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: 811-05686
AIM Investment Securities Funds (Invesco Investment Securities 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: 02/28
Date of reporting period: 08/31/20
Item 1. Reports to Stockholders.
The Registrant’s semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:
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Semiannual Report to Shareholders | August 31, 2020 | |||||
| ||||||
Invesco Corporate Bond Fund | ||||||
Nasdaq: | ||||||
A: ACCBX ∎ C: ACCEX ∎ R: ACCZX ∎ Y: ACCHX ∎ R5: ACCWX ∎ R6: ICBFX |
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.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Bruce Crockett | Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it | |
charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs. |
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Andrew Schlossberg | Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. | |
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. | ||
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us. |
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Corporate Bond Fund
Performance summary | ||||||
Fund vs. Indexes | ||||||
Cumulative total returns, 2/29/20 to 8/31/20, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. |
| |||||
Class A Shares | 2.96 | % | ||||
Class C Shares | 2.45 | |||||
Class R Shares | 2.83 | |||||
Class Y Shares | 3.08 | |||||
Class R5 Shares | 3.11 | |||||
Class R6 Shares | 3.15 | |||||
Bloomberg Barclays U.S. Credit Indexq (Broad Market/Style-Specific Index) | 2.84 | |||||
Lipper BBB Rated Funds Index◾ (Peer Group Index) | 1.77 | |||||
Source(s): qRIMES Technologies Corp.; ◾Lipper Inc. | ||||||
The Bloomberg Barclays U.S. Credit Index is an unmanaged index considered representative of publicly issued, SEC-registered US corporate and specified foreign debentures and secured notes. The Lipper BBB Rated Funds Index is an unmanaged index considered representative of BBB-rated funds tracked by Lipper. The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
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For more information about your Fund
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance. Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
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3 Invesco Corporate Bond Fund
Average Annual Total Returns |
| |||
As of 8/31/20, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (9/23/71) | 7.05 | % | ||
10 Years | 5.04 | |||
5 Years | 5.45 | |||
1 Year | 2.69 | |||
Class C Shares | ||||
Inception (8/30/93) | 5.34 | % | ||
10 Years | 4.73 | |||
5 Years | 5.58 | |||
1 Year | 5.48 | |||
Class R Shares | ||||
10 Years | 5.25 | % | ||
5 Years | 6.11 | |||
1 Year | 7.01 | |||
Class Y Shares | ||||
Inception (8/12/05) | 5.84 | % | ||
10 Years | 5.76 | |||
5 Years | 6.62 | |||
1 Year | 7.54 | |||
Class R5 Shares | ||||
Inception (6/1/10) | 6.40 | % | ||
10 Years | 5.89 | |||
5 Years | 6.72 | |||
1 Year | 7.59 | |||
Class R6 Shares | ||||
10 Years | 5.86 | % | ||
5 Years | 6.81 | |||
1 Year | 7.68 |
Effective June 1, 2010, Class A, Class C and Class I shares of the predecessor fund, Van Kampen Corporate Bond Fund, advised by Van Kampen Asset Management were reorganized into Class A, Class C and Class Y shares, respectively, of Invesco Van Kampen Corporate Bond Fund (renamed Invesco Corporate Bond Fund). Returns shown above, prior to June 1, 2010, for Class A, Class C and Class Y shares are those for Class A, Class C and Class I shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
Class R shares incepted on June 6, 2011. Performance shown prior to that date is that of the Fund’s Class A shares at net asset value, restated to reflect the higher 12b-1 fees applicable to Class R shares.
Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of the Fund’s Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Class A share performance reflects the maximum 4.25% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
4 Invesco Corporate Bond Fund
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. 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 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. |
5 Invesco Corporate Bond Fund
August 31, 2020
(Unaudited)
Principal Amount | Value | |||||||
| ||||||||
U.S. Dollar Denominated Bonds & Notes–92.26% |
| |||||||
Advertising–0.39% | ||||||||
Interpublic Group of Cos., Inc. (The), 4.75%, 03/30/2030 | $ | 4,855,000 | $ | 5,843,392 | ||||
| ||||||||
Lamar Media Corp., 3.75%, 02/15/2028(b) | 3,342,000 | 3,348,266 | ||||||
| ||||||||
9,191,658 | ||||||||
| ||||||||
Aerospace & Defense–0.21% |
| |||||||
Boeing Co. (The), | ||||||||
5.15%, 05/01/2030 | 2,612,000 | 2,930,099 | ||||||
| ||||||||
5.71%, 05/01/2040 | 1,132,000 | 1,316,480 | ||||||
| ||||||||
Howmet Aerospace, Inc., 6.88%, 05/01/2025 | 214,000 | 244,769 | ||||||
| ||||||||
TransDigm UK Holdings PLC, 6.88%, 05/15/2026 | 301,000 | 308,206 | ||||||
| ||||||||
TransDigm, Inc., | ||||||||
6.50%, 07/15/2024 | 70,000 | 70,521 | ||||||
| ||||||||
6.38%, 06/15/2026 | 141,000 | 144,476 | ||||||
| ||||||||
5,014,551 | ||||||||
| ||||||||
Agricultural & Farm Machinery–0.01% |
| |||||||
Titan International, Inc., 6.50%, 11/30/2023 | 337,000 | 252,750 | ||||||
| ||||||||
Agricultural Products–0.04% |
| |||||||
Bunge Ltd. Finance Corp., 1.63%, 08/17/2025 | 1,059,000 | 1,065,630 | ||||||
| ||||||||
Air Freight & Logistics–0.00% |
| |||||||
XPO Logistics, Inc., 6.50%, 06/15/2022(b) | 84,000 | 84,445 | ||||||
| ||||||||
Airlines–1.96% | ||||||||
American Airlines Pass Through Trust, | ||||||||
Series 2017-1, Class B, 4.95%, 02/15/2025 | 1,002,960 | 712,035 | ||||||
| ||||||||
Series 2016-1, Class AA, 3.58%, 01/15/2028 | 1,553,989 | 1,505,101 | ||||||
| ||||||||
Series 2019-1, Class B, 3.85%, 02/15/2028 | 3,334,869 | 2,166,923 | ||||||
| ||||||||
Series 2016-3, Class AA, 3.00%, 10/15/2028 | 3,748,025 | 3,506,161 | ||||||
| ||||||||
Series 2017-1, Class AA, 3.65%, 02/15/2029 | 2,565,810 | 2,462,254 | ||||||
| ||||||||
Series 2017-2, Class AA, 3.35%, 10/15/2029 | 4,340,174 | 4,094,094 | ||||||
| ||||||||
British Airways Pass Through Trust (United Kingdom), | ||||||||
Series 2019-1, Class A, 3.35%, 06/15/2029(b) | 1,426,061 | 1,194,067 | ||||||
