) This reflects the amount of gross borrowings in use by a company and takes no account of any cash balances. It is based on gross borrowings as a percentage of net assets. GLOBAL EQUITY UK EQUITY INCOME 2020 PAGE £’000 £’000 Bank overdraft 76 2 – Bank loans 76 4,800 4,980

Gross borrowings a 4,802 4,980 Net asset value 76 b 46,617 51,372

Gross gearing c = a/b 10.3% 9.7%

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2019 PAGE Bank loans 77 7,350 4,880

Gross borrowings a 7,350 4,880 Net asset value 77 b 57,286 62,589

Gross gearing c = a/b 12.8% 7.8%

Net Gearing or Net Cash (APM) Net gearing reflects the amount of net borrowings invested, i.e. borrowings less cash and cash equivalents (incl. investments in money market funds). It is based on net borrowings as a percentage of net assets. Net cash reflects the net exposure to cash and cash equivalents, as a percentage of net assets, after any offset against total borrowings. GLOBAL EQUITY UK EQUITY INCOME 2020 PAGE £’000 £’000 Bank overdraft 76 2 – Bank loans 76 4,800 4,980 Less cash and cash equivalents 76 – (146)

Net borrowings a 4,802 4,834 Net asset value 76 b 46,617 51,372

Net gearing c = a/b 10.3% 9.4%

2019 PAGE Bank loans 77 7,350 4,880 Less cash and cash equivalents 77 (476) (245)

Net borrowings a 6,874 4,635 Net asset value 77 b 57,286 62,589

Net gearing c = a/b 12.0% 7.4%

Leverage Leverage, for the purposes of the Alternative Investment Fund Managers Directive (AIFMD), is not synonymous with gearing as defined above. In addition to borrowings, it encompasses anything that increases the Company’s exposure, including foreign currency and exposure gained through derivatives. Leverage expresses the Company’s exposure as a ratio of the Company’s net asset value. Accordingly, if a Company’s exposure was equal to its net assets it would have leverage of 100%. Two methods of calculating such exposure are set out in the AIFMD, gross and commitment. Under the gross method, exposure represents the aggregate of all the Company’s exposures other than cash balances held in base currency and without any offsetting. The commitment method takes into account hedging and other netting arrangements designed to limit risk, offsetting them against the underlying exposure. Ongoing Charges (APM) The ongoing administrative costs of operating the Company are encapsulated in the ongoing charges ratio, which is calculated in accordance with guidance issued by the AIC. The calculation incorporates charges allocated to capital in the financial statements as well as those allocated to revenue, but excludes non-recurring costs, transaction costs of investments, finance costs, taxation, and the costs of buying back or issuing shares. The ongoing charges ratio is the aggregate of these costs expressed as a percentage of the daily average net asset value reported in the year.

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GLOBAL BALANCED UK EQUITY RISK MANAGED COMPANY EQUITY INCOME ALLOCATION LIQUIDITY TOTAL 2020 PAGE £’000 £’000 £’000 £’000 £’000 Investment management fee 83 (note 3) 294 324 57 4 679 Other expenses 84 (note 4) 200 222 41 9 472 Less: costs in relation to custody dealing charges and one off legal costs (3) (5) (1) – (9)

Total recurring expenses a 491 541 97 13 1,142 Average daily net assets value b 54,928 61,133 7,739 3,723 127,523

Ongoing charges % c = a/b 0.89% 0.88% 1.25% 0.35% 0.90%

2019 PAGE Investment management fee 83 (note 3) 326 357 60 6 749 Other expenses 84 (note 4) 200 215 40 13 468 Less: costs in relation to custody dealing charges and one off legal costs (5) (6) (1) (1) (13)

Total recurring expenses a 521 566 99 18 1,204 Average daily net assets value b 60,711 65,441 8,194 4,778 139,124

Ongoing charges % c = a/b 0.86% 0.86% 1.21% 0.38% 0.87%

Total Return Total return is the theoretical return to shareholders that measures the combined effect of any dividends paid, together with the rise or fall in the share price or NAV. In this annual financial report these return figures have been sourced from Refinitiv who calculate returns on an industry comparative basis.

Net Asset Value Total Return (APM) Total return on net asset value per share, with debt at market value, assuming dividends paid by the Company were reinvested into the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend. GLOBAL BALANCED UK EQUITY RISK MANAGED 2020 PAGE EQUITY INCOME ALLOCATION LIQUIDITY Net asset value as at 31 May 2020 76 145.8p 178.5p 135.1p 104.4p Net asset value as at 31 May 2019 77 173.1p 197.6p 139.5p 104.9p

Change in year a –15.8% –9.7% –3.2% –0.5% Impact of dividend reinvestments(1) b 3.4% 3.3% 0.1% 1.6%

Net asset value total return for the year c = a+b –12.4% –6.4% –3.1% 1.1%

2019 PAGE Net asset value as at 31 May 2019 77 173.1p 197.6p 139.5p 104.9p Net asset value as at 31 May 2018 189.0p 207.2p 143.4p 103.5p

