Invesco Global Equity Income Trust Plc - Annual Financial Report

LEI: 549300JZQ39WJPD7U596

Invesco Global Equity Income Trust plc

Annual Financial Report for the year ended 31 May 2024

The following text is extracted from the Annual Financial Report of the Company for the year ended 31 May 2024. All page numbers below refer to the Annual Financial Report which will be made available on the Company's website.

Financial Performance

Capital Statistics – Company Level(1)

At 31 May

Chairman’s Statement

Highlights

– Consolidation and simplification of Company structure completed to form Invesco Global Equity Income Trust plc (Ticker: IGET)

– Continued strong performance has delivered a share price total return ahead of benchmark of 26.9% for the year.

– Dividend to be increased by at least 70% over previous dividend share class arrangement.

Welcome to the first annual report and accounts for the recently consolidated and renamed Invesco Global Equity Income Trust, ticker ‘IGET’.

It has been a year of much change for your Company.

Following a comprehensive review and consultation regarding the strategy and market appeal of your Company, an announcement in December and then a Circular, outlining reconstruction proposals, was published in February 2024. The proposals included reclassifying the UK Equity, Balanced Risk Allocation and the Managed Liquidity shares into the Global Equity Income share-class, thus simplifying the structure of the trust, creating a one share-class vehicle. Part of these plans included enhancing and giving more predictability to the dividend level, a new maximum discount level objective as well as the introduction of a five yearly continuation vote. The objective of the restructure and simplification of your Company was two-fold: to broaden the appeal of the Company’s shares, thus improving liquidity and narrowing the discount at which the shares trade; and, by converting to a global equity mandate, offering the broadest set of investment opportunities for equity investors, whilst also providing diversification benefits.

Your Company was launched in 2006 with a multi-share class structure to enable shareholders to invest in a wide array of asset classes and to rebalance their portfolio by allowing them to convert, tax-efficiently, between share-classes. In recent years there was only a limited take-up of the conversion opportunity by shareholders and the pattern of conversions had gradually, over the years, led to the size of the Balanced Risk Allocation and Managed Liquidity share-classes representing, in aggregate, only a low single-digit percentage of the Company’s overall net asset value.

Investors are increasingly demanding larger, more liquid investment vehicles, and your Board believe that it would have been increasingly challenging to separately market the four individual share-classes and that the multi-share-class structure may have added an additional hurdle for some investors.

Your Board concluded that the broader, global, investment remit, in combination with Stephen Anness’s Global Equity Team’s management, presented the best outcome for the Company’s shareholders.

Shareholders voted in favour of the various resolutions recommended by the Board, to bring about the simplification of the Company’s structure and associated enhancements, at Company and Share Class meetings held in late March and early April. Thank you for your support of these proposals.

The proposals included the opportunity for a 15% tender on the UK Equity share-class and a full cash exit opportunity on the two smaller share-classes, given their significantly differentiated risk profile and asset exposure compared to the Global share-class. Whilst the UK Equity Share tender was subscribed in full, the majority of shareholders of the Balanced Risk Allocation and Managed Liquidity shares opted to roll their investment into Global shares.

The restructure completed in early May, and in mid-May your Company changed its name from Invesco Select Trust plc to Invesco Global Equity Income Trust plc, with the memorable and distinctive ticker of IGET.

Your Company’s Articles of Association were also updated to reflect the change from a multi to a single share-class structure.

Performance

As at 31 May 2024 your Company’s net assets stood at over £197m.

Over the period the Global Equity Income Shares’ NAV total return was 21.0% against the MSCI World Index (£) return of 21.6%. Although the portfolio’s NAV return was marginally below the index, it is important to acknowledge that your Portfolio Managers have achieved this return with a portfolio that looks quite different to the index.

This is covered in more detail in the Portfolio Managers’ update on page 12, as it’s an achievement that should not be overlooked. Your Company’s share price total return successfully surpassed that of the index, at 26.9%.

The returns for the previous share-classes (UK Equity, Balanced Risk Allocation and Managed Liquidity) are shown on pages 24, 27 and 30. Please note they show a partial period (to 3 May 2024), as shareholders in these share-classes either had their holding reclassified into Global Equity Income Shares or elected for a full or partial cash tender as a result of the reconstruction proposals. Thus, shareholders who elected to continue to hold shares in the Company will have a performance return made up of their original share-class returns from 1 June 2023 to 3 May 2024 and, added to this, the returns made by the Global Equity Income share-class from 7 May to 31 May 2024.

Your Team

As a great number of IGET shareholders will have recently converted into the Global Equity Income shares from previous share-classes, we thought it would be helpful to include a chart of the Global Equity Team; please find this on page 18. Your Board has been impressed with the team’s track record of process and performance, throughout varying market conditions, as well as the calibre of the individuals within the team.

As Stephen Anness refers to in the Portfolio Managers’ report, there is a depth and breadth of comprehensive thought and analysis in how the team select and monitor stocks for the portfolio. The team are not afraid to hold a mirror up to their process, with the aim of constantly and continually improving and evolving their fund management approach, to enhance shareholder outcomes.

Within the team, Stephen Anness has been ably assisted by Joe Dowling; the Portfolio Managers have worked together for 11 years. To better reflect Joe’s work and contribution to the management of your Company’s portfolio, we have decided to change Joe’s title to Deputy Portfolio Manager, effective 1 September 2024. A biography of both Portfolio Managers is included on page 12.

Global Portfolio

The objective of the Global Equity Income portfolio is to provide an attractive level of predictable income and capital appreciation over the long term, predominantly through investment in a diversified portfolio of equities worldwide.

Although the fundamental focus of the Portfolio Managers remains on stock selection rather than sector, geographic or macro-economic trend forecasting, the only constant in the global backdrop is change. Key aspects include inflation or disinflation, interest rates and to cut or not to cut, elections have happened or will happen, with a particular eye to the USA.

A key driver of performance for global stock markets has been the narrow focus on a handful of Artificial Intelligence (AI) stocks. As I write, there has been some challenge to the one-way performance of these stocks, which highlights the importance of two of the key fundamentals of our Portfolio Managers’ approach – diversification and valuation.

Gearing

Your Company has the ability to ‘gear’ its portfolio by tactically using borrowings to amplify portfolio returns. During the period your Board renewed the Company’s revolving credit bank loan facility, at a level of £40 million. Your Portfolio Managers have the ability to employ borrowings up to 30% of the value of the Company’s total assets. As at the date I write, your Portfolio Managers have decided to not employ gearing.