| ||||||||
Series 2019-1, Class AA, 3.30%, 12/15/2032(b) | 3,793,520 | 3,517,807 | ||||||
| ||||||||
Delta Air Lines Pass Through Trust, | ||||||||
Series 2019-1, Class A, 3.40%, 04/25/2024 | 3,090,000 | 2,873,233 | ||||||
| ||||||||
Series 2020-1, Class AA, 2.00%, 06/10/2028 | 4,066,000 | 3,961,191 | ||||||
| ||||||||
Delta Air Lines, Inc., | ||||||||
7.00%, 05/01/2025(b) | 531,000 | 581,880 | ||||||
| ||||||||
7.38%, 01/15/2026 | 605,000 | 630,200 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Airlines–(continued) | ||||||||
Norwegian Air Shuttle ASA Pass Through Trust (Norway), | ||||||||
Series 2016-1, Class B, 7.50%, 11/10/2023(b) | $ | 4,312,706 | $ | 3,169,839 | ||||
| ||||||||
Series 2016-1, Class A, 4.88%, 05/10/2028(b) | 4,169,923 | 3,794,734 | ||||||
| ||||||||
Southwest Airlines Co., 5.25%, 05/04/2025 | 39,000 | 42,610 | ||||||
| ||||||||
United Airlines Pass Through Trust, | ||||||||
Series 2014-2, Class B, 4.63%, 09/03/2022 | 1,413,273 | 1,277,355 | ||||||
| ||||||||
Series 2016-1, Class B, 3.65%, 01/07/2026 | 2,085,724 | 1,573,947 | ||||||
| ||||||||
Series 2018-1, Class A, 3.70%, 03/01/2030 | 314,430 | 261,212 | ||||||
| ||||||||
Series 2018-1, Class AA, 3.50%, 03/01/2030 | 4,079,192 | 3,843,493 | ||||||
| ||||||||
Series 2019-1, Class A, 4.55%, 08/25/2031 | 1,882,666 | 1,591,224 | ||||||
| ||||||||
Series 2019-1, Class AA, 4.15%, 08/25/2031 | 3,670,595 | 3,655,815 | ||||||
| ||||||||
46,415,175 | ||||||||
| ||||||||
Alternative Carriers–0.12% |
| |||||||
CenturyLink, Inc., | ||||||||
Series S, 6.45%, 06/15/2021 | 299,000 | 309,504 | ||||||
| ||||||||
Series Y, 7.50%, 04/01/2024 | 264,000 | 299,640 | ||||||
| ||||||||
4.00%, 02/15/2027(b) | 1,165,000 | 1,185,388 | ||||||
| ||||||||
Level 3 Financing, Inc., | ||||||||
5.38%, 05/01/2025 | 717,000 | 740,159 | ||||||
| ||||||||
5.25%, 03/15/2026 | 377,000 | 393,531 | ||||||
| ||||||||
2,928,222 | ||||||||
| ||||||||
Aluminum–0.03% | ||||||||
Alcoa Nederland Holding B.V., 6.75%, 09/30/2024(b) | 600,000 | 621,753 | ||||||
| ||||||||
Novelis Corp., 4.75%, | 198,000 | 201,066 | ||||||
| ||||||||
822,819 | ||||||||
| ||||||||
Apparel Retail–0.30% | ||||||||
L Brands, Inc., 6.75%, 07/01/2036 | 303,000 | 310,075 | ||||||
| ||||||||
Michaels Stores, Inc., 8.00%, 07/15/2027(b) | 267,000 | 270,121 | ||||||
| ||||||||
Ross Stores, Inc., 5.45%, 04/15/2050 | 5,021,000 | 6,451,426 | ||||||
| ||||||||
7,031,622 | ||||||||
| ||||||||
Apparel, Accessories & Luxury Goods–0.03% |
| |||||||
Hanesbrands, Inc., | ||||||||
4.63%, 05/15/2024(b) | 58,000 | 61,051 | ||||||
| ||||||||
4.88%, 05/15/2026(b) | 560,000 | 610,739 | ||||||
| ||||||||
671,790 | ||||||||
| ||||||||
Asset Management & Custody Banks–1.29% |
| |||||||
Affiliated Managers Group, Inc., 4.25%, 02/15/2024 | 4,316,000 | 4,763,687 | ||||||
| ||||||||
Ameriprise Financial, Inc., 3.00%, 04/02/2025 | 3,368,000 | 3,693,388 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Asset Management & Custody Banks–(continued) |
| |||||||
Apollo Management Holdings L.P., | ||||||||
2.65%, 06/05/2030(b) | $ | 3,712,000 | $ | 3,706,076 | ||||
| ||||||||
4.95%, 01/14/2050(b)(c) | 6,801,000 | 6,876,967 | ||||||
| ||||||||
Bank of New York Mellon Corp. (The), Series G, 4.70%(c)(d) | 4,150,000 | 4,517,275 | ||||||
| ||||||||
Carlyle Holdings II Finance LLC, 5.63%, 03/30/2043(b) | 5,640,000 | 7,098,657 | ||||||
| ||||||||
30,656,050 | ||||||||
| ||||||||
Auto Parts & Equipment–0.11% |
| |||||||
Clarios Global L.P./Clarios US Finance Co., 8.50%, 05/15/2027(b) | 178,000 | 189,292 | ||||||
| ||||||||
Dana Financing Luxembourg S.a.r.l., 5.75%, 04/15/2025(b) | 132,000 | 137,330 | ||||||
| ||||||||
Dana, Inc., 5.38%, 11/15/2027 | 221,000 | 234,943 | ||||||
| ||||||||
Magna International, Inc. (Canada), 2.45%, 06/15/2030 | 1,745,000 | 1,849,777 | ||||||
| ||||||||
Tenneco, Inc., 5.00%, 07/15/2026 | 115,000 | 84,600 | ||||||
| ||||||||
2,495,942 | ||||||||
| ||||||||
Automobile Manufacturers–1.34% |
| |||||||
Ford Motor Co., | ||||||||
8.50%, 04/21/2023 | 261,000 | 288,927 | ||||||
| ||||||||
9.00%, 04/22/2025 | 413,000 | 483,850 | ||||||
| ||||||||
9.63%, 04/22/2030 | 226,000 | 296,598 | ||||||
| ||||||||
4.75%, 01/15/2043 | 345,000 | 320,203 | ||||||
| ||||||||
Ford Motor Credit Co. LLC, | ||||||||
5.09%, 01/07/2021 | 2,172,000 | 2,180,145 | ||||||
| ||||||||
5.60%, 01/07/2022 | 410,000 | 422,288 | ||||||
| ||||||||
4.39%, 01/08/2026 | 200,000 | 203,746 | ||||||
| ||||||||
General Motors Financial Co., Inc., Series B, 6.50%(c)(d) | 200,000 | 202,650 | ||||||
| ||||||||
Harley-Davidson Financial Services, Inc., 3.35%, 06/08/2025(b) | 2,417,000 | 2,567,735 | ||||||
| ||||||||
Hyundai Capital America, | ||||||||
2.85%, 11/01/2022(b) | 3,094,000 | 3,205,494 | ||||||
| ||||||||
4.30%, 02/01/2024(b) | 12,491,000 | 13,597,146 | ||||||
| ||||||||
2.65%, 02/10/2025(b) | 4,837,000 | 5,034,253 | ||||||
| ||||||||
3.50%, 11/02/2026(b) | 2,527,000 | 2,735,291 | ||||||
| ||||||||
J.B. Poindexter & Co., Inc., 7.13%, 04/15/2026(b) | 320,000 | 341,261 | ||||||
| ||||||||
31,879,587 | ||||||||
| ||||||||
Automotive Retail–0.45% |
| |||||||
Advance Auto Parts, Inc., | ||||||||
4.50%, 12/01/2023 | 3,059,000 | 3,340,360 | ||||||
| ||||||||
3.90%, 04/15/2030 | 5,345,000 | 5,894,649 | ||||||
| ||||||||
Asbury Automotive Group, Inc., 4.75%, 03/01/2030(b) | 60,000 | 62,332 | ||||||
| ||||||||
AutoZone, Inc., 3.75%, 04/18/2029 | 200,000 | 231,973 | ||||||
| ||||||||
Group 1 Automotive, Inc., 4.00%, 08/15/2028(b) | 300,000 | 299,878 | ||||||
| ||||||||
Lithia Motors, Inc., | ||||||||
5.25%, 08/01/2025(b) | 108,000 | 112,320 | ||||||
| ||||||||
4.63%, 12/15/2027(b) | 106,000 | 112,095 | ||||||
| ||||||||
Murphy Oil USA, Inc., 5.63%, 05/01/2027 | 300,000 | 319,068 | ||||||
| ||||||||
Penske Automotive Group, Inc., 5.50%, 05/15/2026 | 356,000 | 371,473 | ||||||
| ||||||||
10,744,148 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Biotechnology–1.16% | ||||||||
AbbVie, Inc., | ||||||||
3.20%, 11/21/2029(b) | $ | 8,476,000 | $ | 9,417,944 | ||||
| ||||||||
4.05%, 11/21/2039(b) | 8,944,000 | 10,445,969 | ||||||
| ||||||||
4.88%, 11/14/2048 | 2,066,000 | 2,662,130 | ||||||
| ||||||||
Amgen, Inc., | ||||||||
2.45%, 02/21/2030 | 1,620,000 | 1,728,595 | ||||||