Change in year a –8.4% –4.6% –2.7% 1.3% Impact of dividend reinvestments(1) b 3.5% 3.3% 0.0% 0.0%

Net asset value total return for the year c = a+b –4.9% –1.3% –2.7% 1.3%

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GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES continued

Share Price Total Return (APM) Total return to shareholders, on a mid-market price basis, assuming all dividends received were re-invested, without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend. GLOBAL BALANCED UK EQUITY RISK MANAGED 2020 PAGE EQUITY INCOME ALLOCATION LIQUIDITY Share price as at 31 May 2020 2 139.5p 176.5p 129.0p 101.5p Share price as at 31 May 2019 37 173.5p 195.0p 138.5p 101.5p

Change in year a –19.6% –9.5% –6.9% 0.0% Impact of dividend reinvestments(1) b 3.4% 3.4% 0.0% 1.6%

Share price total return for the year c = a+b –16.2% –6.1% –6.9% 1.6%

2019 PAGE Share price as at 31 May 2019 37 173.5p 195.0p 138.5p 101.5p Share price as at 31 May 2018 186.0p 202.0p 139.5p 102.0p

Change in year a –6.7% –3.5% –0.7% –0.5% Impact of dividend reinvestments(1) b 3.6% 3.4% 0.0% 0.0%

Share price total return for the year c = a+b –3.1% –0.1% –0.7% –0.5%

(1) Total dividends paid during the year for the UK Equity Share Portfolio of 6.60p (2019: 6.60p), Global Equity Share Income Portfolio of 7.05p (2019: 6.90p) and Managed Liquidity Share Portfolio 1.60p (2019: nil), reinvested at the NAV or share price on the ex-dividend date. A fall in the NAV or Share price, subsequent to the reinvestment date, consequently further reduces the returns and vice versa if NAV or Share price rises.

Benchmark Total return on the benchmark is on a mid-market value basis, assuming all dividends received were reinvested, without transaction costs, into the shares of the underlying companies at the time the shares were quoted ex-dividend. Notional Exposure Notional exposure in relation to a future, or other derivative contract, is the value of the assets referenced by the contract that could alternatively be held to provide an identical return. Volatility Volatility refers to the amount of uncertainty or risk about the size of changes in a security’s value. It is a statistical measure of the dispersion of returns for a given security or market index measured by using the standard deviation or variance of returns from that same security or market index. Commonly, the higher the volatility, the riskier the security.

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INFORMATION FOR SHAREHOLDERS

ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE DISCLOSURES

Alternative Investment Fund Manager (AIFM) and the Alternative Investment Fund Managers Directive (the ‘AIFMD’, the Directive) The Company falls within the definition of an Alternative Investment Fund (AIF) under the Directive and, as such, is required to have (or be) an authorised AIFM. Invesco Fund Managers Limited (IFML) was authorised by the FCA as an AIFM, and appointed by the Company as such, with effect from 22 July 2014. Amongst other things, regulations implementing AIFMD require certain information to be provided to prospective investors. This information can be found in each Share class’ section of the Manager’s website (see links on page 110) in downloadable documents entitled ‘AIFMD Investor Information’. Changes to this information since May 2019 were to include additional information on the UK Equity Portfolio’s investment policy to the effect that unquoted securities will not be invested in and clarification for both UK Equity and Global Equity Income that the limitations on investment in other listed investment companies do not apply to property companies structured as REITs. Any information requiring immediate disclosure pursuant to the Directive will be disclosed through a primary information provider. In addition, the Directive requires information in relation to the Company’s leverage (both ‘gross’ and ‘commitment’ – see Glossary of Terms on page 112) and the remuneration of the Company’s AIFM (IFML) to be made available to investors. Accordingly: • the leverage calculated for the Company’s portfolios at the year end and the limits the AIFM has set for them are as follows:

AIFMD LEVERAGE AIFMD LEVERAGE AT 31 MAY 2020 LIMIT GROSS COMMITMENT GROSS COMMITMENT UK Equity 112% 112% 250% 200% Global Equity Income 110% 110% 250% 200% Balanced Risk Allocation 164% 161% 350% 300% Managed Liquidity 101% 101% 175% 150% • the AIFM remuneration paid for the year to 31 December 2019 is set out below.