Consumer Duty

Your Board continues to work with the Manager to ensure adherence to Consumer Duty, in respect of the four areas of focus, namely products and services, price and value, consumer understanding and consumer support.

To improve the access to information on your Company, the Board, in conjunction with the Manager, has introduced a new information service, which allows shareholders to register to receive updates and similar information; further details are included below.

Company Profile and Information Updates

Following on from the award win in November for the International Income category at the Citywire Investment Trust Awards and being given a Kepler Growth Rating, the performance of IGET and the Global Equities Team continues to be recognised by independent parties. Recently, your Company has been shortlisted by a panel of experts for the Global Equity category for the AJ Bell Investment Awards and, additionally, shortlisted at the Investment Week, Investment Company Awards, for the Global Income category.

Appreciating that the reliability of income can be important for the Company’s shareholders, IGET is classified as an AIC ‘Next Generation Dividend Hero’, with 14 consecutive years of dividend increases.

Shareholders may have noticed that, aligned with the change of structure, your Company has had a significant change in how it is presented, which is a small part of a broader marketing campaign, designed to enhance the profile of the Company. This includes the creation of a new information service, which aims to provide shareholders with regular updates on the portfolio and Manager’s views, which I would encourage you to register for by scanning the QR code included on page 8 with your smartphone/device, visiting the Company’s specific page on the Manager’s website, at https://intouch.rdir.com/Public/PreferenceCentre/Invesco/Standard, or by contacting Invesco directly at investmenttrusts@invesco.com.

Dividend Policy and Dividends Paid

The previous dividend policy consisted of three equal interim dividends and a ‘wrap up’ fourth interim dividend. For the year under review the first three dividends declared were 1.60p per share, with a final fourth interim dividend declared in April 2024 of 2.55p, bringing the total for the year to 7.35p.

Your Company’s new policy will pay an annual dividend of at least 4%, calculated on the unaudited year-end NAV, paid quarterly in equal amounts, thus giving a smoother, more predictable and enhanced income to shareholders. The intention is that these dividends will be paid from your Company’s revenues and, if required, capital reserves. The unaudited year-end NAV was 313.30p; accordingly the first interim dividend, in respect of the year ending May 2025, of 3.13p was paid on 15 August 2024. This represents a projected annualised total dividend of 12.52p per share, which amounts to an increase of at least 70% over the annual dividend that was paid to shareholders of any share class for the year ending 31 May 2024.

As is normal practice an advisory vote on the dividend policy will be put to shareholders at the 2024 annual general meeting (AGM).

Discount Management and Share Capital Movements

Your Company adopted a new discount control policy as part of its reconstruction proposals, whereby ad hoc share buybacks may be used to seek to maintain the discount at less than 10%, in normal market conditions. The Board will ask shareholders to renew the buyback authorities as and when appropriate and intends to put a resolution to shareholders at the 2024 AGM to renew this authority.

As at the date of my statement, for the financial year ending May 2025, 57,000 Global Equity Shares have been repurchased, and placed in treasury, at an average price of 285.79p. Your Company currently has a 6.4% share price discount to NAV. No shares have been issued in the present year.

Full details of shares bought back during the year, including those in the former share classes are set out in the table on page 39.

Other than in connection with the reconstruction proposals, no shares were issued over the period, including shares issued from treasury.

UK Equity, Balanced Risk Allocation and Managed Liquidity shares held in treasury were cancelled as part of the reconstruction proposals.

Prior to the announcement of the restructuring proposals there were two share conversion opportunities, these took place in August and November 2023. Full details of the share movements arising on those conversions are set out in the table on page 39.

On 19 April and 3 May respectively, your Board formally announced the outcome of the restructuring tender, (including the number of shares to be repurchased and the tender prices), and the results of the restructuring and the calculation ratios in respect of the reclassification of the former share-classes into Global Equity Income Shares. I refer shareholders to those announcements as well as the table showing movements in the share capital of your Company set out on page 39.

Continuation Vote

As described in February’s Circular, your Board intends to put forward a vote at the Company’s annual general meeting in 2026 for the continuation of the Company. If the 2026 Continuation Vote is passed the Board will put forward a continuation vote at the Company’s annual general meeting in 2031 and, if passed, at each fifth AGM thereafter.

Corporate Broker changes

Cavendish Capital Markets Ltd were appointed as joint corporate broker to your Company in March 2024. Upon completion of the reconstruction proposals Winterflood Securities Limited retired from their position and Cavendish Capital Markets continue as your Company’s sole corporate broker.

Board Succession

There were no changes to the composition of your Board during the period.

I have recently reached my 9-year anniversary of serving on the Board and therefore it is my intention to retire once my successor has been appointed.

Davina Curling joined the Board of your Company following its merger with Invesco Income Growth Trust plc in 2021, where she served as a director from 2011; Davina intends to retire at the upcoming AGM. I thank Davina for her service to your Company.

A recruitment process is underway to appoint a new Chair of the Board and a new director; announcements will be made once those appointments are formalised. Your Board will be taking into account the skill and diversity make-up of the directors in its hiring decision-making.

Your Company’s remaining three directors will all stand for re-election at the forthcoming AGM.

Timeline of AGM and Invitation to Attend

The Annual General Meeting of your Company will be held at the offices of Invesco Asset Management, 43-45 Portman Square, London, W1H 6LY on Thursday, 21 November 2024 at 3.00pm. A separate circular, including the Notice of AGM and voting instructions, will be sent to shareholders during October 2024.

Any shareholder wishing to submit questions to the Board or the Manager is encouraged to do so by following the procedures which will be set out in the circular. We look forward to welcoming as many of you as possible to the AGM.

Outlook

The NAV total return for the period 31 May to the latest practical date available at the signing of this report is 4.0%, versus 2.5% for the benchmark.

Your Board believes that the Global Equity universe offers the broadest set of investment opportunities for equity investors. We also believe that your Company is well positioned, as Stephen Anness, Joe Dowling and the Global Equities Team will continue to seek out investment opportunities to deliver capital growth with predictable income, to generate the best returns for the ongoing benefit of shareholders.

