UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-05426
AIM Investment Funds (Invesco Investment Funds)
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 1000 Houston, Texas 77046
(Address of principal executive offices) (Zip code)
Sheri Morris
11 Greenway Plaza, Suite 1000
Houston, Texas 77046
(Name and address of agent for service)
Registrant’s telephone number, including area code: (713) 626-1919
Date of fiscal year end: November 30
Date of reporting period: 5/31/2020
Item 1. Reports to Stockholders.
The Registrant’s annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:
Semiannual Report | May 31, 2020 | |||
Invesco Oppenheimer SteelPath MLP Alpha Fund | ||||
2 | Fund Performance | |
6 | Fund Expenses | |
8 | Schedule of Investments | |
9 | Financial Statements | |
12 | Financial Highlights | |
18 | Notes to Financial Statements |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800 959 4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
Class A Shares
AVERAGE ANNUAL TOTAL RETURNS AT 5/31/2020
Class A Shares of the Fund | S&P 500 Index | Alerian MLP Index | ||||||||||||||
Without Sales Charge | With Sales Charge | |||||||||||||||
6-Month | (23.38 | )% | (27.63 | )% | (2.10 | )% | (24.26 | )% | ||||||||
1-Year | (34.61 | )% | (38.17 | )% | 12.84 | % | (34.74 | )% | ||||||||
5-Year | (12.99 | )% | (13.97 | )% | 9.86 | % | (12.93 | )% | ||||||||
10-Year | (1.82 | )% | (2.37 | )% | 13.15 | % | (0.06 | )% | ||||||||
Since Inception (3/31/10) | (1.91 | )% | (2.45 | )% | 12.18 | % | (0.28 | )% |
Performance quoted is past performance and cannot guarantee future results; current performance may be lower or higher. Visit invesco.com for the most recent month-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Fund returns include changes in share price, reinvested distributions and a 5.50% maximum applicable sales charge except where “without sales charge” is indicated. Returns for periods of less than one year are cumulative and not annualized. As the result of a reorganization after the close of business on May 24, 2019, the returns of the Fund for periods on or prior to May 24, 2019 reflect performance of the Oppenheimer SteelPath MLP Alpha Fund (the predecessor fund). Share class returns will differ from those of the predecessor fund because they have different expenses. Returns do not consider capital gains or income taxes on an individual’s investment. See Fund prospectus and summary prospectus for more information on share classes, sales charges and fee agreements, if any. Fund literature is available at invesco.com.
2 Invesco Oppenheimer SteelPath MLP Alpha Fund
Top Holdings and Allocations
TOP TEN MASTER LIMITED PARTNERSHIP AND RELATED ENTITIES HOLDINGS
Enterprise Products Partners LP | 13.46 | % | ||
Energy Transfer LP | 13.28 | % | ||
Magellan Midstream Partners LP | 13.02 | % | ||
MPLX LP | 12.31 | % | ||
TC PipeLines LP | 10.69 | % | ||
Williams Cos., Inc. | 10.03 | % | ||
Targa Resources Corp. | 8.40 | % | ||
EQM Midstream Partners LP | 3.93 | % | ||
Westlake Chemical Partners LP | 3.13 | % | ||
Plains All American Pipeline LP | 2.93 | % |
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of May 31, 2020, and are based on net assets.
SECTOR ALLOCATION
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of May 31, 2020 and are based on total market value of investments.
For more current Fund holdings, please visit invesco.com.
3 Invesco Oppenheimer SteelPath MLP Alpha Fund
Share Class Performance
AVERAGE ANNUAL TOTAL RETURNS WITHOUT SALES CHARGE AS OF 5/31/2020 | ||||||||||||||||||||||||||||
Inception Date | 6-Month | 1-Year | 5-Year | 10-Year | Since Inception | |||||||||||||||||||||||
CLASS A | (MLPAX | ) | 3/31/10 | (23.38 | )% | (34.61 | )% | (12.99 | )% | (1.82 | )% | (1.91 | )% | |||||||||||||||
CLASS C | (MLPGX | ) | 8/25/11 | (23.51 | )% | (34.94 | )% | (13.59 | )% | (3.96 | )% | |||||||||||||||||
CLASS R 1 | (SPMGX | ) | 5/24/19 | (23.42 | )% | (34.76 | )% | (13.20 | )% | (2.06 | )% | |||||||||||||||||
CLASS Y | (MLPOX | ) | 3/31/10 | (23.25 | )% | (34.45 | )% | (12.76 | )% | (1.56 | )% | (1.66 | )% | |||||||||||||||
CLASS R5 1 | (SPMHX | ) | 5/24/19 | (23.14 | )% | (34.28 | )% | (12.90 | )% | (1.77 | )% | |||||||||||||||||
CLASS R6 2 | (OSPAX | ) | 6/28/13 | (23.12 | )% | (34.30 | )% | (12.68 | )% | (7.81 | )% | |||||||||||||||||
AVERAGE ANNUAL TOTAL RETURNS WITH SALES CHARGE AS OF 5/31/2020 | ||||||||||||||||||||||||||||
Inception Date | 6-Month | 1-Year | 5-Year | 10-Year | Since Inception | |||||||||||||||||||||||
CLASS A | (MLPAX | ) | 3/31/10 | (27.63 | )% | (38.17 | )% | (13.97 | )% | (2.37 | )% | (2.45 | )% | |||||||||||||||
CLASS C | (MLPGX | ) | 8/25/11 | (24.22 | )% | (35.50 | )% | (13.59 | )% | (3.96 | )% | |||||||||||||||||
CLASS R 1 | (SPMGX | ) | 5/24/19 | (23.42 | )% | (34.76 | )% | (13.20 | )% | (2.06 | )% | |||||||||||||||||
CLASS Y | (MLPOX | ) | 3/31/10 | (23.25 | )% | (34.45 | )% | (12.76 | )% | (1.56 | )% | (1.66 | )% | |||||||||||||||
CLASS R5 1 | (SPMHX | ) | 5/24/19 | (23.14 | )% | (34.28 | )% | (12.90 | )% | (1.77 | )% | |||||||||||||||||
CLASS R6 2 | (OSPAX | ) | 6/28/13 | (23.12 | )% | (34.30 | )% | (12.68 | )% | (7.81 | )% |
1. | Class R and Class R5 shares’ performance shown prior to the inception date (after the close of business on May 24, 2019) is that of the predecessor fund’s Class A shares at net asset value (NAV) and includes the 12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements. |
2. | Class I shares of the predecessor fund were reorganized as Class R6 shares on May 24, 2019. |
Performance quoted is past performance and cannot guarantee future results; current performance may be lower or higher. Visit invesco.com for the most recent month-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Performance shown at NAV does not include the applicable front-end sales charge, which would have reduced the performance. The current maximum initial sales charge for Class A shares is 5.50%, and the contingent deferred sales charge for Class C shares is 1% for the 1-year period. Class R, Class Y, Class R5 and Class R6 shares have no sales charge; therefore, performance is at NAV. Effective after the close of business on May 24, 2019, Class A, Class C, Class Y, and Class I shares of the predecessor fund were reorganized into Class A, Class C, Class Y, and Class R6 shares, respectively, of the Fund. Class R and Class R5 shares’ performance shown prior to the inception date is that of the predecessor fund’s Class A shares at NAV and includes the 12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements. Returns shown for Class A, Class C, Class R, Class Y, Class R5, and Class R6 shares are blended returns of the predecessor fund and the Fund. Share class returns will differ from those of the predecessor fund because of different expenses. See Fund prospectuses and summary prospectuses for more information on share classes, sales charges and new fee agreements, if any. Fund literature is available at invesco.com.
The Fund’s performance is compared to the performance of the S&P 500 Index and the Alerian MLP Index. The S&P 500 Index is a broad-based measure of domestic stock performance. The Alerian MLP Index is a composite of the 50 most prominent Master Limited Partnerships that provides investors with an unbiased, comprehensive benchmark for this emerging asset class. The Alerian MLP Index, which is calculated using a float-adjusted, capitalization weighted methodology, is disseminated real-time on a total-return basis. The returns for the S&P 500 Index and Alerian MLP Index are calculated pre-tax, while the Fund’s returns are calculated post corporate tax. The indices are unmanaged and cannot be purchased directly by investors. While index comparisons may be useful to provide a benchmark for the Fund’s performance, it must be noted that the Fund’s investments are not limited to the investments comprising the indices. Index performance includes reinvestment of income, but does not reflect transaction costs, fees, expenses or taxes. The Fund’s performance reflects the effects of the Fund’s business and operating expenses.
Liquidity Risk Management Program
The Securities and Exchange Commission has adopted Rule 22e-4 under the Investment Company Act of 1940 (the “Liquidity Rule”) in order to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders. The Fund has adopted and implemented a liquidity risk management program in accordance with the Liquidity Rule (the “Program”). The Program is reasonably designed to assess and manage the Fund’s liquidity risk, which is the risk that the Fund could not meet redemption requests without significant dilution of remaining investors’ interests in the Fund. The Board of Trustees of the Fund (the “Board”) has appointed Invesco Advisers, Inc. (“Invesco”), the Fund’s investment adviser, as the Program’s administrator, and Invesco has delegated oversight of the Program to the Liquidity Risk Management Committee (the “Committee”), which is composed of senior representatives from relevant business groups at Invesco.
As required by the Liquidity Rule, the Program includes policies and procedures providing for an assessment, no less frequently than annually, of the Fund’s liquidity risk that takes into account, as relevant to the Fund’s liquidity risk: (1) the Fund’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions; (2) short-term and long-term cash flow projections for the Fund during both normal and reasonably foreseeable stressed conditions; and (3) the Fund’s holdings of cash and cash equivalents and any borrowing arrangements, including the terms of the Fund’s credit facility, the financial health of the institution providing the credit facility and the fact that the credit facility is shared among multiple funds. The Liquidity Rule also requires the classification of the Fund’s investments into categories that reflect the assessment of their relative liquidity under current market conditions. The Fund classifies its investments into one of four categories defined in
4 Invesco Oppenheimer SteelPath MLP Alpha Fund
the Liquidity Rule: “Highly Liquid,” “Moderately Liquid,” “Less Liquid” and “Illiquid.” Funds that are not invested primarily in “Highly Liquid Investments” that are assets (cash or investments that are reasonably expected to be convertible into cash within three business days without significantly changing the market value of the investment) are required to establish a “Highly Liquid Investment Minimum” (“HLIM”), which is the minimum percentage of net assets that must be invested in Highly Liquid Investments. Funds with HLIMs have procedures for addressing HLIM shortfalls, including reporting to the Board and the SEC (on a non-public basis) as required by the Program and the Liquidity Rule. In addition, the Fund may not acquire an investment if, immediately after the acquisition, over 15% of the Fund’s net assets would consist of “Illiquid Investments” that are assets (an investment that cannot reasonably be expected to be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment). The Liquidity Rule and the Program also require reporting to the Board and the SEC (on a non-public basis) if a Fund’s holdings of Illiquid Investments exceed 15% of the Fund’s assets.
At a meeting held on March 30-April 1, 2020, the Committee presented a report to the Board that addressed the operation of the Program and assessed the Program’s adequacy and effectiveness of implementation (the “Report”). The Report covered the period from December 1, 2018 through December 31, 2019 (the “Program Reporting Period”).
The Report stated, in relevant part, that during the Program Reporting Period:
• | The Program, as adopted and implemented, remained reasonably designed to assess and manage the Fund’s liquidity risk and was operated effectively to achieve that goal; |
• | The Fund’s investment strategy remained appropriate for an open-end fund; |
• | The Fund was able to meet requests for redemption without significant dilution of remaining investors’ interests in the Fund; |
• | The Fund did not breach the 15% limit on Illiquid Investments; and |
• | The Fund primarily held Highly Liquid Investments and therefore has not adopted an HLIM. |
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisors for a prospectus/summary prospectus or visit invesco.com/fundprospectus.
Shares of Invesco funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
5 Invesco Oppenheimer SteelPath MLP Alpha Fund
Fund Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended May 31, 2020.
Actual Expenses
The first section of the table provides information about actual account values and actual expenses. You may use the information in this section for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During 6 Months Ended May 31, 2020” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio for each class of shares, and an assumed rate of return of 5% per year for each class before expenses, which is not the actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads). Therefore, the “hypothetical” section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Beginning Account Value December 1, 2019 | Ending Account Value May 31, 2020 | Expenses Paid During 6 Months Ended May 31, 20201,2 | |||||||||
CLASS A | $ | 1,000.00 | $ | 766.20 | $ | 13.86 | ||||||
CLASS C | 1,000.00 | 764.90 | 17.21 | |||||||||
CLASS R | 1,000.00 | 765.80 | 14.97 | |||||||||
CLASS Y | 1,000.00 | 767.50 | 12.77 | |||||||||
CLASS R5 | 1,000.00 | 768.60 | 12.69 | |||||||||
CLASS R6 | 1,000.00 | 768.80 | 12.47 | |||||||||
Hypothetical (5% return before expenses) | ||||||||||||
CLASS A | 1,000.00 | 1,009.30 | 15.77 | |||||||||
CLASS C | 1,000.00 | 1,005.40 | 19.55 | |||||||||
CLASS R | 1,000.00 | 1,008.00 | 17.02 | |||||||||
CLASS Y | 1,000.00 | 1,010.50 | 14.53 | |||||||||
CLASS R5 | 1,000.00 | 1,010.60 | 14.43 | |||||||||
CLASS R6 | 1,000.00 | 1,010.90 | 14.18 |
1. | Actual expenses paid for all classes are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
2. | Hypothetical expenses paid for all classes are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
6 Invesco Oppenheimer SteelPath MLP Alpha Fund
Those annualized expense ratios, based on the 6-month period ended May 31, 2020 for Classes A, C, R, Y, R5 and R6 are as follows:
Class | Expense Ratios | |||
CLASS A | 3.14 | % | ||
CLASS C | 3.90 | |||
CLASS R | 3.39 | |||
CLASS Y | 2.89 | |||
CLASS R5 | 2.87 | |||
CLASS R6 | 2.82 |
The expense ratios for Class A, C, R, Y, and R6 reflect contractual waivers and/or reimbursements of expenses by the Fund’s Adviser. The “Financial Highlights” tables in the Fund’s financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements, if applicable.
7 Invesco Oppenheimer SteelPath MLP Alpha Fund
May 31, 2020
(Unaudited)
Description | Shares | Value | ||||||
MLP Investments and Related Entities–103.3% |
| |||||||
Diversified–23.5% | ||||||||
Enterprise Products Partners LP | 5,054,136 | $ | 96,533,998 | |||||
Williams Cos., Inc. | 3,519,571 | 71,904,835 | ||||||
Total Diversified | 168,438,833 | |||||||
Gathering/Processing–24.8% |
| |||||||
Hess Midstream LP, Class A | 742,909 | 14,427,293 | ||||||
MPLX LP | 4,649,412 | 88,292,334 | ||||||
Targa Resources Corp. | 3,365,312 | 60,205,431 | ||||||
Western Midstream Partners LP | 1,549,720 | 14,474,384 | ||||||
Total Gathering/Processing | 177,399,442 | |||||||
Natural Gas Pipeline Transportation–27.9% |
| |||||||
Energy Transfer LP | 11,669,906 | 95,226,436 | ||||||
EQM Midstream Partners LP | 1,433,388 | 28,166,074 | ||||||
TC PipeLines LP | 2,181,647 | 76,684,892 | ||||||
Total Natural Gas Pipeline Transportation | 200,077,402 | |||||||
Other Energy–5.6% |
| |||||||
Sunoco LP | 141,202 | 3,643,012 | ||||||
USA Compression Partners LP | 1,176,494 | 14,176,753 | ||||||
Westlake Chemical Partners LP | 1,095,581 | 22,459,410 | ||||||
Total Other Energy | 40,279,175 |
Description | Shares | Value | ||||||
Petroleum Pipeline Transportation–21.5% |
| |||||||
Magellan Midstream Partners LP | 2,059,747 | $ | 93,388,929 | |||||
Phillips 66 Partners LP | 388,732 | 17,368,546 | ||||||
Plains All American Pipeline LP | 2,165,206 | 21,002,498 | ||||||
Plains GP Holdings LP, Class A | 1,524,371 | 15,228,466 | ||||||
Shell Midstream Partners LP | 529,323 | 7,140,567 | ||||||
Total Petroleum Pipeline Transportation | 154,129,006 | |||||||
Total MLP Investments And Related Entities |
| 740,323,858 | ||||||
Short-Term Investments–4.4% |
| |||||||
Money Market–4.4% | ||||||||
Fidelity Treasury Portfolio, Institutional Class, 0.107%1 | 31,826,581 | 31,826,581 | ||||||
Total Short-Term Investments |
| 31,826,581 | ||||||
TOTAL INVESTMENTS–107.7% | 772,150,439 | |||||||
LIABILITIES IN EXCESS OF OTHER ASSETS–(7.7)% |
| (55,073,515 | ) | |||||
NET ASSETS–100% | $ | 717,076,924 |
Investment Abbreviations
GP | – General Partnership | |
LP | – Limited Partnership |
Footnotes to Schedule of Investments
1. | Rate shown is the 7-day yield at period end. |
See accompanying Notes to Financial Statements.
8 Invesco Oppenheimer SteelPath MLP Alpha Fund
Statement of Assets and Liabilities
May 31, 2020
(Unaudited)
Assets: | ||||
Investments at value (cost $882,859,558) | $ | 772,150,439 | ||
Receivables and other assets: | ||||
AMT Credit Carryforward | 4,067,066 | |||
Receivable for beneficial interest sold | 1,029,801 | |||
Prepaid taxes | 461,413 | |||
Prepaid expenses | 238,012 | |||
Deferred compensation | 104,464 | |||
Dividends receivable | 2,632 | |||
Total assets | 778,053,827 | |||
Liabilities: | ||||
Payables and other liabilities: | ||||
Payable for investments purchased | 51,082,517 | |||
Payable for beneficial interest redeemed | 1,322,159 | |||
Payable to Advisor | 559,376 | |||
Deferred tax liability, net | 6,744,287 | |||
Payable for distribution and service plan fees | 184,183 | |||
Transfer agent fees payable | 180,877 | |||
Deferred compensation | 104,464 | |||
Borrowing expense payable | 21,904 | |||
Trustees’ fees payable | 2,988 | |||
Other liabilities | 774,148 | |||
Total liabilities | 60,976,903 | |||
Net Assets | $ | 717,076,924 | ||
Composition of Net Assets | ||||
Shares of beneficial interest | $ | 1,998,074,881 | ||
Distributable earnings (loss) | (1,280,997,957 | ) | ||
Net Assets | $ | 717,076,924 |
Net Asset Value Per Share | ||||
Class A Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $226,097,181 and 59,742,705) | $ | 3.78 | ||
Maximum offering price per share (net asset value plus sales charge of 5.50% of offering price) | $ | 4.00 | ||
Class C Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $171,235,159 and 49,523,362) | $ | 3.46 | ||
Class R Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $205,176 and 54,482) | $ | 3.77 | ||
Class Y Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $303,259,343 and 76,966,624) | $ | 3.94 | ||
Class R5 Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $5,485 and 1,445) | $ | 3.80 | ||
Class R6 Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $16,274,580 and 4,102,012) | $ | 3.97 |
See accompanying Notes to Financial Statements.
9 Invesco Oppenheimer SteelPath MLP Alpha Fund
Statement of Operations
For the Six Months Ended May 31, 2020
(Unaudited)
Investment Income | ||||
Distributions and dividends | $ | 41,829,160 | ||
Less return of capital on distributions and dividends | (39,404,161 | ) | ||
Total investment income | 2,424,999 | |||
Expenses | ||||
Advisory fees | 4,843,201 | |||
Distribution and service plan fees | ||||
Class A | 324,525 | |||
Class C | 1,053,588 | |||
Class R | 364 | |||
Transfer and shareholder servicing agent fees: | ||||
Class A | 198,978 | |||
Class C | 160,782 | |||
Class R | 112 | |||
Class Y | 294,077 | |||
Class R5 | 1 | |||
Class R6 | 1,988 | |||
Borrowing fees | 189,528 | |||
Administrative fees | 155,070 | |||
Custody fees | 102,267 | |||
Legal, auditing, and other professional fees | 64,886 | |||
Registration fees | 46,681 | |||
Tax expense | 36,488 | |||
Trustees’ fees | 14,073 | |||
Other | 101,619 | |||
Total expenses, before waivers and deferred taxes | 7,588,228 | |||
Less expense waivers | (487,171 | ) | ||
Net expenses, before deferred taxes | 7,101,057 | |||
Net investment loss, before deferred taxes | (4,676,058 | ) | ||
Deferred tax (expense)/benefit | — | |||
Net investment loss, net of deferred taxes | (4,676,058 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized loss | ||||
Investments (includes net losses from securities sold to affiliates of ($27,274,764)) | (343,126,029 | ) | ||
Deferred tax (expense)/benefit | — | |||
Net realized loss, net of deferred taxes | (343,126,029 | ) | ||
Net change in unrealized appreciation on: | ||||
Investment transaction in | 129,862,295 | |||
Deferred tax (expense)/benefit | (6,744,287 | ) | ||
Net change in unrealized appreciation, net of deferred taxes | 123,118,008 | |||
Net (Decrease) in Net Assets Resulting from Operations | $ | (224,684,079 | ) |
See accompanying Notes to Financial Statements.
10 Invesco Oppenheimer SteelPath MLP Alpha Fund
Statements of Changes in Net Assets
For the Six Months Ended May 31, 2020 (Unaudited) | For the Year Ended November 30, 2019 | |||||||
Operations | ||||||||
Net investment (loss), net of deferred taxes | $ | (4,676,058 | ) | $ | (8,386,151 | ) | ||
Net realized gains/(losses), net of deferred tax | (343,126,029 | ) | (3,866,999 | ) | ||||
Net change in unrealized appreciation/(depreciation), net of deferred taxes | 123,118,008 | (111,534,471 | ) | |||||
Net increase (decrease) in net assets resulting from operations | (224,684,079 | ) | (123,787,621 | ) | ||||
Distributions to Shareholders | ||||||||
Distributions to shareholders from return of capital: | ||||||||
Class A shares | (15,735,695 | ) | (39,888,956 | ) | ||||
Class C shares | (13,757,998 | ) | (36,790,747 | ) | ||||
Class R shares | (9,860 | ) | (2,048 | ) | ||||
Class Y shares | (22,015,546 | ) | (71,098,183 | ) | ||||
Class R5 shares | (394 | ) | (520 | ) | ||||
Class R6 shares | (1,257,526 | ) | (10,317,245 | ) | ||||
Distributions to shareholders from return of capital | (52,777,019 | ) | (158,097,699 | ) | ||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A shares | — | (2,404,268 | ) | |||||
Class C shares | — | (2,217,526 | ) | |||||
Class R shares | — | (124 | ) | |||||
Class Y shares | — | (4,285,375 | ) | |||||
Class R5 shares | — | (31 | ) | |||||
Class R6 shares | — | (621,862 | ) | |||||
Distributions to shareholders from distributable earnings | — | (9,529,186 | ) | |||||
Change in net assets resulting from distributions to shareholders | (52,777,019 | ) | (167,626,885 | ) | ||||
Beneficial Interest Transactions | ||||||||
Net increase/(decrease) in net assets resulting from beneficial interest transactions | ||||||||
Class A shares | (12,855,805 | ) | (58,551,770 | ) | ||||
Class C shares | (23,975,144 | ) | (70,125,834 | ) | ||||
Class R shares | 161,292 | 100,046 | ||||||
Class Y shares | (134,791,849 | ) | (322,666,637 | ) | ||||
Class R5 shares | — | 10,000 | ||||||
Class R6 shares | (16,046,228 | ) | (89,977,443 | ) | ||||
Change in net assets resulting from beneficial interest transactions | (187,507,734 | ) | (541,211,638 | ) | ||||
Change in net assets | (464,968,832 | ) | (832,626,144 | ) | ||||
Net Assets | ||||||||
Beginning of period | 1,182,045,756 | 2,014,671,900 | ||||||
End of period | $ | 717,076,924 | $ | 1,182,045,756 |
See accompanying Notes to Financial Statements.
11 Invesco Oppenheimer SteelPath MLP Alpha Fund
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class A | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 5.28 | $ | 6.56 | $ | 7.35 | $ | 8.64 | $ | 8.70 | $ | 12.81 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.02 | ) | (0.03 | ) | (0.09 | ) | (0.13 | ) | (0.10 | ) | (0.09 | ) | ||||||||||||
Return of capital1 | 0.16 | 0.34 | 0.39 | 0.35 | 0.35 | 0.40 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.37 | ) | (0.93 | ) | (0.43 | ) | (0.85 | ) | 0.38 | (3.73 | ) | |||||||||||||
Total from investment operations | (1.23 | ) | (0.62 | ) | (0.13 | ) | (0.63 | ) | 0.63 | (3.42 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.27 | ) | (0.62 | ) | (0.62 | ) | — | (0.69 | ) | (0.69 | ) | |||||||||||||
Income | — | (0.04 | ) | (0.04 | ) | (0.66 | ) | — | — | |||||||||||||||
Total distributions to shareholders | (0.27 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.69 | ) | (0.69 | ) | ||||||||||||
Net asset value, end of period | $ | 3.78 | $ | 5.28 | $ | 6.56 | $ | 7.35 | $ | 8.64 | $ | 8.70 | ||||||||||||
Total Return, at Net Asset Value2 | (23.38 | )% | (10.69 | )% | (2.33 | )% | (8.02 | )% | 8.25 | % | (27.68 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 226,097 | $ | 321,237 | $ | 459,733 | $ | 593,811 | $ | 1,023,541 | $ | 1,143,231 | ||||||||||||
Ratio of Expenses to Average Net Assets:7 | ||||||||||||||||||||||||
Before (waivers) and deferred/current tax expense/(benefit) | 1.70 | % | 1.67 | % | 1.68 | % | 1.68 | % | 1.75 | % | 1.64 | % | ||||||||||||
Expense (waivers) | (0.12 | )% | (0.08 | )% | (0.11 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of (waivers) and before deferred/current tax expense/(benefit)4 | 1.58 | % | 1.59 | % | 1.57 | % | 1.56 | % | 1.63 | % | 1.53 | % | ||||||||||||
Deferred/current tax expense/(benefit)5 | 1.56 | % | — | % | 0.03 | % | — | % | — | % | (9.23 | )% | ||||||||||||
Total expenses/(benefit) | 3.14 | % | 1.59 | % | 1.60 | % | 1.56 | % | 1.63 | % | (7.70 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 |
| |||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (1.14 | )% | (0.56 | )% | (1.29 | )% | (1.60 | )% | (1.37 | )% | (1.36 | )% | ||||||||||||
Expense (waivers) | (0.12 | )% | (0.08 | )% | (0.11 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (1.02 | )% | (0.48 | )% | (1.18 | )% | (1.48 | )% | (1.25 | )% | (1.25 | )% | ||||||||||||
Deferred tax benefit/(expense)6 | — | % | — | % | — | % | — | % | — | % | 0.46 | % | ||||||||||||
Net investment income/(loss) | (1.02 | )% | (0.48 | )% | (1.18 | )% | (1.48 | )% | (1.25 | )% | (0.79 | )% | ||||||||||||
Portfolio turnover rate | 54 | % | 32 | % | 36 | % | 37 | % | 35 | % | 36 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
4. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 1.53%, 1.55%, 1.54%, 1.55%, 1.60%, and 1.51, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $254,610 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
12 Invesco Oppenheimer SteelPath MLP Alpha Fund
Financial Highlights—(continued)
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class C | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 4.87 | $ | 6.14 | $ | 6.97 | $ | 8.29 | $ | 8.43 | $ | 12.53 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.04 | ) | (0.07 | ) | (0.14 | ) | (0.18 | ) | (0.16 | ) | (0.17 | ) | ||||||||||||
Return of capital1 | 0.15 | 0.31 | 0.39 | 0.35 | 0.35 | 0.40 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.25 | ) | (0.85 | ) | (0.42 | ) | (0.83 | ) | 0.36 | (3.64 | ) | |||||||||||||
Total from investment operations | (1.14 | ) | (0.61 | ) | (0.17 | ) | (0.66 | ) | 0.55 | (3.41 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.27 | ) | (0.62 | ) | (0.62 | ) | — | (0.69 | ) | (0.69 | ) | |||||||||||||
Income | — | (0.04 | ) | (0.04 | ) | (0.66 | ) | — | — | |||||||||||||||
Total distributions to shareholders | (0.27 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.69 | ) | (0.69 | ) | ||||||||||||
Net asset value, end of period | $ | 3.46 | $ | 4.87 | $ | 6.14 | $ | 6.97 | $ | 8.29 | $ | 8.43 | ||||||||||||
Total Return, at Net Asset Value2 | (23.51 | )% | (11.29 | )% | (3.06 | )% | (8.75 | )% | 7.53 | % | (28.23 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 171,235 | $ | 266,485 | $ | 407,345 | $ | 539,908 | $ | 737,299 | $ | 730,900 | ||||||||||||
Ratio of Expenses to Average Net Assets:7 | ||||||||||||||||||||||||
Before (waivers) and deferred/current tax expense/(benefit) | 2.46 | % | 2.44 | % | 2.46 | % | 2.46 | % | 2.55 | % | 2.39 | % | ||||||||||||
Expense (waivers) | (0.12 | )% | (0.08 | )% | (0.11 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of (waivers) and before deferred/current tax | 2.34 | % | 2.36 | % | 2.35 | % | 2.34 | % | 2.43 | % | 2.28 | % | ||||||||||||
Deferred/current tax expense/(benefit)5 | 1.56 | % | — | % | 0.03 | % | — | % | — | % | (9.23 | )% | ||||||||||||
Total expenses/(benefit) | 3.90 | % | 2.36 | % | 2.38 | % | 2.34 | % | 2.43 | % | (6.95 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 |
| |||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (1.90 | )% | (1.33 | )% | (2.07 | )% | (2.38 | )% | (2.17 | )% | (2.11 | )% | ||||||||||||
Expense (waivers) | (0.12 | )% | (0.08 | )% | (0.11 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (1.78 | )% | (1.25 | )% | (1.96 | )% | (2.26 | )% | (2.05 | )% | (2.00 | )% | ||||||||||||
Deferred tax benefit/(expense)6 | — | % | — | % | — | % | — | % | — | % | 0.46 | % | ||||||||||||
Net investment income/(loss) | (1.78 | )% | (1.25 | )% | (1.96 | )% | (2.26 | )% | (2.05 | )% | (1.54 | )% | ||||||||||||
Portfolio turnover rate | 54 | % | 32 | % | 36 | % | 37 | % | 35 | % | 36 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
4. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense the net expense ratio would be 2.29%, 2.32%, 2.32%, 2.33%, 2.40%, and 2.26%, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $206,544 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
13 Invesco Oppenheimer SteelPath MLP Alpha Fund
Financial Highlights—(continued)
Class R | Six Months Ended (Unaudited) | Period Ended November 30, 20191 | ||||||
Per Share Operating Data | ||||||||
Net Asset Value, Beginning of Period | $ | 5.27 | $ | 6.80 | ||||
Income/(loss) from investment operations: | ||||||||
Net investment loss2 | (0.03 | ) | (0.02 | ) | ||||
Return of capital2 | 0.15 | 0.16 | ||||||
Net realized and unrealized gains/(losses) | (1.35 | ) | (1.29 | ) | ||||
Total from investment operations | (1.23 | ) | (1.15 | ) | ||||
Distributions to shareholders: | ||||||||
Return of capital | (0.27 | ) | (0.36 | ) | ||||
Income | — | (0.02 | ) | |||||
Total distributions to shareholders | (0.27 | ) | (0.38 | ) | ||||
Net asset value, end of period | $ | 3.77 | $ | 5.27 | ||||
Total Return, at Net Asset Value3 | (23.42 | )% | (17.44 | )% | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 205 | $ | 87 | ||||
Ratio of Expenses to Average Net Assets:7 | ||||||||
Before (waivers) and deferred/current tax expense/(benefit) | 1.95 | % | 1.93 | % | ||||
Expense (waivers) | (0.12 | )% | (0.09 | )% | ||||
Net of (waivers) and before deferred/current tax expense/(benefit)4 | 1.83 | % | 1.84 | % | ||||
Deferred/current tax expense/(benefit)5 | 1.56 | % | — | % | ||||
Total expenses/(benefit) | 3.39 | % | 1.84 | % | ||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 |
| |||||||
Before (waivers) and deferred tax benefit/(expense) | (1.39 | )% | (0.82 | )% | ||||
Expense (waivers) | (0.12 | )% | (0.09 | )% | ||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (1.27 | )% | (0.73 | )% | ||||
Deferred tax benefit/(expense)6 | — | % | — | % | ||||
Net investment income/(loss) | (1.27 | )% | (0.73 | )% | ||||
Portfolio turnover rate | 54 | % | 32 | % |
1. | Shares commenced operations after the close of business on May 24, 2019. |
2. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 1.78% and 1.80%, for the period ended May 31, 2020 and the year ended November 30, 2019, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $143 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
14 Invesco Oppenheimer SteelPath MLP Alpha Fund
Financial Highlights—(continued)
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class Y | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 5.48 | $ | 6.76 | $ | 7.53 | $ | 8.82 | $ | 8.85 | $ | 12.99 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.02 | ) | (0.01 | ) | (0.07 | ) | (0.11 | ) | (0.08 | ) | (0.06 | ) | ||||||||||||
Return of capital1 | 0.17 | 0.35 | 0.39 | 0.35 | 0.35 | 0.40 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.42 | ) | (0.96 | ) | (0.43 | ) | (0.87 | ) | 0.39 | (3.79 | ) | |||||||||||||
Total from investment operations | (1.27 | ) | (0.62 | ) | (0.11 | ) | (0.63 | ) | 0.66 | (3.45 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.27 | ) | (0.62 | ) | (0.62 | ) | — | (0.69 | ) | (0.69 | ) | |||||||||||||
Income | — | (0.04 | ) | (0.04 | ) | (0.66 | ) | — | — | |||||||||||||||
Total distributions to shareholders | (0.27 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.69 | ) | (0.69 | ) | ||||||||||||
Net asset value, end of period | $ | 3.94 | $ | 5.48 | $ | 6.76 | $ | 7.53 | $ | 8.82 | $ | 8.85 | ||||||||||||
Total Return, at Net Asset Value2 | (23.25 | )% | (10.36 | )% | (2.00 | )% | (7.86 | )% | 8.45 | % | (27.52 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 303,259 | $ | 555,814 | $ | 1,005,677 | $ | 1,305,894 | $ | 1,477,335 | $ | 1,477,952 | ||||||||||||
Ratio of Expenses to Average Net Assets:7 | ||||||||||||||||||||||||
Before (waivers) and deferred/current tax expense/(benefit) | 1.45 | % | 1.42 | % | 1.43 | % | 1.43 | % | 1.48 | % | 1.39 | % | ||||||||||||
Expense (waivers) | (0.12 | )% | (0.09 | )% | (0.11 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of (waivers) and before deferred/current tax expense/(benefit)4 | 1.33 | % | 1.33 | % | 1.32 | % | 1.31 | % | 1.36 | % | 1.28 | % | ||||||||||||
Deferred/current tax expense/(benefit)5 | 1.56 | % | — | % | 0.03 | % | — | % | — | % | (9.23 | )% | ||||||||||||
Total expenses/(benefit) | 2.89 | % | 1.33 | % | 1.35 | % | 1.31 | % | 1.36 | % | (7.95 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 | ||||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (0.89 | )% | (0.31 | )% | (1.04 | )% | (1.35 | )% | (1.10 | )% | (1.11 | )% | ||||||||||||
Expense (waivers) | (0.12 | )% | (0.09 | )% | (0.11 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (0.77 | )% | (0.22 | )% | (0.93 | )% | (1.23 | )% | (0.98 | )% | (1.00 | )% | ||||||||||||
Deferred tax benefit/(expense)6 | — | % | — | % | — | % | — | % | — | % | 0.46 | % | ||||||||||||
Net investment income/(loss) | (0.77 | )% | (0.22 | )% | (0.93 | )% | (1.23 | )% | (0.98 | )% | (0.54 | )% | ||||||||||||
Portfolio turnover rate | 54 | % | 32 | % | 36 | % | 37 | % | 35 | % | 36 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
4. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 1.28%, 1.29%, 1.29%, 1.30%, 1.33%, and 1.26%, for the period ended May 31, 2020 and the years ended November 30, 2019 November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $378,749 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
15 Invesco Oppenheimer SteelPath MLP Alpha Fund
Financial Highlights—(continued)
Class R5 | Six Months Ended (Unaudited) | Year Ended November 30, 20191 | ||||||
Per Share Operating Data | ||||||||
Net Asset Value, Beginning of Period | $ | 5.29 | $ | 6.80 | ||||
Income/(loss) from investment operations: | ||||||||
Net investment income/(loss)2 | (0.02 | ) | (0.01 | ) | ||||
Return of capital2 | 0.16 | 0.17 | ||||||
Net realized and unrealized gains/(losses) | (1.36 | ) | (1.29 | ) | ||||
Total from investment operations | (1.22 | ) | (1.13 | ) | ||||
Distributions to shareholders: | ||||||||
Return of capital | (0.27 | ) | (0.36 | ) | ||||
Income | — | (0.02 | ) | |||||
Total distributions to shareholders | (0.27 | ) | (0.38 | ) | ||||
Net asset value, end of period | $ | 3.80 | $ | 5.29 | ||||
Total Return, at Net Asset Value3 | (23.14 | )% | (17.13 | )% | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 5 | $ | 8 | ||||
Ratio of Expenses to Average Net Assets:7 | ||||||||
Before deferred/current tax expense/(benefit)4 | 1.31 | % | 1.30 | % | ||||
Deferred/current tax expense/(benefit)5 | 1.56 | % | — | % | ||||
Total expenses/(benefit) | 2.87 | % | 1.30 | % | ||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 | ||||||||
Before deferred tax benefit/(expense) | (0.75 | )% | (0.19 | )% | ||||
Deferred tax benefit/(expense)6 | — | % | — | % | ||||
Net investment income/(loss) | (0.75 | )% | (0.19 | )% | ||||
Portfolio turnover rate | 54 | % | 32 | % |
1. | Shares commenced operations after the close of business on May 24, 2019. |
2. | Per share net investment loss is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 1.26% and 1.26% for the period ended May 31, 2020 and the year ended November 30, 2019, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $6 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
16 Invesco Oppenheimer SteelPath MLP Alpha Fund
Financial Highlights—(continued)
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class R6 | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 5.51 | $ | 6.80 | $ | 7.58 | $ | 8.85 | $ | 8.86 | $ | 12.99 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.02 | ) | (0.01 | ) | (0.07 | ) | (0.10 | ) | (0.07 | ) | (0.05 | ) | ||||||||||||
Return of capital1 | 0.18 | 0.36 | 0.39 | 0.35 | 0.35 | 0.40 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.43 | ) | (0.98 | ) | (0.44 | ) | (0.86 | ) | 0.40 | (3.79 | ) | |||||||||||||
Total from investment operations | (1.27 | ) | (0.63 | ) | (0.12 | ) | (0.61 | ) | 0.68 | (3.44 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.27 | ) | (0.62 | ) | (0.62 | ) | — | (0.69 | ) | (0.69 | ) | |||||||||||||
Income | — | (0.04 | ) | (0.04 | ) | (0.66 | ) | — | — | |||||||||||||||
Total distributions to shareholders | (0.27 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.69 | ) | (0.69 | ) | ||||||||||||
Net asset value, end of period | $ | 3.97 | $ | 5.51 | $ | 6.80 | $ | 7.58 | $ | 8.85 | $ | 8.86 | ||||||||||||
Total Return, at Net Asset Value2 | (23.12 | )% | (10.45 | )% | (2.11 | )% | (7.59 | )% | 8.68 | % | (27.44 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 16,275 | $ | 38,414 | $ | 141,917 | $ | 140,475 | $ | 94,845 | $ | 9,066 | ||||||||||||
Ratio of Expenses to Average Net Assets:6 | ||||||||||||||||||||||||
Before deferred/current tax expense/(benefit) | 1.30 | % | 1.27 | % | 1.25 | % | 1.23 | % | 1.25 | % | 1.21 | % | ||||||||||||
Expense (waivers) | (0.04 | )% | — | % | — | % | — | % | — | % | — | % | ||||||||||||
Net of (waivers) and before deferred/current tax expense/(benefit)3 | 1.26 | % | 1.27 | % | 1.25 | % | 1.23 | % | 1.25 | % | 1.21 | % | ||||||||||||
Deferred/current tax expense/(benefit)4 | 1.56 | % | — | % | 0.03 | % | — | % | — | % | (9.23 | )% | ||||||||||||
Total expenses/(benefit) | 2.82 | % | 1.27 | % | 1.28 | % | 1.23 | % | 1.25 | % | (8.02 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:6 | ||||||||||||||||||||||||
Before deferred tax benefit/(expense) | (0.74 | )% | (0.16 | )% | (0.86 | )% | (1.15 | )% | (0.87 | )% | (0.93 | )% | ||||||||||||
Expense (waivers) | (0.04 | )% | — | % | — | % | — | % | — | % | — | % | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (0.70 | )% | (0.16 | )% | (0.86 | )% | (1.15 | )% | (0.87 | )% | (0.93 | )% | ||||||||||||
Deferred tax benefit/(expense)5 | — | % | — | % | — | % | — | % | — | % | 0.46 | % | ||||||||||||
Net investment income/(loss) | (0.70 | )% | (0.16 | )% | (0.86 | )% | (1.15 | )% | (0.87 | )% | (0.47 | )% | ||||||||||||
Portfolio turnover rate | 54 | % | 32 | % | 36 | % | 37 | % | 35 | % | 36 | % |
1. | Per share net investment loss is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 1.21%, 1.23%, 1.22%, 1.22%, 1.22%, and 1.19%, for the period ended May 31, 2020 and the November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016 and November 30, 2015, respectively. |
4. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
5. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
6. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $23,073 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
17 Invesco Oppenheimer SteelPath MLP Alpha Fund
May 31, 2020
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Oppenheimer SteelPath MLP Alpha Fund (the “Fund”) is a separate series of AIM Investment Funds (Invesco Investment Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust, as amended (the “1940 Act”), as an open-end management investment company authorized to an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.
