Invesco Perpetual Smaller Companies and Markets Investment Series
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01 Front Cover_Layout 1 26-Sep-17 16:23 Page 1 Smaller Companies and Markets Investment Series Annual Report Including Long Form Financial Statements Issued September 2017 For the year 1 August 2016 to 31 July 2017 02 Aggregate_Layout 1 26-Sep-17 16:23 Page 1 Contents Invesco Perpetual Smaller Companies and Markets Investment Series (the “Company”) 02 Report of the Authorised Corporate Director (the “Manager”)* 05 Notes applicable to the financial statements of all Sub-Funds 15 Invesco Perpetual Emerging European Fund 16 Strategy, review and outlook* 17 Comparative tables 21 Portfolio statement* 24 Financial statements 32 Distribution table 33 Invesco Perpetual European Smaller Companies Fund 34 Strategy, review and outlook* 35 Comparative tables 37 Portfolio statement* 42 Financial statements 50 Distribution table 51 Invesco Perpetual Global Emerging Markets Fund 52 Strategy, review and outlook* 53 Comparative tables 57 Portfolio statement* 61 Financial statements 69 Distribution table 70 Invesco Perpetual Global Smaller Companies Fund 71 Strategy, review and outlook* 72 Comparative tables 76 Portfolio statement* 86 Financial statements 94 Distribution table 95 Invesco Perpetual Japanese Smaller Companies Fund 96 Strategy, review and outlook* 97 Comparative tables 99 Portfolio statement* 102 Financial statements 109 Distribution table 110 Invesco Perpetual UK Smaller Companies Equity Fund 111 Strategy, review and outlook* 112 Comparative tables 116 Portfolio statement* 119 Financial statements 127 Distribution table 128 Regulatory Statements 128 Statement of Manager’s responsibilities 128 Statement of Depositary’s responsibilities 128 Depositary’s Report to Shareholders 129 Independent Auditors’ Report * These collectively comprise the Authorised Corporate Director’s Report. 01 Invesco Perpetual Smaller Companies and Markets Investment Series 02 Aggregate_Layout 1 26-Sep-17 16:23 Page 2 Invesco Perpetual Smaller Companies and Markets Investment Series (the “Company”) Report of the Authorised Corporate Director (the “Manager”) The Company is consistent with the new remuneration principles The Invesco Perpetual Smaller Companies and Markets applicable to UCITS management companies. Its Investment Series i s an investment company with purpose is to ensure that the remuneration of the staff variable capital, incorporated in England and Wales of the Manager is consistent with and promotes sound on 8 May 2003. and effective risk management, does not encourage risk-taking which is inconsistent with the risk profiles, The Company is an “umbrella company” (under the rules or instruments of incorporation of itself and the OEIC Regulations) and therefore new Sub-Funds may UCITS it manages (including the Company) and does be formed by the Manager, subject to regulatory not impair the Manager’s compliance with its duty to approval. Any changes to Sub-Funds or share classes act in the best interests of the UCITS it manages. will be included in an updated Prospectus. Further information is available in the Manager’s UCITS Remuneration Policy document which can be obtained The Company is a Financial Conduct Authority (FCA) from the Literature and forms section of our website authorised scheme complying with the FCA’s Collective (www.invescoperpetual.co.uk). Paper copies can be Investment Schemes sourcebook. obtained, free of charge, upon request to the Manager using the contact details shown on the back cover. Terms used in this report shall have the same meaning as defined in the Prospectus. The rules require the Manager to disclose in the Company’s annual report, certain quantitative At 31 July 2017, the Company consisted of disclosures concerning the Manager’s remuneration six Sub-Funds: policy, including: (i) the total and aggregate amount of Invesco Perpetual Emerging European Fund remuneration paid by the Manager to its staff (including Invesco Perpetual European Smaller Companies Fund any amounts paid directly by the Company); (ii) the Invesco Perpetual Global Emerging Markets Fund number of beneficiaries; (iii) a description of how the Invesco Perpetual Global Smaller Companies Fund remuneration and benefits have been calculated; and Invesco Perpetual Japanese Smaller Companies Fund (iv) certain information regarding the Manager’s Invesco Perpetual UK Smaller Companies Equity Fund oversight of its remuneration policy and details of any changes to the Manager’s remuneration policies since Accounting periods the previous annual report. However, as noted above, Annual accounting date 31 July the revised policy has been in place for less than a full Interim accounting date 31 January performance period. Consequently, in accordance with Distribution payable on 30 