As my time on the Board comes towards an end, I would like to thank the members of the Board, past and present, as well as your Company’s Manager and corporate advisors, for their service and expertise; and particularly to you, the Company’s shareholders, for your support of IGET, over recent times and into the future.  

Victoria Muir

Chairman

25 September 2024

Global Equity Income

(formerly Global Equity Income Share Portfolio)

Total Return

For the year ended 31 May

(1) Source: LSEG Data & Analytics.

Global Equity Income Share Portfolio Historical Shareholder Returns from an Initial Investment of £1,000 on 31 May 2014

Source: LSEG Data & Analytics.

Global Equity Income Share Portfolio Managers’ Report

Q What changes has the Company undergone?

A After the share class consolidation and the subsequent relaunch of Invesco Global Equity Income Trust (IGET), some shareholders will note the significant transformation that the Company has undergone, whilst others will have remained in the same portfolio throughout, but for all it marks a new chapter in the Company’s history.

For continuing shareholders, I thank you for your support and to our new shareholders, welcome.

Both myself and the Global Equities Team have ensured that throughout the consolidation process, capital was invested into the portfolio as quickly and smoothly as possible and without incident.

This strategic shift aims to enhance capital growth and income potential for investors. With a diversified portfolio of global companies, IGET is targeting capital growth alongside a predictable income, setting an annual dividend target of at least 4% as set by the board.

For those who know us less well, our investment approach is centred around bottom-up stock selection, with a focus on finding quality companies at attractive prices. We look to build a concentrated portfolio of around 40-45 stocks where holdings are mostly uncorrelated to one another, giving the Trust the best opportunity to perform well through most market conditions.

Q How has the Company performed in the year under review?

A In what has been an extremely narrow market, we were pleased to deliver 21.0% (net asset value, total return, sterling), remaining broadly in line with the index (MSCI World) which rose by 21.6%.

2023 was seen by many as the year of “The Magnificent 7”. The 7 largest stocks in the S&P 500 made up over 50% of the returns of the MSCI World. When 7 out of 500 companies make up 60% of the total return of a major index, being benchmark agnostic (or underweight them) can be extremely painful.

Stock market leadership has continued to remain narrow in 2024, mostly a result of the strong share price appreciation in Nvidia.

The bedrock of our philosophy is a focus on cash flows, dividend paying companies and a strict focus on valuation. Given that only 3 of the magnificent 7 pay a dividend we tend to be underweight these companies.

Q What have been some of the biggest contributors?

A Rolls Royce. The turnaround continues at Rolls Royce: flying hours are recovering and cost control remains excellent. The company is well positioned with a strong recurring revenue stream in a growing and duopolistic market.

3i Group continues to benefit from the very strong performance of its main underlying portfolio company, Action, a European discount retailer. Though we have taken some profits and reduced our exposure, the stock remains the portfolio’s largest holding as we continue to see a long runway for growth.

Broadcom delivered strong results supported by accelerating demand for its custom AI semiconductor chips combined with the early benefits derived from its acquisition of VM Ware. We have since reduced our position size to reflect the significant valuation re-rating in the shares.

KKR has performed really well over the period following a series of earnings beats. Though we have reduced some of our exposure this year following the sharp rally in 2023, it remains in the portfolio as a core holding as we think the business should continue to deliver above average growth and improvement in margins.

Progressive. The business continues to take market share (with price increases). They are using their technology advantage to great effect by giving consumers low prices and advertising with high return on investments.

Q And detractors?

A Nvidia shares have rallied sharply in the previous 12 months which has been a headwind to relative performance since we do not own the stock. As readers of our previous updates will know we bought Nvidia in the summer of 2022 following a sharp selloff and then subsequently sold in March 2023, after the share price had more than doubled. In hindsight it is easy to say we were too early in selling but we followed our process and stuck to our valuation discipline. Today, we remain hesitant to buy back into the shares as investor expectations are high and the valuation multiple leaves limited room for error, as we have more recently seen.

AIA group. We have undergone a review of this holding to ensure the investment story remains intact and that there has not been a thesis change. Part of the underperformance appears to be related to the accounting move to IFRS 17, rather than any cracks appearing in AIA’s economic moats. We have maintained our exposure.

Azelis. A mid-cap specialty chemicals manufacturer has struggled of late as the cyclical recovery story has been pushed out. The share price came under further pressure when a large shareholder disposed of their holding. We have reviewed the thesis, met management and even conducted a visit to one of their research sites and remain confident in the long term prospects of the business.

Inwit has struggled in the ‘higher for longer’ interest rate environment due to the nature of its balance sheet, i.e., it is highly leveraged. We like the business for its relatively defensive earnings power and the diversification role it plays from a portfolio construction perspective (should benefit when monetary policy begins to ease).

Reckitt Benckiser. When we started the buying the stock a year ago, we regarded it as a ‘cheap defensive’ with an attractive yield that would benefit from an improvement in some of its key brands and better management execution. Unfortunately, recent results have shown this not to be the case. We have sold our position and we put this down to a thesis break and quickly moved on.

Q Have there been any changes to the investment process?

A It is important to note that although a new dividend policy has been introduced, the unique nature of the investment trust wrapper means that this does not impact our  approach of rigorous research to select quality companies at attractive valuations.

For stock selection and portfolio construction, the Global Equities Team are always trying to reflect on our process and whether we can improve the results we achieve. As part of this we have been working with a behavioural finance consultancy called Essentia. Essentia use our trading data and try to understand our strengths and weaknesses.

In 2022 Essentia diagnosed our strengths as generating alpha from high conviction stock picks that we had held for the long term (+18 months). Our weaknesses primarily laid around exit timing – selling positions entirely instead of gently trimming would have added to returns. We also tended to average down into both winners and losers. Averaging down to mixed effect is a bias that is common in valuation driven investors and so this was an area we had been actively working on.

In October 2023 we received our latest “check-up” results. We were very pleased to see that we had made significant progress on our exit timing – there were no benefits to trimming vs exiting over three months. Our adding to positions had brought significant value and most importantly we were also delighted to see that we had maintained a high hit rate and payoff.

Q When considering stock selection for the portfolio, how do you incorporate ESG risks and considerations?

A We view analysing ESG risks as a key part of our investment process. As active, fundamental managers we consider every key aspect of a company’s true worth, including material ESG considerations because we believe that the most sustainable way to make money is to buy companies for less than they are worth.