| ||||||||
3.15%, 02/21/2040 | 3,141,000 | 3,328,363 | ||||||
| ||||||||
27,583,001 | ||||||||
| ||||||||
Brewers–0.29% | ||||||||
Anheuser-Busch InBev Worldwide, Inc. (Belgium), | ||||||||
4.00%, 04/13/2028 | 300,000 | 347,772 | ||||||
| ||||||||
8.00%, 11/15/2039 | 2,307,000 | 3,675,478 | ||||||
| ||||||||
4.35%, 06/01/2040 | 2,178,000 | 2,537,011 | ||||||
| ||||||||
Molson Coors Beverage Co., 5.00%, 05/01/2042 | 249,000 | 281,302 | ||||||
| ||||||||
6,841,563 | ||||||||
| ||||||||
Broadcasting–0.10% | ||||||||
AMC Networks, Inc., | ||||||||
5.00%, 04/01/2024 | 329,000 | 335,786 | ||||||
| ||||||||
4.75%, 08/01/2025 | 61,000 | 63,227 | ||||||
| ||||||||
Clear Channel Worldwide Holdings, Inc., 9.25%, 02/15/2024 | 223,000 | 219,121 | ||||||
| ||||||||
Fox Corp., 3.50%, 04/08/2030 | 1,105,000 | 1,245,479 | ||||||
| ||||||||
Gray Television, Inc., 7.00%, 05/15/2027(b) | 167,000 | 181,621 | ||||||
| ||||||||
iHeartCommunications, Inc., 8.38%, 05/01/2027 | 195,000 | 196,329 | ||||||
| ||||||||
TV Azteca S.A.B. de C.V. (Mexico), 8.25%, | 300,000 | 167,593 | ||||||
| ||||||||
2,409,156 | ||||||||
| ||||||||
Building Products–1.33% |
| |||||||
Carrier Global Corp., | ||||||||
2.24%, 02/15/2025(b) | 7,294,000 | 7,649,025 | ||||||
| ||||||||
2.49%, 02/15/2027(b) | 2,850,000 | 2,994,336 | ||||||
| ||||||||
2.72%, 02/15/2030(b) | 5,968,000 | 6,260,370 | ||||||
| ||||||||
3.38%, 04/05/2040(b) | 5,693,000 | 5,940,383 | ||||||
| ||||||||
3.58%, 04/05/2050(b) | 3,849,000 | 4,093,138 | ||||||
| ||||||||
Owens Corning, 4.30%, 07/15/2047 | 250,000 | 272,160 | ||||||
| ||||||||
Standard Industries, Inc., | ||||||||
6.00%, 10/15/2025(b) | 725,000 | 749,505 | ||||||
| ||||||||
5.00%, 02/15/2027(b) | 47,000 | 49,213 | ||||||
| ||||||||
3.38%, 01/15/2031(b) | 3,511,000 | 3,497,834 | ||||||
| ||||||||
31,505,964 | ||||||||
| ||||||||
Cable & Satellite–2.45% |
| |||||||
Altice Financing S.A. (Luxembourg), 7.50%, 05/15/2026(b) | 260,000 | 277,797 | ||||||
| ||||||||
CCO Holdings LLC/CCO Holdings Capital Corp., | ||||||||
5.75%, 02/15/2026(b) | 1,273,000 | 1,335,772 | ||||||
| ||||||||
4.50%, 08/15/2030(b) | 131,000 | 139,188 | ||||||
| ||||||||
4.25%, 02/01/2031(b) | 1,362,000 | 1,424,797 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Cable & Satellite–(continued) |
| |||||||
Charter Communications Operating LLC/ Charter Communications Operating Capital Corp., | ||||||||
4.91%, 07/23/2025 | $ | 5,265,000 | $ | 6,129,557 | ||||
| ||||||||
5.38%, 04/01/2038 | 249,000 | 303,136 | ||||||
| ||||||||
5.75%, 04/01/2048 | 2,404,000 | 3,007,374 | ||||||
| ||||||||
6.83%, 10/23/2055 | 4,253,000 | 5,845,207 | ||||||
| ||||||||
Comcast Corp., | ||||||||
6.45%, 03/15/2037 | 1,802,000 | 2,717,378 | ||||||
| ||||||||
4.60%, 10/15/2038 | 2,447,000 | 3,140,469 | ||||||
| ||||||||
3.25%, 11/01/2039 | 994,000 | 1,100,251 | ||||||
| ||||||||
3.45%, 02/01/2050 | 4,115,000 | 4,622,029 | ||||||
| ||||||||
2.80%, 01/15/2051 | 13,769,000 | 13,914,245 | ||||||
| ||||||||
4.95%, 10/15/2058 | 2,505,000 | 3,592,843 | ||||||
| ||||||||
Cox Communications, Inc., 3.35%, 09/15/2026(b) | 2,228,000 | 2,486,619 | ||||||
| ||||||||
CSC Holdings LLC, | ||||||||
5.50%, 05/15/2026(b) | 265,000 | 278,306 | ||||||
| ||||||||
4.63%, 12/01/2030(b) | 490,000 | 501,807 | ||||||
| ||||||||
DISH DBS Corp., | ||||||||
5.88%, 11/15/2024 | 239,000 | 252,967 | ||||||
| ||||||||
7.75%, 07/01/2026 | 130,000 | 149,014 | ||||||
| ||||||||
Intelsat Jackson Holdings S.A. (Luxembourg), 8.50%, 10/15/2024(b)(e) | 265,000 | 180,836 | ||||||
| ||||||||
NBCUniversal Media LLC, 5.95%, 04/01/2041 | 3,802,000 | 5,675,764 | ||||||
| ||||||||
UPC Holding B.V. (Netherlands), 5.50%, 01/15/2028(b) | 200,000 | 209,231 | ||||||
| ||||||||
Virgin Media Secured Finance PLC (United Kingdom), | ||||||||
5.50%, 08/15/2026(b) | 239,000 | 252,444 | ||||||
| ||||||||
4.50%, 08/15/2030(b) | 350,000 | 368,812 | ||||||
| ||||||||
Ziggo B.V. (Netherlands), 5.50%, 01/15/2027(b) | 225,000 | 236,892 | ||||||
| ||||||||
58,142,735 | ||||||||
| ||||||||
Casinos & Gaming–0.05% |
| |||||||
MGM Resorts International, |
| |||||||
7.75%, 03/15/2022 | 301,000 | 320,001 | ||||||
| ||||||||
6.00%, 03/15/2023 | 559,000 | 590,793 | ||||||
| ||||||||
Scientific Games International, Inc., 8.25%, 03/15/2026(b) | 115,000 | 118,661 | ||||||
| ||||||||
Station Casinos LLC, 4.50%, 02/15/2028(b) | 133,000 | 126,762 | ||||||
| ||||||||
1,156,217 | ||||||||
| ||||||||
Coal & Consumable Fuels–0.03% |
| |||||||
Parsley Energy LLC/Parsley Finance Corp., | ||||||||
5.38%, 01/15/2025(b) | 107,000 | 109,328 | ||||||
| ||||||||
4.13%, 02/15/2028(b) | 89,000 | 86,321 | ||||||
| ||||||||
SunCoke Energy Partners L.P./SunCoke Energy Partners Finance Corp., 7.50%, 06/15/2025(b) | 602,000 | 541,418 | ||||||
| ||||||||
737,067 | ||||||||
| ||||||||
Commodity Chemicals–0.03% |
| |||||||
Koppers, Inc., 6.00%, 02/15/2025(b) | 219,000 | 225,703 | ||||||
| ||||||||
Olin Corp., 5.63%, 08/01/2029 | 509,000 | 509,639 | ||||||
| ||||||||
735,342 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Communications Equipment–0.02% |
| |||||||
Hughes Satellite Systems Corp., |
| |||||||
7.63%, 06/15/2021 | $ | 281,000 | $ | 291,889 | ||||
| ||||||||
5.25%, 08/01/2026 | 263,000 | 288,921 | ||||||
| ||||||||
580,810 | ||||||||
| ||||||||
Construction & Engineering–0.18% |
| |||||||
AECOM, 5.13%, 03/15/2027 | 133,000 | 146,315 | ||||||
| ||||||||
New Enterprise Stone & Lime Co., Inc., 9.75%, | 197,000 | 214,405 | ||||||
| ||||||||
Shea Homes L.P./Shea Homes Funding Corp., 4.75%, 02/15/2028(b) | 3,579,000 | 3,667,920 | ||||||
| ||||||||
Valmont Industries, Inc., 5.00%, 10/01/2044 | 250,000 | 274,949 | ||||||
| ||||||||
4,303,589 | ||||||||
| ||||||||
Construction Machinery & Heavy Trucks–0.17% |
| |||||||
Ashtead Capital, Inc. (United Kingdom), 4.00%, 05/01/2028(b) | 2,115,000 | 2,199,600 | ||||||
| ||||||||
Caterpillar, Inc., 3.25%, 04/09/2050 | 1,421,000 | 1,600,111 | ||||||
| ||||||||
Wabtec Corp., 4.95%, 09/15/2028 | 209,000 | 240,390 | ||||||
| ||||||||
4,040,101 | ||||||||
| ||||||||
Construction Materials–0.16% |
| |||||||
CRH America Finance, Inc. (Ireland), 3.95%, | 3,324,000 | 3,764,090 | ||||||
| ||||||||
Consumer Finance–0.80% |
| |||||||
Ally Financial, Inc., |