September the relevant rules, the aforementioned disclosures are not included in this report as the available partial-year Should expenses and taxation exceed revenue in a information would not provide materially relevant, distribution period for a share class, no distribution reliable, comparable and clear information to investors. will be payable for that class. The Manager will disclose the quantitative UCITS remuneration data in the next annual report for the Securities Financing Transactions Regulation Company where information for a full performance The European Regulation on reporting and year will be available. transparency of securities financing transactions (SFTR), which aims to improve the transparency Share classes available and monitoring of the financial system, entered into force on 12 January 2016. The SFTR applies to Invesco Perpetual Emerging European Fund the Manager as a UCITS management company Accumulation shares and requires the Manager to comply with a series Accumulation shares (No Trail) of obligations. In particular, the Manager will be Z Accumulation shares required to provide investors with information on the Y Accumulation shares use of securities financing transactions (SFTs) and Income shares total return swaps (TRS) by the Company in Income shares (No Trail) all interim and annual reports for the Company Z Income shares published from 13 January 2017. Y Income shares During the year from 1 August 2016 to 31 July 2017, Invesco Perpetual European Smaller Companies Fund none of the Sub-Funds entered into any SFTs and/or Accumulation shares TRS. Should this change in the future, the interim Accumulation shares (No Trail) and annual reports for the Company will disclose all Z Accumulation shares required information on the use of SFTs and TRS Y Accumulation shares by the Company. Invesco Perpetual Global Emerging Markets Fund Please refer to the Prospectus for further details on Accumulation shares SFTs and TRS. Accumulation shares (No Trail) Z Accumulation shares Remuneration policy Y Accumulation shares Following recent changes to the rules applicable to Income shares UCITS management companies (such as the Manager, Income shares (No Trail) Invesco Fund Managers Limited), the Manager adopted Z Income shares on 18 March 2016 a revised remuneration policy which Y Income shares 02 Invesco Perpetual Smaller Companies and Markets Investment Series 02 Aggregate_Layout 1 26-Sep-17 16:23 Page 3 Invesco Perpetual Smaller Companies and Markets Investment Series (the “Company”) Report of the Authorised Corporate Director (the “Manager”) Share classes available continued Global Emerging Markets Fund and the Invesco Perpetual Global Smaller Companies Fund may invest Invesco Perpetual Global Smaller Companies Fund to a limited extent in certain securities listed in China, Accumulation shares which can involve significant regulatory constraints Accumulation shares (No Trail) that may affect the liquidity and/or the investment Z Accumulation shares performance of the Sub-Fund. The Invesco Perpetual Y Accumulation shares Emerging European Fund will invest directly in Russia, Income shares which can involve significant risks to capital. Although Income shares (No Trail) the Invesco Perpetual Emerging European Fund does Z Income shares not actively pursue a concentrated portfolio, it may Y Income shares have a concentrated number of holdings on occasions. Accordingly, the Sub-Fund may carry a higher degree Invesco Perpetual Japanese Smaller of risk than a Sub-Fund which invests in a broader range Companies Fund of companies or takes smaller positions in a relatively Accumulation shares large number of holdings. Although the Invesco Accumulation shares (No Trail) Perpetual Global Smaller Companies Fund invests Z Accumulation shares mainly in established markets, it can invest in emerging Y Accumulation shares and developing markets, where there is potential for a decrease in market liquidity, which may mean that it is Invesco Perpetual UK Smaller Companies not easy to buy or sell securities. There may also be Equity Fund difficulties in dealing and settlement, and custody Accumulation shares problems could arise. Accumulation shares (No Trail) Z Accumulation shares The Invesco Perpetual European Smaller Companies Y Accumulation shares Fund, Invesco Perpetual Global Smaller Companies Income shares Fund, Invesco Perpetual Japanese Smaller Companies Income shares (No Trail) Fund and Invesco Perpetual UK Smaller Companies Z Income shares Equity Fund are smaller companies Sub-Funds. Smaller Y Income shares company Sub-Funds are higher risk than Sub-Funds that can invest in larger company sizes. Market The prices of shares will appear on our website conditions, such as a decrease in market liquidity, (www.invescoperpetual.co.uk). This is the primary may mean that it