Establishing an estimated ‘fair value’ of a company is therefore essential and this entails incorporating ESG aspects into our investment methodology. We take a holistic approach where a company’s ESG credentials are scrutinised alongside traditional financial and qualitative aspects to derive a fair value. All companies face challenges regarding ESG and therefore we must consider materiality (the impact of ESG factors on fair value) and ESG momentum (the potential for ESG improvement over time). Both can influence a stock’s potential returns and our conviction levels in an investment. As shareholders we actively engage with companies to enhance the value of our investments.

We encourage companies to create sustainable value and mitigate risks in relation to their corporate activities. This can include prompting them to improve governance structures, make better asset allocation decisions, instilling sustainable practices and policies, and providing better disclosure. This reinforces our fundamental belief that responsible investing demands a long-term view and that a stakeholder-centric culture of ownership and stewardship is at the heart.

Q What are your reflections on the market today?

A The key dynamic this year has been the ongoing concentration of market performance in the largest of companies. This has created a challenging backdrop for a number of reasons:

Firstly, it is a key aim of the fund to make sure that we have a diverse portfolio which has the potential to deliver performance in a variety of conditions.

Secondly, that diversity of portfolio helps us to manage risk for clients by avoiding excessive factor or correlation bias. It is challenging to do this when the market performance is so narrow: 2 stocks accounted for around 80% of the index (MSCI World) returns in Q2.

Thirdly, many of the stocks which are some of the largest in the market are deemed somewhat impervious to the macro cycle. This type of behaviour has occurred in the past and generally does not end well.

Of course, much of this has been driven by enthusiasm for AI related stocks.

Q What are your thoughts on AI?

A Technology moves quickly, and it is crucial to understand how it affects our businesses. From advances in semiconductors to artificial intelligence, we are always looking at how these innovations can enhance or challenge the companies within our portfolio.

With regards to AI, we fully appreciate that this new technology will prove to be incredibly important for the world. However, a lot has now been priced into the share prices of many of these companies and we still need to see the speed/scale of AI adoption in proven use cases.

We have seen staggering earnings per share (EPS) upgrades in companies such as Nvidia, and we believe it is unlikely we will see similar going forward. Indeed, it is an interesting point to note that none of the 50+ buy rated analysts covering Nvidia saw the scale of upgrades coming. AI did ‘surprise’ with the pace of change to Nvidia’s earnings which it delivered. It does make us slightly caution how we should think about the EPS power of Nvidia. Might analysts have over-corrected and assumed no cyclicality in demand?

Perhaps the best illustration of the market cap gains of Nvidia, is the comparison with Berkshire Hathaway. It took Warren Buffett almost 60 years to build his company up to a trillion dollars; Nvidia managed to add a trillion in 30 days from April 2024.

Q Are you finding more opportunities in UK equities given how much they have lagged other markets such as the US?

A I guess the first thing to say on that is we do not make asset allocation decisions and the portfolio construction is driven by a bottom-up approach. Although the portfolio has significant exposure to the UK this is not driven by our macroeconomic view of the UK market, but rather the attractive valuation of specific companies within it. Part of this is linked to the UK becoming a smaller and smaller part of the overall index meaning less and less managers are looking at it and so you can find some interesting opportunities and hidden gems.

One such example, albeit less of a hidden gem now after recent performance, is 3i Group – a stock that has been the largest position in the portfolio for quite some time now. What particularly attracted us to 3i when we first looked at it in 2020 was one of its underlying portfolio companies, Action – Europe’s fastest-growing non-food discount retailer. We see this as nothing less than one of the best businesses on the continent, hidden within “Financials”. Action currently has more than 2,300 stores across Europe and plans to open 400 a year by 2026. We estimate it could take almost 20 years to saturate Europe alone so there is a very long runway for growth. The company has a c. 2% dividend yield at the time of writing, and the dividend per share has grown at around 16% pa over the last 3 years.

Q What are your thoughts on gearing?

A We have maintained a neutral position over the period (no gearing) due to some caution on adding additional risk to the portfolio at a point when expectations are already quite high in the market and the cost of gearing has risen. However, this can change quickly if there are any notable market events and we see an opportunity to scale up our risk.

Q Where have you found opportunities in the market?

A We look to build a diverse portfolio of stocks that can perform through most environments. 

We do this by carefully managing the risk in the portfolio, namely ensuring we are not overly exposed to any one particular factor and that correlation amongst stocks is limited.

We wrote in our Q2 letter that the market had become excessively concentrated and valuations for some stocks (e.g. magnificent 7 / AI winners) was unlikely to be sustainable, particularly if we were to hit any macro weakness or saw earnings disappointments. Although being underweight this theme had been extremely painful in the past few months, we stuck to our process, and we are pleased to see that this is starting to prove beneficial for our clients.

We will continue to stick to our bottom-up process as we navigate this period of market volatility. These events often provide exceptional opportunities to buy good businesses on sale and the current drawdown is no different.

Stephen Anness Joe Dowling

Portfolio Manager Deputy Portfolio Manager

25 September 2024

Global Equity Income Share Portfolio List of Investments

AT 31 May 2024

Ordinary shares unless stated otherwise

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.

†  MSCI and Standard & Poor’s Global Industry Classification Standard.

* The investment in Sberbank – ADR has been valued at zero as secondary listings of the depositary receipts on Russian companies have been suspended from trading.

+ The hedge fund investments are residual holdings of the previous investment strategy, transferred from the Balanced Risk Allocation Portfolio as part of the Company’s restructure in May 2024, which are awaiting realisation of underlying investments. Given lack of availability of recent valuation, the market value has been written-down to zero.

Global Equity Income Share Portfolio

Individual portfolio breakdowns are provided for additional information only. See note 1(a)(ii) on page 75 for further details.

Income Statement

Summary of Net Assets

Global Equity Income Share Portfolio Summary of Changes in Net Assets

UK Equity Share Portfolio Performance Record

Total Return

For the year ended 31 May

(1) Source: LSEG Data & Analytics.

(2) This class was closed on 7 May 2024, all performance data is calculated to 3 May 2024, being the date of the final computed Net Asset Value of the class.

UK Equity Share Portfolio

Individual portfolio breakdowns are provided for additional information only. See note 1(a)(ii) on page 75 for further details. This share class was closed on 7 May 2024.

Income Statement

Summary of Changes in Net Assets

Balanced Risk Allocation Share Portfolio Performance Record

Total Return

For the year ended 31 May

(1) Source: LSEG Data & Analytics.