| |||||||
5.13%, 09/30/2024 | 434,000 | 486,124 | ||||||
| ||||||||
4.63%, 03/30/2025 | 1,303,000 | 1,443,015 | ||||||
| ||||||||
American Express Co., Series C, 3.60% (3 mo. USD LIBOR + 3.29%)(d)(f) | 3,075,000 | 2,856,737 | ||||||
| ||||||||
Capital One Financial Corp., 3.75%, 03/09/2027 | 304,000 | 337,498 | ||||||
| ||||||||
Credit Acceptance Corp., 5.13%, 12/31/2024(b) | 1,381,000 | 1,425,744 | ||||||
| ||||||||
6.63%, 03/15/2026 | 1,923,000 | 2,066,023 | ||||||
| ||||||||
GE Capital Funding LLC, 4.40%, 05/15/2030(b) | 2,812,000 | 2,967,388 | ||||||
| ||||||||
Navient Corp., | ||||||||
7.25%, 01/25/2022 | 160,000 | 168,356 | ||||||
| ||||||||
7.25%, 09/25/2023 | 1,040,000 | 1,101,438 | ||||||
| ||||||||
5.00%, 03/15/2027 | 486,000 | 470,079 | ||||||
| ||||||||
OneMain Finance Corp., | ||||||||
6.88%, 03/15/2025 | 300,000 | 338,904 | ||||||
| ||||||||
8.88%, 06/01/2025 | 200,000 | 225,870 | ||||||
| ||||||||
7.13%, 03/15/2026 | 735,000 | 844,331 | ||||||
| ||||||||
Synchrony Financial, 4.50%, 07/23/2025 | 3,823,000 | 4,177,499 | ||||||
| ||||||||
18,909,006 | ||||||||
| ||||||||
Copper–0.43% | ||||||||
Freeport-McMoRan, Inc., | ||||||||
5.00%, 09/01/2027 | 3,285,000 | 3,479,291 | ||||||
| ||||||||
4.13%, 03/01/2028 | 2,747,000 | 2,877,029 | ||||||
| ||||||||
4.38%, 08/01/2028 | 2,179,000 | 2,293,376 | ||||||
| ||||||||
5.40%, 11/14/2034 | 1,102,000 | 1,248,891 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Copper–(continued) | ||||||||
Taseko Mines Ltd. (Canada), 8.75%, 06/15/2022(b) | $ | 217,000 | $ | 200,403 | ||||
| ||||||||
10,098,990 | ||||||||
| ||||||||
Data Processing & Outsourced Services–0.24% |
| |||||||
Cardtronics, Inc./Cardtronics USA, Inc., 5.50%, 05/01/2025(b) | 212,000 | 214,893 | ||||||
| ||||||||
Fiserv, Inc., 4.20%, 10/01/2028 | 2,294,000 | 2,729,805 | ||||||
| ||||||||
PayPal Holdings, Inc., 2.85%, 10/01/2029 | 2,398,000 | 2,659,039 | ||||||
| ||||||||
5,603,737 | ||||||||
| ||||||||
Department Stores–0.03% |
| |||||||
Kohl’s Corp., 5.55%, 07/17/2045 | 249,000 | 227,231 | ||||||
| ||||||||
Macy’s, Inc., 8.38%, 06/15/2025(b) | 366,000 | 384,688 | ||||||
| ||||||||
611,919 | ||||||||
| ||||||||
Diversified Banks–11.83% |
| |||||||
Africa Finance Corp. (Supranational), 4.38%, 04/17/2026(b) | 7,620,000 | 8,280,502 | ||||||
| ||||||||
Australia & New Zealand Banking Group Ltd. (Australia), 6.75%(b)(c)(d) | 3,647,000 | 4,183,419 | ||||||
| ||||||||
Banco del Estado de Chile (Chile), 2.70%, | 2,875,000 | 3,027,763 | ||||||
| ||||||||
Banco Nacional de Panama (Panama), 2.50%, 08/11/2030(b) | 2,175,000 | 2,200,828 | ||||||
| ||||||||
Bank of America Corp., | ||||||||
3.86%, 07/23/2024(c) | 8,342,000 | 9,078,052 | ||||||
| ||||||||
2.59%, 04/29/2031(c) | 2,954,000 | 3,148,724 | ||||||
| ||||||||
1.90%, 07/23/2031(c) | 15,930,000 | 16,107,915 | ||||||
| ||||||||
7.75%, 05/14/2038 | 2,724,000 | 4,521,436 | ||||||
| ||||||||
2.68%, 06/19/2041(c) | 14,587,000 | 14,894,527 | ||||||
| ||||||||
Series AA, 6.10%(c)(d) | 6,150,000 | 6,904,882 | ||||||
| ||||||||
Series DD, 6.30%(c)(d) | 1,950,000 | 2,256,014 | ||||||
| ||||||||
Series Z, 6.50%(c)(d) | 4,301,000 | 4,860,839 | ||||||
| ||||||||
Bank of China Ltd. (China), 5.00%, 11/13/2024(b) | 2,850,000 | 3,200,293 | ||||||
| ||||||||
Barclays Bank PLC (United Kingdom), | ||||||||
5.14%, 10/14/2020 | 765,000 | 768,516 | ||||||
| ||||||||
7.63%, 11/21/2022 | 200,000 | 222,442 | ||||||
| ||||||||
BBVA Bancomer S.A. (Mexico), 4.38%, 04/10/2024(b) | 2,015,000 | 2,181,046 | ||||||
| ||||||||
BNP Paribas S.A. (France), 4.38%, 03/01/2033(b)(c) | 250,000 | 282,438 | ||||||
| ||||||||
Citigroup, Inc., | ||||||||
3.50%, 05/15/2023 | 3,804,000 | 4,078,621 | ||||||
| ||||||||
5.50%, 09/13/2025 | 4,297,000 | 5,123,536 | ||||||
| ||||||||
3.11%, 04/08/2026(c) | 3,837,000 | 4,170,151 | ||||||
| ||||||||
3.98%, 03/20/2030(c) | 3,823,000 | 4,443,377 | ||||||
| ||||||||
4.41%, 03/31/2031(c) | 3,123,000 | 3,797,410 | ||||||
| ||||||||
2.57%, 06/03/2031(c) | 6,280,000 | 6,644,735 | ||||||
| ||||||||
4.65%, 07/23/2048 | 1,895,000 | 2,542,005 | ||||||
| ||||||||
Series Q, 4.38% (3 mo. USD LIBOR + 4.10%)(d)(f) | 1,570,000 | 1,562,723 | ||||||
| ||||||||
Series T, 6.25%(c)(d) | 2,110,000 | 2,396,612 | ||||||
| ||||||||
Series U, 5.00%(c)(d) | 7,500,000 | 7,590,346 | ||||||
| ||||||||
Series V, 4.70%(c)(d) | 2,340,000 | 2,332,687 | ||||||
| ||||||||
Credit Agricole S.A. (France), | ||||||||
1.91%, 06/16/2026(b)(c) | 1,828,000 | 1,889,820 | ||||||
| ||||||||
8.13%(b)(c)(d) | 202,000 | 240,254 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Diversified Banks–(continued) |
| |||||||
Federation des Caisses Desjardins du Quebec (Canada), 2.05%, 02/10/2025(b) | $ | 5,293,000 | $ | 5,529,366 | ||||
| ||||||||
Global Bank Corp. (Panama), 4.50%, 10/20/2021(b) | 6,573,000 | 6,757,208 | ||||||
| ||||||||
HSBC Holdings PLC (United Kingdom), | ||||||||
1.27%, (3 mo. USD LIBOR + 1.00%), 05/18/2024(f) | 1,194,000 | 1,197,624 | ||||||
| ||||||||
1.65%, 04/18/2026(c) | 1,970,000 | 1,986,841 | ||||||
| ||||||||
2.36%, 08/18/2031(c) | 201,000 | 203,494 | ||||||
| ||||||||
6.00%(c)(d) | 4,549,000 | 4,706,327 | ||||||
| ||||||||
JPMorgan Chase & Co., | ||||||||
1.15%, (3 mo. USD LIBOR + 0.89%), 07/23/2024(f) | 5,200,000 | 5,262,546 | ||||||
| ||||||||
2.08%, 04/22/2026(c) | 5,189,000 | 5,451,174 | ||||||
| ||||||||
3.63%, 12/01/2027 | 2,629,000 | 2,958,995 | ||||||
| ||||||||
3.70%, 05/06/2030(c) | 3,823,000 | 4,413,663 | ||||||
| ||||||||
2.74%, 10/15/2030(c) | 4,385,000 | 4,740,323 | ||||||
| ||||||||
2.52%, 04/22/2031(c) | 4,233,000 | 4,540,059 | ||||||
| ||||||||
2.96%, 05/13/2031(c) | 1,821,000 | 1,958,332 | ||||||
| ||||||||
3.11%, 04/22/2041(c) | 3,229,000 | 3,563,400 | ||||||
| ||||||||
4.26%, 02/22/2048(c) | 1,850,000 | 2,347,585 | ||||||
| ||||||||
Series W, 1.28% (3 mo. USD LIBOR + 1.00%), 05/15/2047(f) | 5,770,000 | 4,447,585 | ||||||
| ||||||||
Series I, 3.74% (3 mo. USD LIBOR +3.47%)(d)(f) | 2,606,000 | 2,527,853 | ||||||
| ||||||||
Series V, 3.62% (3 mo. USD LIBOR +3.32%)(d)(f) | 1,917,000 | 1,822,517 | ||||||
| ||||||||
Mitsubishi UFJ Financial Group, Inc. (Japan), 2.05%, 07/17/2030 | 5,000,000 | 5,086,035 | ||||||
| �� | |||||||
Mizuho Financial Group, Inc. (Japan), 2.20%, 07/10/2031(c) | 6,494,000 | 6,638,820 | ||||||