The Fund’s investment objective is to seek total return.
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services — Investment Companies. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
18 Invesco Oppenheimer SteelPath MLP Alpha Fund
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investments reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Dividends and Distributions to Shareholders — Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. GAAP, are recorded on the ex-dividend date. The Fund’s dividend distribution policy is intended to provide monthly distributions to its shareholders at a rate that over time is similar to the distribution rate the Fund receives from the master limited partnerships (”MLPs”) in which it invests. The Fund generally pays out dividends that over time approximate the distributions received from the Fund’s portfolio investments based on, among other considerations, distributions the Fund actually received from portfolio investments, distributions it would have received if it had been fully invested at all times, and estimated future cash flows. Such dividends are not tied to the Fund’s investment income and may not represent yield or investment return on the Fund’s portfolio. To the extent that the dividends paid exceed the distributions the Fund receives from its underlying investments, the Fund’s assets will be reduced. The Fund’s tendency to pay out a consistent dividend may change, and the Fund’s level of distributions may increase or decrease. |
The estimated characterization of the distributions paid will be either a qualified dividend or distribution (return of capital). This estimate is based on the Fund’s operating results during the period. The actual characterization of the distributions made during the period will not be determined until after the end of the fiscal year.
E. | Master Limited Partnerships — The Fund primarily invests in Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships and limited liability companies taxed as partnerships under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Fund principally invests in MLPs that derive their revenue primarily from businesses involved in the gathering, transporting, processing, treating, storing, refining, distributing, mining or marketing of natural gas, natural gas liquids, crude oil, refined products or coal (“energy infrastructure MLPs”). The Fund is a partner in each MLP; accordingly, the Fund is required to take into account the Fund’s allocable share of income, gains, losses, deductions, expenses, and tax credits recognized by each MLP. The Fund is non-diversified and will concentrate its investments in the energy sector. Energy infrastructure MLPs are subject to a variety of industry specific risk factors that may adversely affect their business or operations, including a decrease in production or reduced volumes of natural gas or other energy commodities available for transporting, processing, storing or distributing; changes in energy commodity prices; a sustained reduced demand for crude oil, natural gas and refined petroleum products; depletion of natural gas reserves or other commodities if not replaced; natural disasters, extreme weather and environmental hazards; rising interest rates, how facilities are constructed, maintained and operated, environmental and safety controls, and the prices they may charge for products and services. In addition, taxes, government regulation, international politics, price, and supply fluctuations, volatile interest rates and energy conservation may cause difficulties for energy infrastructure MLPs. |
MLPs may be less liquid and subject to more abrupt or erratic price movements than conventional publicly traded securities.
F. | Return of Capital — Distributions received from the Fund’s investments in MLPs generally are comprised of income and return of capital. The Fund records investment income and return of capital based on estimates made at the time such distributions are received. The return of capital portion of the distribution is a reduction to investment income that results in an equivalent reduction in the cost basis of the associated investments and increases net realized gains (losses) and change in unrealized appreciation (depreciation). Such estimates are based on historical information available from each MLP and other industry sources. These estimates will subsequently be revised and may materially differ primarily based on information received from the MLPs after their tax reporting periods are concluded. |
G. | Federal Income Taxes — The Fund does not intend to qualify as a regulated investment company pursuant to Subchapter M of the Internal Revenue Code, but will rather be taxed as a corporation. As a corporation, the Fund is obligated to pay federal, state and local income tax on taxable income. For the six months ended May 31, 2020, the federal income tax rate is 21 percent. The Fund is currently using an estimated rate of 1.4 percent for state and local tax, net of federal tax expense. |
19 Invesco Oppenheimer SteelPath MLP Alpha Fund
The alternative minimum tax (“AMT”) requirements were repealed with the enactment of H.R. 1, Tax Cuts and Jobs Act (the “TCJA”), for tax years beginning after December 31, 2017. Any past alternative minimum taxes paid by the Fund do qualify for substantial refundability under the TCJA with AMT credit carryforwards becoming partially refundable prior to, or fully refundable for tax years beginning in 2021.
The Fund’s income tax provision consists of the following as of May 31, 2020:
Current tax (expense) benefit | ||||
Federal | $ | — | ||
State | — | |||
Total current tax (expense) benefit | $ | — | ||
Deferred tax (expense) benefit | ||||
Federal | $ | 46,167,953 | ||
State | 3,077,863 | |||
Valuation allowance | (55,990,103) | |||
Total deferred tax (expense) benefit | $ | (6,744,287) |
The reconciliation between the federal statutory income tax rate of 21% and the tax effect on net investment income (loss) and realized and unrealized gain (loss) follows:
Amount | % Effect | |||||||
Application of Federal statutory income tax rate | $ | 45,767,357 | 21.00% | |||||
State income taxes net of federal benefit | 3,051,157 | 1.40% | ||||||
Effect of permanent differences | 427,302 | 0.20% | ||||||
Change in valuation allowance | (55,990,103) | (25.69)% | ||||||
Total income tax (expense) benefit | $ | (6,744,287) | (3.09)% |
For the six months ended May 31, 2020 the Fund’s tax effect on net investment income (loss) and realized and unrealized gain (loss) of (3.09)% differed from the combined federal and state statutory tax rate of 22.40% due in large part to the change in valuation allowance primarily as a result of the change in unrealized appreciation.
The Fund intends to invest its assets primarily in MLP investments, which generally are treated as partnerships for federal income tax purposes. As a limited partner in the MLP investments, the Fund reports its allocable share of the MLP investments’ taxable income in computing its own taxable income. The Fund’s tax expense or benefit is included in the Statement of Operations based on the component of income or gains (losses) to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Such temporary differences are principally: (i) taxes on unrealized gains/(losses), which are attributable to the temporary difference between fair market value and tax basis, (ii) the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes and (iii) the net tax benefit of accumulated net operating losses and capital loss carryforwards. Deferred tax assets and liabilities are measured using effective tax rates expected to apply to taxable income in the years such temporary differences are realized or otherwise settled. To the extent the Fund has a deferred tax asset, consideration is given to whether or not a valuation allowance is required. A valuation allowance is required if, based on the evaluation criterion provided by ASC 740, Income Taxes, it is more-likely-than-not some portion or all of the deferred tax asset will not be realized.
At May 31, 2020, the Fund determined a valuation allowance was required. The Fund’s assessment considered, among other matters, the nature, frequency and severity of current and cumulative losses, the duration of statutory carryforward periods and the associated risk that operating loss and capital loss carryforwards were limited as a result of shareholder transactions or were likely to expire unused, and unrealized gains and losses on investments. Consideration was also given to market cycles, the severity and duration of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. Additionally, various tax law changes resulting from the enactment of the TCJA were considered by the Fund in assessing the recoverability of its deferred tax assets. Specifically, the TCJA eliminated the net operating loss carryback ability and replaced the 20 year carryforward period with an indefinite carryforward period for any net operating losses arising in tax years ending after December 31, 2017. The TCJA also established a limitation for any net operating losses generated in tax years beginning after December 31, 2017 to the lesser of the aggregate of available net operating losses or 80% of taxable income before any net operating loss utilization. Through the consideration of these factors, the Fund has determined that it is more likely than not that the Fund’s deferred tax assets would not be fully realized. As a result, the Fund recorded a valuation allowance with respect to its deferred tax assets that are not considered to be realizable as of the six months ended May 31, 2020.
From time to time, the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related guidance or interpretations thereof, limitations imposed on or expirations of the Fund’s net operating losses and capital loss carryovers (if any) and changes in applicable tax law could result in increases or decreases in the Fund’s NAV per share, which could be material.
20 Invesco Oppenheimer SteelPath MLP Alpha Fund
Components of the Fund’s deferred tax assets and liabilities as of May 31, 2020 are as follows:
Deferred tax assets: | ||||
Net operating loss carryforward (tax basis) — Federal | $ | 26,363,746 | ||
Net operating loss carryforward (tax basis) — State | 4,853,979 | |||
Net unrealized losses on investment securities (tax basis) | 32,426,149 | |||
Excess business interest expense carryforward | 207,732 | |||
Capital loss carryforward (tax basis) | 175,590,021 | |||
Valuation allowance | (246,185,914) | |||
Total deferred tax asset | (6,744,287) | |||
Deferred tax liabilities: | ||||
Net unrealized gains on investment securities (tax basis) | $ | — | ||
Total deferred tax liability | — | |||
Total net deferred tax asset/(liability) | $ | (6,744,287) |
The Fund may rely, to some extent, on information provided by the MLPs, which may not necessarily be timely, to estimate taxable income allocable to MLP units held in its portfolio, and to estimate its associated deferred tax liability or asset. Such estimates are made in good faith. From time to time, as new information becomes available, the Fund will modify its estimates or assumptions regarding its tax liability or asset.
The Fund’s policy is to classify interest and penalties associated with underpayment of federal and state income taxes, if any, as income tax expense on its Statement of Operations.
The Fund files income tax returns in the U.S. federal jurisdiction and various states. The Fund has reviewed all major jurisdictions and concluded that there is no significant impact on the Fund’s net assets and no tax liability resulting from unrecognized tax benefits relating to uncertain tax positions expected to be taken on its tax returns. Furthermore, management of the Fund is not aware of any uncertain tax positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly change in the next 12 months. Generally, the Fund is subject to examinations by taxing authorities for up to three years after the filing of the return for the tax period. All relevant periods are still open for examination.
At May 31, 2020, the Fund had net operating loss carryforwards for federal income tax purposes, as follows:
Expiration date for expiring net operating loss carryforwards: | ||||
11/30/2036 | $ | 125,541,646 | ||
Total expiring net operating loss carryforwards | $ | 125,541,646 | ||
Total non-expiring net operating loss carryforwards | $ | — | ||
Total net operating loss carryforwards | $ | 125,541,646 |
During the six months ended May 31, 2020, the Fund estimates that it will utilize $99,090,949 of net operating loss carryforward.
At May 31, 2020, the Fund had net capital loss carryforwards for federal income tax purposes, which may be carried forward for 5 years, as follows:
Expiration Date | ||||
11/30/2021 | $ | 406,293,272 | ||
11/30/2023 | 68,065,020 | |||
11/30/2024 | 76,122,169 | |||
11/30/2025 | 233,403,562 | |||
Total | $ | 783,884,023 |
At May 31, 2020, gross unrealized appreciation and depreciation of investments, based on cost for federal income tax purposes were as follows:
Cost of Investments | $ | 917,835,472 | ||
Gross Unrealized Appreciation | $ | 105,464,869 | ||
Gross Unrealized Depreciation | (251,149,902) | |||
Net Unrealized Appreciation (Depreciation) on Investments | $ | (145,685,033) |
The difference between cost amounts for financial statement and federal income tax purposes is due primarily to timing differences in recognizing certain gains and losses in security transactions.
H. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
I. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and |
21 Invesco Oppenheimer SteelPath MLP Alpha Fund
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
J. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $3 billion | 1.10% | |||
Next $2 billion | 1.08% | |||
Over $5 billion | 1.05% |
For the six months ended May 31, 2020, the effective advisory fees incurred by the Fund was 1.10%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC, and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a Sub-Advisory Agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Fund.
The Adviser has contractually agreed, through May 31, 2021, to waive advisory fees and/or reimburse expenses of all shares to the to the extent necessary to limit the total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.50%. 2.25%, 1.75%, 1.25%, 1.24% and 1.19%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expense after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expenses on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate May 31, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. See Note 10.
The Fund’s total annual operating expenses after fee waiver and/or expense reimbursement (“Net Expenses”) will be higher than these amounts to the extent that the Fund incurs expenses excluded from the expense cap. Because the Fund’s deferred income tax expense/(benefit) and interest expense are excluded from the expense cap, the Fund’s Net Expenses for each class of shares is increased/(decreased) by the amount of this expense. See Note 10.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended May 31, 2020, advisory fees of $487,171 were waived.
The Trust has entered into an administration and fund accounting agreement with UMB Fund Services, Inc. (“UMB”) pursuant to which UMB shall provide administration and fund accounting services to the Fund. The Trust and the Adviser have entered into a Master Administrative Services Agreement (“Administrative Services Agreement”) pursuant to which the Adviser may perform or arrange for the provision of certain accounting and other administrative services to the Fund which are not required to be performed by the Adviser under the Investment Advisory Agreement. The Adviser may only receive fees for administrative services under the Administrative Services Agreement to the extent that those fees assessed under the agreement are in excess of the fees paid to UMB Fund Services. For the six months ended May 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative fees. Additionally, Invesco has entered into service agreements whereby UMB Bank, n.a., serves as custodian to the Fund.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended May 31, 2020, expenses incurred under these agreements are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund . The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of the Class A shares, 1.00% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net
22 Invesco Oppenheimer SteelPath MLP Alpha Fund
assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plan would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended May 31, 2020, expenses incurred under the plans are shown in the Statement of Operations as Distribution and service plan fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended May 31, 2020, IDI advised the Fund that IDI retained $34,019 in front-end sales commissions from the sale of Class A shares and $5,464 and $15,517 from Class A and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of May 31, 2020, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
NOTE 4—Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures for the six month period May 31, 2020 the Fund engaged in transactions with affiliates as listed: Securities purchases of $18,318,641 and securities sales of $35,730,030, which resulted in net realized losses of ($27,274,764).
NOTE 5—Trustees’ and Officer Fees and Benefits
Certain trustees have executed a Deferred Compensation Agreement pursuant to which they have the option to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Invesco and/or Invesco Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities, if applicable. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance with the compensation deferral plan.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with UMB Bank n.a the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended May 31, 2020 was $460,699,873 and $643,245,583 respectively.
23 Invesco Oppenheimer SteelPath MLP Alpha Fund
NOTE 8—Share Information
The Fund has authorized an unlimited number of shares of beneficial interest in each class. Transactions in shares of beneficial interest were as follows:
For the Six Months Ended May 31, 2020 (unaudited)2 | Year Ended November 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A | ||||||||||||||||
Sold | 10,563,225 | $ | 42,993,741 | 11,539,640 | $ | 75,272,704 | ||||||||||
Dividends and/or distributions reinvested | 3,780,039 | 15,240,604 | 6,353,148 | 41,099,361 | ||||||||||||
Redeemed | (15,452,194 | ) | (71,090,150 | ) | (27,172,586 | ) | (174,923,835 | ) | ||||||||
Net decrease | (1,108,930 | ) | $ | (12,855,805 | ) | (9,279,798 | ) | $ | (58,551,770 | ) | ||||||
Class C | ||||||||||||||||
Sold | 5,855,868 | $ | 23,549,684 | 7,483,501 | $ | 44,854,911 | ||||||||||
Dividends and/or distributions reinvested | 3,646,240 | 13,638,825 | 6,427,189 | 38,699,709 | ||||||||||||
Redeemed | (14,697,478 | ) | (61,163,653 | ) | (25,528,806 | ) | (153,680,454 | ) | ||||||||
Net decrease | (5,195,370 | ) | $ | (23,975,144 | ) | (11,618,116 | ) | $ | (70,125,834 | ) | ||||||
Class R1 | ||||||||||||||||
Sold | 40,060 | $ | 171,031 | 16,380 | $ | 99,160 | ||||||||||
Dividends and/or distributions reinvested | 2,543 | 9,466 | 285 | 1,620 | ||||||||||||
Redeemed | (4,663 | ) | (19,205 | ) | (123 | ) | (734 | ) | ||||||||
Net increase | 37,940 | $ | 161,292 | 16,542 | $ | 100,046 | ||||||||||
Class Y | ||||||||||||||||
Sold | 32,707,473 | $ | 135,519,164 | 49,264,266 | $ | 329,291,920 | ||||||||||
Dividends and/or distributions reinvested | 5,148,663 | 21,951,999 | 11,085,410 | 74,315,380 | ||||||||||||
Redeemed | (62,395,399 | ) | (292,263,012 | ) | (107,620,800 | ) | (726,273,937 | ) | ||||||||
Net decrease | (24,539,263 | ) | $ | (134,791,849 | ) | (47,271,124 | ) | $ | (322,666,637 | ) | ||||||
Class R51 | ||||||||||||||||
Sold | — | $ | — | 1,445 | $ | 10,000 | ||||||||||
Dividends and/or distributions reinvested | — | — | — | — | ||||||||||||
Redeemed | — | — | — | — | ||||||||||||
Net increase | — | $ | — | 1,445 | $ | 10,000 | ||||||||||
Class R6 | ||||||||||||||||
Sold | 2,471,812 | $ | 12,952,574 | 7,134,865 | $ | 49,096,885 | ||||||||||
Dividends and/or distributions reinvested | 283,361 | 1,251,125 | 1,585,073 | 10,868,622 | ||||||||||||
Redeemed | (5,624,870 | ) | (30,249,927 | ) | (22,632,763 | ) | (149,942,950 | ) | ||||||||
Net decrease | (2,869,697 | ) | $ | (16,046,228 | ) | (13,912,825 | ) | $ | (89,977,443 | ) |
1. | Class R and R5 shares commenced operations after the close of business on May 24, 2019. |
2. | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and own 66% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates, including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 9—Borrowing Agreement
The Fund, along with Invesco Oppenheimer SteelPath MLP Alpha Plus Fund, Invesco Oppenheimer SteelPath MLP Income Fund, and Invesco Oppenheimer SteelPath MLP Select 40 Fund (collectively, the “Trust”), is a borrower in a $700 million revolving credit agreement (the “Loan Agreement”) with a major lending institution (the “Lender”). The Fund is permitted to borrow up to the lesser of one-third of the Fund’s total assets, or the maximum amount permitted pursuant to the Fund’s investment limitations. As the Loan Agreement is not available exclusively to the Fund, the Fund may not be able to borrow all of its requested amounts at any given time. Amounts borrowed under the Loan Agreement, if any, are invested by the Fund under the direction of the Adviser consistent with the Fund’s investment objective and policies, and as such, the related investments are subject to normal market fluctuations and investment risks, including the risk of loss due to a decline in value. The borrowing, if any, is fully collateralized throughout the term of the borrowing with securities or other assets of the Fund. The Fund is not liable for borrowings of other Funds in the Trust. If applicable, securities that have been pledged as collateral for the borrowing are indicated in the Schedule of Investments.
Borrowings under the Loan Agreement are charged interest at a calculated rate computed by the Lender based on the one month LIBOR rate plus 0.75% per annum. An unused commitment fee at the rate of 0.30% per annum is charged for any undrawn portion of the credit facility, and each
24 Invesco Oppenheimer SteelPath MLP Alpha Fund
series of the Trust will pay its pro rata share of this fee. A facility fee of 0.10% was charged on the commitment amount, and each series of the Trust paid its pro rata share of this fee. The borrowing is due November 15, 2020, unless another date is mutually agreed upon by the parties of the Loan Agreement. For the six months ended May 31, 2020, the Fund paid $189,528 in borrowing fees. The Fund did not utilize the facility during the six months ended May 31, 2020.
NOTE 10—Remediation Note
Subsequent to the period ended November 30, 2019, the Fund determined that the valuation allowance related to the deferred tax asset included in the calculation of the net asset values per share (“NAV”) upon which the shareholders transacted had not been properly accounted for during the period that includes days between December 1, 2014 through March 6, 2020 (“overstatement period”). Specifically, it was determined that the realizability of the deferred tax asset did not meet the “more likely than not” evaluation criterion provided by ASC 740, Income Taxes, resulting in the overstatement of the deferred tax asset and corresponding understatement of the valuation allowance. As a result, the Fund’s NAVs have been corrected during certain days of the overstatement period.
Invesco is assessing the extent to which shareholders who transacted in the Fund during the overstatement period were negatively impacted by the overstatement of the Fund’s deferred tax asset, including the Fund’s overpayment of asset-based fees to affiliates. Invesco is preparing a remediation plan that contemplates payments by Invesco to shareholders whose accounts or transactions were negatively impacted by the overstatement of the NAVs during the overstatement period. The method of determining the actual remediation payments to be paid to individual shareholders is subject to various factors that are not yet certain and information that is not yet readily available, including retrieval of beneficial owner data for Fund shares held in omnibus accounts. The Fund’s Board has directed Invesco to proceed with the remediation plan with any remediation payments to be made directly to affected shareholders outside of the Fund, and that no remediation payments be made to the Fund unless or until the Board were to approve so in the future. The Fund is estimated to have over paid $7,686,000 in asset-based fees to affiliates as a result of the overstatement of the deferred tax asset, such amount which will be included in the calculation of remediation payments. Accordingly, all shareholder remediation payments are intended to be made directly to affected shareholders and not to the Fund and therefore no provision for such remediation payments have been made in the Fund’s financial statements. No remediation payments will be made by the Fund.
NOTE 11—Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared (COVID-19) to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12—Subsequent Event
Effective on or about September 30, 2020, the name of the Fund and all references thereto will change from Invesco Oppenheimer SteelPath MLP Alpha Fund to Invesco SteelPath MLP Alpha Fund.
25 Invesco Oppenheimer SteelPath MLP Alpha Fund
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Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
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Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
O-SPMA-SAR-1 072720 |
Semiannual Report | May 31, 2020 | |||
Invesco Oppenheimer SteelPath MLP Alpha Plus Fund | ||||
2 | Fund Performance | |
6 | Fund Expenses | |
8 | Schedule of Investments | |
9 | Financial Statements | |
13 | Financial Highlights | |
19 | Notes to Financial Statements |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800 959 4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
Fund Performance
Class A Shares
AVERAGE ANNUAL TOTAL RETURNS AT 5/31/2020
Class A Shares of the Fund | S&P 500 Index | Alerian MLP Index | ||||||||||||||
Without Sales Charge | With Sales Charge | |||||||||||||||
6-Month | (36.36 | )% | (39.87 | )% | (2.10 | )% | (24.26 | )% | ||||||||
1-Year | (48.81 | )% | (51.66 | )% | 12.84 | % | (34.74 | )% | ||||||||
5-Year | (20.15 | )% | (21.05 | )% | 9.86 | % | (12.93 | )% | ||||||||
Since Inception (2/6/12) | (8.71 | )% | (9.33 | )% | 12.66 | % | (4.89 | )% |
Performance quoted is past performance and cannot guarantee future results; current performance may be lower or higher. Visit invesco.com for the most recent month-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Fund returns include changes in share price, reinvested distributions and a 5.50% maximum applicable sales charge except where “without sales charge” is indicated. Returns for periods of less than one year are cumulative and not annualized. As the result of a reorganization after the close of business on May 24, 2019, the returns of the Fund for periods on or prior to May 24, 2019 reflect performance of the Oppenheimer SteelPath MLP Alpha Plus Fund (the predecessor fund). Share class returns will differ from those of the predecessor fund because they have different expenses. Returns do not consider capital gains or income taxes on an individual’s investment. See Fund prospectus and summary prospectus for more information on share classes, sales charges and fee agreements, if any. Fund literature is available at invesco.com.
2 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Top Holdings and Allocations
TOP TEN MASTER LIMITED PARTNERSHIP AND RELATED ENTITIES HOLDINGS
Enterprise Products Partners LP | 17.46 | % | ||
Energy Transfer LP | 17.03 | % | ||
Magellan Midstream Partners LP | 16.82 | % | ||
MPLX LP | 15.96 | % | ||
TC PipeLines LP | 13.83 | % | ||
Williams Cos., Inc. | 12.96 | % | ||
Targa Resources Corp. | 10.87 | % | ||
EQM Midstream Partners LP | 5.06 | % | ||
Westlake Chemical Partners LP | 4.02 | % | ||
Plains All American Pipeline LP | 3.80 | % |
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of May 31, 2020, and are based on net assets.
SECTOR ALLOCATION
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of May 31, 2020 and are based on total market value of investments.
For more current Fund holdings, please visit invesco.com.
3 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
AVERAGE ANNUAL TOTAL RETURNS WITHOUT SALES CHARGE AS OF 5/31/2020 | ||||||||||||||||||||||||
Inception Date | 6-Month | 1-Year | 5-Year | Since Inception | ||||||||||||||||||||
CLASS A | (MLPLX | ) | 2/6/12 | (36.36 | )% | (48.81 | )% | (20.15 | )% | (8.71)% | ||||||||||||||
CLASS C | (MLPMX | ) | 5/22/12 | (36.33 | )% | (49.16 | )% | (20.69 | )% | (9.20)% | ||||||||||||||
CLASS R1 | (SPMJX | ) | 5/24/19 | (36.16 | )% | (48.89 | )% | (20.30 | )% | (8.91)% | ||||||||||||||
CLASS Y | (MLPNX | ) | 12/30/11 | (36.24 | )% | (48.72 | )% | (19.95 | )% | (8.22)% | ||||||||||||||
CLASS R51 | (SPMPX | ) | 5/24/19 | (36.24 | )% | (48.68 | )% | (20.08 | )% | (8.66)% | ||||||||||||||
CLASS R62 | (OSPPX | ) | 6/28/13 | (36.14 | )% | (48.64 | )% | (19.82 | )% | (13.02)% |
AVERAGE ANNUAL TOTAL RETURNS WITH SALES CHARGE AS OF 5/31/2020 | ||||||||||||||||||||||||
Inception Date | 6-Month | 1-Year | 5-Year | Since Inception | ||||||||||||||||||||
CLASS A | (MLPLX | ) | 2/6/12 | (39.87 | )% | (51.66 | )% | (21.05 | )% | (9.33)% | ||||||||||||||
CLASS C | (MLPMX | ) | 5/22/12 | (36.89 | )% | (49.56 | )% | (20.69 | )% | (9.20)% | ||||||||||||||
CLASS R 1 | (SPMJX | ) | 5/24/19 | (36.16 | )% | (48.89 | )% | (20.30 | )% | (8.91)% | ||||||||||||||
CLASS Y | (MLPNX | ) | 12/30/11 | (36.24 | )% | (48.72 | )% | (19.95 | )% | (8.22)% | ||||||||||||||
CLASS R5 1 | (SPMPX | ) | 5/24/19 | (36.24 | )% | (48.68 | )% | (20.08 | )% | (8.66)% | ||||||||||||||
CLASS R6 2 | (OSPPX | ) | 6/28/13 | (36.14 | )% | (48.64 | )% | (19.82 | )% | (13.02)% |
1. | Class R and Class R5 shares’ performance shown prior to the inception date (after the close of business on May 24, 2019) is that of the predecessor fund’s Class A shares at net asset value (NAV) and includes the 12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements. |
2. | Class I shares of the predecessor fund were reorganized as Class R6 shares on May 24, 2019. |
Performance quoted is past performance and cannot guarantee future results; current performance may be lower or higher. Visit invesco.com for the most recent month-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Performance shown at NAV does not include the applicable front-end sales charge, which would have reduced the performance. The current maximum initial sales charge for Class A shares is 5.50%, and the contingent deferred sales charge for Class C shares is 1% for the 1-year period. Class R, Class Y, Class R5 and Class R6 shares have no sales charge; therefore, performance is at NAV. Effective after the close of business on May 24, 2019, Class A, Class C, Class Y, and Class I shares of the predecessor fund were reorganized into Class A, Class C, Class Y, and Class R6 shares, respectively, of the Fund. Class R and Class R5 shares’ performance shown prior to the inception date is that of the predecessor fund’s Class A shares at NAV and includes the 12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements. Returns shown for Class A, Class C, Class R, Class Y, Class R5, and Class R6 shares are blended returns of the predecessor fund and the Fund. Share class returns will differ from those of the predecessor fund because of different expenses. See Fund prospectuses and summary prospectuses for more information on share classes, sales charges and new fee agreements, if any. Fund literature is available at invesco.com.
The Fund’s performance is compared to the performance of the S&P 500 Index and the Alerian MLP Index. The S&P 500 Index is a broad-based measure of domestic stock performance. The Alerian MLP Index is a composite of the 50 most prominent Master Limited Partnerships that provides investors with an unbiased, comprehensive benchmark for this emerging asset class. The Alerian MLP Index, which is calculated using a float-adjusted, capitalization weighted methodology, is disseminated real-time on a total-return basis. The returns for the S&P 500 Index and Alerian MLP Index are calculated pre-tax, while the Fund’s returns are calculated post corporate tax. The indices are unmanaged and cannot be purchased directly by investors. While index comparisons may be useful to provide a benchmark for the Fund’s performance, it must be noted that the Fund’s investments are not limited to the investments comprising the indices. Index performance includes reinvestment of income, but does not reflect transaction costs, fees, expenses or taxes. The Fund’s performance reflects the effects of the Fund’s business and operating expenses.