(2) With effect from 1 June 2021, the benchmark adopted by the Balanced Risk Allocation Portfolio is comprised of 50% 30-year UK Gilts Index, 25% GBP hedged MSCI World Index (net) and 25% GBP hedged S&P Goldman Sachs Commodity Index. Prior to this, the benchmark was ICE BoA Merrill Lynch 3 month LIBOR plus 5% per annum. Accordingly, both the new and old benchmark are shown. Source: LSEG Data & Analytics/Bloomberg. 

(3) This class was closed on 7 May 2024, all performance data is calculated to 3 May 2024, being the date of the final computed Net Asset Value of the class.

Balanced Risk Allocation Share Portfolio

Individual portfolio breakdowns are provided for additional information only. See note 1(a)(ii) on page 75 for further details. This share class was closed on 7 May 2024.

Income Statement

Summary of Changes in Net Assets

Managed Liquidity Share Portfolio Performance Record

Total Return

For the year ended 31 May

(1) Source: LSEG Data & Analytics.

(2) Includes a £34,000 (1.40p per share) refund of management fees in respect of prior year overcharges.

(3) This class was closed on 7 May 2024, all performance data is calculated to 3 May 2024, being the date of the final computed Net Asset Value of the class.

(4) Includes a £137,000 (11.6p per share) corporation tax liability write-back and transfer to the Global Equity Income Portfolio as part of the Company restructure in May 2024.

Managed Liquidity Share Portfolio

Individual portfolio breakdowns are provided for additional information only. See note 1(a)(ii) on page 75 for further details. This share class was closed on 7 May 2024.

Income Statement

Summary of Changes in Net Assets

Environmental, Social and Corporate Governance (‘ESG’) statement from the Manager

What does ESG mean to us?

Stephen Anness

Head of Global Equities

Joe Dowling

Global Equities Fund Manager

• We draw upon ESGintel, Invesco’s proprietary tool, which helps us to better understand how companies are addressing ESG issues

• Engaging with companies to understand corporate strategy today in order to assess how this could evolve in the future

• Monitoring how companies are performing from an ESG perspective and if the valuations fairly reflect the progress being made

Our focus as active fund managers is always on finding mispriced stocks and ESG integration underpins our investment process.

The incorporation of ESG into our investment process considers ESG factors as inputs into the wider investment process as part of a holistic consideration of the investment risk and opportunity, from valuation through investment process to engagement and monitoring. The core aspects of our ESG philosophy include: materiality; ESG momentum; and engagement.

• Materiality refers to the consideration of ESG issues that are financially material to the company we are analysing.

• The concept of ESG Momentum, or improving ESG performance over time, indicates the degree of improvement of various ESG metrics and factors and help fund managers identify upside in the future. We find that companies which are improving in terms of their ESG practices may enjoy favourable financial performance in the longer term.

• Engagement is part of our responsibility as active owners which we take very seriously, and we see engagement with companies as an opportunity to encourage continual improvement. Dialogue with portfolio companies is a core part of the investment process for our investment team. As such, we often participate in board level dialogue and are instrumental in giving shareholder views on management, corporate strategy, transparency and capital allocation as well as wider ESG aspects.

ESG integration is an ongoing strategic effort to systematically incorporate ESG Factors into fundamental analysis. As illustrated by the diagram below, the aim is to provide a 360 degree evaluation of financial and non-financial materially relevant considerations and to help guide the portfolio strategy.

Our investment process has four stages. In this report we go through in detail how ESG is integrated into each stage of our process.

Idea Generation

We believe it is important to spread our nets as wide as possible when trying to come up with stock ideas which may find their way into our portfolios. We remain open minded as to the type of companies we will consider. This means not ruling out companies just because they happen to be unpopular at that time and vice versa. By focussing on fundamentals and the broader investment landscape – can be a unique way for our portfolios to potentially generate returns in excess of the benchmark as those businesses that have got ESG momentum behind them have the potential to be rerated.

Fundamental Research & ESG Analysis

Research is at the core of what we do. Our fundamental analysis covers many drivers, for example, corporate strategy, market positioning, competitive dynamics, the macroeconomic environment, financials, regulation, valuation, and, of course, ESG considerations, which guide our analysis throughout.

We use a variety of tools from different providers to measure ESG factors. In addition, at Invesco, we have developed ESGintel, Invesco’s proprietary tool built by our Global ESG research team in collaboration with our Technology Strategy Innovation and Planning (SIP) team.

ESGintel provides fund managers with environmental, social and governance insights, metrics, data points and direction of change. In addition, ESGintel offers fund managers an internal rating on a company, a rating trend, and a rank against sector peers. The approach ensures a targeted focus on the issues that matter most for sustainable value creation and risk management.

This provides a holistic view on how a company’s value chain is impacted in different ways by various ESG topics, such as compensation and alignment, health and safety, and low carbon transition/climate change.

We always try to meet with a company prior to investment. Based on our fundamental research, including any ESG findings, we focus on truly understanding the key drivers and, most importantly, the path to change. This helps us better understand corporate strategy today and how this could evolve in the future.

Portfolio Construction

We aim to create a well-diversified portfolio of active positions that reflect our assessment of the potential upside for each stock weighted against our assessment of the risks. Sustainability and ESG factors will be assessed alongside other fundamental drivers of valuation. The impact of any new purchases will need to be considered at a portfolio level. How will it affect the shape of the portfolio having regard to objectives, existing positions, overall size of the portfolio, liquidity and conviction.

We do not seek out stocks which score well on internal or third party research simply to reduce portfolio risk.

Ongoing Monitoring

Our fund managers and analysts continuously monitor how the stocks are performing as well as considering possible replacements. Is the company performing from an ESG perspective and are the valuations fairly reflecting the progress being made or not?

How do we monitor our holdings from an ESG perspective? Again, the same resources used during the fundamental stage are available to us. Our regular meetings with the management teams of the companies we own provides an ideal platform to discuss key ESG issues, which will be researched in advance. We draw on our own knowledge as well as relevant analysis from our ESG team and data from our previously mentioned proprietary system ESGintel which allows us to monitor progress and improvement against sector peers. Outside of company management meetings we constantly discuss as a team all relevant ESG issues, either stimulated internally or from external sources.