| ||||||||
National Australia Bank Ltd. (Australia), 2.33%, 08/21/2030(b) | 3,579,000 | 3,582,029 | ||||||
| ||||||||
Natwest Group PLC (United Kingdom), 3.50%, 05/15/2023(c) | 5,172,000 | 5,397,064 | ||||||
| ||||||||
SMBC Aviation Capital Finance DAC (Ireland), | ||||||||
3.00%, 07/15/2022(b) | 2,947,000 | 3,008,187 | ||||||
| ||||||||
4.13%, 07/15/2023(b) | 3,876,000 | 4,107,506 | ||||||
| ||||||||
Societe Generale S.A. (France), 7.38%(b)(c)(d) | 202,000 | 209,690 | ||||||
| ||||||||
Standard Chartered PLC (United Kingdom), | ||||||||
1.51%, (3 mo. USD LIBOR + 1.20%), 09/10/2022(b)(f) | 3,395,000 | 3,411,065 | ||||||
| ||||||||
1.42%, (3 mo. USD LIBOR + 1.15%), 01/20/2023(b)(f) | 1,442,000 | 1,448,208 | ||||||
| ||||||||
4.30%, 02/19/2027(b) | 1,628,000 | 1,759,814 | ||||||
| ||||||||
7.50%(b)(c)(d) | 200,000 | 211,109 | ||||||
| ||||||||
7.75%(b)(c)(d) | 2,690,000 | 2,918,139 | ||||||
| ||||||||
Sumitomo Mitsui Financial Group, Inc. (Japan), | ||||||||
1.47%, 07/08/2025 | 2,924,000 | 2,990,084 | ||||||
| ||||||||
3.04%, 07/16/2029 | 4,545,000 | 4,978,993 | ||||||
| ||||||||
2.13%, 07/08/2030 | 6,902,000 | 7,063,529 | ||||||
| ||||||||
U.S. Bancorp, 1.38%, 07/22/2030 | 9,375,000 | 9,299,185 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Diversified Banks–(continued) |
| |||||||
Wells Fargo & Co., | ||||||||
2.19%, 04/30/2026(c) | $ | 1,541,000 | $ | 1,612,070 | ||||
| ||||||||
4.15%, 01/24/2029 | 3,823,000 | 4,509,879 | ||||||
| ||||||||
3.07%, 04/30/2041(c) | 2,191,000 | 2,322,477 | ||||||
| ||||||||
5.38%, 11/02/2043 | 7,518,000 | 10,079,708 | ||||||
| ||||||||
4.75%, 12/07/2046 | 1,955,000 | 2,469,256 | ||||||
| ||||||||
280,449,652 | ||||||||
| ||||||||
Diversified Capital Markets–1.21% |
| |||||||
Credit Suisse Group AG (Switzerland), |
| |||||||
7.25%(b)(c)(d) | 330,000 | 363,625 | ||||||
| ||||||||
4.19%, 04/01/2031(b)(c) | 2,792,000 | 3,262,249 | ||||||
| ||||||||
7.50%(b)(c)(d) | 2,410,000 | 2,601,101 | ||||||
| ||||||||
5.10%(b)(c)(d) | 4,230,000 | 4,216,760 | ||||||
| ||||||||
5.25%(b)(c)(d) | 4,357,000 | 4,449,586 | ||||||
| ||||||||
Macquarie Bank Ltd. (Australia), 6.13%(b)(c)(d) | 5,010,000 | 5,139,434 | ||||||
| ||||||||
UBS Group AG (Switzerland), 3.13%, 08/13/2030(b)(c) | 7,801,000 | 8,665,623 | ||||||
| ||||||||
28,698,378 | ||||||||
| ||||||||
Diversified Chemicals–0.08% |
| |||||||
Chemours Co. (The), 7.00%, 05/15/2025 | 105,000 | 107,467 | ||||||
| ||||||||
Dow Chemical Co. (The), 3.15%, 05/15/2024 | 1,743,000 | 1,878,603 | ||||||
| ||||||||
1,986,070 | ||||||||
| ||||||||
Diversified Metals & Mining–1.12% |
| |||||||
Anglo American Capital PLC (South Africa), | ||||||||
5.38%, 04/01/2025(b) | 4,531,000 | 5,232,677 | ||||||
| ||||||||
5.63%, 04/01/2030(b) | 3,674,000 | 4,575,906 | ||||||
| ||||||||
Hudbay Minerals, Inc. (Peru), 7.63%, 01/15/2025(b) | 285,000 | 296,240 | ||||||
| ||||||||
Teck Resources Ltd. (Canada), | ||||||||
6.13%, 10/01/2035 | 5,532,000 | 6,531,906 | ||||||
| ||||||||
6.25%, 07/15/2041 | 8,890,000 | 9,954,470 | ||||||
| ||||||||
26,591,199 | ||||||||
| ||||||||
Diversified REITs–1.04% |
| |||||||
iStar, Inc., 4.75%, 10/01/2024 | 560,000 | 556,794 | ||||||
| ||||||||
Trust Fibra Uno (Mexico), | ||||||||
5.25%, 12/15/2024(b) | 4,124,000 | 4,468,952 | ||||||
| ||||||||
5.25%, 01/30/2026(b) | 3,705,000 | 3,949,752 | ||||||
| ||||||||
4.87%, 01/15/2030(b) | 5,390,000 | 5,479,258 | ||||||
| ||||||||
6.39%, 01/15/2050(b) | 9,390,000 | 9,713,955 | ||||||
| ||||||||
VICI Properties L.P./VICI Note Co., Inc., | ||||||||
3.50%, 02/15/2025(b) | 93,000 | 93,373 | ||||||
| ||||||||
3.75%, 02/15/2027(b) | 93,000 | 92,928 | ||||||
| ||||||||
4.13%, 08/15/2030(b) | 380,000 | 381,311 | ||||||
| ||||||||
24,736,323 | ||||||||
| ||||||||
Drug Retail–0.14% |
| |||||||
CVS Pass-Through Trust, | ||||||||
6.04%, 12/10/2028 | 1,225,370 | 1,391,560 | ||||||
| ||||||||
5.77%, 01/10/2033(b) | 1,725,468 | 1,979,776 | ||||||
| ||||||||
3,371,336 | ||||||||
| ||||||||
Electric Utilities–2.43% |
| |||||||
Commonwealth Edison Co., Series 127, 3.20%, 11/15/2049 | 4,100,000 | 4,510,229 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Electric Utilities–(continued) |
| |||||||
DPL, Inc., 4.35%, 04/15/2029 | $ | 42,000 | $ | 46,082 | ||||
| ||||||||
Drax Finco PLC (United Kingdom), 6.63%, 11/01/2025(b) | 3,600,000 | 3,806,262 | ||||||
| ||||||||
Duke Energy Progress LLC, 2.50%, 08/15/2050 | 10,000,000 | 9,857,260 | ||||||
| ||||||||
Electricite de France S.A. (France), 6.00%, 01/22/2114(b) | 6,655,000 | 8,828,649 | ||||||
| ||||||||
Eversource Energy, | ||||||||
Series Q, 0.80%, 08/15/2025 | 699,000 | 700,211 | ||||||
| ||||||||
Series R, 1.65%, 08/15/2030 | 1,719,000 | 1,716,503 | ||||||
| ||||||||
Georgia Power Co., | ||||||||
2.85%, 05/15/2022 | 3,692,000 | 3,843,445 | ||||||
| ||||||||
Series A, 2.20%, 09/15/2024 | 10,514,000 | 11,132,459 | ||||||
| ||||||||
NRG Energy, Inc., 6.63%, 01/15/2027 | 622,000 | 666,573 | ||||||
| ||||||||
Southern Co. (The), Series B, 5.50%, 03/15/2057(c) | 11,592,000 | 11,962,658 | ||||||
| ||||||||
Talen Energy Supply LLC, 7.63%, 06/01/2028(b) | 468,000 | 485,360 | ||||||
| ||||||||
57,555,691 | ||||||||
| ||||||||
Electrical Components & Equipment–0.03% |
| |||||||
EnerSys, |
| |||||||
5.00%, 04/30/2023(b) | 476,000 | 495,685 | ||||||
| ||||||||
4.38%, 12/15/2027(b) | 107,000 | 110,411 | ||||||
| ||||||||
606,096 | ||||||||
| ||||||||
Electronic Components–1.43% |
| |||||||
Corning, Inc., 5.45%, 11/15/2079 | 26,986,000 | 33,790,058 | ||||||
| ||||||||
Electronic Equipment & Instruments–0.01% |
| |||||||
MTS Systems Corp., 5.75%, 08/15/2027(b) | 316,000 | 321,195 | ||||||
| ||||||||
Electronic Manufacturing Services–0.33% |
| |||||||
Jabil, Inc., 3.00%, 01/15/2031 | 7,591,000 | 7,738,938 | ||||||
| ||||||||
Fertilizers & Agricultural Chemicals–0.01% |
| |||||||
Nutrien Ltd. (Canada), 2.95%, 05/13/2030 | 125,000 | 136,304 | ||||||
| ||||||||
OCI N.V. (Netherlands), 6.63%, 04/15/2023(b) | 211,000 | 219,967 | ||||||
| ||||||||
356,271 | ||||||||
| ||||||||
Financial Exchanges & Data–0.76% |
| |||||||
Intercontinental Exchange, Inc., |
| |||||||
1.85%, 09/15/2032 | 3,022,000 | 3,067,919 | ||||||
| ||||||||
3.00%, 09/15/2060 | 3,828,000 | 3,977,514 | ||||||