Liquidity Risk Management Program
The Securities and Exchange Commission has adopted Rule 22e-4 under the Investment Company Act of 1940 (the “Liquidity Rule”) in order to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders. The Fund has adopted and implemented a liquidity risk management program in accordance with the Liquidity Rule (the “Program”). The Program is reasonably designed to assess and manage the Fund’s liquidity risk, which is the risk that the Fund could not meet redemption requests without significant dilution of remaining investors’ interests in the Fund. The Board of Trustees of the Fund (the “Board”) has appointed Invesco Advisers, Inc. (“Invesco”), the Fund’s investment adviser, as the Program’s administrator, and Invesco has delegated oversight of the Program to the Liquidity Risk Management Committee (the “Committee”), which is composed of senior representatives from relevant business groups at Invesco.
As required by the Liquidity Rule, the Program includes policies and procedures providing for an assessment, no less frequently than annually, of the Fund’s liquidity risk that takes into account, as relevant to the Fund’s liquidity risk: (1) the Fund’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions; (2) short-term and long-term cash flow projections for the Fund during both normal and reasonably foreseeable stressed conditions; and (3) the Fund’s holdings of cash and cash equivalents and any borrowing arrangements, including the terms of the Fund’s credit facility, the financial health of the institution providing the credit facility and the fact that the credit facility is shared among multiple funds. The Liquidity Rule also requires the classification of the Fund’s investments into categories that reflect the assessment of their relative liquidity under current market conditions. The Fund classifies its investments into one of four categories defined in
4 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
the Liquidity Rule: “Highly Liquid,” “Moderately Liquid,” “Less Liquid” and “Illiquid.” Funds that are not invested primarily in “Highly Liquid Investments” that are assets (cash or investments that are reasonably expected to be convertible into cash within three business days without significantly changing the market value of the investment) are required to establish a “Highly Liquid Investment Minimum” (“HLIM”), which is the minimum percentage of net assets that must be invested in Highly Liquid Investments. Funds with HLIMs have procedures for addressing HLIM shortfalls, including reporting to the Board and the SEC (on a non-public basis) as required by the Program and the Liquidity Rule. In addition, the Fund may not acquire an investment if, immediately after the acquisition, over 15% of the Fund’s net assets would consist of “Illiquid Investments” that are assets (an investment that cannot reasonably be expected to be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment). The Liquidity Rule and the Program also require reporting to the Board and the SEC (on a non-public basis) if a Fund’s holdings of Illiquid Investments exceed 15% of the Fund’s assets.
At a meeting held on March 30-April 1, 2020, the Committee presented a report to the Board that addressed the operation of the Program and assessed the Program’s adequacy and effectiveness of implementation (the “Report”). The Report covered the period from December 1, 2018 through December 31, 2019 (the “Program Reporting Period”).
The Report stated, in relevant part, that during the Program Reporting Period:
• | The Program, as adopted and implemented, remained reasonably designed to assess and manage the Fund’s liquidity risk and was operated effectively to achieve that goal; |
• | The Fund’s investment strategy remained appropriate for an open-end fund; |
• | The Fund was able to meet requests for redemption without significant dilution of remaining investors’ interests in the Fund; |
• | The Fund did not breach the 15% limit on Illiquid Investments; and |
• | The Fund primarily held Highly Liquid Investments and therefore has not adopted an HLIM. |
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisors for a prospectus/summary prospectus or visit invesco.com/fundprospectus.
Shares of Invesco funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
5 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Fund Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended May 31, 2020.
Actual Expenses
The first section of the table provides information about actual account values and actual expenses. You may use the information in this section for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During 6 Months Ended May 31, 2020” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio for each class of shares, and an assumed rate of return of 5% per year for each class before expenses, which is not the actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads). Therefore, the “hypothetical” section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Beginning Account Value December 1, 2019 | Ending Account Value May 31, 2020 | Expenses Paid During 6 Months Ended May 31, 2020¹,² | |||||||||
CLASS A | $ | 1,000.00 | $ | 636.40 | $ | 11.62 | ||||||
CLASS C | 1,000.00 | 636.70 | 14.85 | |||||||||
CLASS R | 1,000.00 | 638.40 | 12.62 | |||||||||
CLASS Y | 1,000.00 | 637.60 | 10.69 | |||||||||
CLASS R5 | 1,000.00 | 637.60 | 10.24 | |||||||||
CLASS R6 | 1,000.00 | 638.60 | 10.04 | |||||||||
Hypothetical (5% return before expenses) | ||||||||||||
CLASS A | 1,000.00 | 1,010.80 | 14.28 | |||||||||
CLASS C | 1,000.00 | 1,006.80 | 18.21 | |||||||||
CLASS R | 1,000.00 | 1,009.60 | 15.47 | |||||||||
CLASS Y | 1,000.00 | 1,012.00 | 13.13 | |||||||||
CLASS R5 | 1,000.00 | 1,012.50 | 12.58 | |||||||||
CLASS R6 | 1,000.00 | 1,012.80 | 12.33 |
1. | Actual expenses paid for all classes are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
2. | Hypothetical expenses paid for all classes are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
6 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Those annualized expense ratios, based on the 6-month period ended May 31, 2020 for Classes A, C, R, Y, R5 and R6 are as follows:
Class | Expense Ratios | |||
CLASS A | 2.84 | % | ||
CLASS C | 3.63 | |||
CLASS R | 3.08 | |||
CLASS Y | 2.61 | |||
CLASS R5 | 2.50 | |||
CLASS R6 | 2.45 |
The expense ratios for Class A, C, R, Y, R5, and R6 reflect voluntary and/or contractual waivers and/or reimbursements of expenses by the Fund’s Adviser. The “Financial Highlights” tables in the Fund’s financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements, if applicable.
7 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
May 31, 2020
(Unaudited)
Description | Shares | Value | ||||||
MLP Investments and Related Entities–133.4% |
| |||||||
Diversified–30.4% |
| |||||||
Enterprise Products Partners LP1 | 835,510 | $ | 15,958,241 | |||||
Williams Cos., Inc.1 | 579,550 | 11,840,206 | ||||||
Total Diversified | 27,798,447 | |||||||
Gathering/Processing–32.0% |
| |||||||
Hess Midstream LP, Class A1 | 122,373 | 2,376,484 | ||||||
MPLX LP1 | 767,979 | 14,583,921 | ||||||
Targa Resources Corp.1 | 555,176 | 9,932,099 | ||||||
Western Midstream Partners LP1 | 252,622 | 2,359,490 | ||||||
Total Gathering/Processing | 29,251,994 | |||||||
Natural Gas Pipeline Transportation–35.9% |
| |||||||
Energy Transfer LP1 | 1,906,487 | 15,556,936 | ||||||
EQM Midstream Partners LP1 | 235,431 | 4,626,219 | ||||||
TC PipeLines LP1 | 359,569 | 12,638,851 | ||||||
Total Natural Gas Pipeline Transportation | 32,822,006 | |||||||
Other Energy–7.3% |
| |||||||
Sunoco LP1 | 23,391 | 603,488 | ||||||
USA Compression Partners LP1 | 194,589 | 2,344,797 | ||||||
Westlake Chemical Partners LP1 | 179,301 | 3,675,671 | ||||||
Total Other Energy | 6,623,956 |
Description | Shares | Value | ||||||
Petroleum Pipeline Transportation–27.8% |
| |||||||
Magellan Midstream Partners LP1 | 338,943 | $ | 15,367,676 | |||||
Phillips 66 Partners LP1 | 64,059 | 2,862,156 | ||||||
Plains All American Pipeline LP1 | 357,580 | 3,468,526 | ||||||
Plains GP Holdings LP, Class A1 | 252,125 | 2,518,729 | ||||||
Shell Midstream Partners LP1 | 85,007 | 1,146,744 | ||||||
Total Petroleum Pipeline Transportation | 25,363,831 | |||||||
Total MLP Investments And Related Entities |
| 121,860,234 | ||||||
Short-Term Investments–1.0% | ||||||||
Money Market–1.0% | ||||||||
Fidelity Treasury Portfolio, Institutional Class, 0.107%2 | 939,125 | 939,125 | ||||||
Total Short-Term Investments | 939,125 | |||||||
TOTAL INVESTMENTS–134.4% |
| 122,799,359 | ||||||
LIABILITIES IN EXCESS OF OTHER ASSETS–(34.4)% |
| (31,426,508 | ) | |||||
NET ASSETS–100% | $ | 91,372,851 |
Investment Abbreviations
LP | – Limited Partnership |
Footnotes to Schedule of Investments
1. | As of May 31, 2020, all or a portion of the security has been pledged as collateral for a Fund loan. The market value of the securities in the pledged account totaled $66,090,884 as of May 31, 2020. The loan agreement requires continuous collateral whether the loan has a balance or not. See Note 9 of the Notes to Financial Statements for additional information. |
2. | Rate shown is the 7-day yield at period end. |
See accompanying Notes to Financial Statements.
8 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Statement of Assets and Liabilities
May 31, 2020
(Unaudited)
Assets: | ||||
Investments at value (cost $138,487,615) | $ | 122,799,359 | ||
Cash collateral — Borrowings | 209,700 | |||
Receivables and other assets: | ||||
Receivable for beneficial interest sold | 219,410 | |||
AMT credit carryforward | 216,919 | |||
Prepaid taxes | 14,949 | |||
Prepaid expenses | 229,162 | |||
Deferred compensation | 17,065 | |||
Dividends receivable | 243 | |||
Total assets | 123,706,807 | |||
Liabilities: | ||||
Payables and other liabilities: | ||||
Payable on borrowing | 23,000,000 | |||
Payable for investments purchased | 8,176,221 | |||
Payable for beneficial interest redeemed | 722,473 | |||
Payable to Adviser | 57,240 | |||
Payable for distribution and service plan fees | 24,855 | |||
Interest expense payable | 24,711 | |||
Borrowing expense payable | 23,022 | |||
Transfer agent fees payable | 18,710 | |||
Deferred compensation | 17,065 | |||
Trustees’ fees payable | 711 | |||
Other liabilities | 268,948 | |||
Total liabilities | 32,333,956 | |||
Net Assets | $ | 91,372,851 | ||
Composition of Net Assets | ||||
Shares of beneficial interest | $ | 292,973,882 | ||
Distributable earnings/(loss) | (201,601,031 | ) | ||
Net Assets | $ | 91,372,851 |
Net Asset Value Per Share | ||||
Class A Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $34,073,717 and 15,914,384) | $2.14 | |||
Maximum offering price per share (net asset value plus sales charge of 5.50% of offering price) | $2.26 | |||
Class C Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $23,994,159 and 12,324,323) | $1.95 | |||
Class R Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $151,449 and 70,862) | $2.14 | |||
Class Y Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $33,034,804 and 14,887,397) | $2.22 | |||
Class R5 Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $3,910 and 1,818) | $2.15 | |||
Class R6 Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $114,812 and 51,043) | $2.25 |
See accompanying Notes to Financial Statements.
9 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Statement of Operations
For the Six Months Ended May 31, 2020
(Unaudited)
Investment Income | ||||
Distributions and dividends | $ | 6,595,421 | ||
Less return of capital on distributions and dividends | (6,247,883 | ) | ||
Total investment income | 347,538 | |||
Expenses | ||||
Advisory fees | 649,266 | |||
Distribution and service plan fees | ||||
Class A | 50,255 | |||
Class C | 127,744 | |||
Class R | 49 | |||
Transfer and shareholder servicing agent fees: | ||||
Class A | 29,430 | |||
Class C | 18,673 | |||
Class R | 13 | |||
Class Y | 27,769 | |||
Class R5 | 3 | |||
Class R6 | 103 | |||
Borrowing fees | 243,801 | |||
Legal, auditing, and other professional fees | 56,702 | |||
Administrative fees | 34,255 | |||
Registration fees | 31,039 | |||
Custody fees | 8,570 | |||
Trustees’ fees | 8,480 | |||
Tax expense | 2,945 | |||
Other | 23,911 | |||
Total expenses, before interest expense from payable on borrowing and deferred taxes | 1,313,008 | |||
Interest expense from payable on borrowing | 353,894 | |||
Total expenses, before waivers and deferred taxes | 1,666,902 | |||
Less waivers | (188,447 | ) | ||
Net expenses, before deferred taxes | 1,478,455 | |||
Net investment loss, before deferred taxes | (1,130,917 | ) | ||
Deferred tax (expense)/benefit | — | |||
Net investment loss, net of deferred taxes | (1,130,917 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized loss | ||||
Investments (includes net losses from securities sold to affiliates of ($4,063,933)) | (75,824,198 | ) | ||
Deferred tax (expense)/benefit | — | |||
Net realized loss, net of deferred taxes | (75,824,198 | ) | ||
Net change in unrealized appreciation on: | ||||
Investments | 29,256,697 | |||
Deferred tax (expense)/benefit | — | |||
Net change in unrealized appreciation, net of deferred taxes | 29,256,697 | |||
Net (Decrease) in Net Assets Resulting from Operations | $ | (47,698,418 | ) |
See accompanying Notes to Financial Statements.
10 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Statements of Changes in Net Assets
For the Six Months Ended 2020 (Unaudited) | For the Year Ended November 30, 2019 | |||||||
Operations | ||||||||
Net investment loss, net of deferred taxes | $ | (1,130,917 | ) | $ | (2,586,392 | ) | ||
Net realized gains/(losses), net of deferred taxes | (75,824,198 | ) | 7,124,897 | |||||
Net change in unrealized appreciation/(depreciation), net of deferred taxes | 29,256,697 | (25,959,019 | ) | |||||
Change in net assets resulting from operations | (47,698,418 | ) | (21,420,514 | ) | ||||
Distributions to Shareholders | ||||||||
Distributions to shareholders from return of capital: | ||||||||
Class A shares | (3,757,491 | ) | (5,430,371 | ) | ||||
Class C shares | (2,728,669 | ) | (4,102,494 | ) | ||||
Class R Shares | (1,448 | ) | (467 | ) | ||||
Class Y shares | (3,523,616 | ) | (4,958,728 | ) | ||||
Class R5 Shares | (498 | ) | (467 | ) | ||||
Class R6 shares | (15,460 | ) | (45,970 | ) | ||||
Distributions to shareholders from return of capital | (10,027,182 | ) | (14,538,497 | ) | ||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A shares | — | (2,673,093 | ) | |||||
Class C shares | — | (2,019,447 | ) | |||||
Class R Shares | — | (230 | ) | |||||
Class Y shares | — | (2,440,927 | ) | |||||
Class R5 Shares | — | (230 | ) | |||||
Class R6 shares | — | (22,628 | ) | |||||
Distributions to shareholders from distributable earnings | — | (7,156,555 | ) | |||||
Change in net assets resulting from distributions to shareholders | (10,027,182 | ) | (21,695,052 | ) | ||||
Beneficial Interest Transactions | ||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions: | ||||||||
Class A shares | 15,166,960 | 1,230,582 | ||||||
Class C shares | 16,004,563 | (10,981,646 | ) | |||||
Class R Shares | 123,788 | 10,000 | ||||||
Class Y shares | 9,445,650 | (5,329,275 | ) | |||||
Class R5 Shares | — | 10,000 | ||||||
Class R6 shares | (107,141 | ) | (384,171 | ) | ||||
Change in net assets resulting from beneficial interest transactions | 40,633,820 | (15,444,510 | ) | |||||
Change in net assets | (17,091,780 | ) | (58,560,076 | ) | ||||
Net Assets | ||||||||
Beginning of period | 108,464,631 | 167,024,707 | ||||||
End of period | $ | 91,372,851 | $ | 108,464,631 |
See accompanying Notes to Financial Statements.
11 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Statement of Cash Flows
For the Six Months Ended May 31, 2020
(Unaudited)
Cash flows from operating activities | ||||
Net decrease in net assets resulting from operations | $ | (47,698,418 | ) | |
Adjustments to reconcile the change in net assets from operations to net cash provided by operating activities: | ||||
Purchases of long-term portfolio investments | (123,572,090 | ) | ||
Sales of long-term portfolio investments | 116,627,186 | |||
Purchase of short-term portfolio investments, net | (939,125 | ) | ||
Distributions from Master Limited Partnerships | 6,247,883 | |||
Increase in deferred compensation | (17,065 | ) | ||
Increase in receivable prepaid taxes | (4,725 | ) | ||
Decrease in prepaid expenses | 22,064 | |||
Decrease in receivable for dividends | 2,044 | |||
Decrease in receivable for investments sold | 4,624,582 | |||
Decrease in payable to Adviser | (58,574 | ) | ||
Increase in payable for investments purchased | 8,176,221 | |||
Increase in other liabilities | 51,554 | |||
Increase in deferred compensation payable | 17,065 | |||
Decrease in payable for distribution and service fees payable | (15,489 | ) | ||
Decrease in transfer agent fees payable | (32,322 | ) | ||
Decrease in trustees’ fees payable | (1,305 | ) | ||
Decrease in interest expense payable | (35,806 | ) | ||
Increase in borrowing expense payable | 21,918 | |||
Net realized loss on investments | 75,824,198 | |||
Net change in unrealized appreciation on investments | (29,256,697 | ) | ||
Net cash provided by operating activities | 9,983,099 | |||
Cash flows from financing activities | ||||
Proceeds from shares sold | 67,081,214 | |||
Payment of shares redeemed | (35,992,314 | ) | ||
Distributions paid to shareholders | (739,597 | ) | ||
Proceeds from borrowing | 22,000,000 | |||
Payments on borrowing | (47,000,000 | ) | ||
Payments to custodian | (15,297,842 | ) | ||
Net cash used in financing activities | (9,948,539 | ) | ||
Net change in cash | 34,560 | |||
Cash at beginning of period | — | |||
Cash held as collateral | 175,140 | |||
Total beginning cash | 175,140 | |||
Cash at end of period | — | |||
Cash held as collateral end of period | 209,700 | |||
Total cash at end of period | $ | 209,700 | ||
Supplemental disclosure of cash flow information: | ||||
Cash paid on interest of $389,700. | ||||
Non-cash financing activities not included consist of reinvestment of dividends and distributions of $9,287,585. |
|
See accompanying Notes to Financial Statements.
12 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Six Months Ended 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class A | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 3.77 | $ | 5.04 | $ | 5.90 | $ | 7.26 | $ | 7.31 | $ | 12.95 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.03 | ) | (0.07 | ) | (0.15 | ) | (0.18 | ) | (0.14 | ) | (0.17 | ) | ||||||||||||
Return of capital1 | 0.14 | 0.35 | 0.43 | 0.40 | 0.39 | 0.50 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.47 | ) | (0.89 | ) | (0.48 | ) | (0.92 | ) | 0.36 | (5.31 | ) | |||||||||||||
Total from investment operations | (1.36 | ) | (0.61 | ) | (0.20 | ) | (0.70 | ) | 0.61 | (4.98 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.27 | ) | (0.44 | ) | (0.66 | ) | (0.35 | ) | (0.66 | ) | (0.66 | ) | ||||||||||||
Income | — | (0.22 | ) | — | (0.31 | ) | — | — | ||||||||||||||||
Total distributions to shareholders | (0.27 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | ||||||||||||
Net asset value, end of period | $ | 2.14 | $ | 3.77 | $ | 5.04 | $ | 5.90 | $ | 7.26 | $ | 7.31 | ||||||||||||
Total Return, at Net Asset Value2 | (36.36 | )% | (14.18 | )% | (4.29 | )% | (10.84 | )% | 9.80 | % | (39.77 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 34,074 | $ | 42,952 | $ | 58,889 | $ | 72,455 | $ | 117,536 | $ | 81,768 | ||||||||||||
Ratio of Expenses to Average Net Assets:8 | ||||||||||||||||||||||||
Before (waivers) and deferred tax expense/(benefit) | 3.23 | % | 3.28 | % | 3.10 | % | 2.57 | % | 2.64 | % | 2.34 | % | ||||||||||||
Expense (waivers) | (0.39 | )%3 | (0.26 | )%3 | (0.02 | )%3,4 | (0.01 | )%4 | — | % | — | % | ||||||||||||
Net of (waivers) and before deferred tax expense/(benefit)5 | 2.84 | % | 3.02 | % | 3.08 | % | 2.56 | % | 2.64 | % | 2.34 | % | ||||||||||||
Deferred tax expense/(benefit)6 | — | % | — | % | 0.01 | % | — | % | — | % | (7.32 | )% | ||||||||||||
Total expenses/(benefit) | 2.84 | % | 3.02 | % | 3.09 | % | 2.56 | % | 2.64 | % | (4.98 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:8 | ||||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (2.53 | )% | (1.76 | )% | (2.57 | )% | (2.45 | )% | (2.16 | )% | (1.99 | )% | ||||||||||||
Expense (waivers) | (0.39 | )%3 | (0.26 | )%3 | (0.02 | )%3,4 | (0.01 | )%4 | — | % | — | % | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (2.14 | )% | (1.50 | )% | (2.55 | )% | (2.44 | )% | (2.16 | )% | (1.99 | )% | ||||||||||||
Deferred tax benefit/(expense)7 | — | % | — | % | — | % | — | % | — | % | 0.46 | % | ||||||||||||
Net investment income/(loss) | (2.14 | )% | (1.50 | )% | (2.55 | )% | (2.44 | )% | (2.16 | )% | (1.53 | )% | ||||||||||||
Portfolio turnover rate | 88 | % | 52 | % | 44 | % | 46 | % | 45 | % | 39 | % |
1. | Per share net investment loss is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes voluntary Management waiver of 0.25% effective November 1, 2018. |
4. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
5. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 1.64%, 1.70%, 1.97%, 1.95%, 2.06% and 1.89%, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
6. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
7. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $38,818 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
13 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Financial Highlights—(continued)
Six Months Ended 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class C | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 3.47 | $ | 4.72 | $ | 5.61 | $ | 6.99 | $ | 7.11 | $ | 12.71 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.04 | ) | (0.10 | ) | (0.19 | ) | (0.22 | ) | (0.19 | ) | (0.24 | ) | ||||||||||||
Return of capital1 | 0.13 | 0.33 | 0.43 | 0.40 | 0.39 | 0.50 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.34 | ) | (0.82 | ) | (0.47 | ) | (0.90 | ) | 0.34 | (5.20 | ) | |||||||||||||
Total from investment operations | (1.25 | ) | (0.59 | ) | (0.23 | ) | (0.72 | ) | 0.54 | (4.94 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.27 | ) | (0.44 | ) | (0.66 | ) | (0.35 | ) | (0.66 | ) | (0.66 | ) | ||||||||||||
Income | — | (0.22 | ) | — | (0.31 | ) | — | — | ||||||||||||||||
Total distributions to shareholders | (0.27 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | ||||||||||||
Net asset value, end of period | $ | 1.95 | $ | 3.47 | $ | 4.72 | $ | 5.61 | $ | 6.99 | $ | 7.11 | ||||||||||||
Total Return, at Net Asset Value2 | (36.33 | )% | (14.77 | )% | (5.10 | )% | (11.57 | )% | 9.06 | % | (40.21 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 23,994 | $ | 23,037 | $ | 44,352 | $ | 42,115 | $ | 46,502 | $ | 35,718 | ||||||||||||
Ratio of Expenses to Average Net Assets:8 | ||||||||||||||||||||||||
Before (waivers) and deferred tax expense/(benefit) | 4.00 | % | 4.07 | % | 3.89 | % | 3.39 | % | 3.46 | % | 3.12 | % | ||||||||||||
Expense (waivers) | (0.37 | )%3 | (0.26 | )%3 | (0.02 | )%3,4 | (0.01 | )%4 | — | % | — | % | ||||||||||||
Net of (waivers) and before deferred tax expense/(benefit)5 | 3.63 | % | 3.81 | % | 3.87 | % | 3.38 | % | 3.46 | % | 3.12 | % | ||||||||||||
Deferred tax expense/(benefit)6 | — | % | — | % | 0.01 | % | — | % | — | % | (7.32 | )% | ||||||||||||
Total expenses/(benefit) | 3.63 | % | 3.81 | % | 3.88 | % | 3.38 | % | 3.46 | % | (4.20 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:8 | ||||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (3.30 | )% | (2.56 | )% | (3.36 | )% | (3.27 | )% | (2.98 | )% | (2.77 | )% | ||||||||||||
Expense (waivers) | (0.37 | )%3 | (0.26 | )%3 | (0.02 | )%3,4 | (0.01 | )%4 | — | % | — | % | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (2.93 | )% | (2.30 | )% | (3.34 | )% | (3.26 | )% | (2.98 | )% | (2.77 | )% | ||||||||||||
Deferred tax benefit/(expense)7 | — | % | — | % | — | % | — | % | — | % | 0.46 | % | ||||||||||||
Net investment income/(loss) | (2.93 | )% | (2.30 | )% | (3.34 | )% | (3.26 | )% | (2.98 | )% | (2.31 | )% | ||||||||||||
Portfolio turnover rate | 88 | % | 52 | % | 44 | % | 46 | % | 45 | % | 39 | % |
1. | Per share net investment loss is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes voluntary Management waiver of 0.25% effective November 1, 2018. |
4. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
5. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 2.43%, 2.49%,2.77%, 2.77%, 2.88% and 2.67%, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
6. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
7. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $24,707 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
14 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Financial Highlights—(continued)
Class R | Six Months Ended 2020 (Unaudited) | Year Ended November 30, 20191 | ||||||
Per Share Operating Data | ||||||||
Net asset value, beginning of period | $ | 3.76 | $ | 5.31 | ||||
Income/(loss) from investment operations: | ||||||||
Net investment loss2 | (0.02 | ) | (0.04 | ) | ||||
Return of capital2 | 0.10 | 0.17 | ||||||
Net realized and unrealized loss on investments | (1.43 | ) | (1.30 | ) | ||||
Total from investment operations | (1.35 | ) | (1.17 | ) | ||||
Distributions to shareholders: | ||||||||
Return of capital | (0.27 | ) | (0.25 | ) | ||||
Income | — | (0.13 | ) | |||||
Total distributions to shareholders | (0.27 | ) | (0.38 | ) | ||||
Net asset value, end of period | $ | 2.14 | $ | 3.76 | ||||
Total Return, at Net Asset Value3 | (36.16 | )% | (22.96 | )% | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 151 | $ | 7 | ||||
Ratio of expenses to average net assets:8 | ||||||||
Before (waivers) and deferred tax expense/(benefit) | 3.39 | % | 3.54 | % | ||||
Expense (waivers) | (0.31 | )%4 | (0.26 | )%4 | ||||
Net of (waivers) and before deferred tax expense/(benefit)5 | 3.08 | % | 3.28 | % | ||||
Deferred tax expense/(benefit)6 | — | % | — | % | ||||
Total expenses/(benefit) | 3.08 | % | 3.28 | % | ||||
Ratio of Investment Income/(Loss) to Average Net Assets:8 | ||||||||
Before (waivers) and deferred tax benefit/(expense) | (2.69 | )% | (2.02 | )% | ||||
Expense (waivers) | (0.31 | )%4 | (0.26 | )%4 | ||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (2.38 | )% | (1.76 | )% | ||||
Deferred tax benefit/(expense)7 | — | % | — | % | ||||
Net investment income/(loss) | (2.38 | )% | (1.76 | )% | ||||
Portfolio turnover rate | 88 | % | 52 | % |
1. | Shares commenced operations after the close of business on May 24, 2019. |
2. | Per share net investment loss is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Includes voluntary Management waiver of 0.25% effective November 1, 2018. |
5. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 1.88% and 1.96%, for the period ended May 31, 2020 and the year ended November 30, 2019, respectively. |
6. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
7. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $22 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
15 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Financial Highlights—(continued)
Six Months Ended 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class Y | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 3.88 | $ | 5.15 | $ | 6.02 | $ | 7.38 | $ | 7.40 | $ | 13.07 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.03 | ) | (0.06 | ) | (0.14 | ) | (0.16 | ) | (0.13 | ) | (0.14 | ) | ||||||||||||
Return of capital1 | 0.14 | 0.36 | 0.43 | 0.40 | 0.39 | 0.50 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.50 | ) | (0.91 | ) | (0.50 | ) | (0.94 | ) | 0.38 | (5.37 | ) | |||||||||||||
Total from investment operations | (1.39 | ) | (0.61 | ) | (0.21 | ) | (0.70 | ) | 0.64 | (5.01 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.27 | ) | (0.44 | ) | (0.66 | ) | (0.35 | ) | (0.66 | ) | (0.66 | ) | ||||||||||||
Income | — | (0.22 | ) | — | (0.31 | ) | — | — | ||||||||||||||||
Total distributions to shareholders | (0.27 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | ||||||||||||
Net asset value, end of period | $ | 2.22 | $ | 3.88 | $ | 5.15 | $ | 6.02 | $ | 7.38 | $ | 7.40 | ||||||||||||
Total Return, at Net Asset Value2 | (36.24 | )% | (13.89 | )% | (4.39 | )% | (10.65 | )% | 10.10 | % | (39.62 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 33,035 | $ | 42,164 | $ | 63,044 | $ | 80,663 | $ | 72,258 | $ | 84,500 | ||||||||||||
Ratio of Expenses to Average Net Assets:8 | ||||||||||||||||||||||||
Before (waivers) and deferred tax expense/(benefit) | 2.97 | % | 3.02 | % | 2.84 | % | 2.34 | % | 2.37 | % | 2.09 | % | ||||||||||||
Expense (waivers) | (0.36 | )%3 | (0.26 | )%3 | (0.02 | )%3,4 | (0.01 | )%4 | — | % | — | % | ||||||||||||
Net of (waivers) and before deferred tax expense/(benefit)5 | 2.61 | % | 2.76 | % | 2.82 | % | 2.33 | % | 2.37 | % | 2.09 | % | ||||||||||||
Deferred tax expense/(benefit)6 | — | % | — | % | 0.01 | % | — | % | — | % | (7.32 | )% | ||||||||||||
Total expenses/(benefit) | 2.61 | % | 2.76 | % | 2.83 | % | 2.33 | % | 2.37 | % | (5.23 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:8 | ||||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (2.27 | )% | (1.50 | )% | (2.31 | )% | (2.22 | )% | (1.89 | )% | (1.74 | )% | ||||||||||||
Expense (waivers) | (0.36 | )%3 | (0.26 | )%3 | (0.02 | )%3,4 | (0.01 | )%4 | — | % | — | % | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (1.91 | )% | (1.24 | )% | (2.29 | )% | (2.21 | )% | (1.89 | )% | (1.74 | )% | ||||||||||||
Deferred tax benefit/(expense)7 | — | % | — | % | — | % | — | % | — | % | 0.46 | % | ||||||||||||
Net investment income/(loss) | (1.91 | )% | (1.24 | )% | (2.29 | )% | (2.21 | )% | (1.89 | )% | (1.28 | )% | ||||||||||||
Portfolio turnover rate | 88 | % | 52 | % | 44 | % | 46 | % | 45 | % | 39 | % |
1. | Per share net investment loss is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes voluntary Management waiver of 0.25% effective November 1, 2018. |
4. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
5. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 1.41%, 1.44%, 1.71%, 1.72%, 1.79%, and 1.64%, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
6. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
7. | Deferred tax benefit/(expense) for the ratio calculation is derived from net investment income/loss only. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $36,641 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
16 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Financial Highlights—(continued)
Class R5 | Six Months Ended 2020 (Unaudited) | Year Ended November 30, 20191 | ||||||
Per Share Operating Data | ||||||||
Net asset value, beginning of period | $ | 3.78 | $ | 5.31 | ||||
Income/(loss) from investment operations: | ||||||||
Net investment loss2 | (0.03 | ) | (0.03 | ) | ||||
Return of capital2 | 0.15 | 0.17 | ||||||
Net realized and unrealized loss on investments | (1.48 | ) | (1.29 | ) | ||||
Total from investment operations | (1.36 | ) | (1.15 | ) | ||||
Distributions to shareholders: | ||||||||
Return of capital | (0.27 | ) | (0.25 | ) | ||||
Income | — | (0.13 | ) | |||||
Return of capital | (0.27 | ) | (0.38 | ) | ||||
Net asset value, end of period | $ | 2.15 | $ | 3.78 | ||||
Total Return, at Net Asset Value3 | (36.24 | )% | (22.55 | )% | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 4 | $ | 7 | ||||
Ratio of expenses to average net assets:8 | ||||||||
Before (waivers) and deferred tax expense/(benefit) | 2.93 | % | 2.94 | % | ||||
Expense (waiver) | (0.43 | )%4 | (0.26 | )%4 | ||||
Net of (waivers) and before deferred tax expense/(benefit)5 | 2.50 | % | 2.68 | % | ||||
Deferred tax expense/(benefit)6 | — | % | — | % | ||||
Total expenses/(benefit) | 2.50 | % | 2.68 | % | ||||
Ratio of Investment Income/(Loss) to Average Net Assets:8 | ||||||||
Before (waivers) and deferred tax benefit/(expense) | (2.23 | )% | (1.42 | )% | ||||
Expense (waivers) | (0.43 | )%4 | (0.26 | )%4 | ||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (1.80 | )% | (1.16 | )% | ||||
Deferred tax benefit/(expense)7 | — | % | — | % | ||||
Net investment income/(loss) | (1.80 | )% | (1.16 | )% | ||||
Portfolio turnover rate | 88 | % | 52 | % |
1. | Shares commenced operations after the close of business on May 24, 2019. |
2. | Per share net investment loss is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Includes voluntary Management waiver of 0.25% effective November 1, 2018. |
5. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 1.30% and 1.36%, for the period ended May 31, 2020 and the year ended November 30, 2019, respectively. |
6. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
7. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $5 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
17 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Financial Highlights—(continued)
Six Months Ended 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class R6 | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 3.93 | $ | 5.20 | $ | 6.06 | $ | 7.41 | $ | 7.41 | $ | 13.06 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.03 | ) | (0.06 | ) | (0.13 | ) | (0.15 | ) | (0.11 | ) | (0.12 | ) | ||||||||||||
Return of capital1 | 0.16 | 0.39 | 0.43 | 0.40 | 0.39 | 0.50 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.54 | ) | (0.94 | ) | (0.50 | ) | (0.94 | ) | 0.38 | (5.37 | ) | |||||||||||||
Total from investment operations | (1.41 | ) | (0.61 | ) | (0.20 | ) | (0.69 | ) | 0.66 | (4.99 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.27 | ) | (0.44 | ) | (0.66 | ) | (0.35 | ) | (0.66 | ) | (0.66 | ) | ||||||||||||
Income | — | (0.22 | ) | — | (0.31 | ) | — | — | ||||||||||||||||
Total distributions to shareholders | (0.27 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.66 | ) | ||||||||||||
Net asset value, end of period | $ | 2.25 | $ | 3.93 | $ | 5.20 | $ | 6.06 | $ | 7.41 | $ | 7.41 | ||||||||||||
Total Return, at Net Asset Value2 | (36.14 | )% | (13.73 | )% | (4.18 | )% | (10.47 | )% | 10.37 | % | (39.50 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 115 | $ | 299 | $ | 739 | $ | 842 | $ | 424 | $ | 311 | ||||||||||||
Ratio of Expenses to Average Net Assets:7 | ||||||||||||||||||||||||
Before (waivers) and deferred tax expense/(benefit) | 2.93 | % | 2.88 | % | 2.67 | % | 2.16 | % | 2.17 | % | 1.91 | % | ||||||||||||
Expense (waivers) | (0.48 | )%3 | (0.26 | )%3 | (0.02 | )%3 | — | % | — | % | — | % | ||||||||||||
Net of (waivers) and before deferred tax expense/(benefit)4 | 2.45 | % | 2.62 | % | 2.65 | % | 2.16 | % | 2.17 | % | 1.91 | % | ||||||||||||
Deferred tax expense/(benefit)5 | — | % | — | % | 0.01 | % | — | % | — | % | (7.32 | )% | ||||||||||||
Total expenses/(benefit) | 2.45 | % | 2.62 | % | 2.66 | % | 2.16 | % | 2.17 | % | (5.41 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 | ||||||||||||||||||||||||
Before (waivers) deferred tax benefit/(expense) | (2.23 | )% | (1.36 | )% | (2.14 | )% | (2.04 | )% | (1.69 | )% | (1.56 | )% | ||||||||||||
Expense (waivers) | (0.48 | )%3 | (0.26 | )%3 | (0.02 | )%3 | — | % | — | % | — | % | ||||||||||||
Net of expense (waivers) before deferred tax benefit/(expense) | (1.75 | )% | (1.10 | )% | (2.12 | )% | (2.04 | )% | (1.69 | )% | (1.56 | )% | ||||||||||||
Deferred tax benefit/(expense)6 | — | % | — | % | — | % | — | % | — | % | 0.46 | % | ||||||||||||
Net investment income/(loss) | (1.75 | )% | (1.10 | )% | (2.12 | )% | (2.04 | )% | (1.69 | )% | (1.10 | )% | ||||||||||||
Portfolio turnover rate | 88 | % | 52 | % | 44 | % | 46 | % | 45 | % | 39 | % |
1. | Per share net investment loss is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes voluntary Management waiver of 0.25% effective November 1, 2018. |
4. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be1.25%, 1.30%, 1.55%, 1.55%, 1.59%, and 1.46%, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016 and November 30, 2015, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $191 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
18 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
May 31, 2020
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Oppenheimer SteelPath MLP Alpha Plus Fund (the “Fund”) is a separate series of AIM Investment Funds (Invesco Investment Funds) (the “Trust”) . The Trust is organized as a Delaware statutory trust, as amended (the “1940 Act”), as an open-end management investment company authorized to an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.