Challenge, Assessing & Monitoring Risk

In addition, there are two more formal ways in which our portfolios are monitored:

There is a rigorous semi-annual review process which includes a meeting led by the ESG team to assess how our portfolios are performing from an ESG perspective. This ensures a circular process for identifying flags and monitoring of improvements over time. These meetings are important in capturing issues that have developed and evolved whilst we have been shareholders.

There is also the ‘CIO challenge’, a formal review meeting held between the Henley Investment Centre’s Chief Investment Officer (CIO) and each fund manager. This review includes a full breakdown of the ESG performance using Sustainalytics and ISS data, such as the absolute ESG performance of the portfolio, relative performance to benchmarks, stocks exposed to severe controversies, top and bottom ESG performers, carbon intensity and trends. The ESG team review the ESG data and develop stock specific or thematic ESG questions. The ESG performance of the portfolio is discussed with the CIO using the data and the stock specific questions to analyse the fund manager’s level of ESG integration. The aim of these meetings is not to prevent a fund manager from holding any specific stock: rather, what matters is that the fund manager can evidence understanding of ESG issues and show that they have been taken into consideration when building the investment case.

Global Equity Income Portfolio Example

Asian company that manufactures a wide range of consumer and industrial electronic products

Key ESG issues

E           Environmental Policy

S            No major issues

G           Senior Management

Rated Low Risk by Sustainalytics.

– Invesco’s ESG team have met with management several times alongside members of the investment team over the past few years. The company has had previous issues with senior corruption, which is still a risk and therefore a priority for management. We were also keen to have an update on their sustainability targets.

– Company representatives walked Invesco through their potential candidates for director positions with the upcoming AGM approaching. This took up a majority of the call, however when we broached the subject of environmental sustainability, we were directed to their new environmental policy which is yet to be released. They did not provide any details surrounding targets, as they will be found in the policy.

– Invesco has asked for a follow up meeting once the environmental policy has been released in order to evaluate the ambitiousness of the standards.

Voting Policy

The Global Equity Team’s corporate engagement specialists review AGM and EGM proposals taking into account our own knowledge of the companies in which our funds are invested, as well as the comments and recommendations of ISS*, Glass Lewis and IVIS**. In addition, Invesco provides proprietary proxy voting recommendations and publishes these recommendations via its PROXYintel platform.

Especially where there are situations of controversy or differing views between the consultants mentioned above we will draw on the additional expertise of our internal ESG team.

There will be times when we will follow the recommendations made by ISS, Glass Lewis and IVIS but times where we disagree with the stance being taken. Voting in line with management recommendations should not be seen as evidence of a lack of challenge on our part, but rather that either the governance of the companies in which we are invested is already good and worthy of support or we have engaged with the company and our concerns have been addressed satisfactorily.

Source: Invesco, relates to the period 1 June 2023 to 31 May 2024 for the Invesco Global Equity Income Trust plc.

Engagements in 2023

Our ESG interactions with companies typically occur in group or 1:1 calls between our fund manager(s)/analyst(s) and corporate representative(s).

We strive to meet with companies in order to better understand the management team and their focus and outlook, and to bring up any concerns and suggestions; this can often cover ESG.

Source: Invesco, Data relates to the Henley-based Global Equities team, as at 31 December 2023.

Conclusion

The regulatory landscape is rapidly evolving, which increasingly compels organisations and investors alike to clearly demonstrate their awareness of ESG issues in their decisions. Landmark initiatives such as the European Union’s new Sustainable Finance Disclosure Regulation (SFDR) are at the forefront of this shift.

We believe that our approach is fair, coherent and pragmatic. Whilst we consider ESG aspects, we are not bound by any specific ESG criteria and have the flexibility to invest across the ESG spectrum from best to worst in class, but we think that the principles behind ESG deserve to be embedded in an investment framework which encourages positive change. Coupling this with a focus on valuation is, to our minds, the best way to deliver strong investment outcomes for our clients long term. This reinforces our fundamental belief that responsible investing demands a long-term view and that a stakeholder-centric culture of ownership and stewardship is at the heart of ESG integration.

* ISS – Institutional Shareholder Services.

** IVIS – Institutional Voting Information Service.

Business Review

Purpose, Business Model and Strategy

Invesco Global Equity Income Trust plc is an investment company and its investment objective is set out below. The strategy the Board follows to achieve that objective 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 and have been approved by shareholders.

The Company’s purpose is to generate returns for shareholders by investing their pooled capital to achieve the Company’s investment objective through the application of its investment policy and with the aim of spreading investment risk.

The business model the Company has adopted to achieve its investment objective has been to contract out investment management and administration to appropriate external service providers, which are overseen by the Board.

The principal service provider is Invesco Fund Managers Limited, which throughout this report is referred to as ‘the Manager’. Invesco Asset Management Limited, an associate company of the Manager, manages the Company’s investments and acts as Company Secretary under delegated authority from the Manager.

The Manager provides company secretarial, marketing and general administration services including accounting and manages the portfolio in accordance with the Board’s strategy.

Stephen Anness and Joe Dowling are the Portfolio Managers responsible for the day-to-day management of the portfolio.

The Company also 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 Objective

Following completion of the restructuring on 7 May 2024, the Company’s investment objective aims to provide an attractive level of predictable income and capital appreciation over the long term, predominately 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.

The Directors believe that the use of borrowings can enhance returns to shareholders, and the Company 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).

Investment Limits

The Board has prescribed the following limits on the investment policy of the Company:

• no more than 20% of the gross assets of the Company may be invested in fixed interest securities;

• no more than 10% of the gross assets of the Company may be held in a single investment;

• no more than 10% of the gross assets of the Company 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 Company, when it is considered appropriate.

Key Performance Indicators

The Board reviews the performance of the Company by reference to a number of Key Performance Indicators, 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 Company relative to that of the benchmark index it considers to be appropriate. However, given the requirements and constraints of the investment objective and policy followed, no index can be expected to fully represent the performance that might reasonably be expected from the Company’s Global Equity Income Portfolio.

The NAV total return performance of the Global Equity Income portfolio over the year to 31 May 2024 and of the relevant benchmark index as follows:

Source: LSEG Data & Analytics.

Details of the NAV total return on the Company’s former share classes including other performance periods, together with share price total returns, are shown on pages 24, 27 and 30.

Further details on the definition and calculation of total returns can be found in the Glossary and Alternative Performance Measures on pages 97 to 100 of the financial report.