AIFM Remuneration The AIFM remuneration paid is based on the financial year of the AIFM, which is 31 December 2019. The aggregate total remuneration of Invesco staff involved in AIF related activities of the Manager in respect of performance year (1 January 2019 to 31 December 2019) is £7.73 million of which £4.57 million is fixed remuneration and £3.16 million is variable remuneration. The number of beneficiaries is 36. The Manager has identified individuals considered to have a material impact on the risk profile of the Manager or the AIF it manages (‘Identified Staff’), who include board members of the Manager, senior management, heads of control functions, other risk takers and any employees receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers. Identified Staff of the Manager are employed by Invesco. The aggregate total remuneration paid to the Identified Staff of the Manager for AIF related activities for the performance year (1 January 2019 to 31 December 2019) is £0.97 million of which £0.22 million is paid to Senior Management and £0.75 million is paid to other Identified Staff. Please note that remuneration for AIFMD Identified Staff includes remuneration for staff employed by delegates (all delegates are employed by various entities of the Invesco Ltd. Group). Invesco’s summary remuneration policy is available from the corporate policies section of its website (www.invesco.co.uk). Paper copies of the full remuneration policy can be obtained for free from the registered office of the Manager, Invesco Fund Managers Limited, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire RG9 1HH, UK upon request.

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INFORMATION FOR SHAREHOLDERS

The Manager of Invesco Perpetual Select Trust plc is Invesco Fund Managers Limited.

Invesco Fund Managers Limited is a wholly owned subsidiary of Invesco Limited and is authorised and regulated by the Financial Conduct Authority.

Invesco is one of the largest independent global investment management firms, with funds under management of US$1,145 billion.*

Invesco aims to provide the highest returns available from markets, through active management, but in a controlled manner, conscious of the risks involved and within clients’ objectives.

* Funds under Management as at 30 June 2020.

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INFORMATION FOR SHAREHOLDERS

INVESTMENT COMPANIES MANAGED BY INVESCO

Investing for Income, Income Growth and Capital Growth (from equities and fixed interest securities)

Invesco Perpetual Select Trust plc – UK Equity Portfolio whilst seeking to maximise total return through investing, Aims to provide shareholders with an attractive real long-term primarily in a diversified portfolio of high-yielding corporate and total return by investing primarily in UK quoted equities. The government bonds. The Company seeks to balance the portfolio may use bank borrowings. attraction of high-yield securities with the need for protection of capital and to manage volatility. The Company uses repo Invesco Perpetual Select Trust plc – Managed Liquidity financing to enhance returns. Portfolio Aims to produce an appropriate level of income return Invesco Income Growth Trust plc combined with a high degree of security. The portfolio invests Aims to produce income and capital growth superior to that in a range of sterling based or related high quality debt of the UK stock market and a stream of dividends paid securities and similar assets either directly or indirectly quarterly that, over time, grow at above the rate of inflation. through authorised funds. The Company may use bank borrowings. City Merchants High Yield Trust Limited Keystone Investment Trust plc A Jersey-incorporated closed-ended Company that aims Aims to provide shareholders with long-term growth of to generate a high level of income from a variety of fixed capital mainly from UK investments. The Company has two income instruments. The Company may use repo financing to debenture stocks in issue and, in addition, may use bank enhance returns. borrowings. Invesco Enhanced Income Limited A Jersey-incorporated closed-ended Company that aims to provide a high level of income, paid gross to UK investors,

Investing in Smaller Companies Invesco Perpetual UK Smaller Companies Investment Trust plc Aims to achieve long-term total returns for the Company’s of small to medium sized UK-quoted companies. shareholders primarily by investment in a broad cross-section The Company may use bank borrowings.

Investing Internationally Invesco Perpetual Select Trust plc – Global Equity Income Invesco Asia Trust plc Portfolio Aims to provide an attractive and growing level of income Aims to provide long-term capital growth by investing in return and capital appreciation over the long term, a diversified portfolio of Asian and Australasian securities. predominantly through investment in a diversified portfolio The Company aims to achieve growth in its net asset value of equities worldwide. The portfolio may use bank in excess of the MSCI AC Asia Ex Japan Index, total return, borrowings. in sterling terms. The Company may use bank borrowings.

Investing for Total Returns Invesco Perpetual Select Trust plc – Balanced Risk Allocation Portfolio Aims to provide shareholders with an attractive total return in The portfolio is constructed so as to balance risk, is long-only, differing economic and inflationary environments and with using mainly transparently-priced exchange-traded futures low correlation to equity and bond market indices by gaining contracts and other derivative instruments to gain such exposure to three asset classes: debt securities, equities and exposure and to provide leverage. commodities.

Investing in Multiple Asset Classes

Invesco Perpetual Select Trust plc • UK Equity Portfolio A choice of four investment policies and objectives, each • Global Equity Income Portfolio intended to generate attractive risk-adjusted returns from • Managed Liquidity Portfolio segregated portfolios, with the ability to switch between • Balanced Risk Allocation Portfolio them, four times a year, free from capital gains tax liability. Dividends paid quarterly, apart from Balanced Risk Allocation which will not normally pay dividends.

Please contact the Invesco Investor Services Team on 0800 085 8677 if you would like more information about the investment trusts or other specialist funds listed above. Further details are also available on the following website: www.invesco.co.uk/investmenttrusts.

Linkway Financial Printers Typeset & Printed in London (UK) 17201

INVESCO PERPETUAL SELECT TRUST PLC 117