| ||||||||
Moody’s Corp., | ||||||||
5.25%, 07/15/2044 | 1,592,000 | 2,193,864 | ||||||
| ||||||||
3.25%, 05/20/2050 | 1,211,000 | 1,337,978 | ||||||
| ||||||||
2.55%, 08/18/2060 | 1,267,000 | 1,182,634 | ||||||
| ||||||||
MSCI, Inc., 3.88%, 02/15/2031(b) | 2,367,000 | 2,503,103 | ||||||
| ||||||||
S&P Global, Inc., | ||||||||
1.25%, 08/15/2030 | 2,559,000 | 2,530,981 | ||||||
| ||||||||
2.30%, 08/15/2060 | 1,373,000 | 1,268,634 | ||||||
| ||||||||
18,062,627 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Food Retail–0.19% | ||||||||
Albertsons Cos., Inc./Safeway, Inc./New Albertsons L.P./Albertson’s LLC, |
| |||||||
3.50%, 02/15/2023(b) | $ | 3,502,000 | $ | 3,584,297 | ||||
| ||||||||
6.63%, 06/15/2024 | 363,000 | 375,052 | ||||||
| ||||||||
4.63%, 01/15/2027(b) | 248,000 | 262,308 | ||||||
| ||||||||
5.88%, 02/15/2028(b) | 193,000 | 208,766 | ||||||
| ||||||||
4,430,423 | ||||||||
| ||||||||
Forest Products–0.02% | ||||||||
Norbord, Inc. (Canada), 5.75%, 07/15/2027(b) | 410,000 | 439,135 | ||||||
| ||||||||
Gas Utilities–0.29% | ||||||||
AmeriGas Partners L.P./AmeriGas Finance Corp., |
| |||||||
5.63%, 05/20/2024 | 298,000 | 326,274 | ||||||
| ||||||||
5.88%, 08/20/2026 | 464,000 | 526,876 | ||||||
| ||||||||
East Ohio Gas Co. (The), | ||||||||
1.30%, 06/15/2025(b) | 1,138,000 | 1,165,595 | ||||||
| ||||||||
3.00%, 06/15/2050(b) | 3,684,000 | 3,863,306 | ||||||
| ||||||||
Suburban Propane Partners L.P./Suburban Energy Finance Corp., 5.50%, 06/01/2024 | 590,000 | 601,113 | ||||||
| ||||||||
Superior Plus L.P./Superior General Partner, Inc. (Canada), 7.00%, 07/15/2026(b) | 339,000 | 365,632 | ||||||
| ||||||||
6,848,796 | ||||||||
| ||||||||
Gold–0.13% | ||||||||
Newmont Corp., 2.25%, 10/01/2030 | 2,911,000 | 3,044,461 | ||||||
| ||||||||
Health Care Equipment–0.07% |
| |||||||
Becton, Dickinson and Co., 2.82%, 05/20/2030 | 188,000 | 204,222 | ||||||
| ||||||||
Children’s Hospital Corp. (The), 2.59%, 02/01/2050 | 1,342,000 | 1,320,765 | ||||||
| ||||||||
Teleflex, Inc., 4.88%, 06/01/2026 | 50,000 | 52,428 | ||||||
| ||||||||
1,577,415 | ||||||||
| ||||||||
Health Care Facilities–0.75% |
| |||||||
HCA, Inc., | ||||||||
5.00%, 03/15/2024 | 9,094,000 | 10,281,647 | ||||||
| ||||||||
5.38%, 02/01/2025 | 242,000 | 272,888 | ||||||
| ||||||||
5.25%, 04/15/2025 | 151,000 | 176,138 | ||||||
| ||||||||
5.88%, 02/15/2026 | 166,000 | 190,277 | ||||||
| ||||||||
5.38%, 09/01/2026 | 111,000 | 126,257 | ||||||
| ||||||||
7.50%, 11/06/2033 | 362,000 | 489,989 | ||||||
| ||||||||
5.50%, 06/15/2047 | 5,018,000 | 6,357,048 | ||||||
| ||||||||
17,894,244 | ||||||||
| ||||||||
Health Care REITs–0.56% |
| |||||||
Diversified Healthcare Trust, | ||||||||
6.75%, 12/15/2021 | 2,606,000 | 2,674,813 | ||||||
| ||||||||
9.75%, 06/15/2025 | 482,000 | 539,291 | ||||||
| ||||||||
Healthpeak Properties, Inc., | ||||||||
4.25%, 11/15/2023 | 46,000 | 50,394 | ||||||
| ||||||||
2.88%, 01/15/2031 | 1,983,000 | 2,119,244 | ||||||
| ||||||||
MPT Operating Partnership L.P./MPT Finance Corp., | ||||||||
5.00%, 10/15/2027 | 605,000 | 640,861 | ||||||
| ||||||||
4.63%, 08/01/2029 | 2,463,000 | 2,633,390 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Health Care REITs–(continued) |
| |||||||
Physicians Realty L.P., 4.30%, 03/15/2027 | $ | 1,697,000 | $ | 1,801,619 | ||||
| ||||||||
Welltower, Inc., 3.10%, 01/15/2030 | 2,573,000 | 2,707,391 | ||||||
| ||||||||
13,167,003 | ||||||||
| ||||||||
Health Care Services–1.56% | ||||||||
AMN Healthcare, Inc., 5.13%, 10/01/2024(b) | 181,000 | 184,827 | ||||||
| ||||||||
Cigna Corp., | ||||||||
3.75%, 07/15/2023 | 3,210,000 | 3,496,190 | ||||||
| ||||||||
1.17%, (3 mo. USD LIBOR + 0.89%), 07/15/2023(f) | 5,327,000 | 5,389,956 | ||||||
| ||||||||
4.38%, 10/15/2028 | 1,852,000 | 2,217,852 | ||||||
| ||||||||
4.80%, 08/15/2038 | 5,241,000 | 6,606,130 | ||||||
| ||||||||
CVS Health Corp., | ||||||||
1.30%, 08/21/2027 | 3,912,000 | 3,892,549 | ||||||
| ||||||||
2.70%, 08/21/2040 | 1,691,000 | 1,651,690 | ||||||
| ||||||||
4.25%, 04/01/2050 | 1,069,000 | 1,271,743 | ||||||
| ||||||||
DaVita, Inc., | ||||||||
4.63%, 06/01/2030(b) | 160,000 | 168,300 | ||||||
| ||||||||
3.75%, 02/15/2031(b) | 4,169,000 | 4,125,309 | ||||||
| ||||||||
Hadrian Merger Sub, Inc., 8.50%, 05/01/2026(b) | 257,000 | 247,797 | ||||||
| ||||||||
New York and Presbyterian Hospital (The), | ||||||||
2.26%, 08/01/2040 | 1,725,000 | 1,690,234 | ||||||
| ||||||||
2.61%, 08/01/2060 | 2,537,000 | 2,493,453 | ||||||
| ||||||||
Team Health Holdings, Inc., 6.38%, 02/01/2025(b) | 172,000 | 117,820 | ||||||
| ||||||||
Texas Health Resources, 2.33%, 11/15/2050 | 3,564,000 | 3,327,383 | ||||||
| ||||||||
36,881,233 | ||||||||
| ||||||||
Home Improvement Retail–0.07% |
| |||||||
Lowe’s Cos., Inc., | ||||||||
4.00%, 04/15/2025 | 1,140,000 | 1,302,432 | ||||||
| ||||||||
3.65%, 04/05/2029 | 225,000 | 260,575 | ||||||
| ||||||||
1,563,007 | ||||||||
| ||||||||
Homebuilding–1.22% | ||||||||
Ashton Woods USA LLC/Ashton Woods Finance Co., 9.88%, 04/01/2027(b) | 326,000 | 360,575 | ||||||
| ||||||||
KB Home, 4.80%, 11/15/2029 | 456,000 | 495,045 | ||||||
| ||||||||
Lennar Corp., | ||||||||
8.38%, 01/15/2021 | 36,000 | 36,990 | ||||||
| ||||||||
5.38%, 10/01/2022 | 324,000 | 344,579 | ||||||
| ||||||||
4.75%, 11/15/2022 | 172,000 | 180,983 | ||||||
| ||||||||
5.25%, 06/01/2026 | 636,000 | 720,009 | ||||||
| ||||||||
M.D.C. Holdings, Inc., | ||||||||
3.85%, 01/15/2030 | 9,643,000 | 9,852,446 | ||||||
| ||||||||
6.00%, 01/15/2043 | 12,008,000 | 13,955,938 | ||||||
| ||||||||
Mattamy Group Corp. (Canada), |
| |||||||
5.25%, 12/15/2027(b) | 174,000 | 182,374 | ||||||
| ||||||||
4.63%, 03/01/2030(b) | 1,700,000 | 1,741,174 | ||||||
| ||||||||
Meritage Homes Corp., 5.13%, 06/06/2027 | 322,000 | 352,126 | ||||||
| ||||||||
PulteGroup, Inc., 6.38%, 05/15/2033 | 15,000 | 18,921 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Homebuilding–(continued) | ||||||||
Taylor Morrison Communities, Inc., |
| |||||||
6.63%, 07/15/2027(b) | $ | 352,000 | $ | 381,811 | ||||
| ||||||||
5.75%, 01/15/2028(b) | 226,000 | 254,325 | ||||||
| ||||||||
Taylor Morrison Communities, Inc./Taylor Morrison Holdings II, Inc., 5.88%, 04/15/2023(b) | 57,000 | 60,556 | ||||||
| ||||||||