Revenue and Dividends

The Directors review revenue estimates and prospective dividend levels at each Board meeting. Whilst the Directors have become more focussed on total return and have sanctioned contributions to dividends from capital, dividends paid continue to be mostly constituted from revenue and revenue is an important element of overall portfolio returns. Details of dividends paid during the year, including those paid on the Company’s former share classes are set out below.

Global Equity Income Shares

Revenue earnings per Share for the Global Equity Income Share Portfolio was 9.03p (2023: 5.20p), based on net revenue for the year of £2,553,000 (2023: £1,299,000), which included £21,000 (2023: £1,000) of non-recurring special dividends.

Dividend Policy:

As a result of the restructuring and in recognition of the continuing importance of dividends to Shareholders, the Board has introduced a new dividend policy. Under this new policy the Company will pay an annual dividend of at least 4% calculated on the unaudited prior year end NAV, paid quarterly in equal amounts.

The intention is that these dividends are to be paid from the Company’s revenues and, if required, capital reserves.

The Board believes that this new dividend policy should provide both an enhanced dividend compared to historical level of dividends paid on the Global Share Class and, once the relevant unaudited year end NAV is known, a smoother, more predictable income to Shareholders.

Dividends Declared:

The Directors have declared and paid four interim dividends for the year ended 31 May 2024 totalling 7.35p (2023: 7.20p) per Global Equity Income Share, of which 5.02p (2023: 5.20p) was met from revenue earned in the year. The aggregate of dividends paid in respect of the year was £1,864,000 (2023: £1,791,000).

A first interim dividend for the year to 31 May 2025 of 3.13p was declared on 10 July 2024. 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 three quarterly dividends.

UK Equity Shares

Revenue earnings per Share for the UK Equity Share Portfolio was 5.12p (2023: 6.40p), based on net revenue for the year of £3,178,000 (2023: £4,541,000), which included £244,000 (2023: £92,000) of non-recurring special dividends.

Dividends Declared:

Prior to completion of the restructuring, the Directors declared and paid four interim dividends for the year ended 31 May 2024 totalling 7.35p per UK Equity Share (2023: 7.05p) of which 7.35p (2023: 6.40p) was met from revenue earned in the year. The aggregate of dividends paid in respect of the year was £4,695,000 (2023: £4,981,000).

Balanced Risk Allocation Shares

Prior to completion of the restructuring, the Directors declared and paid one interim dividend and one special dividend for the year ended 31 May 2024 totalling 3.00p (2023: 1.00p). The portfolio recorded a net revenue return of £167,000 in the year (2023: £141,000).

Managed Liquidity Shares

Prior to completion of the restructuring, the Directors declared and paid one interim dividend for the year ended 31 May 2024 totalling 1.00p (2023: 1.00p). The Managed Liquidity Portfolio recorded a net revenue return for the year of £201,000 (2023: £13,000).

Discount

As a result of the restructuring the Company introduced a new discount control policy. Under this policy the Company intends to use ad hoc share buybacks to seek to maintain the discount at less than 10%, in normal market conditions. 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 Board reviews the buy back parameters from time to time taking into account current market conditions and other factors and instructs the brokers accordingly.

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 Global Equity Income shares will trade at close to their respective net asset value. 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 price and dealings in the Company’s shares. Share movements in the year are summarised on page 39. At 31 May 2024, the share price, net asset values (‘NAV’) and the discount of the Global Equity Income shares were as follows:

(1) Further details on the definition and calculation of the discount can be found in the Glossary and Alternative Performance Measures on pages 97 to 100 of the financial report.

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.

Further details on the definition and calculation of ongoing charges can be found in the Glossary and Alternative Performance Measures on pages 97 to 100 of the financial report.

At the year end the ongoing charges figure of the Company was as follows:

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 73 shows the assets and liabilities at the year end. Details of the Company’s borrowing facility are shown in note 13 of the financial statements on page 84, 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 limit is 30% of the Company’s total assets.

Issued Share Capital

The Global Equity Income shares have a nominal value of 1 penny per share.

Authorities given to the Directors at the AGM on 2 October 2023 to allot shares, disapply statutory pre-emption rights and buy back shares will expire at the forthcoming AGM. The following table summarises the Company’s share capital at the year end and movements during the year, including the impact of the restructuring. As a result of the restructuring, on 7 May 2024 the UK Equity, Balanced Risk Allocation and Managed Liquidity shares were redesignated as Global Equity Income shares. The number of new Global Equity Income shares arising from the redesignation is set out in the table.

Details of treasury shares cancelled during the year are shown in the table above. Since the year end 57,000 Global Equity Income shares have been bought back into treasury at an average price of 285.79p.

Further details on net changes in issued share capital are set out in note 14 to the financial statements on pages 84 and 85.

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 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’ report. 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 56 and 57). In carrying out this assessment, the Audit Committee together with the Manager, have considered emerging risks such as geopolitical risks, evolving cyber threats (including risks associated with Artificial Intelligence) and ESG, including climate related risks.

The following are considered to be the most significant risks, after consideration of mitigating factors, 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 17 to the financial statements.

Continuation Vote

As part of the ancillary changes introduced as part of the restructuring, the Board intends to put forward a vote at the Company’s Annual General Meeting in 2026 for the continuation of the Company (the 2026 Continuation Vote). If the 2026 Continuation Vote is passed the Board will put forward a continuation vote at the Company’s annual general meeting in 2031 and, if passed, at each fifth annual general meeting thereafter.

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.

In assessing the viability of the Company the Board considered the principal and emerging risks to which it is exposed, as set out on pages 39 to 41, together with mitigating factors. The risks of failure to meet the Company’s investment objectives, contributory market and investment risks and the challenges of lack of scale have been 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 the impact of the Covid-19 pandemic on global economies and the war in Ukraine. Despite the disruption to markets from these and other more recent geopolitical and macro-economic events such as the ongoing conflict in the Middle East, the Directors remain confident that the Company’s investment strategy will continue to serve shareholders well over the longer term.

In terms of financial risks to viability, materially all of the investments are readily realisable. The portfolio also produces 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 portfolio more than covers the value of the Company’s short term liabilities and annual operating costs. In arriving at this assessment, the Board considered stressed scenario-testing for both income and loan covenants; borrowing structure; level of gearing; and the liquidity of the portfolio. 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, notwithstanding the continuation vote in 2026, 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 audit committee report required by the AIC Corporate Governance Code is set out on pages 56 and 57. There are no areas of concern in relation to the financial statements to bring to the attention of shareholders.