The Fund’s investment objective is to seek total return.
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services — Investment Companies. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
19 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on an accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investments reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Dividends and Distributions to Shareholders — Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. GAAP, are recorded on the ex-dividend date. The Fund’s dividend distribution policy is intended to provide monthly distributions to its shareholders at a rate that over time is similar to the distribution rate the Fund receives from the master limited partnerships (”MLPs”) in which it invests. The Fund generally pays out dividends that over time approximate the distributions received from the Fund’s portfolio investments based on, among other considerations, distributions the Fund actually received from portfolio investments, distributions it would have received if it had been fully invested at all times, and estimated future cash flows. Such dividends are not tied to the Fund’s investment income and may not represent yield or investment return on the Fund’s portfolio. To the extent that the dividends paid exceed the distributions the Fund receives from its underlying investments, the Fund’s assets will be reduced. The Fund’s tendency to pay out a consistent dividend may change, and the Fund’s level of distributions may increase or decrease. |
The estimated characterization of the distributions paid will be either a qualified dividend or distribution (return of capital). This estimate is based on the Fund’s operating results during the period. The actual characterization of the distributions made during the period will not be determined until after the end of the fiscal year.
E. | Master Limited Partnerships — The Fund primarily invests in Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships and limited liability companies taxed as partnerships under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Fund principally invests in MLPs that derive their revenue primarily from businesses involved in the gathering, transporting, processing, treating, storing, refining, distributing, mining or marketing of natural gas, natural gas liquids, crude oil, refined products or coal (“energy infrastructure MLPs”). The Fund is a partner in each MLP; accordingly, the Fund is required to take into account the Fund’s allocable share of income, gains, losses, deductions, expenses, and tax credits recognized by each MLP. The Fund is non-diversified and will concentrate its investments in the energy sector. Energy infrastructure MLPs are subject to a variety of industry specific risk factors that may adversely affect their business or operations, including a decrease in production or reduced volumes of natural gas or other energy commodities available for transporting, processing, storing or distributing; changes in energy commodity prices; a sustained reduced demand for crude oil, natural gas and refined petroleum products; depletion of natural gas reserves or other commodities if not replaced; natural disasters, extreme weather and environmental hazards; rising interest rates, how facilities are constructed, maintained and operated, environmental and safety controls, and the prices they may charge for products and services. In addition, taxes, government regulation, international politics, price, and supply fluctuations, volatile interest rates and energy conservation may cause difficulties for energy infrastructure MLPs. |
MLPs may be less liquid and subject to more abrupt or erratic price movements than conventional publicly traded securities.
F. | Return of Capital — Distributions received from the Fund’s investments in MLPs generally are comprised of income and return of capital. The Fund records investment income and return of capital based on estimates made at the time such distributions are received. The return of capital portion of the distribution is a reduction to investment income that results in an equivalent reduction in the cost basis of the associated investments and increases net realized gains (losses) and change in unrealized appreciation (depreciation). Such estimates are based on historical information available from each MLP and other industry sources. These estimates will subsequently be revised and may materially differ primarily based on information received from the MLPs after their tax reporting periods are concluded. |
G. | Federal Income Taxes — The Fund does not intend to qualify as a regulated investment company pursuant to Subchapter M of the Internal Revenue Code, but will rather be taxed as a corporation. As a corporation, the Fund is obligated to pay federal, state and local income tax on taxable income. For the six months ended May 31, 2020, the federal income tax rate is 21 percent. The Fund is currently using an estimated rate of 1.4 percent for state and local tax, net of federal tax expense. |
20 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
The alternative minimum tax (“AMT”) requirements were repealed with the enactment of H.R. 1, Tax Cuts and Jobs Act (the “TCJA”), for tax years beginning after December 31, 2017. Any past alternative minimum taxes paid by the Fund do qualify for substantial refundability under the TCJA with AMT credit carryforwards becoming partially refundable prior to, or fully refundable for tax years beginning in 2021.
The Fund’s income tax provision consists of the following as of May 31, 2020:
Current tax (expense) benefit | ||||
Federal | $ | — | ||
State | — | |||
Total current tax (expense) benefit | $ | — | ||
Deferred tax (expense) benefit | ||||
Federal | $ | 10,053,709 | ||
State | 670,247 | |||
Valuation allowance | (10,723,956) | |||
Total deferred tax (expense) benefit | $ | — |
The reconciliation between the federal statutory income tax rate of 21% and the tax effect on net investment income (loss) and realized and unrealized gain (loss) follows:
Amount | % Effect | |||||||
Application of Federal statutory income tax rate | $ | 10,016,669 | 21 | .00% | ||||
State income taxes net of federal benefit | 667,778 | 1 | .40% | |||||
Effect of permanent differences | 39,509 | 0 | .08% | |||||
Change in valuation allowance | (10,723,956) | (22 | .48)% | |||||
Total income tax (expense) benefit | $ | — | 0 | .00% |
For the six months ended May 31, 2020 the Fund’s tax effect on net investment income (loss) and realized and unrealized gain (loss) of 0% differed from the combined federal and state statutory tax rate of 22.40% due in large part to the change in valuation allowance primarily as a result of the change in unrealized appreciation.
The Fund intends to invest its assets primarily in MLP investments, which generally are treated as partnerships for federal income tax purposes. As a limited partner in the MLP investments, the Fund reports its allocable share of the MLP investments’ taxable income in computing its own taxable income. The Fund’s tax expense or benefit is included in the Statement of Operations based on the component of income or gains (losses) to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Such temporary differences are principally: (i) taxes on unrealized gains/(losses), which are attributable to the temporary difference between fair market value and tax basis, (ii) the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes and (iii) the net tax benefit of accumulated net operating losses and capital loss carryforwards. Deferred tax assets and liabilities are measured using effective tax rates expected to apply to taxable income in the years such temporary differences are realized or otherwise settled. To the extent the Fund has a deferred tax asset, consideration is given to whether or not a valuation allowance is required. A valuation allowance is required if, based on the evaluation criterion provided by ASC 740, Income Taxes, it is more-likely-than-not some portion or all of the deferred tax asset will not be realized.
At May 31, 2020, the Fund determined a valuation allowance was required. The Fund’s assessment considered, among other matters, the nature, frequency and severity of current and cumulative losses, the duration of statutory carryforward periods and the associated risk that operating loss and capital loss carryforwards were limited as a result of shareholder transactions or were likely to expire unused, and unrealized gains and losses on investments. Consideration was also given to market cycles, the severity and duration of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. Additionally, various tax law changes resulting from the enactment of the TCJA were considered by the Fund in assessing the recoverability of its deferred tax assets. Specifically, the TCJA eliminated the net operating loss carryback ability and replaced the 20 year carryforward period with an indefinite carryforward period for any net operating losses arising in tax years ending after December 31, 2017. The TCJA also established a limitation for any net operating losses generated in tax years beginning after December 31, 2017 to the lesser of the aggregate of available net operating losses or 80% of taxable income before any net operating loss utilization. Through the consideration of these factors, the Fund has determined that it is more likely than not that the Fund’s deferred tax assets would not be fully realized. As a result, the Fund recorded a valuation allowance with respect to its deferred tax assets that are not considered to be realizable as of the six months ended May 31, 2020.
From time to time, the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related guidance or interpretations thereof, limitations imposed on or expirations of the Fund’s net operating losses and capital loss carryovers (if any) and changes in applicable tax law could result in increases or decreases in the Fund’s NAV per share, which could be material.
21 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Components of the Fund’s deferred tax assets and liabilities as of May 31, 2020 are as follows:
Deferred tax assets: | ||||
Net operating loss carryforward (tax basis) – Federal | $ | 6,005,374 | ||
Net operating loss carryforward (tax basis) – State | 642,613 | |||
Net unrealized losses on investment securities (tax basis) | 8,882,646 | |||
Excess business interest expense carryforward | 25,461 | |||
Capital loss carryforward (tax basis) | 26,799,465 | |||
Valuation allowance | (42,355,559) | |||
Total deferred tax asset | — | |||
Deferred tax liabilities: | ||||
Net unrealized gains on investment securities (tax basis) | $ | — | ||
Total deferred tax liability | — | |||
Total net deferred tax asset/(liability) | $ | — |
The Fund may rely, to some extent, on information provided by the MLPs, which may not necessarily be timely, to estimate taxable income allocable to MLP units held in its portfolio, and to estimate its associated deferred tax liability or asset. Such estimates are made in good faith. From time to time, as new information becomes available, the Fund will modify its estimates or assumptions regarding its tax liability or asset.
The Fund’s policy is to classify interest and penalties associated with underpayment of federal and state income taxes, if any, as income tax expense on its Statement of Operations. As of May 31, 2020, the Fund does not have any interest or penalties associated with the underpayment of any income taxes.
The Fund files income tax returns in the U.S. federal jurisdiction and various states. The Fund has reviewed all major jurisdictions and concluded that there is no significant impact on the Fund’s net assets and no tax liability resulting from unrecognized tax benefits relating to uncertain tax positions expected to be taken on its tax returns. Furthermore, management of the Fund is not aware of any uncertain tax positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly change in the next 12 months. Generally, the Fund is subject to examinations by taxing authorities for up to three years after the filing of the return for the tax period. All relevant periods are still open for examination.
At May 31, 2020, the Fund had net operating loss carryforwards for federal income tax purposes as follows:
Expiration date for expiring net operating loss carryforwards | ||||
11/30/2036 | $ | 21,439,074 | ||
Total expiring net operating loss carryforwards | 21,439,074 | |||
Total non-expiring net operating loss carryforwards | $ | 7,156,738 | ||
Total net operating loss carryforwards | $ | 28,595,812 |
During the six months ended May 31, 2020, the Fund estimates that it will utilize $8,158,215 of net operating loss carryforward.
At May 31, 2020, the Fund had net capital loss carryforwards for federal income tax purposes, which may be carried forward for 5 years, as follows:
Expiration Date | ||||
11/30/2020 | $ | 36,062,893 | ||
11/30/2021 | 36,577,191 | |||
11/30/2023 | 3,939,195 | |||
11/30/2025 | 43,061,188 | |||
Total | $ | 119,640,467 |
At May 31, 2020, gross unrealized appreciation and depreciation of investments, based on cost for federal income tax purposes were as follows:
Cost of Investments | $ | 162,441,352 | ||
Gross Unrealized Appreciation | $ | 5,456,904 | ||
Gross Unrealized Depreciation | (45,098,897) | |||
Net Unrealized Appreciation (Depreciation) on Investments | $ | (39,641,993) |
The difference between cost amounts for financial statement and federal income tax purposes is due primarily to timing differences in recognizing certain gains and losses in security transactions.
H. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
22 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
I. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
J. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. |
K. | Cash and Cash Equivalents — For the purposes of the Statement of Cash Flows, the Fund defines Cash and Cash Equivalents as cash and includes cash collateral received. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $3 billion | 1.25% | |||
Next $2 billion | 1.23% | |||
Over $5 billion | 1.20% |
For the six months ended May 31, 2020, the effective advisory fees incurred by the Fund was 1.25%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC, and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a Sub-Advisory Agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Fund.
The Adviser has contractually agreed, through May 31, 2021, to waive advisory fees and/or reimburse expenses of all shares to the to the extent necessary to limit the total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.83%, 2.60%, 2.08%, 1.61%, 1.51% and 1.46%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expense after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expenses on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate May 31, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. See Note 10.
The Fund’s total annual operating expenses after fee waiver and/or expense reimbursement (“Net Expenses”) will be higher than these amounts to the extent that the Fund incurs expenses excluded from the expense cap. Because the Fund’s deferred income tax expense/(benefit) and interest expense are excluded from the expense cap, the Fund’s Net Expenses for each class of shares is increased/(decreased) by the amount of this expense. See Note 10.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended May 31, 2020, advisory fees of $58,594 were waived.
Effective November 1, 2018, the Adviser has voluntarily agreed to reduce its advisory fee by 0.25% of the Fund’s daily net assets. The advisory fee reduction is a voluntary undertaking and may be terminated by the Adviser in consultation with the Board at any time. For the six months ended May 31, 2020, the Adviser has voluntarily waived $50,214, $31,960, $28, $47,397, $7, and $247 for Class A, Class C, Class R, Class Y, Class R5, and Class R6, respectively. Amounts previously waived are not eligible for recoupment.
The Trust has entered into an administration and fund accounting agreement with UMB Fund Services, Inc. (“UMB”) pursuant to which UMB shall provide administration and fund accounting services to the Fund. The Trust and the Adviser have entered into a Master Administrative Services Agreement (“Administrative Services Agreement”) pursuant to which the Adviser may perform or arrange for the provision of certain accounting and other administrative services to the Fund which are not required to be performed by the Adviser under the Investment Advisory Agreement. The Adviser may only receive fees for administrative services under the Administrative Services Agreement to the extent that those fees assessed under the agreement are in excess of the fees paid to UMB Fund Services. For the six months ended May 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative fees. Additionally, Invesco has entered into service agreements whereby UMB Bank, n.a., serves as custodian to the Fund.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or
23 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended May 31, 2020, expenses incurred under these agreements are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of the Class A shares, 1.00% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plan would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended May 31, 2020, expenses incurred under the plans are shown in the Statement of Operations as Distribution and service plan fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended May 31, 2020, IDI advised the Fund that IDI retained $4,843 in front-end sales commissions from the sale of Class A shares and $0 and $912 from Class A and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of May 31, 2020, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
NOTE 4—Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures for the six month period May 31, 2020, the Fund engaged in transactions with affiliates as listed: Securities purchases of $3,094,708 and securities sales of $4,910,056, which resulted in net realized losses of ($4,063,933).
NOTE 5—Trustees’ and Officer Fees and Benefits
Certain trustees have executed a Deferred Compensation Agreement pursuant to which they have the option to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Invesco and/or Invesco Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities, if applicable. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance with the compensation deferral plan.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with UMB Bank n.a the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian
24 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended May 31, 2020 was $123,572,090 and $116,627,186 respectively.
NOTE 8—Share Information
The Fund has authorized an unlimited number of shares of beneficial interest in each class. Transactions in shares of beneficial interest were as follows:
Six Months Ended May 31, 2020 (unaudited)2 | Year Ended November 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A | ||||||||||||||||
Sold | 7,474,343 | $ | 22,202,051 | 4,391,685 | $ | 22,484,612 | ||||||||||
Dividends and/or distributions reinvested | 1,358,299 | 3,238,924 | 1,412,062 | 7,028,794 | ||||||||||||
Redeemed | (4,318,315 | ) | (10,274,015 | ) | (6,095,418 | ) | (28,282,824 | ) | ||||||||
Net increase/(decrease) | 4,514,327 | $ | 15,166,960 | (291,671 | ) | $ | 1,230,582 | |||||||||
Class C | ||||||||||||||||
Sold | 5,956,432 | $ | 17,258,081 | 1,967,461 | $ | 9,389,678 | ||||||||||
Dividends and/or distributions reinvested | 1,185,298 | 2,516,224 | 1,174,322 | 5,489,104 | ||||||||||||
Redeemed | (1,449,874 | ) | (3,769,742 | ) | (5,905,753 | ) | (25,860,428 | ) | ||||||||
Net increase/(decrease) | 5,691,856 | $ | 16,004,563 | (2,763,970 | ) | $ | (10,981,646 | ) | ||||||||
Class R1 | ||||||||||||||||
Sold | 68,411 | $ | 122,838 | 1,818 | $ | 10,000 | ||||||||||
Dividends and/or distributions reinvested | 633 | 950 | — | — | ||||||||||||
Redeemed | — | — | — | — | ||||||||||||
Net increase/(decrease) | 69,044 | $ | 123,788 | 1,818 | $ | 10,000 | ||||||||||
Class Y | ||||||||||||||||
Sold | 11,175,977 | $ | 27,213,842 | 7,067,909 | $ | 36,800,108 | ||||||||||
Dividends and/or distributions reinvested | 1,498,766 | 3,516,027 | 1,429,071 | 7,369,227 | ||||||||||||
Redeemed | (8,641,628 | ) | (21,284,219 | ) | (9,873,348 | ) | (49,498,610 | ) | ||||||||
Net increase/(decrease) | 4,033,115 | $ | 9,445,650 | (1,376,368 | ) | $ | (5,329,275 | ) | ||||||||
Class R51 | ||||||||||||||||
Sold | — | $ | — | 1,818 | $ | 10,000 | ||||||||||
Dividends and/or distributions reinvested | — | — | — | — | ||||||||||||
Redeemed | — | — | — | — | ||||||||||||
Net increase/(decrease) | — | $ | — | 1,818 | $ | 10,000 | ||||||||||
Class R6 | ||||||||||||||||
Sold | 4,011 | $ | 16,826 | 19,261 | $ | 98,129 | ||||||||||
Dividends and/or distributions reinvested | 5,824 | 15,460 | 12,877 | 68,468 | ||||||||||||
Redeemed | (34,824 | ) | (139,427 | ) | (98,315 | ) | (550,768 | ) | ||||||||
Net increase/(decrease) | (24,989 | ) | $ | (107,141 | ) | (66,177 | ) | $ | (384,171 | ) |
1. | Class R and R5 shares commenced operations after the close of business on May 24, 2019. |
2. | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and own 52% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates, including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 9—Borrowing Agreement
The Fund, along with Invesco Oppenheimer SteelPath MLP Alpha Fund, Invesco Oppenheimer SteelPath MLP Income Fund, and Invesco Oppenheimer SteelPath MLP Select 40 Fund (collectively, the “Trust”), is a borrower in a $700 million revolving credit agreement (the “Loan Agreement”) with a
25 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
major lending institution (the “Lender”). The Fund is permitted to borrow up to the lesser of one-third of the Fund’s total assets, or the maximum amount permitted pursuant to the Fund’s investment limitations. As the Loan Agreement is not available exclusively to the Fund, the Fund may not be able to borrow all of its requested amounts at any given time. Amounts borrowed under the Loan Agreement, if any, are invested by the Fund under the direction of the Adviser consistent with the Fund’s investment objective and policies, and as such, the related investments are subject to normal market fluctuations and investment risks, including the risk of loss due to a decline in value. The borrowing, if any, is fully collateralized throughout the term of the borrowing with securities or other assets of the Fund. The Fund is not liable for borrowings of other Funds in the Trust. If applicable, securities that have been pledged as collateral for the borrowing are indicated in the Schedule of Investments.
Borrowings under the Loan Agreement are charged interest at a calculated rate computed by the Lender based on the one month LIBOR rate plus 0.75% per annum. An unused commitment fee at the rate of 0.30% per annum is charged for any undrawn portion of the credit facility, and each series of the Trust will pay its pro rata share of this fee. A facility fee of 0.10% was charged on the commitment amount, and each series of the Trust paid its pro rata share of this fee. The borrowing is due November 15, 2020, unless another date is mutually agreed upon by the parties of the Loan Agreement. For the six months ended May 31, 2020, the Fund paid $243,801 in borrowing fees. The Fund’s payable on borrowing balance and interest rate at May 31, 2020 was $23,000,000 and 1.12%, respectively.
Information related to the Fund’s borrowings under the Loan Agreement for the six months ended May 31, 2020, is as follows:
Average Interest Rate | Average Loan Balance | Number of Days Outstanding | Interest Expense Incurred | Maximum Amount Borrowed During the Period | ||||||||||||
2.24% | $ | 31,650,273 | 366 | $ | 353,894 | $ | 49,000,000 |
NOTE 10—Remediation Note
Subsequent to the period ended November 30, 2019, the Fund determined that the valuation allowance related to the deferred tax asset included in the calculation of the net asset values per share (“NAV”) upon which the shareholders transacted had not been properly accounted for during the period that includes days between December 1, 2014 through March 6, 2020 (“overstatement period”). Specifically, it was determined that the realizability of the deferred tax asset did not meet the “more likely than not” evaluation criterion provided by ASC 740, Income Taxes, resulting in the overstatement of the deferred tax asset and corresponding understatement of the valuation allowance. As a result, the Fund’s NAVs have been corrected during certain days of the overstatement period.
Invesco is assessing the extent to which shareholders who transacted in the Fund during the overstatement period were negatively impacted by the overstatement of the Fund’s deferred tax asset, including the Fund’s overpayment of asset-based fees to affiliates. Invesco is preparing a remediation plan that contemplates payments by Invesco to shareholders whose accounts or transactions were negatively impacted by the overstatement of the NAVs during the overstatement period. The method of determining the actual remediation payments to be paid to individual shareholders is subject to various factors that are not yet certain and information that is not yet readily available, including retrieval of beneficial owner data for Fund shares held in omnibus accounts. The Fund’s Board has directed Invesco to proceed with the remediation plan with any remediation payments to be made directly to affected shareholders outside of the Fund, and that no remediation payments be made to the Fund unless or until the Board were to approve so in the future. The Fund is estimated to have over paid $1,038,000 in asset-based fees to affiliates as a result of the overstatement of the deferred tax asset, such amount which will be included in the calculation of remediation payments. Accordingly, all shareholder remediation payments are intended to be made directly to affected shareholders and not to the Fund and therefore no provision for such remediation payments have been made in the Fund’s financial statements. No remediation payments will be made by the Fund.
NOTE 11—Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared (COVID-19) to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12—Subsequent Event
Effective on or about September 30, 2020, the name of the Fund and all references thereto will change from Invesco Oppenheimer SteelPath MLP Alpha Plus Fund to Invesco SteelPath MLP Alpha Plus Fund.
26 Invesco Oppenheimer SteelPath MLP Alpha Plus Fund
Explore High-Conviction Investing with Invesco
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Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
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Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
O-SPMAP-SAR-1 072720 |
Semiannual Report | May 31, 2020 | |||
Invesco Oppenheimer SteelPath MLP Income Fund | ||||
2 | Fund Performance | |
6 | Fund Expenses | |
8 | Schedule of Investments | |
10 | Financial Statements | |
13 | Financial Highlights | |
19 | Notes to Financial Statements |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800 959 4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
Class A Shares
AVERAGE ANNUAL TOTAL RETURNS AT 5/31/2020
Class A Shares of the Fund | S&P 500 Index | Alerian MLP Index | ||||||||||||||
Without Sales Charge | With Sales Charge | |||||||||||||||
6-Month | (25.64 | )% | (29.71 | )% | (2.10 | )% | (24.26 | )% | ||||||||
1-Year | (34.67 | )% | (38.26 | )% | 12.84 | % | (34.74 | )% | ||||||||
5-Year | (12.23 | )% | (13.22 | )% | 9.86 | % | (12.93 | )% | ||||||||
10-year | (2.14 | )% | (2.69 | )% | 13.15 | % | (0.06 | )% | ||||||||
Since Inception (3/31/10) | (2.30 | )% | (2.84 | )% | 12.18 | % | (0.28 | )% |
Performance quoted is past performance and cannot guarantee future results; current performance may be lower or higher. Visit invesco.com for the most recent month-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Fund returns include changes in share price, reinvested distributions and a 5.50% maximum applicable sales charge except where “without sales charge” is indicated. Returns for periods of less than one year are cumulative and not annualized. As the result of a reorganization after the close of business on May 24, 2019, the returns of the Fund for periods on or prior to May 24, 2019 reflect performance of the Oppenheimer SteelPath MLP Income Fund (the predecessor fund). Share class returns will differ from those of the predecessor fund because they have different expenses. Returns do not consider capital gains or income taxes on an individual’s investment. See Fund prospectus and summary prospectus for more information on share classes, sales charges and fee agreements, if any. Fund literature is available at invesco.com.
2 Invesco Oppenheimer SteelPath MLP Income Fund
Top Holdings and Allocations
TOP TEN MASTER LIMITED PARTNERSHIP AND RELATED ENTITIES HOLDINGS
Energy Transfer LP | 13.27% | |||
MPLX LP | 12.08% | |||
Sunoco LP | 9.80% | |||
USA Compression Partners LP | 6.98% | |||
Western Midstream Partners LP | 6.73% | |||
Genesis Energy LP | 5.06% | |||
Antero Midstream Corp | 4.94% | |||
NuStar Energy LP | 4.81% | |||
EnLink Midstream LLC | 3.96% | |||
Suburban Propane Partners LP | 3.86% |
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of May 31, 2020, and are based on net assets.
SECTOR ALLOCATION
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of May 31, 2020 and are based on total market value of investments.
For more current Fund holdings, please visit invesco.com.
3 Invesco Oppenheimer SteelPath MLP Income Fund
AVERAGE ANNUAL TOTAL RETURNS WITHOUT SALES CHARGE AS OF 5/31/2020 | ||||||||||||||||||||||||||||
Inception Date | 6-Month | 1-Year | 5-Year | 10-Year | Since Inception | |||||||||||||||||||||||
CLASS A | (MLPDX | ) | 3/31/10 | (25.64 | )% | (34.67 | )% | (12.23 | )% | (2.14 | )% | (2.30 | )% | |||||||||||||||
CLASS C | (MLPRX | ) | 6/10/11 | (25.71 | )% | (35.08 | )% | (12.84 | )% | (4.85 | )% | |||||||||||||||||
CLASS R 1 | (SPNNX | ) | 5/24/19 | (25.70 | )% | (34.86 | )% | (12.46 | )% | (2.38 | )% | |||||||||||||||||
CLASS Y | (MLPZX | ) | 3/31/10 | (25.55 | )% | (34.54 | )% | (12.02 | )% | (1.90 | )% | (2.08 | )% | |||||||||||||||
CLASS R5 1 | (SPMQX | ) | 5/24/19 | (25.39 | )% | (34.45 | )% | (12.17 | )% | (2.10 | )% | |||||||||||||||||
CLASS R6 2 | (OSPMX | ) | 6/28/13 | (25.39 | )% | (34.47 | )% | (11.94 | )% | (7.63 | )% |
AVERAGE ANNUAL TOTAL RETURNS WITH SALES CHARGE AS OF 5/31/2020 | ||||||||||||||||||||||||||||
Inception Date | 6-Month | 1-Year | 5-Year | 10-Year | Since Inception | |||||||||||||||||||||||
CLASS A | (MLPDX | ) | 3/31/10 | (29.71 | )% | (38.26 | )% | (13.22 | )% | (2.69 | )% | (2.84 | )% | |||||||||||||||
CLASS C | (MLPRX | ) | 6/10/11 | (26.38 | )% | (35.61 | )% | (12.84 | )% | (4.85 | )% | |||||||||||||||||
CLASS R 1 | (SPNNX | ) | 5/24/19 | (25.70 | )% | (34.86 | )% | (12.46 | )% | (2.38 | )% | |||||||||||||||||
CLASS Y | (MLPZX | ) | 3/31/10 | (25.55 | )% | (34.54 | )% | (12.02 | )% | (1.90 | )% | (2.08 | )% | |||||||||||||||
CLASS R5 1 | (SPMQX | ) | 5/24/19 | (25.39 | )% | (34.45 | )% | (12.17 | )% | �� | (2.10 | )% | ||||||||||||||||
CLASS R6 2 | (OSPMX | ) | 6/28/13 | (25.39 | )% | (34.47 | )% | (11.94 | )% | (7.63 | )% |
1. | Class R and Class R5 shares’ performance shown prior to the inception date (after the close of business on May 24, 2019) is that of the predecessor fund’s Class A shares at net asset value (NAV) and includes the 12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements. |
2. | Class I shares of the predecessor fund were reorganized as Class R6 shares on May 24, 2019. |
Performance quoted is past performance and cannot guarantee future results; current performance may be lower or higher. Visit invesco.com for the most recent month-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Performance shown at NAV does not include the applicable front-end sales charge, which would have reduced the performance. The current maximum initial sales charge for Class A shares is 5.50%, and the contingent deferred sales charge for Class C shares is 1% for the 1-year period. Class R, Class Y, Class R5 and Class R6 shares have no sales charge; therefore, performance is at NAV. Effective after the close of business on May 24, 2019, Class A, Class C, Class Y, and Class I shares of the predecessor fund were reorganized into Class A, Class C, Class Y, and Class R6 shares, respectively, of the Fund. Class R and Class R5 shares’ performance shown prior to the inception date is that of the predecessor fund’s Class A shares at NAV and includes the 12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements. Returns shown for Class A, Class C, Class R, Class Y, Class R5, and Class R6 shares are blended returns of the predecessor fund and the Fund. Share class returns will differ from those of the predecessor fund because of different expenses. See Fund prospectuses and summary prospectuses for more information on share classes, sales charges and new fee agreements, if any. Fund literature is available at invesco.com.
The Fund’s performance is compared to the performance of the S&P 500 Index and the Alerian MLP Index. The S&P 500 Index is a broad-based measure of domestic stock performance. The Alerian MLP Index is a composite of the 50 most prominent Master Limited Partnerships that provides investors with an unbiased, comprehensive benchmark for this emerging asset class. The Alerian MLP Index, which is calculated using a float-adjusted, capitalization weighted methodology, is disseminated real-time on a total-return basis. The returns for the S&P 500 Index and Alerian MLP Index are calculated pre-tax, while the Fund’s returns are calculated post corporate tax. The indices are unmanaged and cannot be purchased directly by investors. While index comparisons may be useful to provide a benchmark for the Fund’s performance, it must be noted that the Fund’s investments are not limited to the investments comprising the indices. Index performance includes reinvestment of income, but does not reflect transaction costs, fees, expenses or taxes. The Fund’s performance reflects the effects of the Fund’s business and operating expenses.
Liquidity Risk Management Program
The Securities and Exchange Commission has adopted Rule 22e-4 under the Investment Company Act of 1940 (the “Liquidity Rule”) in order to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders. The Fund has adopted and implemented a liquidity risk management program in accordance with the Liquidity Rule (the “Program”). The Program is reasonably designed to assess and manage the Fund’s liquidity risk, which is the risk that the Fund could not meet redemption requests without significant dilution of remaining investors’ interests in the Fund. The Board of Trustees of the Fund (the “Board”) has appointed Invesco Advisers, Inc. (“Invesco”), the Fund’s investment adviser, as the Program’s administrator, and Invesco has delegated oversight of the Program to the Liquidity Risk Management Committee (the “Committee”), which is composed of senior representatives from relevant business groups at Invesco.
As required by the Liquidity Rule, the Program includes policies and procedures providing for an assessment, no less frequently than annually, of the Fund’s liquidity risk that takes into account, as relevant to the Fund’s liquidity risk: (1) the Fund’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions; (2) short-term and long-term cash flow projections for the Fund during both normal and reasonably foreseeable stressed conditions; and (3) the Fund’s holdings of cash and cash equivalents and any borrowing arrangements, including the terms of the Fund’s credit facility, the financial health of the institution providing the credit facility and the fact that the credit facility is shared among multiple funds. The Liquidity Rule also requires the classification of the Fund’s investments into categories that reflect the assessment of their relative liquidity under current market conditions. The Fund classifies its investments into one of four categories defined in
4 Invesco Oppenheimer SteelPath MLP Income Fund
the Liquidity Rule: “Highly Liquid,” “Moderately Liquid,” “Less Liquid” and “Illiquid.” Funds that are not invested primarily in “Highly Liquid Investments” that are assets (cash or investments that are reasonably expected to be convertible into cash within three business days without significantly changing the market value of the investment) are required to establish a “Highly Liquid Investment Minimum” (“HLIM”), which is the minimum percentage of net assets that must be invested in Highly Liquid Investments. Funds with HLIMs have procedures for addressing HLIM shortfalls, including reporting to the Board and the SEC (on a non-public basis) as required by the Program and the Liquidity Rule. In addition, the Fund may not acquire an investment if, immediately after the acquisition, over 15% of the Fund’s net assets would consist of “Illiquid Investments” that are assets (an investment that cannot reasonably be expected to be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment). The Liquidity Rule and the Program also require reporting to the Board and the SEC (on a non-public basis) if a Fund’s holdings of Illiquid Investments exceed 15% of the Fund’s assets.
At a meeting held on March 30-April 1, 2020, the Committee presented a report to the Board that addressed the operation of the Program and assessed the Program’s adequacy and effectiveness of implementation (the “Report”). The Report covered the period from December 1, 2018 through December 31, 2019 (the “Program Reporting Period”).
The Report stated, in relevant part, that during the Program Reporting Period:
• | The Program, as adopted and implemented, remained reasonably designed to assess and manage the Fund’s liquidity risk and was operated effectively to achieve that goal; |
• | The Fund’s investment strategy remained appropriate for an open-end fund; |
• | The Fund was able to meet requests for redemption without significant dilution of remaining investors’ interests in the Fund; |
• | The Fund did not breach the 15% limit on Illiquid Investments; and |
• | The Fund primarily held Highly Liquid Investments and therefore has not adopted an HLIM. |
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisors for a prospectus/summary prospectus or visit invesco.com/fundprospectus.
Shares of Invesco funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
5 Invesco Oppenheimer SteelPath MLP Income Fund
Fund Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended May 31, 2020.