28,937,852 | ||||||||
| ||||||||
Hotel & Resort REITs–0.08% | ||||||||
Service Properties Trust, | ||||||||
4.95%, 02/15/2027 | 1,592,000 | 1,464,640 | ||||||
| ||||||||
4.95%, 10/01/2029 | 549,000 | 492,041 | ||||||
| ||||||||
1,956,681 | ||||||||
| ||||||||
Hotels, Resorts & Cruise Lines–0.12% |
| |||||||
Carnival Corp., 11.50%, | 605,000 | 675,782 | ||||||
| ||||||||
Choice Hotels International, Inc., 3.70%, 01/15/2031 | 1,990,000 | 2,107,131 | ||||||
| ||||||||
2,782,913 | ||||||||
| ||||||||
Household Products–0.00% | ||||||||
Spectrum Brands, Inc., 5.00%, 10/01/2029(b) | 108,000 | 112,704 | ||||||
| ||||||||
Housewares & Specialties–0.02% |
| |||||||
Newell Brands, Inc., | ||||||||
4.70%, 04/01/2026 | 269,000 | 291,596 | ||||||
| ||||||||
5.88%, 04/01/2036 | 221,000 | 249,770 | ||||||
| ||||||||
541,366 | ||||||||
| ||||||||
Independent Power Producers & Energy Traders–0.19% |
| |||||||
AES Corp. (The), 5.50%, 04/15/2025 | 733,000 | 757,336 | ||||||
| ||||||||
AES Panama Generation Holdings SRL (Panama), 4.38%, 05/31/2030(b) | 3,300,000 | 3,440,002 | ||||||
| ||||||||
Enviva Partners L.P./Enviva Partners Finance Corp., 6.50%, 01/15/2026(b) | 210,000 | 224,000 | ||||||
| ||||||||
4,421,338 | ||||||||
| ||||||||
Industrial Conglomerates–1.03% |
| |||||||
GE Capital International Funding Co. Unlimited Co., 4.42%, 11/15/2035 | 4,313,000 | 4,458,016 | ||||||
| ||||||||
General Electric Co., | ||||||||
5.55%, 01/05/2026 | 8,706,000 | 10,101,638 | ||||||
| ||||||||
4.35%, 05/01/2050 | 9,803,000 | 9,976,915 | ||||||
| ||||||||
24,536,569 | ||||||||
| ||||||||
Industrial Gases–0.11% | ||||||||
Praxair, Inc., 2.00%, 08/10/2050 | 2,703,000 | 2,493,689 | ||||||
| ||||||||
Industrial Machinery–0.22% | ||||||||
Cleaver-Brooks, Inc., 7.88%, 03/01/2023(b) | 249,000 | 244,305 | ||||||
| ||||||||
EnPro Industries, Inc., 5.75%, 10/15/2026 | 489,000 | 512,746 | ||||||
| ||||||||
Mueller Industries, Inc., 6.00%, 03/01/2027 | 492,000 | 500,610 | ||||||
| ||||||||
Parker-Hannifin Corp., 3.25%, 06/14/2029 | 3,473,000 | 3,927,019 | ||||||
| ||||||||
5,184,680 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Industrial REITs–0.13% | ||||||||
Cibanco S.A. Ibm/PLA Administradora Industrial S de RL de C.V. (Mexico), 4.96%, 07/18/2029(b) | $ | 873,000 | $ | 903,555 | ||||
| ||||||||
Lexington Realty Trust, 2.70%, 09/15/2030 | 1,570,000 | 1,592,984 | ||||||
| ||||||||
Prologis L.P., 2.13%, 04/15/2027 | 612,000 | 654,161 | ||||||
| ||||||||
3,150,700 | ||||||||
| ||||||||
Integrated Oil & Gas–1.91% | ||||||||
BP Capital Markets America, Inc., |
| |||||||
1.75%, 08/10/2030 | 5,085,000 | 5,049,514 | ||||||
| ||||||||
2.77%, 11/10/2050 | 6,192,000 | 5,856,186 | ||||||
| ||||||||
BP Capital Markets PLC (United Kingdom), 4.38%(c)(d) | 2,598,000 | 2,734,395 | ||||||
| ||||||||
Cenovus Energy, Inc. (Canada), 4.25%, 04/15/2027 | 561,000 | 539,036 | ||||||
| ||||||||
Chevron USA, Inc., 2.34%, 08/12/2050 | 3,810,000 | 3,642,459 | ||||||
| ||||||||
Occidental Petroleum Corp., | ||||||||
2.90%, 08/15/2024 | 12,445,000 | 11,472,672 | ||||||
| ||||||||
5.55%, 03/15/2026 | 322,000 | 320,847 | ||||||
| ||||||||
3.20%, 08/15/2026 | 307,000 | 269,816 | ||||||
| ||||||||
3.50%, 08/15/2029 | 263,000 | 226,601 | ||||||
| ||||||||
6.20%, 03/15/2040 | 233,000 | 221,933 | ||||||
| ||||||||
4.10%, 02/15/2047 | 315,000 | 240,918 | ||||||
| ||||||||
Petroleos Mexicanos (Mexico), | ||||||||
6.88%, 08/04/2026 | 110,000 | 112,458 | ||||||
| ||||||||
5.95%, 01/28/2031(b) | 115,000 | 104,035 | ||||||
| ||||||||
6.95%, 01/28/2060(b) | 1,670,000 | 1,392,112 | ||||||
| ||||||||
Saudi Arabian Oil Co. (Saudi Arabia), |
| |||||||
2.88%, 04/16/2024(b) | 9,601,000 | 10,101,214 | ||||||
| ||||||||
4.38%, 04/16/2049(b) | 2,407,000 | 2,913,322 | ||||||
| ||||||||
45,197,518 | ||||||||
| ||||||||
Integrated Telecommunication Services–1.82% |
| |||||||
Altice France Holding S.A. (Luxembourg), 10.50%, 05/15/2027(b) | 210,000 | 241,106 | ||||||
| ||||||||
Altice France S.A. (France), 7.38%, 05/01/2026(b) | 400,000 | 425,080 | ||||||
| ||||||||
AT&T, Inc., | ||||||||
1.50%, (3 mo. USD LIBOR + 1.18%), 06/12/2024(f) | 2,832,000 | 2,894,172 | ||||||
| ||||||||
5.25%, 03/01/2037 | 2,543,000 | 3,205,978 | ||||||
| ||||||||
5.15%, 03/15/2042 | 3,508,000 | 4,409,166 | ||||||
| ||||||||
3.10%, 02/01/2043 | 5,053,000 | 5,034,870 | ||||||
| ||||||||
5.35%, 12/15/2043 | 3,212,000 | 4,030,160 | ||||||
| ||||||||
4.75%, 05/15/2046 | 2,529,000 | 3,023,914 | ||||||
| ||||||||
5.15%, 11/15/2046 | 5,960,000 | 7,453,546 | ||||||
| ||||||||
5.15%, 02/15/2050 | 350,000 | 448,150 | ||||||
| ||||||||
3.50%, 02/01/2061 | 3,240,000 | 3,212,490 | ||||||
| ||||||||
CommScope, Inc., 6.00%, 03/01/2026(b) | 413,000 | 439,356 | ||||||
| ||||||||
Embarq Corp., 8.00%, 06/01/2036 | 425,000 | 510,616 | ||||||
| ||||||||
Frontier Communications Corp., | ||||||||
10.50%, 09/15/2022(e) | 146,000 | 65,118 | ||||||
| ||||||||
11.00%, 09/15/2025(e) | 159,000 | 68,370 | ||||||
| ||||||||
Telecom Italia Capital S.A. (Italy), |
| |||||||
6.38%, 11/15/2033 | 46,000 | 57,363 | ||||||
| ||||||||
7.20%, 07/18/2036 | 589,000 | 776,390 | ||||||
| ||||||||
Telefonica Emisiones S.A. (Spain), 7.05%, 06/20/2036 | 2,739,000 | 3,990,529 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Integrated Telecommunication Services–(continued) |
| |||||||
Verizon Communications, Inc., 4.81%, 03/15/2039 | $ | 2,167,000 | $ | 2,851,278 | ||||
| ||||||||
43,137,652 | ||||||||
| ||||||||
Interactive Home Entertainment–0.34% |
| |||||||
Activision Blizzard, Inc., 2.50%, 09/15/2050 | 4,826,000 | 4,546,164 | ||||||
| ||||||||
WMG Acquisition Corp., 3.00%, 02/15/2031(b) | 3,536,000 | 3,527,160 | ||||||
| ||||||||
8,073,324 | ||||||||
| ||||||||
Interactive Media & Services–1.66% |
| |||||||
Alphabet, Inc., | ||||||||
1.90%, 08/15/2040 | 2,516,000 | 2,452,400 | ||||||
| ||||||||
2.25%, 08/15/2060 | 4,391,000 | 4,186,811 | ||||||
| ||||||||
Baidu, Inc. (China), | ||||||||
3.08%, 04/07/2025 | 1,175,000 | 1,258,560 | ||||||
| ||||||||
3.43%, 04/07/2030 | 725,000 | 809,009 | ||||||
| ||||||||
Cumulus Media New Holdings, Inc., 6.75%, 07/01/2026(b) | 247,000 | 222,724 | ||||||
| ||||||||
Diamond Sports Group LLC/Diamond Sports Finance Co., | ||||||||