Duty to Promote the Success of the Company (s.172)

The Directors have a statutory duty under section 172 of the Companies Act 2006 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. The Company has no employees and no customers in the traditional sense 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. In doing so, it has due regard to the desirability of the Company maintaining a reputation for high standards of business conduct, the need to foster the Company's business relationships and the impact of its actions on other stakeholders including the Manager, other third-party service providers and the impact of the Company’s operations on the community and the environment which are all taken into account during all discussions and as part of the Board’s decision making.

The Board is committed to maintaining open channels of communication and engagement with stakeholders in a manner which they find most meaningful. The table below sets out how the Board engages with each of its key stakeholders:

The mechanisms for engaging with stakeholders are kept under review by the Directors and will be discussed on a regular basis at Board meetings to ensure that they remain effective. Examples of key discussions and considerations of the Board made during the year were:

• to consider and approve, for the long-term benefit of the Company and its shareholders, the restructuring of the Company (see page 2 and the Chairman’s Statement on pages 6 to 8 for further details);

• to consider and approve the appointment of a new corporate broker and financial adviser (see page 8 for further details);

• to consider and approve the renewal of the Company’s loan facility;

• to consider and approve four quarterly dividend payments (see page 37 for further details); and

• to consider and approve the ongoing use of share buybacks as part of the Board’s adopted discount policy (see page 37 for further details).

Board Diversity

The Company’s policy on diversity is set out on page 51, under the section ‘Nomination Committee’. The Board considers diversity, including the balance of skills, knowledge, experience and gender amongst other factors when reviewing its composition and appointing new directors. The Board continues to recognise the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations.

In view of its relatively small size, the Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment. In doing so, the Board will seek to meet the targets set out in the FCA’s UK Listing Rule 6.6.6R (9)(a), which are summarised below.

In accordance with Listing Rule 6.6.6R (9), (10) and (11) the Board has provided the following information in relation to its diversity as at 31 May 2024, being the financial year-end of the Company. The information included in the tables below has been obtained following confirmation from the individual Directors. As shown in the tables, the Company did not meet the FCA ethnic diversity target as at 31 May 2024, however the Board will continue to take all matters of diversity into account as part of its succession planning.

Board Gender as at 31 May 2024

A The Company does not disclose the number of directors in executive management as this is not applicable for an investment trust.

B Meets the target of 40% as set out in UKLR 6.6.6R (9)(a)(i).

C The positions of Chairman and Senior Independent Director are held by women. The position of Chair of the Audit Committee is held by a man but this is not currently defined as a senior position.

D Exceeds target of 1 as set out in UKLR 6.6.6R (9)(a)(ii).

A The Company does not disclose the number of directors in executive management as this is not applicable for an investment trust.

B Does not meet the target as set out in UKLR 6.6.6R (9)(a)(iii).

There have been no changes since the year end that have affected the Company’s ability to meet the targets set in LR 6.6.6R (9)(a).

Environment, Social and Governance (‘ESG’) Matters

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 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 (‘PRI’), which demonstrates its extensive efforts in terms of ESG integration, active ownership, investor collaboration and transparency. The Manager scored four stars for its Investment & Stewardship Policy under new scoring methodology produced by PRI. This followed five consecutive years of achieving an A+ rating for responsible investment (Strategy & Governance) under the previous methodology. In addition, the Manager is an active member of the UK Sustainable Investment and Finance Association as well as a supporter of the Task Force for Climate Related Financial Disclosure (‘TCFD’) since 2019 and published its fourth iteration of its TCFD-aligned Climate Change Report in 2023.

The Manager is complying with the spirit of the Sustainable Finance Disclosure Regulation (‘SFDR’) which came into effect within the European Union on 10 March 2021 and is disclosing in its AIFM document as well as its website how sustainability risks are integrated.

The wider Invesco investment team incorporates ESG considerations in its investment process 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 portfolios, 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.

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.

Further details are shown in the ESG Statement from the Manager on pages 33 to 35.

The Company’s stewardship functions have been delegated to the Manager. The Manager 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. The Manager is also a Tier 1 signatory of the Financial Reporting Council’s Stewardship Code, 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.

A copy of the current Manager’s Stewardship Policy can be found at www.invesco.com/uk.

A greenhouse gas emissions statement is included in the Directors’ Report on page 52.

Whilst TCFD is currently not applicable to the Company, the Manager has produced a product level report on the Company in accordance with the Financial Conduct Authority’s (‘FCA’) rules and guidance regarding the disclosure of climate-related financial information consistent with TCFD Recommendations and Recommended Disclosures. These disclosures are intended to help meet the information needs of market participants, including institutional clients and consumers of financial products, in relation to the climate-related impact and risks of the Manager’s TCFD in-scope business. The product level report on the Company is available on the Company’s website at https://www.invesco.com/uk/en/investment-trusts/invesco-global-equity-income-trust.html.

Key elements of the product level report include a scenario analysis of how climate change is likely to impact the portfolio valuation under net zero 2050, delayed transition and hothouse scenarios, and a discussion of the most significant drivers of performance under those scenarios.

Invesco’s Group Level Task Force on Climate-Related Financial Disclosures (‘TCFD’) is available on the Managers’ Website at https://www.invesco.com/uk/en/about-us/esg-and-responsibleinvesting.html

Modern Slavery

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  25 September 2024.

James Poole

Senior Company Secretary

Invesco Asset Management Limited

Corporate Company Secretary

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

Victoria Muir

Chairman

25 September 2024

Electronic Publication

The Annual Financial Report is published on the Manager’s website https://www.invesco.com/uk/en/investment-trusts/invesco-global-equity-income-trust.html. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website, which is maintained by the Company’s Manager. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Income Statement

(1) This Portfolio was closed as part of the Company restructure on 7 May 2024.

The total column of this statement represents the Company’s Income Statement 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 current year. Income Statements for the different share classes are shown on pages 21, 25, 28 and 31 for the Global Equity Income, UK Equity, Balanced Risk Allocation and Managed Liquidity Share Portfolios respectively.

The accompanying accounting policies and notes are an integral part of these financial statements.

Statement of Changes in Equity