Actual Expenses
The first section of the table provides information about actual account values and actual expenses. You may use the information in this section for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During 6 Months Ended May 31, 2020” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio for each class of shares, and an assumed rate of return of 5% per year for each class before expenses, which is not the actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads). Therefore, the “hypothetical” section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Beginning Account Value December 01, 2019 | Ending Account Value May 31, 2020 | Expenses Paid During 6 Months Ended May 31, 20201,2 | |||||||||
CLASS A | $ | 1,000.00 | $ | 743.60 | $ | 6.36 | ||||||
CLASS C | 1,000.00 | 742.90 | 9.76 | |||||||||
CLASS R | 1,000.00 | 743.00 | 7.45 | |||||||||
CLASS Y | 1,000.00 | 744.50 | 5.23 | |||||||||
CLASS R5 | 1,000.00 | 746.10 | 4.98 | |||||||||
CLASS R6 | 1,000.00 | 746.20 | 4.89 | |||||||||
Hypothetical (5% return before expenses) | ||||||||||||
CLASS A | 1,000.00 | 1,017.70 | 7.36 | |||||||||
CLASS C | 1,000.00 | 1,013.80 | 11.28 | |||||||||
CLASS R | 1,000.00 | 1,016.40 | 8.62 | |||||||||
CLASS Y | 1,000.00 | 1,019.00 | 6.06 | |||||||||
CLASS R5 | 1,000.00 | 1,019.30 | 5.76 | |||||||||
CLASS R6 | 1,000.00 | 1,019.40 | 5.65 |
1. | Actual expenses paid for all classes are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
2. | Hypothetical expenses paid for all classes are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
6 Invesco Oppenheimer SteelPath MLP Income Fund
Those annualized expense ratios, based on the 6-month period ended May 31, 2020 for Classes A, C, R, Y, R5 and R6 are as follows:
Class | Expense Ratios | |||
CLASS A | 1.46 | % | ||
CLASS C | 2.24 | |||
CLASS R | 1.71 | |||
CLASS Y | 1.20 | |||
CLASS R5 | 1.14 | |||
CLASS R6 | 1.12 |
The expense ratios for Class A, C, R, and Y reflect contractual waivers and/or reimbursements of expenses by the Fund’s Adviser. Some of these undertakings may be modified or terminated at any time, as indicated in the Fund’s prospectus. The “Financial Highlights” tables in the Fund’s financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements, if applicable.
7 Invesco Oppenheimer SteelPath MLP Income Fund
May 31, 2020
(Unaudited)
Description | Shares | Value | ||||||
MLP Investments and Related Entities–91.5% |
| |||||||
Gathering/Processing–31.9% |
| |||||||
Antero Midstream Corp1 | 19,099,166 | $ | 91,294,013 | |||||
DCP Midstream LP | 5,726,622 | 62,992,842 | ||||||
EnLink Midstream LLC1 | 30,960,910 | 73,067,748 | ||||||
MPLX LP | 11,750,000 | 223,132,500 | ||||||
Sanchez Midstream Partners LP1 | 1,758,705 | 569,996 | ||||||
Summit Midstream Partners LP1 | 11,150,202 | 14,606,765 | ||||||
Western Midstream Partners LP | 13,305,706 | 124,275,294 | ||||||
Total Gathering/Processing | 589,939,158 | |||||||
Natural Gas Pipeline Transportation–13.9% |
| |||||||
Energy Transfer LP | 30,040,783 | 245,132,793 | ||||||
EQM Midstream Partners LP | 568,997 | 11,180,791 | ||||||
Total Natural Gas Pipeline Transportation |
| 256,313,584 | ||||||
Other Energy–27.4% |
| |||||||
CrossAmerica Partners LP1 | 3,059,477 | 46,198,103 | ||||||
GasLog Partners LP2 | 1,190,291 | 5,225,377 | ||||||
Global Partners LP1 | 2,881,379 | 29,390,066 | ||||||
Golar LNG Partners LP1,2 | 4,669,416 | 11,346,681 | ||||||
Hoegh LNG Partners LP2 | 484,142 | 5,020,552 | ||||||
KNOT Offshore Partners LP1,2 | 1,788,152 | 27,108,384 | ||||||
Suburban Propane Partners LP1 | 4,884,901 | 71,270,706 | ||||||
Sunoco LP1 | 7,016,751 | 181,032,176 | ||||||
USA Compression Partners LP1 | 10,700,459 | 128,940,531 | ||||||
Total Other Energy | 505,532,576 | |||||||
Petroleum Pipeline Transportation–17.0% |
| |||||||
Delek Logistics Partners LP | 1,274,515 | 30,346,202 | ||||||
Genesis Energy LP1 | 11,656,274 | 93,483,317 | ||||||
NGL Energy Partners LP1 | 13,864,586 | 70,709,389 | ||||||
NuStar Energy LP1 | 5,110,991 | 88,777,914 | ||||||
PBF Logistics LP | 2,596,128 | 26,999,731 | ||||||
Shell Midstream Partners LP | 300,000 | 4,047,000 | ||||||
Total Petroleum Pipeline Transportation |
| 314,363,553 |
Description | Shares | Value | ||||||
Terminalling & Storage–1.3% |
| |||||||
Blueknight Energy Partners LP1 | 2,140,334 | $ | 2,975,064 | |||||
Martin Midstream Partners LP1 | 8,047,133 | 20,117,833 | ||||||
Total Terminalling & Storage | 23,092,897 | |||||||
Total MLP Investments And Related Entities |
| 1,689,241,768 | ||||||
Preferred MLP Investments and Related Entities–2.9% |
| |||||||
Gathering/Processing–0.6% | ||||||||
Crestwood Equity Partners LP, 9.25%3 | 1,562,627 | 10,360,217 | ||||||
Petroleum Pipeline Transportation–1.6% |
| |||||||
GPM Petroleum LP, 10%1,3,4,5 | 1,500,000 | 29,970,000 | ||||||
Terminalling & Storage–0.7% |
| |||||||
Altera Infrastructure LP, 7.25%1,2,3 | 592,198 | 9,250,133 | ||||||
Blueknight Energy Partners LP, 11%1,3,6 | 799,993 | 4,279,962 | ||||||
Total Terminalling & Storage | 13,530,095 | |||||||
Total Preferred MLP Investments And Related Entities |
| 53,860,312 | ||||||
Short-Term Investments–6.9% |
| |||||||
Money Market–6.9% | ||||||||
Fidelity Treasury Portfolio, Institutional Class, 0.107%7 | 127,249,796 | 127,249,796 | ||||||
Total Short-Term Investments |
| 127,249,796 | ||||||
TOTAL INVESTMENTS–101.3% |
| 1,870,351,876 | ||||||
LIABILITIES IN EXCESS OF OTHER ASSETS–(1.3)% |
| (23,680,845 | ) | |||||
NET ASSETS–100% |
| $ | 1,846,671,031 |
Investment Abbreviations
LLC | – Limited Liability Company | |
LP | – Limited Partnership |
Footnotes to Schedule of Investments
1. | Is or was an affiliate, as defined by the Investment Company Act of 1940, at or during the period ended May 31, 2020, by virtue of the Fund owning at least 5% of the voting securities of the issuer. Transactions during this period in which the issuer was an affiliate are as follows: |
Shares November 30, 2019 | Gross Additions | Gross Reductions | Shares May 31, 2020 | |||||||||||||
MLP Investments and Related Entities | ||||||||||||||||
Antero Midstream Corpi | 29,751,400 | 14,326,786 | (24,979,020 | ) | 19,099,166 | |||||||||||
Blueknight Energy Partners LP | 2,140,334 | — | — | 2,140,334 | ||||||||||||
CrossAmerica Partners LP | 3,059,477 | — | — | 3,059,477 | ||||||||||||
Enlink Midstream LLC | 14,700,910 | 16,260,000 | — | 30,960,910 | ||||||||||||
Genesis Energy LP | 9,956,274 | 1,700,000 | — | 11,656,274 | ||||||||||||
Global Partners LP | 2,881,379 | — | — | 2,881,379 |
See accompanying Notes to Financial Statements.
8 Invesco Oppenheimer SteelPath MLP Income Fund
Shares November 30, 2019 | Gross Additions | Gross Reductions | Shares May 31, 2020 | |||||||||||||
Golar LNG Partners LP | 4,669,416 | — | — | 4,669,416 | ||||||||||||
KNOT Offshore Partners LP | 1,788,152 | — | — | 1,788,152 | ||||||||||||
Martin Midstream Partners LP | 8,047,133 | — | — | 8,047,133 | ||||||||||||
NGL Energy Partners LP | 13,664,586 | 200,000 | — | 13,864,586 | ||||||||||||
NuStar Energy LPi | 7,625,269 | 200,000 | (2,714,278 | ) | 5,110,991 | |||||||||||
Sanchez Midstream Partners LP | 1,758,705 | — | — | 1,758,705 | ||||||||||||
Sprague Resources LPi | 1,638,339 | — | (1,638,339 | ) | — | |||||||||||
Suburban Propane Partners LP | 4,584,901 | 300,000 | — | 4,884,901 | ||||||||||||
Summit Midstream Partners LP | 11,150,202 | — | — | 11,150,202 | ||||||||||||
Sunoco LP | 9,584,958 | — | (2,568,207 | ) | 7,016,751 | |||||||||||
Tallgrass Energy LPi | 9,911,662 | — | (9,911,662 | ) | — | |||||||||||
USA Compression Partners LP | 10,650,459 | 50,000 | — | 10,700,459 | ||||||||||||
Preferred MLP Investments and Related Entities | ||||||||||||||||
Altera Infrastructure LP–Preferredii | 592,198 | — | — | 592,198 | ||||||||||||
Blueknight Energy Partners LP–Preferred | 799,993 | — | — | 799,993 | ||||||||||||
GPM Petroleum LP–Preferrediii | 1,500,000 | — | — | 1,500,000 |
Value May 31, 2020 | Dividends and Distributions | Change in Unrealized Appreciation/ Depreciation | ||||||||||||||||||||||
Return of Capital | Capital Gains | Income | Realized Gain/(Loss) | |||||||||||||||||||||
MLP Investments and Related Entities | ||||||||||||||||||||||||
Antero Midstream Corpi | $ | 91,294,013 | $ | 13,061,740 | $ | — | $ | 2,675,296 | $ | (103,147,219 | ) | $ | 56,614,209 | |||||||||||
Blueknight Energy Partners LP | 2,975,064 | 33,312 | 137,915 | — | — | 718,219 | ||||||||||||||||||
CrossAmerica Partners LP | 46,198,103 | 3,212,451 | — | — | — | (6,516,686 | ) | |||||||||||||||||
Enlink Midstream LLC | 73,067,748 | 6,755,881 | — | — | — | (65,294,756 | ) | |||||||||||||||||
Genesis Energy LP | 93,483,317 | 6,988,492 | 235,900 | — | — | (98,959,030 | ) | |||||||||||||||||
Global Partners LP | 29,390,066 | 2,647,267 | — | — | — | (25,647,875 | ) | |||||||||||||||||
Golar LNG Partners LP | 11,346,681 | 1,981,700 | — | — | — | (31,077,765 | ) | |||||||||||||||||
KNOT Offshore Partners LP | 27,108,384 | 718,193 | — | 1,141,485 | — | (7,320,266 | ) | |||||||||||||||||
Martin Midstream Partners LP | 20,117,833 | 892,203 | 113,689 | — | — | (12,385,566 | ) | |||||||||||||||||
NGL Energy Partners LP | 70,709,389 | 8,134,511 | 45,595 | — | — | (59,143,134 | ) | |||||||||||||||||
NuStar Energy LPi | 88,777,914 | 5,797,376 | 77,415 | — | 9,791,242 | (57,894,341 | ) | |||||||||||||||||
Sanchez Midstream Partners LP | 569,996 | — | — | — | — | 77,383 | ||||||||||||||||||
Sprague Resources LPi | — | 1,093,591 | — | — | 8,609,478 | (12,503,661 | ) | |||||||||||||||||
Suburban Propane Partners LP | 71,270,706 | 5,621,881 | — | — | — | (30,244,683 | ) | |||||||||||||||||
Summit Midstream Partners LP | 14,606,765 | 1,322,094 | 71,681 | — | — | (18,190,759 | ) | |||||||||||||||||
Sunoco LP | 181,032,176 | 13,685,460 | — | — | 11,297,558 | (60,548,174 | ) | |||||||||||||||||
Tallgrass Energy LPi | — | — | — | — | 22,201,077 | 19,296,810 | ||||||||||||||||||
USA Compression Partners LP | 128,940,531 | 10,660,620 | 548,612 | — | — | (36,295,395 | ) | |||||||||||||||||
Preferred MLP Investments and Related Entities |
| |||||||||||||||||||||||
Altera Infrastructure LP—Preferredii | 9,250,133 | 536,650 | — | — | — | (3,123,133 | ) | |||||||||||||||||
Blueknight Energy Partners LP—Preferred | 4,279,963 | 285,998 | — | — | — | 421,997 | ||||||||||||||||||
GPM Petroleum LP—Preferrediii | 29,970,000 | 1,482,199 | — | — | — | 1,452,199 | ||||||||||||||||||
$ | 994,388,782 | $ | 84,911,619 | $ | 1,230,807 | $ | 3,816,781 | $ | (51,247,864 | ) | $ | (446,564,407 | ) |
i | Is not an affiliate as of May 31, 2020. Was an affiliate during the period ended May 31, 2020. |
ii. | Name changed from Teekay Offshore Partners effective March 24, 2020. |
iii. | An affiliate due to the Manager sitting on the board. |
2. | Foreign security denominated in U.S. dollars. |
3. | Perpetual security. Maturity date is not applicable. |
4. | Restricted security. The aggregate value of restricted securities at period end was $29,970,000, which represents 1.6% of the Fund’s net assets. |
5. | The value of this security was determined using significant unobservable inputs. |
6. | Represents the current interest rate for a variable or increasing rate security, which may be fixed for a predetermined period. The interest rate is, or will be as of an established date, determined as [Referenced Rate + Basis-point spread]. |
7. | Rate shown is the 7-day yield at period end. |
See accompanying Notes to Financial Statements.
9 Invesco Oppenheimer SteelPath MLP Income Fund
Statement of Assets and Liabilities
May 31, 2020
(Unaudited)
Assets: | ||||
Investments at value | ||||
Unaffiliated companies (cost $1,279,250,258) | $ | 1,056,035,021 | ||
Affiliated companies (cost $1,504,464,788) | 814,316,855 | |||
1,870,351,876 | ||||
Receivables and other assets: | ||||
Receivable for beneficial interest sold | 4,749,809 | |||
Prepaid taxes | 224,019 | |||
Prepaid expenses | 345,744 | |||
Dividends receivable | 789,997 | |||
Deferred compensation | 117,147 | |||
Total assets | 1,876,578,592 | |||
Liabilities: | ||||
Payables and other liabilities: | ||||
Payable for investments purchased | 23,873,078 | |||
Payable for beneficial interest redeemed | 2,574,635 | |||
Payable to Advisor | 1,313,575 | |||
Payable for distribution and service plan fees | 526,764 | |||
Transfer agent fees payable | 318,176 | |||
Borrowing expense payable | 54,338 | |||
Trustees’ fees payable | 2,665 | |||
Deferred compensation | 117,147 | |||
Other liabilities | 1,127,183 | |||
Total liabilities | 29,907,561 | |||
Net Assets | $ | 1,846,671,031 | ||
Composition of Net Assets | ||||
Shares of beneficial interest | $ | 3,568,530,734 | ||
Distributable earnings (loss) | (1,721,859,703 | ) | ||
Net Assets | $ | 1,846,671,031 |
Net Asset Value Per Share | ||||
Class A Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $843,121,276 and 288,377,210) | $2.92 | |||
Maximum offering price per share (net asset value plus sales charge of 5.50% of offering price) | $3.09 | |||
Class C Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $465,356,305 and 177,580,668) | $2.62 | |||
Class R Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $266,277 and 91,455) | $2.91 | |||
Class Y Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $512,469,867 and 167,780,105) | $3.05 | |||
Class R5 Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $5,197 and 1,773) | $2.93 | |||
Class R6 Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $25,452,109 and 8,262,044) | $3.08 |
See accompanying Notes to Financial Statements.
10 Invesco Oppenheimer SteelPath MLP Income Fund
Statement of Operations
For the Six Months Ended May 31, 2020
(Unaudited)
Investment Income | ||||
Distributions and dividends ($3,816,781 from affiliates) | $ | 142,340,906 | ||
Less return of capital on distributions and dividends ($84,911,619 from affiliates) | (136,010,501 | ) | ||
Less return of capital on distributions and dividends in excess of cost basis ($1,230,807 from affiliates) | (1,949,641 | ) | ||
Total investment income | 4,380,764 | |||
Expenses | ||||
Advisory fees | 10,209,671 | |||
Distribution and service plan fees | ||||
Class A | 1,207,308 | |||
Class C | 2,768,542 | |||
Class R | 513 | |||
Transfer agent fees | ||||
Class A | 545,477 | |||
Class C | 312,525 | |||
Class R | 116 | |||
Class Y | 340,221 | |||
Class R5 | 1 | |||
Class R6 | 806 | |||
Borrowing fees | 453,276 | |||
Administrative fees | 349,358 | |||
Tax expense | 179,450 | |||
Custody fees | 98,819 | |||
Legal, auditing, and other professional fees | 71,985 | |||
Registration fees | 71,667 | |||
Trustees’ fees | 20,506 | |||
Other | 117,262 | |||
Total expenses, before waivers and deferred taxes | 16,747,503 | |||
Less expense waivers | (326,932 | ) | ||
Net expenses, before deferred taxes | 16,420,571 | |||
Net investment loss, before deferred taxes | (12,039,807 | ) | ||
Deferred tax (expense)/benefit | — | |||
Net investment loss, net of deferred taxes | (12,039,807 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized loss | ||||
Investments from: | ||||
Unffiliated companies (net return of capital in excess of cost basis of $718,834) | ||||
(includes net losses from securities sold to affiliates of ($47,105,967)) | (195,502,174 | ) | ||
Affiliated companies (net return of capital in excess of cost basis of $1,230,807) | (51,247,864 | ) | ||
Deferred tax (expense)/benefit | — | |||
Net realized losses, net of deferred taxes | (246,750,038 | ) | ||
Net change in unrealized appreciation/(depreciation) on: | ||||
Investment transaction in: | ||||
Unaffiliated companies | 36,713,466 | |||
Affiliated companies | (446,564,407 | ) | ||
Deferred tax (expense)/benefit | — | |||
Net change in unrealized appreciation/(depreciation), net of deferred taxes | (409,850,941 | ) | ||
Net (Decrease) in Net Assets Resulting from Operations | $ | (668,640,786 | ) |
See accompanying Notes to Financial Statements.
11 Invesco Oppenheimer SteelPath MLP Income Fund
Statements of Changes in Net Assets
For the Six Months Ended May 31, 2020 (Unaudited) | For the Year Ended 2019 | |||||||
Operations | ||||||||
Net investment income/(loss), net of deferred taxes | $ | (12,039,807 | ) | $ | (39,548,067 | ) | ||
Net realized gains/(losses) on investments, net of deferred taxes | (246,750,038 | ) | 29,834,523 | |||||
Net change in unrealized appreciation/(depreciation), net of deferred taxes | (409,850,941 | ) | (108,626,844 | ) | ||||
Change in net assets resulting from operations | (668,640,786 | ) | (118,340,388 | ) | ||||
Distributions to shareholders from return of capital: | ||||||||
Class A shares | (78,003,126 | ) | (174,975,492 | ) | ||||
Class C shares | (49,060,825 | ) | (119,553,991 | ) | ||||
Class R shares | (17,878 | ) | (6,505 | ) | ||||
Class Y shares | (46,726,719 | ) | (106,411,983 | ) | ||||
Class R5 shares | (504 | ) | (706 | ) | ||||
Class R6 shares | (2,235,139 | ) | (3,595,204 | ) | ||||
Distributions to shareholders from return of capital | (176,044,191 | ) | (404,543,881 | ) | ||||
Beneficial Interest Transactions | ||||||||
Net increase in net assets resulting from beneficial interest transactions | ||||||||
Class A shares | 56,565,251 | 146,868,341 | ||||||
Class C shares | (5,683,936 | ) | 16,907,048 | |||||
Class R shares | 186,130 | 197,539 | ||||||
Class Y shares | 33,919,126 | 29,537,971 | ||||||
Class R5 shares | — | 10,000 | ||||||
Class R6 shares | 14,617,712 | 8,008,434 | ||||||
Change in net assets resulting from beneficial interest transactions | 99,604,283 | 201,529,333 | ||||||
Change in net assets | (745,080,694 | ) | (321,354,936 | ) | ||||
Net Assets | ||||||||
Beginning of period | 2,591,751,725 | 2,913,106,661 | ||||||
End of period | $ | 1,846,671,031 | $ | 2,591,751,725 |
See accompanying Notes to Financial Statements.
12 Invesco Oppenheimer SteelPath MLP Income Fund
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class A | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 4.32 | $ | 5.14 | $ | 5.92 | $ | 7.10 | $ | 7.16 | $ | 11.01 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.02 | ) | (0.06 | ) | (0.08 | ) | (0.08 | ) | (0.08 | ) | (0.08 | ) | ||||||||||||
Return of capital1 | 0.17 | 0.40 | 0.44 | 0.39 | 0.41 | 0.48 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.27 | ) | (0.48 | ) | (0.46 | ) | (0.78 | ) | 0.39 | (3.47 | ) | |||||||||||||
Total from investment operations | (1.12 | ) | (0.14 | ) | (0.10 | ) | (0.47 | ) | 0.72 | (3.07 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.28 | ) | (0.68 | ) | (0.68 | ) | (0.62 | ) | (0.78 | ) | (0.78 | ) | ||||||||||||
Income | — | — | — | 2 | (0.09 | ) | — | — | ||||||||||||||||
Total distributions to shareholders | (0.28 | ) | (0.68 | ) | (0.68 | ) | (0.71 | ) | (0.78 | ) | (0.78 | ) | ||||||||||||
Net asset value, end of period | $ | 2.92 | $ | 4.32 | $ | 5.14 | $ | 5.92 | $ | 7.10 | $ | 7.16 | ||||||||||||
Total Return, at Net Asset Value3 | (25.64 | )% | (3.89 | )% | (2.23 | )% | (7.58 | )% | 11.74 | % | (29.28 | )% | ||||||||||||
Ratios /Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 843,121 | $ | 1,162,368 | $ | 1,246,886 | $ | 1,378,553 | $ | 1,597,534 | $ | 1,247,161 | ||||||||||||
Ratio of Expenses to Average Net Assets:8 | ||||||||||||||||||||||||
Before (waivers) and deferred tax expense/(benefit) | 1.49 | % | 1.50 | % | 1.55 | % | 1.53 | % | 1.59 | % | 1.51 | % | ||||||||||||
Expense (waivers) | (0.03 | )% | (0.05 | )% | (0.10 | )%4 | (0.11 | )%4 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of (waivers) and before deferred tax expense/(benefit)5 | 1.46 | % | 1.45 | % | 1.45 | % | 1.42 | % | 1.47 | % | 1.40 | % | ||||||||||||
Deferred tax expense/(benefit)6 | — | % | — | % | — | % | — | % | — | % | (6.93 | )% | ||||||||||||
Total expenses/(benefit) | 1.46 | % | 1.45 | % | 1.45 | % | 1.42 | % | 1.47 | % | (5.53 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:8 |
| |||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (1.07 | )% | (1.22 | )% | (1.46 | )% | (1.29 | )% | (1.28 | )% | (1.29 | )% | ||||||||||||
Expense (waivers) | (0.03 | )% | (0.05 | )% | (0.10 | )%4 | (0.11 | )%4 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (1.04 | )% | (1.17 | )% | (1.36 | )% | (1.18 | )% | (1.16 | )% | (1.18 | )% | ||||||||||||
Deferred tax benefit/(expense)7 | — | % | — | % | — | % | — | % | — | % | 0.33 | % | ||||||||||||
Net investment income/(loss) | (1.04 | )% | (1.17 | )% | (1.36 | )% | (1.18 | )% | (1.16 | )% | (0.85 | )% | ||||||||||||
Portfolio turnover rate | 33 | % | 35 | % | 30 | % | 17 | % | 22 | % | 18 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Rounds to less than ($.005) per share. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
5. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 1.40%, 1.41%, 1.41%, 1.41%, 1.45%, and 1.37%, for the period ended May 31, 2020 and the years November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
6. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
7. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $932,924 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
13 Invesco Oppenheimer SteelPath MLP Income Fund
Financial Highlights—(continued)
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class C | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 3.92 | $ | 4.76 | $ | 5.57 | $ | 6.77 | $ | 6.91 | $ | 10.73 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.03 | ) | (0.09 | ) | (0.12 | ) | (0.13 | ) | (0.12 | ) | (0.15 | ) | ||||||||||||
Return of capital1 | 0.16 | 0.37 | 0.44 | 0.39 | 0.41 | 0.48 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.15 | ) | (0.44 | ) | (0.45 | ) | (0.75 | ) | 0.35 | (3.37 | ) | |||||||||||||
Total from investment operations | (1.02 | ) | (0.16 | ) | (0.13 | ) | (0.49 | ) | 0.64 | (3.04 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.28 | ) | (0.68 | ) | (0.68 | ) | (0.62 | ) | (0.78 | ) | (0.78 | ) | ||||||||||||
Income | — | — | — | 2 | (0.09 | ) | — | — | ||||||||||||||||
Total distributions to shareholders | (0.28 | ) | (0.68 | ) | (0.68 | ) | (0.71 | ) | (0.78 | ) | (0.78 | ) | ||||||||||||
Net asset value, end of period | $ | 2.62 | $ | 3.92 | $ | 4.76 | $ | 5.57 | $ | 6.77 | $ | 6.91 | ||||||||||||
Total Return, at Net Asset Value3 | (25.71 | )% | (4.68 | )% | (2.95 | )% | (8.27 | )% | 10.97 | % | (29.78 | )% | ||||||||||||
Ratios /Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 465,357 | $ | 690,751 | $ | 823,980 | $ | 973,023 | $ | 1,139,524 | $ | 1,008,201 | ||||||||||||
Ratio of Expenses to Average Net Assets:8 | ||||||||||||||||||||||||
Before (waivers) and deferred tax expense/(benefit) | 2.27 | % | 2.29 | % | 2.33 | % | 2.31 | % | 2.40 | % | 2.27 | % | ||||||||||||
Expense (waivers) | (0.03 | )% | (0.05 | )% | (0.10 | )%4 | (0.11 | )%4 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of (waivers) and before deferred tax expense/(benefit)5 | 2.24 | % | 2.24 | % | 2.23 | % | 2.20 | % | 2.28 | % | 2.16 | % | ||||||||||||
Deferred tax expense/(benefit)6 | — | % | — | % | — | % | — | % | — | % | (6.93 | )% | ||||||||||||
Total expenses/(benefit) | 2.24 | % | 2.24 | % | 2.23 | % | 2.20 | % | 2.28 | % | (4.77 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:8 |
| |||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (1.84 | )% | (2.01 | )% | (2.24 | )% | (2.07 | )% | (2.09 | )% | (2.05 | )% | ||||||||||||
Expense (waivers) | (0.03 | )% | (0.05 | )% | (0.10 | )%4 | (0.11 | )%4 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (1.81 | )% | (1.96 | )% | (2.14 | )% | (1.96 | )% | (1.97 | )% | (1.94 | )% | ||||||||||||
Deferred tax benefit/(expense)7 | — | % | — | % | — | % | — | % | — | % | 0.33 | % | ||||||||||||
Net investment income/(loss) | (1.81 | )% | (1.96 | )% | (2.14 | )% | (1.96 | )% | (1.97 | )% | (1.61 | )% | ||||||||||||
Portfolio turnover rate | 33 | % | 35 | % | 30 | % | 17 | % | 22 | % | 18 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Rounds to less than ($.005) per share |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
5. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 2.18%, 2.20%, 2.19%, 2.19%, 2.26%, and 2.13%, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
6. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
7. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $534,665 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
14 Invesco Oppenheimer SteelPath MLP Income Fund
Financial Highlights—(continued)
Class R | Six Months Ended (Unaudited) | Year Ended November 30, 20191 | ||||||
Per Share Operating Data | ||||||||
Net Asset Value, Beginning of Period | $ | 4.31 | $ | 5.46 | ||||
Income/(loss) from investment operations: | ||||||||
Net investment income/(loss)2 | (0.09 | ) | (0.03 | ) | ||||
Return of capital2 | 0.72 | 0.19 | ||||||
Net realized and unrealized gains/(losses) | (1.75 | ) | (0.91 | ) | ||||
Total from investment operations | (1.12 | ) | (0.75 | ) | ||||
Distributions to shareholders: | ||||||||
Return of capital | (0.28 | ) | (0.40 | ) | ||||
Income | — | — | ||||||
Total distributions to shareholders | (0.28 | ) | (0.40 | ) | ||||
Net asset value, end of period | $ | 2.91 | $ | 4.31 | ||||
Total Return, at Net Asset Value3 | (25.70 | )% | (14.41 | )% | ||||
Ratios /Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 266 | $ | 166 | ||||
Ratio of Expenses to Average Net Assets:4,8 | ||||||||
Before (waivers) and deferred tax expense/(benefit) | 1.74 | % | 1.71 | % | ||||
Expense (waivers) | (0.03 | )% | (0.05 | )% | ||||
Net of (waivers) and before deferred tax expense/(benefit)5 | 1.71 | % | 1.66 | % | ||||
Deferred tax expense/(benefit)6 | — | % | — | % | ||||
Total expenses/(benefit) | 1.71 | % | 1.66 | % | ||||
Ratio of Investment Income/(Loss) to Average Net Assets:4,8 | ||||||||
Before (waivers) and deferred tax benefit/(expense) | (1.32 | )% | (1.43 | )% | ||||
Expense (waivers) | (0.03 | )% | (0.05 | )% | ||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (1.29 | )% | (1.38 | )% | ||||
Deferred tax benefit/(expense)7 | — | % | — | % | ||||
Net investment income/(loss) | (1.29 | )% | (1.38 | )% | ||||
Portfolio turnover rate | 33 | % | 35 | % |
1. | Shares commenced operations after the close of business on May 24, 2019. |
2. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Annualized for period less than a full year. |
5. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 1.65% and 1.62%, for the period ended May 31, 2020 and the year ended November 30, 2019, respectively. |
6. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
7. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $199 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
15 Invesco Oppenheimer SteelPath MLP Income Fund
Financial Highlights—(continued)
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class Y | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 4.49 | $ | 5.31 | $ | 6.08 | $ | 7.25 | $ | 7.27 | $ | 11.15 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.01 | ) | (0.05 | ) | (0.07 | ) | (0.06 | ) | (0.06 | ) | (0.06 | ) | ||||||||||||
Return of capital1 | 0.18 | 0.41 | 0.44 | 0.39 | 0.41 | 0.48 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.33 | ) | (0.50 | ) | (0.46 | ) | (0.79 | ) | 0.41 | (3.52 | ) | |||||||||||||
Total from investment operations | (1.16 | ) | (0.14 | ) | (0.09 | ) | (0.46 | ) | 0.76 | (3.10 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.28 | ) | (0.68 | ) | (0.68 | ) | (0.62 | ) | (0.78 | ) | (0.78 | ) | ||||||||||||
Income | — | — | — | 2 | (0.09 | ) | — | — | ||||||||||||||||
Total distributions to shareholders | (0.28 | ) | (0.68 | ) | (0.68 | ) | (0.71 | ) | (0.78 | ) | (0.78 | ) | ||||||||||||
Net asset value, end of period | $ | 3.05 | $ | 4.49 | $ | 5.31 | $ | 6.08 | $ | 7.25 | $ | 7.27 | ||||||||||||
Total Return, at Net Asset Value3 | (25.55 | )% | (3.76 | )% | (1.99 | )% | (7.28 | )% | 12.12 | % | (29.18 | )% | ||||||||||||
Ratios /Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 512,470 | $ | 714,214 | $ | 820,187 | $ | 870,833 | $ | 816,733 | $ | 624,768 | ||||||||||||
Ratio of Expenses to Average Net Assets:8 | ||||||||||||||||||||||||
Before (waivers) and deferred tax expense/(benefit) | 1.23 | % | 1.24 | % | 1.29 | % | 1.27 | % | 1.32 | % | 1.26 | % | ||||||||||||
Expense (waivers) | (0.03 | )% | (0.05 | )% | (0.10 | )%4 | (0.11 | )%4 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of (waivers) and before deferred tax expense/(benefit)5 | 1.20 | % | 1.19 | % | 1.19 | % | 1.16 | % | 1.20 | % | 1.15 | % | ||||||||||||
Deferred tax expense/(benefit)6 | — | % | — | % | — | % | — | % | — | % | (6.93 | )% | ||||||||||||
Total expenses/(benefit) | 1.20 | % | 1.19 | % | 1.19 | % | 1.16 | % | 1.20 | % | (5.78 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:8 |
| |||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (0.81 | )% | (0.96 | )% | (1.20 | )% | (1.03 | )% | (1.01 | )% | (1.04 | )% | ||||||||||||
Expense (waivers) | (0.03 | )% | (0.05 | )% | (0.10 | )%4 | (0.11 | )%4 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (0.78 | )% | (0.91 | )% | (1.10 | )% | (0.92 | )% | (0.89 | )% | (0.93 | )% | ||||||||||||
Deferred tax benefit/(expense)7 | — | % | — | % | — | % | — | % | — | % | 0.33 | % | ||||||||||||
Net investment income/(loss) | (0.78 | )% | (0.91 | )% | (1.10 | )% | (0.92 | )% | (0.89 | )% | (0.60 | )% | ||||||||||||
Portfolio turnover rate | 33 | % | 35 | % | 30 | % | 17 | % | 22 | % | 18 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Rounds to less than ($.005) per share. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
5. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 1.14%, 1.15%, 1.15%, 1.15%, 1.18%, and 1.12%, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, and November 30, 2016, and November 30, 2015, respectively. |
6. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
7. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $582,134 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
16 Invesco Oppenheimer SteelPath MLP Income Fund
Financial Highlights—(continued)
Class R5 | Six Months Ended (Unaudited) | Year Ended November 30, 20191 | ||||||
Per Share Operating Data | ||||||||
Net Asset Value, Beginning of Period | $ | 4.32 | $ | 5.46 | ||||
Income/(loss) from investment operations: | ||||||||
Net investment income/(loss)2 | (0.01 | ) | (0.02 | ) | ||||
Return of capital2 | 0.17 | 0.20 | ||||||
Net realized and unrealized gains/(losses) | (1.27 | ) | (0.92 | ) | ||||
Total from investment operations | (1.11 | ) | (0.74 | ) | ||||
Distributions to shareholders: | ||||||||
Return of capital | (0.28 | ) | (0.40 | ) | ||||
Income | — | — | ||||||
Total distributions to shareholders | (0.28 | ) | (0.40 | ) | ||||
Net asset value, end of period | $ | 2.93 | $ | 4.32 | ||||
Total Return, at Net Asset Value3 | (25.39 | )% | (14.23 | )% | ||||
Ratios /Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 5 | $ | 8 | ||||
Ratio of Expenses to Average Net Assets:4,8 | ||||||||
Before deferred tax expense/(benefit)5 | 1.14 | % | 1.12 | % | ||||
Deferred tax expense/(benefit)6 | — | % | — | % | ||||
Total expenses/(benefit) | 1.14 | % | 1.12 | % | ||||
Ratio of Investment Income/(Loss) to Average Net Assets:4,8 | ||||||||
Before deferred tax benefit/(expense) | (0.72 | )% | (0.84 | )% | ||||
Deferred tax benefit/(expense)7 | — | % | — | % | ||||
Net investment income/(loss) | (0.72 | )% | (0.84 | )% | ||||
Portfolio turnover rate | 33 | % | 35 | % |
1. | Shares commenced operations after the close of business on May 24, 2019. |
2. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Annualized for periods less than a full year. |
5. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 1.08% and 1.08%, for the period ended May 31, 2020 and the year ended November 30, 2019, respectively. |
6. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realizedand unrealized gains/losses. |
7. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $6 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
17 Invesco Oppenheimer SteelPath MLP Income Fund
Financial Highlights—(continued)
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class R6 | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 4.52 | $ | 5.34 | $ | 6.10 | $ | 7.27 | $ | 7.29 | $ | 11.17 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.01 | ) | (0.04 | ) | (0.06 | ) | (0.06 | ) | (0.06 | ) | (0.05 | ) | ||||||||||||
Return of capital1 | 0.17 | 0.42 | 0.44 | 0.39 | 0.41 | 0.48 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.32 | ) | (0.52 | ) | (0.46 | ) | (0.79 | ) | 0.41 | (3.53 | ) | |||||||||||||
Total from investment operations | (1.16 | ) | (0.14 | ) | (0.08 | ) | (0.46 | ) | 0.76 | (3.10 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.28 | ) | (0.68 | ) | (0.68 | ) | (0.62 | ) | (0.78 | ) | (0.78 | ) | ||||||||||||
Income | — | — | — | 2 | (0.09 | ) | — | — | ||||||||||||||||
Total distributions to shareholders | (0.28 | ) | (0.68 | ) | (0.68 | ) | (0.71 | ) | (0.78 | ) | (0.78 | ) | ||||||||||||
Net asset value, end of period | $ | 3.08 | $ | 4.52 | $ | 5.34 | $ | 6.10 | $ | 7.27 | $ | 7.29 | ||||||||||||
Total Return, at Net Asset Value3 | (25.39 | )% | (3.75 | )% | (1.82 | )% | (7.26 | )% | 12.08 | % | (29.13 | )% | ||||||||||||
Ratios /Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 25,452 | $ | 24,245 | $ | 22,054 | $ | 22,409 | $ | 19,110 | $ | 216 | ||||||||||||
Ratio of Expenses to Average Net Assets:7 | ||||||||||||||||||||||||
Before deferred tax expense/(benefit)4 | 1.12 | % | 1.10 | % | 1.11 | % | 1.08 | % | 1.06 | % | 1.07 | % | ||||||||||||
Deferred tax expense/(benefit)5 | — | % | — | % | — | % | — | % | — | % | (6.93 | )% | ||||||||||||
Total expenses/(benefit) | 1.12 | % | 1.10 | % | 1.11 | % | 1.08 | % | 1.06 | % | (5.86 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 |
| |||||||||||||||||||||||
Before deferred tax benefit/(expense) | (0.70 | )% | (0.82 | )% | (1.03 | )% | (0.84 | )% | (0.75 | )% | (0.85 | )% | ||||||||||||
Deferred tax benefit/(expense)6 | — | % | — | % | — | % | — | % | — | % | 0.33 | % | ||||||||||||
Net investment income/(loss) | (0.70 | )% | (0.82 | )% | (1.03 | )% | (0.84 | )% | (0.75 | )% | (0.52 | )% | ||||||||||||
Portfolio turnover rate | 33 | % | 35 | % | 30 | % | 17 | % | 22 | % | 18 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Rounds to less than ($.005) per share. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 1.06%, 1.06%, 1.07%, 1.07%, 1.04%, and 1.05%, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $26,075 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
18 Invesco Oppenheimer SteelPath MLP Income Fund
May 31, 2020
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Oppenheimer SteelPath MLP Income Fund (the “Fund”) is a separate series of AIM Investment Funds (Invesco Investment Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust, as amended (the “1940 Act”), as an open-end management investment company authorized to an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.
The Fund’s investment objective is to seek total return.
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services — Investment Companies. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
19 Invesco Oppenheimer SteelPath MLP Income Fund
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investments reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Dividends and Distributions to Shareholders — Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. GAAP, are recorded on the ex-dividend date. The Fund’s dividend distribution policy is intended to provide monthly distributions to its shareholders at a rate that over time is similar to the distribution rate the Fund receives from the master limited partnerships (“MLPs”) in which it invests. The Fund generally pays out dividends that over time approximate the distributions received from the Fund’s portfolio investments based on, among other considerations, distributions the Fund actually received from portfolio investments, distributions it would have received if it had been fully invested at all times, and estimated future cash flows. Such dividends are not tied to the Fund’s investment income and may not represent yield or investment return on the Fund’s portfolio. To the extent that the dividends paid exceed the distributions the Fund receives from its underlying investments, the Fund’s assets will be reduced. The Fund’s tendency to pay out a consistent dividend may change, and the Fund’s level of distributions may increase or decrease. |
The estimated characterization of the distributions paid will be either a qualified dividend or distribution (return of capital). This estimate is based on the Fund’s operating results during the period. The actual characterization of the distributions made during the period will not be determined until after the end of the fiscal year.
E. | Master Limited Partnerships — The Fund primarily invests in Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships and limited liability companies taxed as partnerships under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Fund principally invests in MLPs that derive their revenue primarily from businesses involved in the gathering, transporting, processing, treating, storing, refining, distributing, mining or marketing of natural gas, natural gas liquids, crude oil, refined products or coal (“energy infrastructure MLPs”). The Fund is a partner in each MLP; accordingly, the Fund is required to take into account the Fund’s allocable share of income, gains, losses, deductions, expenses, and tax credits recognized by each MLP. The Fund is non-diversified and will concentrate its investments in the energy sector. Energy infrastructure MLPs are subject to a variety of industry specific risk factors that may adversely affect their business or operations, including a decrease in production or reduced volumes of natural gas or other energy commodities available for transporting, processing, storing or distributing; changes in energy commodity prices; a sustained reduced demand for crude oil, natural gas and refined petroleum products; depletion of natural gas reserves or other commodities if not replaced; natural disasters, extreme weather and environmental hazards; rising interest rates, how facilities are constructed, maintained and operated, environmental and safety controls, and the prices they may charge for products and services. In addition, taxes, government regulation, international politics, price, and supply fluctuations, volatile interest rates and energy conservation may cause difficulties for energy infrastructure MLPs. |
MLPs may be less liquid and subject to more abrupt or erratic price movements than conventional publicly traded securities.
F. | Return of Capital — Distributions received from the Fund’s investments in MLPs generally are comprised of income and return of capital. The Fund records investment income and return of capital based on estimates made at the time such distributions are received. The return of capital portion of the distribution is a reduction to investment income that results in an equivalent reduction in the cost basis of the associated investments and increases net realized gains (losses) and change in unrealized appreciation (depreciation). Such estimates are based on historical information available from each MLP and other industry sources. These estimates will subsequently be revised and may materially differ primarily based on information received from the MLPs after their tax reporting periods are concluded. |
G. | Federal Income Taxes. The Fund does not intend to qualify as a regulated investment company pursuant to Subchapter M of the Internal Revenue Code, but will rather be taxed as a corporation. As a corporation, the Fund is obligated to pay federal, state and local income tax on taxable income. For the six months ended May 31, 2020, the federal income tax rate is 21 percent. The Fund is currently using an estimated rate of 2.0 percent for state and local tax, net of federal tax expense. |
20 Invesco Oppenheimer SteelPath MLP Income Fund
The alternative minimum tax (“AMT”) requirements were repealed with the enactment of H.R. 1, Tax Cuts and Jobs Act (the “TCJA”), for tax years beginning after December 31, 2017. Any past alternative minimum taxes paid by the Fund do qualify for substantial refundability under the TCJA with AMT credit carryforwards becoming partially refundable prior to, or fully refundable for tax years beginning in 2021.
The Fund’s income tax provision consists of the following as of May 31, 2020:
Current tax (expense) benefit | ||||
Federal | $ | — | ||
State | — | |||
Total current tax (expense) benefit | $ | — | ||
Deferred tax (expense) benefit | ||||
Federal | $ | 140,298,273 | ||
State | 13,361,741 | |||
Valuation allowance | (153,660,014) | |||
Total deferred tax (expense) benefit | $ | — |
The reconciliation between the federal statutory income tax rate of 21% and the tax effect on net investment income (loss) and realized and unrealized gain (loss) follows:
Amount | % Effect | |||||||
Application of Federal statutory income tax rate | $ | 140,414,565 | 21 | .00% | ||||
State income taxes net of federal benefit | 13,372,816 | 2 | .00% | |||||
Effect of permanent differences | (127,367) | (0 | .02)% | |||||
Change in valuation allowance | (153,660,014) | (22 | .98)% | |||||
Total income tax (expense) benefit | $ | — | 0 | .00% |
For the six months ended May 31, 2020 the Fund’s tax effect on net investment income (loss) and realized and unrealized gain (loss) of 0% differed from the combined federal and state statutory tax rate of 23% due in large part to the change in valuation allowance primarily as a result of the change in unrealized appreciation.
The Fund intends to invest its assets primarily in MLP investments, which generally are treated as partnerships for federal income tax purposes. As a limited partner in the MLP investments, the Fund reports its allocable share of the MLP investments’ taxable income in computing its own taxable income. The Fund’s tax expense or benefit is included in the Statement of Operations based on the component of income or gains (losses) to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Such temporary differences are principally: (i) taxes on unrealized gains/(losses), which are attributable to the temporary difference between fair market value and tax basis, (ii) the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes and (iii) the net tax benefit of accumulated net operating losses and capital loss carryforwards. Deferred tax assets and liabilities are measured using effective tax rates expected to apply to taxable income in the years such temporary differences are realized or otherwise settled. To the extent the Fund has a deferred tax asset, consideration is given to whether or not a valuation allowance is required. A valuation allowance is required if, based on the evaluation criterion provided by ASC 740, Income Taxes, it is more-likely-than-not some portion or all of the deferred tax asset will not be realized.
At May 31, 2020, the Fund determined a valuation allowance was required. The Fund’s assessment considered, among other matters, the nature, frequency and severity of current and cumulative losses, the duration of statutory carryforward periods and the associated risk that operating loss and capital loss carryforwards were limited as a result of shareholder transactions or were likely to expire unused, and unrealized gains and losses on investments. Consideration was also given to market cycles, the severity and duration of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. Additionally, various tax law changes resulting from the enactment of the TCJA were considered by the Fund in assessing the recoverability of its deferred tax assets. Specifically, the TCJA eliminated the net operating loss carryback ability and replaced the 20 year carryforward period with an indefinite carryforward period for any net operating losses arising in tax years ending after December 31, 2017. The TCJA also established a limitation for any net operating losses generated in tax years beginning after December 31, 2017 to the lesser of the aggregate of available net operating losses or 80% of taxable income before any net operating loss utilization. Through the consideration of these factors, the Fund has determined that it is more likely than not that the Fund’s deferred tax assets would not be fully realized. As a result, the Fund recorded a valuation allowance with respect to its deferred tax assets that are not considered to be realizable as of the six months ended May 31, 2020.
From time to time, the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related guidance or interpretations thereof, limitations imposed on or expirations of the Fund’s net operating losses and capital loss carryovers (if any) and changes in applicable tax law could result in increases or decreases in the Fund’s NAV per share, which could be material.
21 Invesco Oppenheimer SteelPath MLP Income Fund
Components of the Fund’s deferred tax assets and liabilities as of May 31, 2020 are as follows:
Deferred tax assets: | ||||
Net operating loss carryforward (tax basis) — Federal | $ | 150,990,082 | ||
Net operating loss carryforward (tax basis) — State | 15,376,217 | |||
Excess business interest expense carryforward | 13,894,977 | |||
Capital loss carryforward (tax basis) | 137,239,128 | |||
Valuation Allowance | (386,024,664) | |||
Total deferred tax asset | (68,524,260) | |||
Deferred tax liabilities: | ||||
Net unrealized gains on investment securities (tax basis) | $ | 68,524,260 | ||
Total deferred tax liability | 68,524,260 | |||
Total net deferred tax asset/(liability) | $ | — |
The Fund may rely, to some extent, on information provided by the MLPs, which may not necessarily be timely, to estimate taxable income allocable to MLP units held in its portfolio, and to estimate its associated deferred tax liability or asset. Such estimates are made in good faith. From time to time, as new information becomes available, the Fund will modify its estimates or assumptions regarding its tax liability or asset.
The Fund’s policy is to classify interest and penalties associated with underpayment of federal and state income taxes, if any, as income tax expense on its Statement of Operations. As of May 31, 2020, the Fund does not have any interest or penalties associated with the underpayment of any income taxes.
The Fund files income tax returns in the U.S. federal jurisdiction and various states. The Fund has reviewed all major jurisdictions and concluded that there is no significant impact on the Fund’s net assets and no tax liability resulting from unrecognized tax benefits relating to uncertain tax positions expected to be taken on its tax returns. Furthermore, management of the Fund is not aware of any uncertain tax positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly change in the next 12 months. Generally, the Fund is subject to examinations by taxing authorities for up to three years after the filing of the return for the tax period. All relevant periods are still open for examination.
At May 31, 2020 the Fund had net operating loss carryforwards for federal income tax purposes, as follows:
Expiration date for expiring net operating loss carryforwards: | ||||
11/30/2034 | $ | 124,658,893 | ||
11/30/2035 | 258,649,215 | |||
11/30/2036 | 144,223,600 | |||
11/30/2037 | 63,826,450 | |||
Total expiring net operating loss carryforwards | $ | 591,358,158 | ||
Total non-expiring net operating loss carryforwards | $ | 127,642,231 | ||
Total net operating loss carryforwards | $ | 719,000,389 |
At May 31, 2020, the Fund had net capital loss carryforwards for federal income tax purposes, which may be carried forward for 5 years, as follows:
Expiration Date | ||||
11/30/2021 | $ | 314,648,780 | ||
11/30/2024 | 40,357,372 | |||
11/30/2025 | 241,685,709 | |||
Total | $ | 596,691,861 |
At May 31, 2020, gross unrealized appreciation and depreciation of investments, based on cost for federal income tax purposes were as follows:
Cost of Investments | $ | 2,167,024,314 | ||
Gross Unrealized Appreciation | $ | 345,724,979 | ||
Gross Unrealized Depreciation | (642,397,417) | |||
Net Unrealized Appreciation (Depreciation) on Investments | $ | (296,672,438) |
The difference between cost amounts for financial statement and federal income tax purposes is due primarily to timing differences in recognizing certain gains and losses in security transactions.
H. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
I. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and |
22 Invesco Oppenheimer SteelPath MLP Income Fund
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
J. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $3 billion | 0.95% | |||
Next $2 billion | 0.93% | |||
Over $5 billion | 0.90% |
For the six months ended May 31, 2020, the effective advisory fees incurred by the Fund was 0.95%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC, and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a Sub-Advisory Agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Fund.
The Adviser has contractually agreed, through May 31, 2021, to waive advisory fees and/or reimburse expenses of all shares to the to the extent necessary to limit the total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.35%, 2.10%, 1.60%, 1.10%, 1.08% and 1.03%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expense after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expenses on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate May 31, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. See Note 10.
The Fund’s total annual operating expenses after fee waiver and/or expense reimbursement (“Net Expenses”) will be higher than these amounts to the extent that the Fund incurs expenses excluded from the expense cap. Because the Fund’s deferred income tax expense/(benefit) and interest expense are excluded from the expense cap, the Fund’s Net Expenses for each class of shares is increased/(decreased) by the amount of this expense. See Note 10.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended May 31, 2020, advisory fees of $326,932 were waived.
The Trust has entered into an administration and fund accounting agreement with UMB Fund Services, Inc. (“UMB”) pursuant to which UMB shall provide administration and fund accounting services to the Fund. The Trust and the Adviser have entered into a Master Administrative Services Agreement (“Administrative Services Agreement”) pursuant to which the Adviser may perform or arrange for the provision of certain accounting and other administrative services to the Fund which are not required to be performed by the Adviser under the Investment Advisory Agreement. The Adviser may only receive fees for administrative services under the Administrative Services Agreement to the extent that those fees assessed under the agreement are in excess of the fees paid to UMB Fund Services. For the six months ended May 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative fees. Additionally, Invesco has entered into service agreements whereby UMB Bank, n.a., serves as custodian to the Fund.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended May 31, 2020, expenses incurred under these agreements are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of the Class A shares, 1.00% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net
23 Invesco Oppenheimer SteelPath MLP Income Fund
assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plan would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended May 31, 2020, expenses incurred under the plans are shown in the Statement of Operations as Distribution and service plan fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended May 31, 2020, IDI advised the Fund that IDI retained $302,795 in front-end sales commissions from the sale of Class A shares and $44,874 and $44,914 from Class A and Class C shares, respectively, for CDSC imposed on redemptions by shareholders
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of May 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 — | Level 2 — | Level 3 — | Value | |||||||||||||
Assets Table | ||||||||||||||||
Investments, at Value: | ||||||||||||||||
MLP Investments and Related Entities* | $ | 1,689,241,768 | $ | — | $ | — | $ | 1,689,241,768 | ||||||||
Preferred MLP Investments and Related Entities* | 23,890,312 | — | 29,970,000 | 53,860,312 | ||||||||||||
Short-Term Investments | 127,249,796 | — | — | 127,249,796 | ||||||||||||
Total Assets | $ | 1,840,381,876 | $ | — | $ | 29,970,000 | $ | 1,870,351,876 |
* | A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the reporting period in relation to net assets. |
The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:
Beginning balance November 30, 2019 | $ | 30,000,000 | ||
Transfers into Level 3 during the period | — | |||
Change in unrealized appreciation/(depreciation) | 1,452,199 | |||
Total realized gain/(loss) | — | |||
Purchases | — | |||
Payment in kind from distributions | — | |||
Sales | — | |||
Conversion to common shares, at cost | — | |||
Return of capital distributions | (1,482,199 | ) | ||
Transfers out of Level 3 during the period | — | |||
Ending balance May 31, 2020 | $ | 29,970,000 |
The total change in unrealized appreciation/depreciation included in the Statement of Operations attributable to Level 3 investments still held at May 31, 2020 is ($30,000).
24 Invesco Oppenheimer SteelPath MLP Income Fund
The following table summarizes the valuation techniques and significant unobservable inputs used in determining fair value measurements for those investments classified as Level 3 as of May 31, 2020:
Assets Table Investments, at Value: | Value as of May 31, 2020 | Valuation Technique | Unobservable input | Range of Unobservable Inputs | Unobservable Input Used | |||||||||||||||
Preferred Stocks | $ | 29,970,000 | | Discounted Cash Flow Model | | Illiquidity Discount | N/A | 10 | %(a) | |||||||||||
Average Estimated Yield | 13.1%-13.2% | 13.2 | % | |||||||||||||||||
Total | $ | 29,970,0000 |
(a) | The Fund fair values certain preferred shares using a discounted cash flow model, which incorporates an illiquidity discount and the expected yield based on the average yield on comparable companies’ equity. Such security’s fair valuation could decrease (increase) significantly based on an increase (decrease) in the illiquidity discount. Such security’s fair valuation could decrease (increase) significantly based on a decrease (increase) in expected yields. |
NOTE 4—Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures for the six month period May 31, 2020, the Fund engaged in transactions with affiliates as listed: Securities purchases of $35,637,418 and securities sales of $57,390,734, which resulted in net realized losses of ($47,105,967).
NOTE 5—Trustees’ and Officer Fees and Benefits
Certain trustees have executed a Deferred Compensation Agreement pursuant to which they have the option to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Invesco and/or Invesco Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities, if applicable. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance with the compensation deferral plan.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with UMB Bank n.a the custodian bank. Such balances, if any, at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended May 31, 2020 was $678,514,855 and $725,997,735 respectively.
25 Invesco Oppenheimer SteelPath MLP Income Fund
NOTE 8—Share Information
The Fund has authorized an unlimited number of shares of beneficial interest in each class. Transactions in shares of beneficial interest were as follows:
Six Months Ended May 31, 2020 (Unaudited)2 | Year Ended November 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A | ||||||||||||||||
Sold | 58,984,189 | $ | 190,854,450 | 59,071,919 | $ | 317,298,717 | ||||||||||
Dividends and/or distributions reinvested | 23,541,509 | 70,914,954 | 29,975,510 | 158,793,897 | ||||||||||||
Redeemed | (63,362,468 | ) | (205,204,153 | ) | (62,265,107 | ) | (329,224,273 | ) | ||||||||
Net increase/(decrease) | 19,163,230 | $ | 56,565,251 | 26,782,322 | $ | 146,868,341 | ||||||||||
Class C | ||||||||||||||||
Sold | 23,675,651 | $ | 68,522,635 | 32,135,277 | $ | 158,691,589 | ||||||||||
Dividends and/or distributions reinvested | 17,460,414 | 47,480,644 | 23,900,051 | 116,246,088 | ||||||||||||
Redeemed | (39,604,206 | ) | (121,687,215 | ) | (52,944,397 | ) | (258,030,629 | ) | ||||||||
Net increase/(decrease) | 1,531,859 | $ | (5,683,936 | ) | 3,090,931 | $ | 16,907,048 | |||||||||
Class R1 | ||||||||||||||||
Sold | 63,178 | $ | 200,575 | 37,266 | $ | 191,739 | ||||||||||
Dividends and/or distributions reinvested | 5,987 | 17,374 | 1,180 | 5,800 | ||||||||||||
Redeemed | (16,156 | ) | (31,819 | ) | — | — | ||||||||||
Net increase/(decrease) | 53,009 | $ | 186,130 | 38,446 | $ | 197,539 | ||||||||||
Class Y | ||||||||||||||||
Sold | 76,579,591 | $ | 258,239,310 | 70,637,032 | $ | 391,713,673 | ||||||||||
Dividends and/or distributions reinvested | 14,867,405 | 46,533,600 | 19,254,732 | 105,828,830 | ||||||||||||
Redeemed | (82,801,719 | ) | (270,853,784 | ) | (85,235,792 | ) | (468,004,532 | ) | ||||||||
Net increase/(decrease) | 8,645,277 | $ | 33,919,126 | 4,655,972 | $ | 29,537,971 | ||||||||||
Class R51 | ||||||||||||||||
Sold | — | $ | — | 1,773 | $ | 10,000 | ||||||||||
Dividends and/or distributions reinvested | — | — | — | — | ||||||||||||
Redeemed | — | — | — | — | ||||||||||||
Net increase/(decrease) | — | $ | — | 1,773 | $ | 10,000 | ||||||||||
Class R6 | ||||||||||||||||
Sold | 4,128,042 | $ | 18,632,244 | 3,088,499 | $ | 17,924,592 | ||||||||||
Dividends and/or distributions reinvested | 708,175 | 2,194,810 | 627,552 | 3,468,481 | ||||||||||||
Redeemed | (1,935,063 | ) | (6,209,342 | ) | (2,484,539 | ) | (13,384,639 | ) | ||||||||
Net increase/(decrease) | 2,901,154 | $ | 14,617,712 | 1,231,512 | $ | 8,008,434 |
1. | Class R and R5 shares commenced operations after the close of business on May 24, 2019. |
2. | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and own 44% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates, including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 9—Borrowing Agreement
The Fund, along with Invesco Oppenheimer SteelPath MLP Alpha Plus Fund, Invesco Oppenheimer SteelPath MLP Alpha Fund, and Invesco Oppenheimer SteelPath MLP Select 40 Fund (collectively, the “Trust”), is a borrower in a $700 million revolving credit agreement (the “Loan Agreement”) with a major lending institution (the “Lender”). The Fund is permitted to borrow up to the lesser of one-third of the Fund’s total assets, or the maximum amount permitted pursuant to the Fund’s investment limitations. As the Loan Agreement is not available exclusively to the Fund, the Fund may not be able to borrow all of its requested amounts at any given time. Amounts borrowed under the Loan Agreement, if any, are invested by the Fund under the direction of the Adviser consistent with the Fund’s investment objective and policies, and as such, the related investments are subject to normal market fluctuations and investment risks, including the risk of loss due to a decline in value. The borrowing, if any, is fully collateralized throughout the term of the borrowing with securities or other assets of the Fund. The Fund is not liable for borrowings of other Funds in the Trust. If applicable, securities that have been pledged as collateral for the borrowing are indicated in the Schedule of Investments.
26 Invesco Oppenheimer SteelPath MLP Income Fund
Borrowings under the Loan Agreement are charged interest at a calculated rate computed by the Lender based on the one month LIBOR rate plus 0.75% per annum. An unused commitment fee at the rate of 0.30% per annum is charged for any undrawn portion of the credit facility, and each series of the Trust will pay its pro rata share of this fee. A facility fee of 0.10% was charged on the commitment amount, and each series of the Trust paid its pro rata share of this fee. The borrowing is due November 15, 2020, unless another date is mutually agreed upon by the parties of the Loan Agreement. For the six months ended May 31, 2020, the Fund paid $453,276 in borrowing fees. The Fund did not utilize the facility during the six months ended May 31, 2020.
NOTE 10—Remediation Note
Subsequent to the period ended November 30, 2019, the Fund determined that the valuation allowance related to the deferred tax asset included in the calculation of the net asset values per share (“NAV”) upon which the shareholders transacted had not been properly accounted for during the period that includes days between December 1, 2014 through March 6, 2020 (“overstatement period”). Specifically, it was determined that the realizability of the deferred tax asset did not meet the “more likely than not” evaluation criterion provided by ASC 740, Income Taxes, resulting in the overstatement of the deferred tax asset and corresponding understatement of the valuation allowance. As a result, the Fund’s NAVs have been corrected during certain days of the overstatement period.
Invesco is assessing the extent to which shareholders who transacted in the Fund during the overstatement period were negatively impacted by the overstatement of the Fund’s deferred tax asset, including the Fund’s overpayment of asset-based fees to affiliates. Invesco is preparing a remediation plan that contemplates payments by Invesco to shareholders whose accounts or transactions were negatively impacted by the overstatement of the NAVs during the overstatement period. The method of determining the actual remediation payments to be paid to individual shareholders is subject to various factors that are not yet certain and information that is not yet readily available, including retrieval of beneficial owner data for Fund shares held in omnibus accounts. The Fund’s Board has directed Invesco to proceed with the remediation plan with any remediation payments to be made directly to affected shareholders outside of the Fund, and that no remediation payments be made to the Fund unless or until the Board were to approve so in the future. The Fund is estimated to have over paid $11,833,000 in asset-based fees to affiliates as a result of the overstatement of the deferred tax asset, such amount which will be included in the calculation of remediation payments. Accordingly, all shareholder remediation payments are intended to be made directly to affected shareholders and not to the Fund and therefore no provision for such remediation payments have been made in the Fund’s financial statements. No remediation payments will be made by the Fund.
NOTE 11—Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared (COVID-19) to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12—Subsequent Event
Effective on or about September 30, 2020, the name of the Fund and all references thereto will change from Invesco Oppenheimer SteelPath MLP Income Fund to Invesco SteelPath MLP Income Fund.
27 Invesco Oppenheimer SteelPath MLP Income Fund
Explore High-Conviction Investing with Invesco
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Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
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Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
O-SPMI-SAR-1 072720 |
Semiannual Report | May 31, 2020 | |||
Invesco Oppenheimer SteelPath MLP Select 40 Fund | ||||
2 | Fund Performance | |
6 | Fund Expenses | |
7 | Schedule of Investments | |
9 | Financial Statements | |
12 | Financial Highlights | |
18 | Notes to Financial Statements |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800 959 4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
Fund Performance
Class A Shares
AVERAGE ANNUAL TOTAL RETURNS AT 5/31/2020
Class A Shares of the Fund | S&P 500 Index | Alerian MLP Index | ||||||||||||||
Without Sales Charge | With Sales Charge | |||||||||||||||
6-Month | (27.71 | )% | (31.72 | )% | (2.10 | )% | (24.26 | )% | ||||||||
1-Year | (36.51 | )% | (39.99 | )% | 12.84 | % | (34.74 | )% | ||||||||
5-Year | (11.40 | )% | (12.39 | )% | 9.86 | % | (12.93 | )% | ||||||||
10-year | (0.84 | )% | (1.40 | )% | 13.15 | % | (0.06 | )% | ||||||||
Since Inception (3/31/10) | (1.05 | )% | (1.60 | )% | 12.18 | % | (0.28 | )% |
Performance quoted is past performance and cannot guarantee future results; current performance may be lower or higher. Visit invesco.com for the most recent month-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Fund returns include changes in share price, reinvested distributions and a 5.50% maximum applicable sales charge except where “without sales charge” is indicated. Returns for periods of less than one year are cumulative and not annualized. As the result of a reorganization after the close of business on May 24, 2019, the returns of the Fund for periods on or prior to May 24, 2019 reflect performance of the Oppenheimer SteelPath MLP Select 40 Fund (the predecessor fund). Share class returns will differ from those of the predecessor fund because they have different expenses. Returns do not consider capital gains or income taxes on an individual’s investment. See Fund prospectus and summary prospectus for more information on share classes, sales charges and fee agreements, if any. Fund literature is available at invesco.com.
2 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Top Holdings and Allocations
TOP TEN MASTER LIMITED PARTNERSHIP AND RELATED ENTITIES HOLDINGS
Energy Transfer LP | 6.71 | % | ||
Sunoco LP | 6.18 | % | ||
NuStar Energy LP | 5.65 | % | ||
Westlake Chemical Partners LP | 5.42 | % | ||
TC PipeLines LP | 5.09 | % | ||
Williams Cos., Inc. | 4.91 | % | ||
Enterprise Products Partners LP | 4.82 | % | ||
Magellan Midstream Partners LP | 4.78 | % | ||
MPLX LP | 4.61 | % | ||
Targa Resources Corp. | 4.32 | % |
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of May 31, 2020, and are based on net assets.
SECTOR ALLOCATION
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of May 31, 2020 and are based on total market value of investments.
For more current Fund holdings, please visit invesco.com.
3 Invesco Oppenheimer SteelPath MLP Select 40 Fund
AVERAGE ANNUAL TOTAL RETURNS WITHOUT SALES CHARGE AS OF 5/31/2020 | ||||||||||||||||||||||||||||
Inception Date | 6-Month | 1-Year | 5-Year | 10-Year | Since Inception | |||||||||||||||||||||||
CLASS A | (MLPFX | ) | 3/31/10 | (27.71 | )% | (36.51 | )% | (11.40 | )% | (0.84 | )% | (1.05 | )% | |||||||||||||||
CLASS C | (MLPEX | ) | 7/14/11 | (27.97 | )% | (36.95 | )% | (12.04 | )% | (3.65 | )% | |||||||||||||||||
CLASS R 1 | (SPMWX | ) | 5/24/19 | (27.76 | )% | (36.74 | )% | (11.61 | )% | (1.08 | )% | |||||||||||||||||
CLASS Y | (MLPTX | ) | 3/31/10 | (27.44 | )% | (36.25 | )% | (11.15 | )% | (0.56 | )% | (0.77 | )% | |||||||||||||||
CLASS R5 1 | (SPMVX | ) | 5/24/19 | (27.50 | )% | (36.31 | )% | (11.32 | )% | (0.79 | )% | |||||||||||||||||
CLASS R6 2 | (OSPSX | ) | 6/28/13 | (27.43 | )% | (36.19 | )% | (11.07 | )% | (6.68 | )% |
AVERAGE ANNUAL TOTAL RETURNS WITH SALES CHARGE AS OF 5/31/2020 | ||||||||||||||||||||||||||||
Inception Date | 6-Month | 1-Year | 5-Year | 10-Year | Since Inception | |||||||||||||||||||||||
CLASS A | (MLPFX | ) | 3/31/10 | (31.72 | )% | (39.99 | )% | (12.39 | )% | (1.40 | )% | (1.60 | )% | |||||||||||||||
CLASS C | (MLPEX | ) | 7/14/11 | (28.64 | )% | (37.50 | )% | (12.04 | )% | (3.65 | )% | |||||||||||||||||
CLASS R 1 | (SPMWX | ) | 5/24/19 | (27.76 | )% | (36.74 | )% | (11.61 | )% | (1.08 | )% | |||||||||||||||||
CLASS Y | (MLPTX | ) | 3/31/10 | (27.44 | )% | (36.25 | )% | (11.15 | )% | (0.56 | )% | (0.77 | )% | |||||||||||||||
CLASS R5 1 | (SPMVX | ) | 5/24/19 | (27.50 | )% | (36.31 | )% | (11.32 | )% | (0.79 | )% | |||||||||||||||||
CLASS R6 2 | (OSPSX | ) | 6/28/13 | (27.43 | )% | (36.19 | )% | (11.07 | )% | (6.68 | )% |
1. | Class R and Class R5 shares’ performance shown prior to the inception date (after the close of business on May 24, 2019) is that of the predecessor fund’s Class A shares at net asset value (NAV) and includes the 12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements. |
2. | Class I shares of the predecessor fund were reorganized as Class R6 shares on May 24, 2019. |
Performance quoted is past performance and cannot guarantee future results; current performance may be lower or higher. Visit invesco.com for the most recent month-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Performance shown at NAV does not include the applicable front-end sales charge, which would have reduced the performance. The current maximum initial sales charge for Class A shares is 5.50%, and the contingent deferred sales charge for Class C shares is 1% for the 1-year period. Class R, Class Y, Class R5 and Class R6 shares have no sales charge; therefore, performance is at NAV. Effective after the close of business on May 24, 2019, Class A, Class C, Class Y, and Class I shares of the predecessor fund were reorganized into Class A, Class C, Class Y, and Class R6 shares, respectively, of the Fund. Class R and Class R5 shares’ performance shown prior to the inception date is that of the predecessor fund’s Class A shares at NAV and includes the 12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements. Returns shown for Class A, Class C, Class R, Class Y, Class R5, and Class R6 shares are blended returns of the predecessor fund and the Fund. Share class returns will differ from those of the predecessor fund because of different expenses. See Fund prospectuses and summary prospectuses for more information on share classes, sales charges and new fee agreements, if any. Fund literature is available at invesco.com.
The Fund’s performance is compared to the performance of the S&P 500 Index and the Alerian MLP Index. The S&P 500 Index is a broad-based measure of domestic stock performance. The Alerian MLP Index is a composite of the 50 most prominent Master Limited Partnerships that provides investors with an unbiased, comprehensive benchmark for this emerging asset class. The Alerian MLP Index, which is calculated using a float-adjusted, capitalization weighted methodology, is disseminated real-time on a total-return basis. The returns for the S&P 500 Index and Alerian MLP Index are calculated pre-tax, while the Fund’s returns are calculated post corporate tax. The indices are unmanaged and cannot be purchased directly by investors. While index comparisons may be useful to provide a benchmark for the Fund’s performance, it must be noted that the Fund’s investments are not limited to the investments comprising the indices. Index performance includes reinvestment of income, but does not reflect transaction costs, fees, expenses or taxes. The Fund’s performance reflects the effects of the Fund’s business and operating expenses.
Liquidity Risk Management Program
The Securities and Exchange Commission has adopted Rule 22e-4 under the Investment Company Act of 1940 (the “Liquidity Rule”) in order to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders. The Fund has adopted and implemented a liquidity risk management program in accordance with the Liquidity Rule (the “Program”). The Program is reasonably designed to assess and manage the Fund’s liquidity risk, which is the risk that the Fund could not meet redemption requests without significant dilution of remaining investors’ interests in the Fund. The Board of Trustees of the Fund (the “Board”) has appointed Invesco Advisers, Inc. (“Invesco”), the Fund’s investment adviser, as the Program’s administrator, and Invesco has delegated oversight of the Program to the Liquidity Risk Management Committee (the “Committee”), which is composed of senior representatives from relevant business groups at Invesco.
As required by the Liquidity Rule, the Program includes policies and procedures providing for an assessment, no less frequently than annually, of the Fund’s liquidity risk that takes into account, as relevant to the Fund’s liquidity risk: (1) the Fund’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions; (2) short-term and long-term cash flow projections for the Fund during both normal and reasonably foreseeable stressed conditions; and (3) the Fund’s holdings of cash and cash equivalents and any borrowing arrangements, including the terms of the Fund’s credit facility, the financial health of the institution providing the credit facility and the fact that the credit facility is shared among multiple funds. The Liquidity Rule also requires the classification of the Fund’s investments into categories that reflect the assessment of their relative liquidity under current market conditions. The Fund classifies its investments into one of four categories defined in
4 Invesco Oppenheimer SteelPath MLP Select 40 Fund
the Liquidity Rule: “Highly Liquid,” “Moderately Liquid,” “Less Liquid” and “Illiquid.” Funds that are not invested primarily in “Highly Liquid Investments” that are assets (cash or investments that are reasonably expected to be convertible into cash within three business days without significantly changing the market value of the investment) are required to establish a “Highly Liquid Investment Minimum” (“HLIM”), which is the minimum percentage of net assets that must be invested in Highly Liquid Investments. Funds with HLIMs have procedures for addressing HLIM shortfalls, including reporting to the Board and the SEC (on a non-public basis) as required by the Program and the Liquidity Rule. In addition, the Fund may not acquire an investment if, immediately after the acquisition, over 15% of the Fund’s net assets would consist of “Illiquid Investments” that are assets (an investment that cannot reasonably be expected to be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment). The Liquidity Rule and the Program also require reporting to the Board and the SEC (on a non-public basis) if a Fund’s holdings of Illiquid Investments exceed 15% of the Fund’s assets.
At a meeting held on March 30-April 1, 2020, the Committee presented a report to the Board that addressed the operation of the Program and assessed the Program’s adequacy and effectiveness of implementation (the “Report”). The Report covered the period from December 1, 2018 through December 31, 2019 (the “Program Reporting Period”).
The Report stated, in relevant part, that during the Program Reporting Period:
• | The Program, as adopted and implemented, remained reasonably designed to assess and manage the Fund’s liquidity risk and was operated effectively to achieve that goal; |
• | The Fund’s investment strategy remained appropriate for an open-end fund; |
• | The Fund was able to meet requests for redemption without significant dilution of remaining investors’ interests in the Fund; |
• | The Fund did not breach the 15% limit on Illiquid Investments; and |
• | The Fund primarily held Highly Liquid Investments and therefore has not adopted an HLIM. |
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisors for a prospectus/summary prospectus or visit invesco.com/fundprospectus.
Shares of Invesco funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
5 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Fund Expenses
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended May 31, 2020.
Actual Expenses
The first section of the table provides information about actual account values and actual expenses. You may use the information in this section for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During 6 Months Ended May 31, 2020” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio for each class of shares, and an assumed rate of return of 5% per year for each class before expenses, which is not the actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads). Therefore, the “hypothetical” section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Actual | Beginning Account Value December 01, 2019 | Ending Account Value May 31, 2020 | Expenses Paid During 6 Months Ended May 31, 20201,2 | |||||||||
CLASS A | $ | 1,000.00 | $ | 722.90 | $ | 8.01 | ||||||
CLASS C | 1,000.00 | 720.30 | 11.22 | |||||||||
CLASS R | 1,000.00 | 722.40 | 9.09 | |||||||||
CLASS Y | 1,000.00 | 725.60 | 6.95 | |||||||||
CLASS R5 | 1,000.00 | 725.00 | 6.64 | |||||||||
CLASS R6 | 1,000.00 | 725.70 | 6.60 | |||||||||
Hypothetical (5% return before expenses) | ||||||||||||
CLASS A | 1,000.00 | 1,015.70 | 9.37 | |||||||||
CLASS C | 1,000.00 | 1,012.00 | 13.13 | |||||||||
CLASS R | 1,000.00 | 1,014.50 | 10.63 | |||||||||
CLASS Y | 1,000.00 | 1,017.00 | 8.12 | |||||||||
CLASS R5 | 1,000.00 | 1,017.30 | 7.77 | |||||||||
CLASS R6 | 1,000.00 | 1,017.40 | 7.72 |
1. | Actual expenses paid for all classes are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
2. | Hypothetical expenses paid for all classes are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period). |
Those annualized expense ratios, based on the 6-month period ended May 31, 2020 for Classes A, C, R, Y, R5 and R6 are as follows:
Class | Expense Ratios | |||
CLASS A | 1.86 | % | ||
CLASS C | 2.61 | |||
CLASS R | 2.11 | |||
CLASS Y | 1.61 | |||
CLASS R5 | 1.54 | |||
CLASS R6 | 1.53 |
The expense ratios for Class A, C, R, and Y reflect contractual waivers and/or reimbursements of expenses by the Fund’s Adviser. The “Financial Highlights” tables in the Fund’s financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements, if applicable.
6 Invesco Oppenheimer SteelPath MLP Select 40 Fund
May 31, 2020
(Unaudited)
Description | Shares | Value | ||||||
MLP Investments and Related Entities–95.9% |
| |||||||
Diversified–9.7% |
| |||||||
Enterprise Products Partners LP | 5,112,227 | $ | 97,643,536 | |||||
Williams Cos., Inc. | 4,874,257 | 99,581,070 | ||||||
Total Diversified | 197,224,606 | |||||||
Gathering/Processing–24.7% |
| |||||||
Antero Midstream Corp | 14,713,036 | 70,328,312 | ||||||
Archrock, Inc. | 6,812,753 | 43,260,982 | ||||||
Crestwood Equity Partners LP | 1,000 | 14,210 | ||||||
DCP Midstream LP | 5,653,429 | 62,187,719 | ||||||
EnLink Midstream LLC | 15,675,090 | 36,993,212 | ||||||
Hess Midstream LP, Class A1 | 1,652,500 | 32,091,550 | ||||||
MPLX LP | 4,919,959 | 93,430,022 | ||||||
Summit Midstream Partners LP | 2,756,634 | 3,611,191 | ||||||
Targa Resources Corp. | 4,900,142 | 87,663,540 | ||||||
Western Midstream Partners LP | 7,725,030 | 72,151,774 | ||||||
Total Gathering/Processing | 501,732,512 | |||||||
Natural Gas Pipeline Transportation–15.9% |
| |||||||
Energy Transfer LP | 16,673,107 | 136,052,555 | ||||||
EQM Midstream Partners LP | 4,263,497 | 83,777,716 | ||||||
TC PipeLines LP1 | 2,933,538 | 103,113,860 | ||||||
Total Natural Gas Pipeline Transportation | 322,944,131 | |||||||
Natural Gas Pipelines–1.1% |
| |||||||
CNX Midstream Partners LP | 3,127,357 | 22,704,612 | ||||||
Other Energy–22.0% | ||||||||
CrossAmerica Partners LP1 | 2,708,461 | 40,897,761 | ||||||
CSI Compressco LP1 | 5,350,890 | 2,327,637 | ||||||
GasLog Partners LP2 | 1,239,179 | 5,439,996 | ||||||
Global Partners LP1 | 3,143,746 | 32,066,209 | ||||||
Golar LNG Partners LP2 | 1,596,408 | 3,879,271 | ||||||
Suburban Propane Partners LP | 1,919,257 | 28,001,960 | ||||||
Sunoco LP1 | 4,858,265 | 125,343,237 | ||||||
Teekay LNG Partners LP2 | 1,882,017 | 21,003,310 | ||||||
USA Compression Partners LP1 | 6,329,903 | 76,275,331 | ||||||
Westlake Chemical Partners LP1 | 5,361,394 | 109,908,577 | ||||||
Total Other Energy | 445,143,289 | |||||||
Petroleum Pipeline Transportation–22.4% |
| |||||||
Genesis Energy LP1 | 7,809,614 | 62,633,104 | ||||||
Holly Energy Partners LP | 4,262,004 | 68,873,985 | ||||||
Magellan Midstream Partners LP | 2,136,636 | 96,875,076 | ||||||
NGL Energy Partners LP1 | 7,635,345 | 38,940,259 |
Description | Shares | Value | ||||||
Petroleum Pipeline Transportation–(continued) |
| |||||||
Noble Midstream Partners LP | 300,000 | $ | 2,901,000 | |||||
NuStar Energy LP1 | 6,599,232 | 114,628,660 | ||||||
PBF Logistics LP | 964,498 | 10,030,779 | ||||||
Plains All American Pipeline LP | 1,104,310 | 10,711,807 | ||||||
Plains GP Holdings LP, Class A | 505,250 | 5,047,448 | ||||||
Shell Midstream Partners LP | 3,149,593 | 42,488,010 | ||||||
Total Petroleum Pipeline Transportation | 453,130,128 | |||||||
Production & Mining–0.1% |
| |||||||
Alliance Resource Partners LP | 405,320 | 1,284,864 | ||||||
Terminalling & Storage–0.0% |
| |||||||
Martin Midstream Partners LP | 198,139 | 495,348 | ||||||
Total MLP Investments And Related Entities |
| 1,944,659,490 | ||||||
Private Investment in Public Equity (PIPES)–0.2% |
| |||||||
Petroleum Pipeline Transportation–0.2% |
| |||||||
Noble MIdstream Partners LP PIPE Units3 | 435,000 | 4,206,450 | ||||||
Total Private Investment In Public Equity (PIPES) (identified cost $8,623,745) |
| 4,206,450 | ||||||
Preferred MLP Investments and Related Entities–3.6% |
| |||||||
Gathering/Processing–0.9% |
| |||||||
Crestwood Equity Partners LP, 9.25%4 | 2,649,095 | 17,563,500 | ||||||
Other Energy–0.7% |
| |||||||
Global Partners LP, 9.75%1,4,5 [3-Month USD Libor + 677.4] | 600,000 | 14,082,000 | ||||||
Petroleum Pipeline Transportation–2.0% |
| |||||||
GPM Petroleum LP, 10%1,3,4,6 | 2,000,000 | 39,960,000 | ||||||
Total Preferred MLP Investments And Related Entities |
| 71,605,500 | ||||||
Short-Term Investments–1.6% |
| |||||||
Money Market–1.6% |
| |||||||
Fidelity Treasury Portfolio, | 32,547,185 | 32,547,185 | ||||||
Total Short-Term Investments |
| 32,547,185 | ||||||
TOTAL INVESTMENTS–101.3% |
| 2,053,018,625 | ||||||
LIABILITIES IN EXCESS OF OTHER ASSETS–(1.3)% |
| (25,623,447 | ) | |||||
NET ASSETS–100% |
| $ | 2,027,395,178 |
Investment Abbreviations
GP | – General Partnership | |
LLC | – Limited Liability Company | |
LP | – Limited Partnership |
Footnotes to Schedule of Investments
1. | Is or was an affiliate, as defined by the Investment Company Act of 1940, at or during the period ended May 31, 2020, by virtue of the Fund owning at least 5% of the voting securities of the issuer. Transactions during this period in which the issuer was an affiliate are as follows: |
Shares November 30, 2019 | Gross Additions | Gross Reductions | Shares May 31, 2020 | |||||||||||||
MLP Investments and Related Entities | ||||||||||||||||
CrossAmerica Partners LP | 2,750,000 | — | (41,539 | ) | 2,708,461 |
See accompanying Notes to Financial Statements.
7 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Shares November 30, 2019 | Gross Additions | Gross Reductions | Shares May 31, 2020 | |||||||||||||
CSI Compressco LP | 5,432,951 | — | (82,061 | ) | 5,350,890 | |||||||||||
Genesis Energy LP | 7,665,701 | 600,000 | (456,087 | ) | 7,809,614 | |||||||||||
Global Partners LP | 3,090,424 | 100,000 | (46,678 | ) | 3,143,746 | |||||||||||
Hess Midstream LPiii | — | 1,652,500 | — | 1,652,500 | ||||||||||||
NGL Energy Partners LP | 7,447,842 | 300,000 | (112,497 | ) | 7,635,345 | |||||||||||
Nustar Energy LP | 5,176,317 | 1,600,000 | (177,085 | ) | 6,599,232 | |||||||||||
Sunoco LP | 5,149,759 | — | (291,494 | ) | 4,858,265 | |||||||||||
TC Pipelines LPi | 4,708,277 | 1,247,695 | (3,022,434 | ) | 2,933,538 | |||||||||||
USA Compression Partners | 6,426,980 | — | (97,077 | ) | 6,329,903 | |||||||||||
Westlake Chemical Partners | 4,132,043 | 1,232,959 | (3,608 | ) | 5,361,394 | |||||||||||
Preferred MLP Investments and Related Entities | ||||||||||||||||
Global Partners LP–Preferred | 600,000 | — | — | 600,000 | ||||||||||||
GPM Petroleum LP Class A–Preferredii | 2,000,000 | — | — | 2,000,000 |
Value May 31, 2020 | Dividends and Distributions | Change in Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||
Return of Capital | Capital Gains | Income | Realized Gain/(Loss) | |||||||||||||||||||||
MLP Investments and Related Entities | ||||||||||||||||||||||||
CrossAmerica Partners LP | $ | 40,897,761 | $ | 2,843,884 | $ | — | $ | — | $ | 46,402 | $ | (5,838,600 | ) | |||||||||||
CSI Compressco LP | 2,327,637 | 100,038 | 6,980 | — | (61,176 | ) | (10,523,290 | ) | ||||||||||||||||
Genesis Energy LP | 62,633,104 | 4,567,258 | 479,472 | — | 2,898,156 | (75,756,550 | ) | |||||||||||||||||
Global Partners LP | 32,066,209 | 2,860,754 | 27,563 | — | (13,650 | ) | (28,025,003 | ) | ||||||||||||||||
Hess Midstream LPiii | 32,091,550 | — | — | — | — | 4,415,621 | ||||||||||||||||||
NGL Energy Partners LP | 38,940,259 | 4,420,644 | 6,210 | — | (54,100 | ) | (32,395,329 | ) | ||||||||||||||||
Sunoco LP | 125,343,237 | 8,020,996 | — | — | 3,045,654 | (21,164,959 | ) | |||||||||||||||||
Nustar Energy LP | 114,628,660 | 5,280,870 | 241,362 | — | 328,003 | (45,138,010 | ) | |||||||||||||||||
TC Pipelines LPi | 103,113,860 | 4,687,420 | — | — | 24,457,462 | (37,242,889 | ) | |||||||||||||||||
USA Compression Partners | 76,275,331 | 6,646,398 | — | — | (87,719 | ) | (21,108,385 | ) | ||||||||||||||||
Westlake Chemical Partners | 109,908,577 | 4,855,245 | — | — | (3,954 | ) | (6,571,505 | ) | ||||||||||||||||
Preferred MLP Investments and Related Entities |
| |||||||||||||||||||||||
Global Partners LP—Preferred | 14,082,000 | — | — | 731,250 | — | (4,067,400 | ) | |||||||||||||||||
GPM Petroleum LP Class A—Preferredii | 39,960,000 | 1,991,571 | — | — | — | 1,951,571 | ||||||||||||||||||
$ | 792,268,185 | $ | 46,275,078 | $ | 761,587 | $ | 731,250 | $ | 30,555,078 | $ | (281,464,728 | ) |
i. | Is not an affiliate as of May 31, 2020. Was an affiliate during the period ended May 31, 2020. |
ii. | An affiliate due to the Manager sitting on the board. |
iii. | Hess Midstream Partners LP Units merged into Hess Midstream LP on December 17, 2019. Position was not an affliate and liquidated as of April 6, 2020 and purchased after May 13, 2020. |
2. | Foreign security denominated in U.S. dollars. |
3. | Restricted security. The aggregate value of restricted securities at period end was $44,166,450, which represents 2.2% of the Fund’s net assets. |
4. | Perpetual security. Maturity date is not applicable. |
5. | Represents the current interest rate for a variable or increasing rate security, which may be fixed for a predetermined period. The interest rate is, or will be as of an established date, determined as [Referenced Rate + Basis-point spread]. |
6. | The value of this security was determined using significant unobservable inputs. |
7. | Rate shown is the 7-day yield at period end. |
See accompanying Notes to Financial Statements.
8 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Statement of Assets and Liabilities
May 31, 2020
(Unaudited)
Assets: | ||||
Investments at value | ||||
Unaffiliated companies (cost $2,083,510,015) | $ | 1,363,864,300 | ||
Affiliated companies (cost $934,575,994) | 689,154,325 | |||
2,053,018,625 | ||||
Receivable for beneficial interest sold | 2,995,337 | |||
AMT credit carryforward | 76,323 | |||
Prepaid State Taxes | 518,636 | |||
Prepaid expenses | 527,426 | |||
Deferred compensation | 106,460 | |||
Dividends receivable | 299,153 | |||
Total assets | 2,057,541,960 | |||
Liabilities: | ||||
Payables and other liabilities: | ||||
Deferred tax liability, net | 7,991,610 | |||
Payable for beneficial interest redeemed | 3,094,041 | |||
Payable to Adviser | 995,296 | |||
Payable for investments purchased | 16,180,520 | |||
Payable for distribution and service plan fees | 200,969 | |||
Transfer agent fees payable | 290,224 | |||
Borrowing expense payable | 60,077 | |||
Trustees’ fees payable | 2,534 | |||
Deferred compensation | 106,460 | |||
Other liabilities | 1,225,051 | |||
Total liabilities | 30,146,782 | |||
Net Assets | $ | 2,027,395,178 | ||
Composition of Net Assets | ||||
Shares of beneficial interest | $ | 3,252,164,317 | ||
Distributable earnings (loss) | (1,224,769,139 | ) | ||
Net Assets | $ | 2,027,395,178 |
Net Asset Value Per Share | ||||
Class A Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $218,730,707 and 52,639,343) | $4.16 | |||
Maximum offering price per share (net asset value plus sales charge of 5.50% of offering price) | $4.40 | |||
Class C Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $200,451,332 and 52,582,964) | $3.81 | |||
Class R Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $238,537 and 57,570) | $4.14 | |||
Class Y Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $1,049,753,537 and 241,922,004) | $4.34 | |||
Class R5 Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $5,555 and 1,332) | $4.17 | |||
Class R6 Shares: | ||||
Net asset value and redemption price per share (based on net assets and shares of beneficial interest outstanding of $558,215,510 and 127,796,088) | $4.37 |
See accompanying Notes to Financial Statements.
9 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Statement of Operations
For the Six Months Ended May 31, 2020
(Unaudited)
Investment Income | ||||
Distributions and dividends ($731,250 income from affiliates) | $ | 129,787,265 | ||
Less return of capital on distributions and dividends ($46,275,078 from affiliates) | (112,801,632 | ) | ||
Less return of capital on distributions and dividends in excess of cost basis ($761,587 from affiliates) | (7,310,430 | ) | ||
Total investment income | 9,675,203 | |||
Expenses | ||||
Advisory fees | 8,051,658 | |||
Distribution and service plan fees | ||||
Class A | 305,284 | |||
Class C | 1,238,453 | |||
Class R | 926 | |||
Transfer agent fees | ||||
Class A | 160,621 | |||
Class C | 162,391 | |||
Class R | 244 | |||
Class Y | 779,931 | |||
Class R5 | 1 | |||
Class R6 | 9,115 | |||
Borrowing fees | 494,406 | |||
Administrative fees | 370,184 | |||
Tax expense | 135,869 | |||
Custody fees | 98,397 | |||
Registration fees | 93,688 | |||
Legal, auditing, and other professional fees | 71,183 | |||
Trustees’ fees | 21,408 | |||
Other | 121,418 | |||
Total expenses, before waivers and deferred taxes | 12,115,177 | |||
Less waivers and reimbursements of expenses | (411,576 | ) | ||
Net expenses, before deferred taxes | 11,703,601 | |||
Net investment loss, before deferred taxes | (2,028,398 | ) | ||
Deferred tax (expense)/benefit | — | |||
Net investment loss, net of deferred taxes | (2,028,398 | ) | ||
Net Realized and Unrealized Gains/(Losses) on Investments: | ||||
Net realized Gains/(Losses) | ||||
Investments from: | ||||
Unaffiliated companies (net return of capital in excess of cost basis of $6,579,180) | (86,978,603 | ) | ||
Affiliated companies (net return of capital in excess of cost basis of $731,250) | 30,555,078 | |||
Deferred tax (expense)/benefit | — | |||
Net realized losses, net of deferred taxes | (56,423,525 | ) | ||
Net Change in Unrealized Appreciation/(Depreciation) | ||||
Investments from: | ||||
Unaffiliated companies | (375,257,729 | ) | ||
Affiliated companies | (281,464,728 | ) | ||
Deferred tax (expense)/benefit | (7,991,610 | ) | ||
Net change in unrealized appreciation/(depreciation), net of deferred taxes | (664,714,067 | ) | ||
Change in net assets resulting from operations | $ | (723,165,990 | ) |
See accompanying Notes to Financial Statements.
10 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Statements of Changes in Net Assets
For the Six Months Ended May 31, 2020 (Unaudited) | For the Year Ended November 30, 2019 | |||||||
Operations | ||||||||
Net Investment Income/(loss), net of deferred taxes | $ | (2,028,398 | ) | $ | (8,983,051 | ) | ||
Net realized gaines/(losses), net of deferred taxes | (56,423,525 | ) | 63,388,795 | |||||
Net change in unrealized appreciation/(depreciaion), net of deferred taxes | (664,714,067 | ) | (327,215,636 | ) | ||||
Change in net assets resulting from operations | (723,165,990 | ) | (272,809,892 | ) | ||||
Distributions to Shareholders | ||||||||
Distributions to shareholders from return of capital: | ||||||||
Class A shares | (14,544,740 | ) | (30,358,590 | ) | ||||
Class C shares | (15,823,482 | ) | (34,765,786 | ) | ||||
Class R shares | (22,504 | ) | (7,492 | ) | ||||
Class Y shares | (68,268,747 | ) | (129,862,763 | ) | ||||
Class R5 shares | (392 | ) | (456 | ) | ||||
Class R6 shares | (35,451,432 | ) | (69,527,672 | ) | ||||
Distributions to shareholders from return of capital | (134,111,297 | ) | (264,522,759 | ) | ||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A shares | — | (6,107,598 | ) | |||||
Class C shares | — | (6,994,247 | ) | |||||
Class R shares | — | (1,507 | ) | |||||
Class Y shares | — | (26,126,037 | ) | |||||
Class R5 shares | — | (92 | ) | |||||
Class R6 shares | — | (13,987,709 | ) | |||||
Distributions to shareholders from distributable earnings | — | (53,217,190 | ) | |||||
Change in net assets resulting from distributions to shareholders | (134,111,297 | ) | (317,739,949 | ) | ||||
Beneficial Interest Transactions | ||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions: | ||||||||
Class A shares | 7,133,315 | (26,534,567 | ) | |||||
Class C shares | (21,101,821 | ) | (30,489,985 | ) | ||||
Class R shares | (29,369 | ) | 468,502 | |||||
Class Y shares | (44,578,726 | ) | 152,687,919 | |||||
Class R5 shares | — | 10,000 | ||||||
Class R6 shares | (37,119,901 | ) | 270,917,344 | |||||
Change in net assets resulting from beneficial interest transactions | (95,696,502 | ) | 367,059,213 | |||||
Change in net assets | (952,973,789 | ) | (223,490,628 | ) | ||||
Net Assets | ||||||||
Beginning of period | 2,980,368,967 | 3,203,859,595 | ||||||
End of period | $ | 2,027,395,178 | $ | 2,980,368,967 |
See accompanying Notes to Financial Statements.
11 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class A | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 6.14 | $ | 7.36 | $ | 8.13 | $ | 9.18 | $ | 9.25 | $ | 12.54 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.01 | ) | (0.03 | ) | (0.08 | ) | (0.06 | ) | (0.05 | ) | (0.03 | ) | ||||||||||||
Return of capital1 | 0.19 | 0.43 | 0.46 | 0.40 | 0.41 | 0.43 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.87 | ) | (0.91 | ) | (0.44 | ) | (0.68 | ) | 0.28 | (2.98 | ) | |||||||||||||
Total from investment operations | (1.69 | ) | (0.51 | ) | (0.06 | ) | (0.34 | ) | 0.64 | (2.58 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.29 | ) | (0.59 | ) | (0.51 | ) | (0.58 | ) | (0.71 | ) | (0.71 | ) | ||||||||||||
Income | — | (0.12 | ) | (0.20 | ) | (0.13 | ) | — | — | |||||||||||||||
Total distributions to shareholders | (0.29 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | ||||||||||||
Net asset value, end of period | $ | 4.16 | $ | 6.14 | $ | 7.36 | $ | 8.13 | $ | 9.18 | $ | 9.25 | ||||||||||||
Total Return, at Net Asset Value2 | (27.71 | )% | (7.89 | )% | (1.06 | )% | (4.22 | )% | 7.69 | % | (21.34 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 218,731 | $ | 304,235 | $ | 392,897 | $ | 465,355 | $ | 631,417 | $ | 602,268 | ||||||||||||
Ratio of Expenses to Average Net Assets:7 | ||||||||||||||||||||||||
Before (waivers) and deferred tax expense/(benefit) | 1.21 | % | 1.20 | % | 1.23 | % | 1.23 | % | 1.27 | % | 1.23 | % | ||||||||||||
Expense (waivers) | (0.05 | )% | (0.06 | )% | (0.10 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of (waivers) and before deferred tax expense/(benefit)4 | 1.16 | % | 1.14 | % | 1.13 | % | 1.11 | % | 1.15 | % | 1.12 | % | ||||||||||||
Deferred tax expense/(benefit)5 | 0.70 | % | — | % | — | % | (2.27 | )% | 2.79 | % | (12.39 | )% | ||||||||||||
Total expenses/(benefit) | 1.86 | % | 1.14 | % | 1.13 | % | (1.16 | )% | 3.94 | % | (11.27 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 |
| |||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (0.39 | )% | (0.45 | )% | (1.04 | )% | (1.04 | )% | (0.98 | )% | (0.77 | )% | ||||||||||||
Expense (waivers) | (0.05 | )% | (0.06 | )% | (0.10 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (0.34 | )% | (0.39 | )% | (0.94 | )% | (0.92 | )% | (0.86 | )% | (0.66 | )% | ||||||||||||
Deferred tax benefit/(expense)6 | — | % | — | % | — | % | 0.31 | % | 0.30 | % | 0.37 | % | ||||||||||||
Net investment income/(loss) | (0.34 | )% | (0.39 | )% | (0.94 | )% | (0.61 | )% | (0.56 | )% | (0.29 | )% | ||||||||||||
Portfolio turnover rate | 19 | % | 23 | % | 24 | % | 13 | % | 10 | % | 8 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
4. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 1.11%, 1.10%, 1.10%, 1.10%, 1.13%, and 1.10%, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $243,414 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
12 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Financial Highlights—(continued)
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class C | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 5.69 | $ | 6.92 | $ | 7.74 | $ | 8.84 | $ | 8.99 | $ | 12.30 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | (0.02 | ) | (0.08 | ) | (0.13 | ) | (0.12 | ) | (0.11 | ) | (0.11 | ) | ||||||||||||
Return of capital1 | 0.18 | 0.40 | 0.46 | 0.40 | 0.41 | 0.43 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.75 | ) | (0.84 | ) | (0.44 | ) | (0.67 | ) | 0.26 | (2.92 | ) | |||||||||||||
Total from investment operations | (1.59 | ) | (0.52 | ) | (0.11 | ) | (0.39 | ) | 0.56 | (2.60 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.29 | ) | (0.59 | ) | (0.51 | ) | (0.58 | ) | (0.71 | ) | (0.71 | ) | ||||||||||||
Income | — | (0.12 | ) | (0.20 | ) | (0.13 | ) | — | — | |||||||||||||||
Total distributions to shareholders | (0.29 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | ||||||||||||
Net asset value, end of period | $ | 3.81 | $ | 5.69 | $ | 6.92 | $ | 7.74 | $ | 8.84 | $ | 8.99 | ||||||||||||
Total Return, at Net Asset Value2 | (27.97 | )% | (8.56 | )% | (1.79 | )% | (4.97 | )% | 6.99 | % | (21.94 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 200,451 | $ | 324,931 | $ | 427,772 | $ | 478,338 | $ | 517,869 | $ | 446,435 | ||||||||||||
Ratio of Expenses to Average Net Assets:7 | ||||||||||||||||||||||||
Before (waivers) and deferred tax expense/(benefit) | 1.96 | % | 1.96 | % | 1.98 | % | 1.98 | % | 2.04 | % | 1.98 | % | ||||||||||||
Expense (waivers) | (0.05 | )% | (0.06 | )% | (0.10 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of (waivers) and before deferred tax expense/(benefit)4 | 1.91 | % | 1.90 | % | 1.88 | % | 1.86 | % | 1.92 | % | 1.87 | % | ||||||||||||
Deferred tax expense/(benefit)5 | 0.70 | % | — | % | — | % | (2.27 | )% | 2.79 | % | (12.39 | )% | ||||||||||||
Total expenses/(benefit) | 2.61 | % | 1.90 | % | 1.88 | % | (0.41 | )% | 4.71 | % | (10.52 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 |
| |||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (1.15 | )% | (1.21 | )% | (1.79 | )% | (1.79 | )% | (1.75 | )% | (1.52 | )% | ||||||||||||
Expense (waivers) | (0.05 | )% | (0.06 | )% | (0.10 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (1.10 | )% | (1.15 | )% | (1.69 | )% | (1.67 | )% | (1.63 | )% | (1.41 | )% | ||||||||||||
Deferred tax benefit/(expense)6 | — | % | — | % | — | % | 0.31 | % | 0.30 | % | 0.37 | % | ||||||||||||
Net investment income/(loss) | (1.10 | )% | (1.15 | )% | (1.69 | )% | (1.36 | )% | (1.33 | )% | (1.04 | )% | ||||||||||||
Portfolio turnover rate | 19 | % | 23 | % | 24 | % | 13 | % | 10 | % | 8 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
4. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 1.86%, 1.86%, 1.85%, 1.85%, 1.90%, and 1.85%, for the period ended May 31, 2020 and the years November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $246,819 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
13 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Financial Highlights—(continued)
Class R | Six Months (Unaudited) | Year Ended November 30, 20191 | ||||||
Per Share Operating Data | ||||||||
Net Asset Value, Beginning of Period | �� | $ | 6.13 | $ | 7.56 | |||
Income/(loss) from investment operations: | ||||||||
Net investment income/(loss)2 | (0.01 | ) | (0.02 | ) | ||||
Return of capital2 | 0.19 | 0.20 | ||||||
Net realized and unrealized gains/(losses) | (1.88 | ) | (1.20 | ) | ||||
Total from investment operations | (1.70 | ) | (1.02 | ) | ||||
Distributions to shareholders: | ||||||||
Return of capital | (0.29 | ) | (0.34 | ) | ||||
Income | — | (0.07 | ) | |||||
Total distributions to shareholders | (0.29 | ) | (0.41 | ) | ||||
Net asset value, end of period | $ | 4.14 | $ | 6.13 | ||||
Total Return, at Net Asset Value3 | (27.76 | )% | (13.94 | )% | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 239 | $ | 419 | ||||
Ratio of expenses to average net assets:7,8 | ||||||||
Before (waivers) and deferred tax expense/(benefit) | 1.46 | % | 1.46 | % | ||||
Expense (waivers) | (0.05 | )% | (0.06 | )% | ||||
Net of (waivers) and before deferred tax expense/(benefit)4 | 1.41 | % | 1.40 | % | ||||
Deferred tax expense/(benefit)5 | 0.70 | % | — | % | ||||
Total expenses/(benefit) | 2.11 | % | 1.40 | % | ||||
Ratio of Investment Income/(Loss) to Average Net Assets:7,8 |
| |||||||
Before (waivers) and deferred tax benefit/(expense) | (0.65 | )% | (0.71 | )% | ||||
Expense (waivers) | (0.05 | )% | (0.06 | )% | ||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (0.60 | )% | (0.65 | )% | ||||
Deferred tax benefit/(expense)6 | — | % | — | % | ||||
Net investment income/(loss) | (0.60 | ) | (0.65 | )% | ||||
Portfolio turnover rate | 19 | % | 23 | % |
1. | Shares commenced operations after the close of business on May 24, 2019. |
2. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 1.36%, for the period ended May 31, 2020 and the year ended November 30, 2019. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Annualized for less than full period. |
8. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $368 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
14 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Financial Highlights—(continued)
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class Y | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 6.38 | $ | 7.61 | $ | 8.37 | $ | 9.40 | $ | 9.43 | $ | 12.74 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | — | 8 | (0.01 | ) | (0.06 | ) | (0.03 | ) | (0.03 | ) | — | 8 | ||||||||||||
Return of capital1 | 0.20 | 0.45 | 0.46 | 0.40 | 0.41 | 0.43 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.95 | ) | (0.96 | ) | (0.45 | ) | (0.69 | ) | 0.30 | (3.03 | ) | |||||||||||||
Total from investment operations | (1.75 | ) | (0.52 | ) | (0.05 | ) | (0.32 | ) | 0.68 | (2.60 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.29 | ) | (0.59 | ) | (0.51 | ) | (0.58 | ) | (0.71 | ) | (0.71 | ) | ||||||||||||
Income | — | (0.12 | ) | (0.20 | ) | (0.13 | ) | — | — | |||||||||||||||
Total distributions to shareholders | (0.29 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | ||||||||||||
Net asset value, end of period | $ | 4.34 | $ | 6.38 | $ | 7.61 | $ | 8.37 | $ | 9.40 | $ | 9.43 | ||||||||||||
Total Return, at Net Asset Value2 | (27.44 | )% | (7.76 | )% | (0.91 | )% | (3.90 | )% | 7.97 | % | (21.16 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | 1,049,754 | $ | 1,540,550 | $ | 1,679,094 | $ | 1,694,069 | $ | 1,598,012 | $ | 1,361,763 | |||||||||||||
Ratio of Expenses to Average Net Assets:7 | ||||||||||||||||||||||||
Before (waivers) and deferred tax expense/(benefit) | 0.96 | % | 0.95 | % | 0.98 | % | 0.98 | % | 1.02 | % | 0.98 | % | ||||||||||||
Expense (waivers) | (0.05 | )% | (0.06 | )% | (0.10 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of (waivers) and before deferred tax expense/(benefit)4 | 0.91 | % | 0.89 | % | 0.88 | % | 0.86 | % | 0.90 | % | 0.87 | % | ||||||||||||
Deferred tax expense/(benefit)5 | 0.70 | % | — | % | — | % | (2.27 | )% | 2.79 | % | (12.39 | )% | ||||||||||||
Total expenses/(benefit) | 1.61 | % | 0.89 | % | 0.88 | % | (1.41 | )% | 3.69 | % | (11.52 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 |
| |||||||||||||||||||||||
Before (waivers) and deferred tax benefit/(expense) | (0.14 | )% | (0.20 | )% | (0.79 | )% | (0.79 | )% | (0.73 | )% | (0.52 | )% | ||||||||||||
Expense (waivers) | (0.05 | )% | (0.06 | )% | (0.10 | )%3 | (0.12 | )%3 | (0.12 | )% | (0.11 | )% | ||||||||||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (0.09 | )% | (0.14 | )% | (0.69 | )% | (0.67 | )% | (0.61 | )% | (0.41 | )% | ||||||||||||
Deferred tax benefit/(expense)6 | — | % | — | % | — | % | 0.31 | % | 0.30 | % | 0.37 | % | ||||||||||||
Net investment income/(loss) | (0.09 | )% | (0.14 | )% | (0.69 | )% | (0.36 | )% | (0.31 | )% | (0.04 | )% | ||||||||||||
Portfolio turnover rate | 19 | % | 23 | % | 24 | % | 13 | % | 10 | % | 8 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes voluntary Transfer Agent waiver of 0.015% effective January 1, 2017 to December 31, 2017. |
4. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 0.86%, 0.85%, 0.85%, 0.85%, 0.88%, and 0.85%, for the period ended May 31, 2020 and the years ended November 30, 2019 November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $1,181,089 for the period ended May 31, 2020. |
8. | Less than (0.005). |
See accompanying Notes to Financial Statements.
15 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Financial Highlights—(continued)
Class R5 | Six Months (Unaudited) | Year Ended November 30, 20191 | ||||||
Per Share Operating Data | ||||||||
Net Asset Value, Beginning of Period | $ | 6.15 | $ | 7.56 | ||||
Income/(loss) from investment operations: | ||||||||
Net investment income/(loss)2 | — | 8 | — | 8 | ||||
Return of capital2 | 0.19 | 0.22 | ||||||
Net realized and unrealized gains/(losses) | (1.88 | ) | (1.22 | ) | ||||
Total from investment operations | (1.69 | ) | (1.00 | ) | ||||
Distributions to shareholders: | ||||||||
Return of capital | (0.29 | ) | (0.34 | ) | ||||
Income | — | (0.07 | ) | |||||
Total distributions to shareholders | (0.29 | ) | (0.41 | ) | ||||
Net asset value, end of period | $ | 4.17 | $ | 6.15 | ||||
Total Return, at Net Asset Value3 | (27.50 | )% | (13.67 | )% | ||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $ | 6 | $ | 8 | ||||
Ratio of expenses to average net assets:7,9 | ||||||||
Before deferred tax expense/(benefit) | 0.84 | % | 0.84 | % | ||||
Expense (waivers) | — | % | — | % | ||||
Net of (waivers) and before deferred tax expense/(benefit)4 | 0.84 | % | 0.84 | % | ||||
Deferred tax expense/(benefit)5 | 0.70 | % | — | % | ||||
Total expenses/(benefit) | 1.54 | % | 0.84 | % | ||||
Ratio of Investment Income/(Loss) to Average Net Assets:7,9 |
| |||||||
Before (waivers) and deferred tax benefit/(expense) | (0.02 | )% | (0.09 | )% | ||||
Expense (waivers) | - | % | — | % | ||||
Net of expense (waivers) and before deferred tax benefit/(expense) | (0.02 | )% | (0.09 | )% | ||||
Deferred tax benefit/(expense)6 | — | % | — | % | ||||
Net investment income/(loss) | (0.02 | )% | (0.09 | )% | ||||
Portfolio turnover rate | 19 | % | 23 | % |
1. | Shares commenced operations after the close of business on May 24, 2019. |
2. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
3. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
4. | Includes interest, borrowing and franchise tax expense. Without interest, borrowing and franchise tax expense, the net expense ratio would be 0.79% and 0.80%, for the period ended May 31, 2020 and the year ended November 30, 2019, respectively. |
5. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
6. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
7. | Annualized for period less than full year. |
8. | Less than (0.005). |
9. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $6 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
16 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Financial Highlights—(continued)
Six Months Ended May 31, 2020 | Year Ended November 30, | |||||||||||||||||||||||
Class R6 | �� | (Unaudited) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 6.42 | $ | 7.64 | $ | 8.39 | $ | 9.43 | $ | 9.44 | $ | 12.74 | ||||||||||||
Income/(loss) from investment operations: | ||||||||||||||||||||||||
Net investment income/(loss)1 | — | 6 | — | 6 | (0.05 | ) | (0.03 | ) | (0.02 | ) | — | 6 | ||||||||||||
Return of capital1 | 0.20 | 0.42 | 0.46 | 0.40 | 0.41 | 0.43 | ||||||||||||||||||
Net realized and unrealized gains/(losses) | (1.96 | ) | (0.93 | ) | (0.45 | ) | (0.70 | ) | 0.31 | (3.02 | ) | |||||||||||||
Total from investment operations | (1.76 | ) | (0.51 | ) | (0.04 | ) | (0.33 | ) | 0.70 | (2.59 | ) | |||||||||||||
Distributions to shareholders: | ||||||||||||||||||||||||
Return of capital | (0.29 | ) | (0.59 | ) | (0.51 | ) | (0.58 | ) | (0.71 | ) | (0.71 | ) | ||||||||||||
Income | — | (0.12 | ) | (0.20 | ) | (0.13 | ) | — | — | |||||||||||||||
Total distributions to shareholders | (0.29 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | (0.71 | ) | ||||||||||||
Net asset value, end of period | $ | 4.37 | $ | 6.42 | $ | 7.64 | $ | 8.39 | $ | 9.43 | $ | 9.44 | ||||||||||||
Total Return, at Net Asset Value2 | (27.43 | )% | (7.59 | )% | (0.78 | )% | (3.99 | )% | 8.19 | % | (21.08 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $ | 558,216 | $ | 810,225 | $ | 702,381 | $ | 466,851 | $ | 313,325 | $ | 191,370 | ||||||||||||
Ratio of Expenses to Average Net Assets:7 | ||||||||||||||||||||||||
Before deferred tax expense/(benefit)3 | 0.83 | % | 0.81 | % | 0.81 | % | 0.79 | % | 0.81 | % | 0.79 | % | ||||||||||||
Deferred tax expense/(benefit)4 | 0.70 | % | — | % | — | % | (2.27 | )% | 2.79 | % | (12.39 | )% | ||||||||||||
Total expenses/(benefit) | 1.53 | % | 0.81 | % | 0.81 | % | (1.48 | )% | 3.60 | % | (11.60 | )% | ||||||||||||
Ratio of Investment Income/(Loss) to Average Net Assets:7 | ||||||||||||||||||||||||
Before deferred tax benefit/(expense) | (0.01 | )% | (0.06 | )% | (0.62 | )% | (0.60 | )% | (0.52 | )% | (0.33 | )% | ||||||||||||
Deferred tax benefit/(expense)5 | — | % | — | % | — | % | 0.31 | % | 0.30 | % | 0.37 | % | ||||||||||||
Net investment income/(loss) | (0.01 | )% | (0.06 | )% | (0.62 | )% | (0.29 | )% | (0.22 | )% | 0.04 | % | ||||||||||||
Portfolio turnover rate | 19 | % | 23 | % | 24 | % | 13 | % | 10 | % | 8 | % |
1. | Per share net investment income/(loss) is calculated based on average shares outstanding during the period net of deferred tax expense/benefit. Per share return of capital is calculated based on average shares during the period net of deferred tax expense/benefit estimated at the combined Federal and State statutory income tax rate. |
2. | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
3. | Includes borrowing and franchise tax expense. Without borrowing and franchise tax expense, the net expense ratio would be 0.78%, 0.77%, 0.78%, 0.78%, 0.79% and 0.77%, for the period ended May 31, 2020 and the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016 and November 30, 2015, respectively. |
4. | Deferred tax expense/(benefit) estimate for the ratio calculation is derived from the net investment income/loss, and realized and unrealized gains/losses. |
5. | Deferred tax benefit/(expense) for the ratio calculation, when applicable, is derived from net investment income/loss only. |
6. | Rounds to less than (0.005). |
7. | Ratios are annualized for periods less than a year and based on average daily net assets (000’s omitted) of $620,969 for the period ended May 31, 2020. |
See accompanying Notes to Financial Statements.
17 Invesco Oppenheimer SteelPath MLP Select 40 Fund
May 31, 2020
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Oppenheimer SteelPath MLP Select 40 Fund (the “Fund”) is a separate series of AIM Investment Funds (Invesco Investment Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust, as amended (the “1940 Act”), as an open-end management investment company authorized to an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.
The Fund’s investment objective is to seek total return.
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services—Investment Companies. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions,
18 Invesco Oppenheimer SteelPath MLP Select 40 Fund
changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investments reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Dividends and Distributions to Shareholders — Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. GAAP, are recorded on the ex-dividend date. The Fund’s dividend distribution policy is intended to provide monthly distributions to its shareholders at a rate that over time is similar to the distribution rate the Fund receives from the master limited partnerships (”MLPs”) in which it invests. The Fund generally pays out dividends that over time approximate the distributions received from the Fund’s portfolio investments based on, among other considerations, distributions the Fund actually received from portfolio investments, distributions it would have received if it had been fully invested at all times, and estimated future cash flows. Such dividends are not tied to the Fund’s investment income and may not represent yield or investment return on the Fund’s portfolio. To the extent that the dividends paid exceed the distributions the Fund receives from its underlying investments, the Fund’s assets will be reduced. The Fund’s tendency to pay out a consistent dividend may change, and the Fund’s level of distributions may increase or decrease. |
The estimated characterization of the distributions paid will be either a qualified dividend or distribution (return of capital). This estimate is based on the Fund’s operating results during the period. The actual characterization of the distributions made during the period will not be determined until after the end of the fiscal year.
E. | Master Limited Partnerships — The Fund primarily invests in Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships and limited liability companies taxed as partnerships under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Fund principally invests in MLPs that derive their revenue primarily from businesses involved in the gathering, transporting, processing, treating, storing, refining, distributing, mining or marketing of natural gas, natural gas liquids, crude oil, refined products or coal (“energy infrastructure MLPs”). The Fund is a partner in each MLP; accordingly, the Fund is required to take into account the Fund’s allocable share of income, gains, losses, deductions, expenses, and tax credits recognized by each MLP. The Fund will concentrate its investments in the energy sector. Energy infrastructure MLPs are subject to a variety of industry specific risk factors that may adversely affect their business or operations, including a decrease in production or reduced volumes of natural gas or other energy commodities available for transporting, processing, storing or distributing; changes in energy commodity prices; a sustained reduced demand for crude oil, natural gas and refined petroleum products; depletion of natural gas reserves or other commodities if not replaced; natural disasters, extreme weather and environmental hazards; rising interest rates, how facilities are constructed, maintained and operated, environmental and safety controls, and the prices they may charge for products and services. In addition, taxes, government regulation, international politics, price, and supply fluctuations, volatile interest rates and energy conservation may cause difficulties for energy infrastructure MLPs. |
MLPs may be less liquid and subject to more abrupt or erratic price movements than conventional publicly traded securities.
F. | Return of Capital — Distributions received from the Fund’s investments in MLPs generally are comprised of income and return of capital. The Fund records investment income and return of capital based on estimates made at the time such distributions are received. The return of capital portion of the distribution is a reduction to investment income that results in an equivalent reduction in the cost basis of the associated investments and increases net realized gains (losses) and change in unrealized appreciation (depreciation). Such estimates are based on historical information available from each MLP and other industry sources. These estimates will subsequently be revised and may materially differ primarily based on information received from the MLPs after their tax reporting periods are concluded. |
G. | Federal Income Taxes — The Fund does not intend to qualify as a regulated investment company pursuant to Subchapter M of the Internal Revenue Code, but will rather be taxed as a corporation. As a corporation, the Fund is obligated to pay federal, state and local income tax on taxable income. For the six months ended May 31, 2020, the federal income tax rate is 21 percent. The Fund is currently using an estimated rate of 1.9 percent for state and local tax, net of federal tax expense. |
19 Invesco Oppenheimer SteelPath MLP Select 40 Fund
The alternative minimum tax (“AMT”) requirements were repealed with the enactment of H.R. 1, Tax Cuts and Jobs Act (the “TCJA”), for tax years beginning after December 31, 2017. Any past alternative minimum taxes paid by the Fund do qualify for substantial refundability under the TCJA with AMT credit carryforwards becoming partially refundable prior to, or fully refundable for tax years beginning in 2021.
The Fund’s income tax provision consists of the following as of May 31, 2020:
Current tax (expense) benefit | ||||
Federal | $ | — | ||
State | — | |||
Total current tax (expense) benefit | $ | — | ||
Deferred tax (expense) benefit | ||||
Federal | $ | 150,725,068 | ||
State | 13,637,029 | |||
Valuation allowance | (172,353,707) | |||
Total deferred tax (expense) benefit | $ | (7,991,610) |
The reconciliation between the federal statutory income tax rate of 21% and the tax effect on net investment income (loss) and realized and unrealized gain (loss) follows:
Amount | % Effect | |||||||
Application of Federal statutory income tax rate | $ | 150,186,618 | 21 | .00% | ||||
State income taxes net of federal benefit | 13,588,314 | 1 | .90% | |||||
Effect of permanent differences | 587,165 | 0 | .08% | |||||
Change in valuation allowance | (172,353,707) | (24 | .09)% | |||||
Total income tax (expense) benefit | $ | (7,991,610) | (1 | .11)% |
For the six months ended May 31, 2020 the Fund’s tax effect on net investment income (loss) and realized and unrealized gain (loss) of (1.11%) differed from the combined federal and state statutory tax rate of 22.90% due in large part to the change in valuation allowance primarily as a result of the change in unrealized appreciation.
The Fund intends to invest its assets primarily in MLP investments, which generally are treated as partnerships for federal income tax purposes. As a limited partner in the MLP investments, the Fund reports its allocable share of the MLP investments’ taxable income in computing its own taxable income. The Fund’s tax expense or benefit is included in the Statement of Operations based on the component of income or gains (losses) to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Such temporary differences are principally: (i) taxes on unrealized gains/(losses), which are attributable to the temporary difference between fair market value and tax basis, (ii) the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes and (iii) the net tax benefit of accumulated net operating losses and capital loss carryforwards. Deferred tax assets and liabilities are measured using effective tax rates expected to apply to taxable income in the years such temporary differences are realized or otherwise settled. To the extent the Fund has a deferred tax asset, consideration is given to whether or not a valuation allowance is required. A valuation allowance is required if, based on the evaluation criterion provided by ASC 740, Income Taxes, it is more-likely-than-not some portion or all of the deferred tax asset will not be realized.
At May 31, 2020, the Fund determined a valuation allowance was required. The Fund’s assessment considered, among other matters, the nature, frequency and severity of current and cumulative losses, the duration of statutory carryforward periods and the associated risk that operating loss and capital loss carryforwards were limited as a result of shareholder transactions or were likely to expire unused, and unrealized gains and losses on investments. Consideration was also given to market cycles, the severity and duration of historical deferred tax assets, the impact of redemptions, and the level of MLP distributions. Additionally, various tax law changes resulting from the enactment of the TCJA were considered by the Fund in assessing the recoverability of its deferred tax assets. Specifically, the TCJA eliminated the net operating loss carryback ability and replaced the 20 year carryforward period with an indefinite carryforward period for any net operating losses arising in tax years ending after December 31, 2017. The TCJA also established a limitation for any net operating losses generated in tax years beginning after December 31, 2017 to the lesser of the aggregate of available net operating losses or 80% of taxable income before any net operating loss utilization. Through the consideration of these factors, the Fund has determined that it is more likely than not that the Fund’s deferred tax assets would not be fully realized. As a result, the Fund recorded a valuation allowance with respect to its deferred tax assets that are not considered to be realizable as of the six months ended May 31, 2020.
From time to time, the Fund may modify its estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance as new information becomes available. Modifications of the Fund’s estimates or assumptions regarding its deferred tax liability and/or asset balances and any applicable valuation allowance, changes in generally accepted accounting principles or related guidance or interpretations thereof, limitations imposed on or expirations of the Fund’s net operating losses and capital loss carryovers (if any) and changes in applicable tax law could result in increases or decreases in the Fund’s NAV per share, which could be material.
20 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Components of the Fund’s deferred tax assets and liabilities as of May 31, 2020 are as follows:
Deferred tax assets: | ||||
Net operating loss carryforward (tax basis) — Federal | $ | 104,147,366 | ||
Net operating loss carryforward (tax basis) — State | 9,472,682 | |||
Excess business interest expense carryforward | 5,339,855 | |||
Capital loss carryforward (tax basis) | 37,447,883 | |||
Organizational Costs | 3,041 | |||
Valuation allowance | (255,279,009) | |||
Total deferred tax asset | (98,868,182) | |||
Deferred tax liabilities: | ||||
Net unrealized gains on investment securities (tax basis) | $ | 90,876,572 | ||
Total deferred tax liability | 90,876,572 | |||
Total net deferred tax asset/(liability) | $ | (7,991,610) |
The Fund may rely, to some extent, on information provided by the MLPs, which may not necessarily be timely, to estimate taxable income allocable to MLP units held in its portfolio, and to estimate its associated deferred tax liability or asset. Such estimates are made in good faith. From time to time, as new information becomes available, the Fund will modify its estimates or assumptions regarding its tax liability or asset.
The Fund’s policy is to classify interest and penalties associated with underpayment of federal and state income taxes, if any, as income tax expense on its Statement of Operations. As of May 31, 2020, the Fund does not have any interest or penalties associated with the underpayment of any income taxes.
The Fund files income tax returns in the U.S. federal jurisdiction and various states. The Fund has reviewed all major jurisdictions and concluded that there is no significant impact on the Fund’s net assets and no tax liability resulting from unrecognized tax benefits relating to uncertain tax positions expected to be taken on its tax returns. Furthermore, management of the Fund is not aware of any uncertain tax positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly change in the next 12 months. Generally, the Fund is subject to examinations by taxing authorities for up to three years after the filing of the return for the tax period. All relevant periods are still open for examination.
At May 31, 2020, the Fund had net operating loss carryforwards for federal income tax purposes, as follows:
Expiration date for expiring net operating loss carryforwards: | ||||
11/30/2033 | $ | 14,873,782 | ||
11/30/2034 | 129,986,547 | |||
11/30/2035 | 153,875,403 | |||
11/30/2036 | 116,663,848 | |||
11/30/2037 | 10,613,012 | |||
Total expiring net operating loss carryforwards | 426,012,592 | |||
Total non-expiring net operating loss carryforwards | 69,927,252 | |||
Total net operating loss carryforwards | $ | 495,939,844 |
At May 31, 2020, the Fund had net capital loss carryforwards for federal income tax purposes, which may be carried forward for 5 years, as follows:
Expiration Date | ||||
11/30/2021 | $ | 29,454,428 | ||
11/30/2024 | 39,127,181 | |||
11/30/2025 | 94,946,264 | |||
Total | $ | 163,527,873 |
At May 31, 2020, gross unrealized appreciation and depreciation of investments, based on cost for federal income tax purposes were as follows:
Cost of Investments | $ | 2,451,595,498 | ||
Gross Unrealized Appreciation | $ | 375,098,518 | ||
Gross Unrealized Depreciation | (773,675,391) | |||
Net Unrealized Appreciation (Depreciation) on Investments | $ | (398,576,873) |
The difference between cost amounts for financial statement and federal income tax purposes is due primarily to timing differences in recognizing certain gains and losses in security transactions.
H. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
21 Invesco Oppenheimer SteelPath MLP Select 40 Fund
I. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
J. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $3 billion | 0.70% | |||
Next $2 billion | 0.68% | |||
Over $5 billion | 0.65% |
For the six months ended May 31, 2020, the effective advisory fees incurred by the Fund was 0.70%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC, and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a Sub-Advisory Agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
The Adviser has contractually agreed, through May 31, 2021, to waive advisory fees and/or reimburse expenses of all shares to the to the extent necessary to limit the total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.10%. 1.85%, 1.35%, 0.85%, 0.84% and 0.79%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expense after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expenses on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate May 31, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. See Note 10.
The Fund’s total annual operating expenses after fee waiver and/or expense reimbursement (“Net Expenses”) will be higher than these amounts to the extent that the Fund incurs expenses excluded from the expense cap. Because the Fund’s deferred income tax expense/(benefit) and interest expense are excluded from the expense cap, the Fund’s Net Expenses for each class of shares is increased/(decreased) by the amount of this expense. See Note 10.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended May 31, 2020, advisory fees of $411,576 were waived.
The Trust has entered into an administration and fund accounting agreement with UMB Fund Services, Inc. (“UMB”) pursuant to which UMB shall provide administration and fund accounting services to the Fund. The Trust and the Adviser have entered into a Master Administrative Services Agreement (“Administrative Services Agreement”) pursuant to which the Adviser may perform or arrange for the provision of certain accounting and other administrative services to the Fund which are not required to be performed by the Adviser under the Investment Advisory Agreement. The Adviser may only receive fees for administrative services under the Administrative Services Agreement to the extent that those fees assessed under the agreement are in excess of the fees paid to UMB Fund Services. For the six months ended May 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative fees. Additionally, Invesco has entered into service agreements whereby UMB Bank, n.a., serves as custodian to the Fund.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended May 31, 2020, expenses incurred under these agreements are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of the Class A shares, 1.00% of the average daily net assets of Class C shares and 0.50% of the
22 Invesco Oppenheimer SteelPath MLP Select 40 Fund
average daily net assets of Class R shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plan would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended May 31, 2020, expenses incurred under the plans are shown in the Statement of Operations as Distribution and service plan fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended May 31, 2020, IDI advised the Fund that IDI retained $73,648 in front-end sales commissions from the sale of Class A shares and $8,874 and $34,773 from Class A and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of May 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 — | Level 2 — | Level 3 — | Value | |||||||||||||
Assets Table | ||||||||||||||||
Investments, at Value: | ||||||||||||||||
MLP Investments and Related Entities | $ | 1,944,659,490 | $ | — | $ | — | $ | 1,944,659,490 | ||||||||
Private Investment in Public Equities (PIPE) | — | 4,206,450 | — | 4,206,450 | ||||||||||||
Preferred MLP Investments and Related Entities* | 31,645,500 | — | 39,960,000 | 71,605,500 | ||||||||||||
Short-Term Investments | 32,547,185 | — | — | 32,547,185 | ||||||||||||
Total Assets | $ | 2,008,852,175 | $ | 4,206,450 | $ | 39,960,000 | $ | 2,053,018,625 |
* | A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the reporting period in relation to net assets. |
The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:
Beginning balance November 30, 2019 | $ | 40,000,000 | ||
Transfers into Level 3 during the period | — | |||
Change in unrealized appreciation/(depreciation) | 1,951,571 | |||
Total realized gain/(loss) | — | |||
Purchases | — | |||
Sales | — | |||
Return of capital distributions | (1,991,571 | ) | ||
Transfers out of Level 3 during the period | — | |||
Ending balance May 31, 2020 | $ | 39,960,000 |
The total change in unrealized appreciation/depreciation included in the Statement of Operations attributable to Level 3 investments still held at May 31, 2020 is ($40,000).
23 Invesco Oppenheimer SteelPath MLP Select 40 Fund
The following table summarizes the valuation techniques and significant unobservable inputs used in determining fair value measurements for those investments classified as Level 3 as of May 31, 2020:
Value as of May 31, 2020 | Valuation Technique | Unobservable input | Range of Unobservable Inputs | Unobservable Input Used | ||||||||||||||||
Assets Table | ||||||||||||||||||||
Investments, at Value: | ||||||||||||||||||||
Preferred Stocks | $ | 39,960,000 | | Discounted Cash Flow Model | | Illiquidity Discount | n/a | 10 | % | |||||||||||
Average Estimated Yield | 13.1 | %-13.2% | 13.2 | %(a) | ||||||||||||||||
Total | $ | 39,960,000 |
(a) | The Fund fair values certain preferred shares using a discounted cash flow model, which incorporates an illiquidity discount and the expected yield based on the average yield on comparable companies’ equity. Such security’s fair valuation could decrease (increase) significantly based on an increase (decrease) in the illiquidity discount. Such security’s fair valuation could increase (decrease) significantly based on an increase (decrease) in expected yields. |
NOTE 4—Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures for the six month period May 31,2020, the Fund engaged in transactions with affiliates as listed: Securities purchases of $74,757,183 and securities sales of $33,777,129, which resulted in net realized losses of ($8,970,118).
NOTE 5—Trustees’ and Officer Fees and Benefits
Certain trustees have executed a Deferred Compensation Agreement pursuant to which they have the option to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Invesco and/or Invesco Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities, if applicable. Deferral of trustees’ fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance with the compensation deferral plan.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with UMB Bank n.a the custodian bank. Such balances, if any, at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended May 31, 2020 was $426,120,185 and $545,944,306 respectively.
24 Invesco Oppenheimer SteelPath MLP Select 40 Fund
NOTE 8—Share Information
The Fund has authorized an unlimited number of shares of beneficial interest in each class. Transactions in shares of beneficial interest were as follows:
For the Six Months Ended May 31, 2020 (unaudited)2 | Year Ended November 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A | ||||||||||||||||
Sold | 17,423,382 | $ | 82,501,651 | 16,719,826 | $ | 120,555,534 | ||||||||||
Dividends and/or distributions reinvested | 3,279,107 | 14,149,452 | 4,959,720 | 34,438,748 | ||||||||||||
Redeemed | (17,625,393 | ) | (89,517,788 | ) | (25,502,732 | ) | (182,528,849 | ) | ||||||||
Net increase/(decrease) | 3,077,096 | $ | 7,133,315 | (3,823,186 | ) | $ | (26,534,567 | ) | ||||||||
Class C | ||||||||||||||||
Sold | 8,051,865 | $ | 39,297,581 | 12,026,204 | $ | 80,775,269 | ||||||||||
Dividends and/or distributions reinvested | 3,888,781 | 15,660,968 | 6,208,203 | 41,341,334 | ||||||||||||
Redeemed | (16,511,247 | ) | (76,060,370 | ) | (22,926,782 | ) | (152,606,588 | ) | ||||||||
Net Increase/(Decrease) | (4,570,601 | ) | $ | (21,101,821 | ) | 4,692,375 | $ | (30,489,985 | ) | |||||||
Class R1 | ||||||||||||||||
Sold | 41,328 | $ | 183,504 | 67,092 | $ | 460,051 | ||||||||||
Dividends and/or distributions reinvested | 5,134 | 22,112 | 1,287 | 8,451 | ||||||||||||
Redeemed | (57,271 | ) | (234,985 | ) | — | — | ||||||||||
Net Increase/(Decrease) | (10,809 | ) | $ | (29,369 | ) | 68,379 | $ | 468,502 | ||||||||
Class Y | ||||||||||||||||
Sold | 153,705,390 | $ | 677,371,351 | 139,056,540 | $ | 1,032,075,357 | ||||||||||
Dividends and/or distributions reinvested | 14,971,646 | 67,326,658 | 20,695,173 | 152,795,585 | ||||||||||||
Redeemed | (168,061,223 | ) | (789,276,735 | ) | (139,353,464 | ) | (1,032,183,023 | ) | ||||||||
Net Increase/(Decrease) | 615,813 | $ | (44,578,726 | ) | 20,398,249 | $ | 152,687,919 | |||||||||
Class R51 | ||||||||||||||||
Sold | — | $ | 1 | 1,332 | $ | 10,000 | ||||||||||
Dividends and/or distributions reinvested | — | (1 | ) | — | ||||||||||||
Redeemed | — | — | — | |||||||||||||
Net Increase/(Decrease) | — | $ | — | 1,332 | $ | 10,000 | ||||||||||
Class R6 | ||||||||||||||||
Sold | 68,996,916 | $ | 299,555,980 | 78,135,033 | $ | 590,086,763 | ||||||||||
Dividends and/or distributions reinvested | 6,908,812 | 31,629,574 | 10,252,853 | 76,181,869 | ||||||||||||
Redeemed | (74,355,434 | ) | (368,305,455 | ) | (54,042,520 | ) | (395,351,288 | ) | ||||||||
Net Increase/(Decrease) | 1,550,294 | $ | (37,119,901 | ) | 34,345,366 | $ | 270,917,344 |
1. | Class R and R5 shares commenced operations after the close of business on May 24, 2019. |
2. | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and own 50% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates, including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 9—Borrowing Agreement
The Fund, along with Invesco Oppenheimer SteelPath MLP Alpha Plus Fund, Invesco Oppenheimer SteelPath MLP Alpha Fund, and Invesco Oppenheimer SteelPath MLP Income Fund (collectively, the “Trust”), is a borrower in a $700 million revolving credit agreement (the “Loan Agreement”) with a major lending institution (the “Lender”). The Fund is permitted to borrow up to the lesser of one-third of the Fund’s total assets, or the maximum amount permitted pursuant to the Fund’s investment limitations. As the Loan Agreement is not available exclusively to the Fund, the Fund may not be able to borrow all of its requested amounts at any given time. Amounts borrowed under the Loan Agreement, if any, are invested by the Fund under the direction of the Adviser consistent with the Fund’s investment objective and policies, and as such, the related investments are subject to normal market fluctuations and investment risks, including the risk of loss due to a decline in value. The borrowing, if any, is fully collateralized throughout the term of the borrowing with securities or other assets of the Fund. The Fund is not liable for borrowings of other Funds in the Trust. If applicable, securities that have been pledged as collateral for the borrowing are indicated in the Schedule of Investments.
25 Invesco Oppenheimer SteelPath MLP Select 40 Fund
Borrowings under the Loan Agreement are charged interest at a calculated rate computed by the Lender based on the one month LIBOR rate plus 0.75% per annum. An unused commitment fee at the rate of 0.30% per annum is charged for any undrawn portion of the credit facility, and each series of the Trust will pay its pro rata share of this fee. A facility fee of 0.10% was charged on the commitment amount, and each series of the Trust paid its pro rata share of this fee. The borrowing is due November 15, 2020, unless another date is mutually agreed upon by the parties of the Loan Agreement. For the six months ended May 31, 2020, the Fund paid $494,406 in borrowing fees. The Fund did not utilize the facility during the six months ended May 31, 2020.
NOTE 10—Remediation Note
Subsequent to the period ended November 30, 2019, the Fund determined that the valuation allowance related to the deferred tax asset included in the calculation of the net asset values per share (“NAV”) upon which the shareholders transacted had not been properly accounted for during the period that includes days between December 1, 2014 through March 6, 2020 (“overstatement period”). Specifically, it was determined that the realizability of the deferred tax asset did not meet the “more likely than not” evaluation criterion provided by ASC 740, Income Taxes, resulting in the overstatement of the deferred tax asset and corresponding understatement of the valuation allowance. As a result, the Fund’s NAVs have been corrected during certain days of the overstatement period.
Invesco is assessing the extent to which shareholders who transacted in the Fund during the overstatement period were negatively impacted by the overstatement of the Fund’s deferred tax asset, including the Fund’s overpayment of asset-based fees to affiliates. Invesco is preparing a remediation plan that contemplates payments by Invesco to shareholders whose accounts or transactions were negatively impacted by the overstatement of the NAVs during the overstatement period. The method of determining the actual remediation payments to be paid to individual shareholders is subject to various factors that are not yet certain and information that is not yet readily available, including retrieval of beneficial owner data for Fund shares held in omnibus accounts. The Fund’s Board has directed Invesco to proceed with the remediation plan with any remediation payments to be made directly to affected shareholders outside of the Fund, and that no remediation payments be made to the Fund unless or until the Board were to approve so in the future. The Fund is estimated to have over paid $990,000 in asset-based fees to affiliates as a result of the overstatement of the deferred tax asset, such amount which will be included in the calculation of remediation payments. Accordingly, all shareholder remediation payments are intended to be made directly to affected shareholders and not to the Fund and therefore no provision for such remediation payments have been made in the Fund’s financial statements. No remediation payments will be made by the Fund.
NOTE 11—Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared (COVID-19) to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12—Subsequent Event
Effective on or about September 30, 2020, the name of the Fund and all references thereto will change from Invesco Oppenheimer SteelPath MLP Select 40 Fund to Invesco SteelPath MLP Select 40 Fund.
26 Invesco Oppenheimer SteelPath MLP Select 40 Fund
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Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
O-SPMS40-SAR-1 072720 |
Item 2. Code of Ethics.
Not required for a semiannual report
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments.
Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
None
Item 11. Controls and Procedures.
(a) | Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the PEO and the PFO, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. |
On May 24, 2019, Invesco Advisers, Inc. (“Invesco”) acquired sponsorship and management responsibilities from Oppenheimer Funds, Inc. for the Invesco Oppenheimer SteelPath MLP Select 40 Fund (formerly known as Oppenheimer SteelPath MLP Select 40 Fund), Invesco Oppenheimer SteelPath MLP Alpha Fund (formerly known as Oppenheimer SteelPath MLP Alpha Fund), Invesco Oppenheimer SteelPath MLP Alpha Plus Fund (formerly known as Oppenheimer SteelPath MLP Alpha Plus Fund), and Invesco Oppenheimer SteelPath MLP Income Fund (formerly known as Oppenheimer SteelPath MLP Income Fund) (each, a “Fund” and collectively, referred to as the “Funds”) each of which resulted from the reorganization of certain predecessor funds (Oppenheimer SteelPath MLP Select 40 Fund, Oppenheimer SteelPath MLP Alpha Fund, Oppenheimer SteelPath MLP Alpha Plus Fund and Oppenheimer SteelPath MLP Income Fund) (collectively referred to as the “Predecessor Funds”) into the Funds. In connection with the original filing of the Predecessor Funds’ Form N-CSR for the fiscal year ended November 30, 2018 on February 5, 2019, as amended on March 29, 2019, an evaluation was performed to assess the effectiveness of the Predecessor Funds’ disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (“Act”), as amended. Based on their evaluation, the Predecessor Funds’ PEO and PFO found, as of November 30, 2018, the Predecessor Funds’ disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by the Predecessor Fund in the reports that it files under the Securities Exchange Act of 1934 is (a) is accumulated and communicated to Predecessor Funds’ management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified by the rules and forms adopted by the U.S. Securities and Exchange Commission.
However, subsequent to the original filing of the Predecessor Funds’ Form N-CSR for the fiscal year ended November 30, 2018, and after the reorganization of the Predecessor Funds into the Funds, a material error was identified which resulted in an understatement of the valuation allowance on deferred tax assets and therefore an overstatement of the Funds’ net
deferred tax assets and an overstatement in the net asset values originally reported in the Predecessor Funds’ financial statements for the semi-annual periods ended May 31, 2016 through May 31, 2018, the fiscal years ended November 30, 2015 through November 30, 2018 and the Funds’ financial statements for the semi-annual period ended May 31, 2019. Management of the Registrant adopted the procedure to determine the valuation allowance on deferred tax assets, as designed by management of the Predecessor Funds, as it was intended. Subsequent to Invesco’s acquisition of the Funds, Invesco concluded that the Funds’ disclosure controls and procedures were not effective as of November 30, 2019, and subsequently as of May 31, 2020, due to a material weakness related to the determination of the valuation allowance on deferred tax assets in accordance with ASC 740, Income Taxes. Controls were not designed at an appropriate level of precision to adequately consider the assessment of the assumptions used to determine the valuation allowance on deferred tax assets.
A material weakness (as defined in Rule 12b-2 under the Exchange Act) is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Registrant’s annual or interim financial statements will not be prevented or detected on a timely basis. This material weakness resulted in the misstatement of the deferred tax assets and related financial disclosures in the Predecessor Funds’ financial statements for the semi-annual periods ended May 31, 2016 through May 31, 2018 and the restatement of the deferred tax assets and related financial disclosures in the Predecessor Funds’ financial statements for the year ended November 30, 2018, which include a restatement of financial data for fiscal years ending November 30, 2015 through November 30, 2017, restatement of the Funds’ financial statements for the semi-annual period ended May 31, 2019, and a material adjustment to the Funds’ financial statements for the year ended November 30, 2019. Additionally, this material weakness could result in misstatements of the deferred tax assets and related financial disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected.
Management’s Remediation Plan
Subsequent to the identification of the issue described above, management has developed a plan to remediate the material weakness described herein. Management has strengthened the Funds’ internal control over financial reporting by enhancing the training for those performing the controls and adding a level of review by a subject matter expert to assess the assumptions used to determine the valuation allowance for the Funds’ deferred tax assets. However, the material weakness will not be considered fully remediated until the foregoing corrective actions operate for a sufficient period of time to allow management to complete its evaluation of their design and operational effectiveness.
(b) | Other than implementing the remediation plan described above, there were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: AIM Investment Funds (Invesco Investment Funds)
By: | /s/ Sheri Morris | |
Sheri Morris | ||
Principal Executive Officer | ||
Date: | August 6, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Sheri Morris | |
Sheri Morris | ||
Principal Executive Officer | ||
Date: | August 6, 2020 |
By: | /s/ Kelli Gallegos | |
Kelli Gallegos | ||
Principal Financial Officer | ||
Date: | August 6, 2020 |