5.38%, 08/15/2026(b) | 586,000 | 458,495 | ||||||
| ||||||||
6.63%, 08/15/2027(b) | 339,000 | 191,111 | ||||||
| ||||||||
Match Group Holdings II LLC, 5.63%, 02/15/2029(b) | 5,513,000 | 6,097,709 | ||||||
| ||||||||
Tencent Holdings Ltd. (China), | ||||||||
2.99%, 01/19/2023(b) | 2,073,000 | 2,165,632 | ||||||
| ||||||||
1.81%, 01/26/2026(b) | 1,509,000 | 1,546,244 | ||||||
| ||||||||
3.60%, 01/19/2028(b) | 4,305,000 | 4,796,245 | ||||||
| ||||||||
2.39%, 06/03/2030(b) | 3,532,000 | 3,665,887 | ||||||
| ||||||||
3.93%, 01/19/2038(b) | 3,137,000 | 3,595,755 | ||||||
| ||||||||
3.24%, 06/03/2050(b) | 975,000 | 1,027,440 | ||||||
| ||||||||
3.29%, 06/03/2060(b) | 996,000 | 1,056,507 | ||||||
| ||||||||
Twitter, Inc., 3.88%, | 5,404,000 | 5,715,811 | ||||||
| ||||||||
39,246,340 | ||||||||
| ||||||||
Internet & Direct Marketing Retail–1.25% |
| |||||||
Alibaba Group Holding Ltd. (China), |
| |||||||
4.20%, 12/06/2047 | 2,190,000 | 2,816,801 | ||||||
| ||||||||
4.40%, 12/06/2057 | 2,190,000 | 2,989,284 | ||||||
| ||||||||
Amazon.com, Inc., | ||||||||
1.20%, 06/03/2027 | 3,042,000 | 3,105,797 | ||||||
| ||||||||
2.50%, 06/03/2050 | 4,019,000 | 4,059,413 | ||||||
| ||||||||
2.70%, 06/03/2060 | 8,549,000 | 8,759,221 | ||||||
| ||||||||
Expedia Group, Inc., | ||||||||
3.60%, 12/15/2023(b) | 2,722,000 | 2,772,513 | ||||||
| ||||||||
4.63%, 08/01/2027(b) | 4,351,000 | 4,543,512 | ||||||
| ||||||||
QVC, Inc., 5.45%, 08/15/2034 | 474,000 | 474,000 | ||||||
| ||||||||
29,520,541 | ||||||||
| ||||||||
Investment Banking & Brokerage–2.28% |
| |||||||
Cantor Fitzgerald L.P., 6.50%, 06/17/2022(b) | 3,064,000 | 3,297,529 | ||||||
| ||||||||
Charles Schwab Corp. (The), | ||||||||
Series E, 4.63%(c)(d) | 4,359,000 | 4,403,941 | ||||||
| ||||||||
Series G, 5.38%(c)(d) | 231,000 | 254,100 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Investment Banking & Brokerage–(continued) |
| |||||||
Goldman Sachs Group, Inc. (The), |
| |||||||
3.50%, 04/01/2025 | $ | 3,308,000 | $ | 3,669,032 | ||||
| ||||||||
6.75%, 10/01/2037 | 4,482,000 | 6,555,524 | ||||||
| ||||||||
4.80%, 07/08/2044 | 4,091,000 | 5,396,766 | ||||||
| ||||||||
Series P, 5.00%(c)(d)(g) | 3,255,000 | 3,143,107 | ||||||
| ||||||||
Jefferies Group LLC/Jefferies Group Capital Finance, Inc., 4.15%, 01/23/2030 | 3,703,000 | 4,184,159 | ||||||
| ||||||||
Morgan Stanley, | ||||||||
2.19%, 04/28/2026(c) | 2,657,000 | 2,798,127 | ||||||
| ||||||||
4.35%, 09/08/2026 | 350,000 | 408,916 | ||||||
| ||||||||
2.70%, 01/22/2031(c) | 13,075,000 | 14,107,484 | ||||||
| ||||||||
3.62%, 04/01/2031(c) | 3,174,000 | 3,692,103 | ||||||
| ||||||||
Raymond James Financial, Inc., |
| |||||||
4.65%, 04/01/2030 | 1,582,000 | 1,927,137 | ||||||
| ||||||||
4.95%, 07/15/2046 | 218,000 | 278,107 | ||||||
| ||||||||
54,116,032 | ||||||||
| ||||||||
IT Consulting & Other Services–0.06% |
| |||||||
DXC Technology Co., 4.45%, 09/18/2022 | 1,396,000 | 1,468,713 | ||||||
| ||||||||
Leisure Facilities–0.01% |
| |||||||
Cedar Fair L.P./Canada’s Wonderland Co./Magnum Management Corp., 5.38%, 06/01/2024 | 247,000 | 248,565 | ||||||
| ||||||||
Life & Health Insurance–2.39% |
| |||||||
American Equity Investment Life Holding Co., 5.00%, 06/15/2027 | 3,226,000 | 3,530,603 | ||||||
| ||||||||
Athene Global Funding, 2.50%, 01/14/2025(b) | 3,288,000 | 3,396,460 | ||||||
| ||||||||
Athene Holding Ltd., | ||||||||
4.13%, 01/12/2028 | 6,831,000 | 7,469,438 | ||||||
| ||||||||
6.15%, 04/03/2030 | 3,543,000 | 4,290,123 | ||||||
| ||||||||
Belrose Funding Trust, 2.33%, 08/15/2030(b) | 2,637,000 | 2,627,005 | ||||||
| ||||||||
Brighthouse Financial, Inc., 4.70%, 06/22/2047 | 6,335,000 | 6,097,087 | ||||||
| ||||||||
Global Atlantic Fin Co., 4.40%, 10/15/2029(b) | 9,745,000 | 10,138,324 | ||||||
| ||||||||
MetLife, Inc., 4.13%, 08/13/2042 | 2,294,000 | 2,805,220 | ||||||
| ||||||||
Series C, 3.89% (3 mo. USD LIBOR +3.58%)(d)(f) | 3,814,000 | 3,768,709 | ||||||
| ||||||||
Series D, 5.88%(c)(d) | 300,000 | 332,880 | ||||||
| ||||||||
Nationwide Financial Services, Inc., |
| |||||||
5.38%, 03/25/2021(b) | 6,660,000 | 6,815,545 | ||||||
| ||||||||
3.90%, 11/30/2049(b) | 3,210,000 | 3,295,995 | ||||||
| ||||||||
Prudential Financial, Inc., 3.91%, 12/07/2047 | 1,913,000 | 2,168,848 | ||||||
| ||||||||
56,736,237 | ||||||||
| ||||||||
Life Sciences Tools & Services–0.02% |
| |||||||
Charles River Laboratories International, Inc., 4.25%, 05/01/2028(b) | 383,000 | 403,755 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Managed Health Care–0.56% |
| |||||||
Centene Corp., | ||||||||
5.25%, 04/01/2025(b) | $ | 340,000 | $ | 353,175 | ||||
| ||||||||
5.38%, 06/01/2026(b) | 521,000 | 551,609 | ||||||
| ||||||||
5.38%, 08/15/2026(b) | 155,000 | 164,736 | ||||||
| ||||||||
4.63%, 12/15/2029 | 526,000 | 577,093 | ||||||
| ||||||||
3.38%, 02/15/2030 | 320,000 | 333,301 | ||||||
| ||||||||
Children’s National Medical Center, Series 2020, 2.93%, 07/15/2050 | 1,791,000 | 1,762,841 | ||||||
| ||||||||
Community Health Network, Inc., Series 20-A, 3.10%, 05/01/2050 | 3,832,000 | 3,755,945 | ||||||
| ||||||||
Hackensack Meridian Health, Inc., Series 2020, | ||||||||
2.68%, 09/01/2041 | 1,673,000 | 1,670,532 | ||||||
| ||||||||
2.88%, 09/01/2050 | 1,616,000 | 1,611,724 | ||||||
| ||||||||
MultiCare Health System, 2.80%, 08/15/2050 | 2,388,000 | 2,403,353 | ||||||
| ||||||||
13,184,309 | ||||||||
| ||||||||
Marine Ports & Services–0.04% |
| |||||||
Adani Abbot Point Terminal Pty. Ltd. (Australia), 4.45%, 12/15/2022(b) | 1,004,000 | 946,747 | ||||||
| ||||||||
Metal & Glass Containers–0.03% |
| |||||||
Ball Corp., 5.25%, 07/01/2025 | 359,000 | 407,594 | ||||||
| ||||||||
Berry Global, Inc., 6.00%, 10/15/2022 | 58,000 | 58,290 | ||||||
| ||||||||
Flex Acquisition Co., Inc., 7.88%, 07/15/2026(b) | 252,000 | 265,128 | ||||||
| ||||||||
OI European Group B.V., 4.00%, 03/15/2023(b) | 73,000 | 74,012 | ||||||
| ||||||||
805,024 | ||||||||
| ||||||||
Movies & Entertainment–0.35% |
| |||||||
AMC Entertainment Holdings, Inc., |
| |||||||
10.50%, 04/15/2025(b) | 491,000 | 433,307 | ||||||
| ||||||||
10.50%, 04/24/2026(b) | 83,000 | 71,795 | ||||||
| ||||||||
6.00% PIK Rate, 5.00% Cash Rate, 06/15/2026(b)(h) | 407,000 | 153,724 | ||||||
| ||||||||
Netflix, Inc., | ||||||||
5.88%, 11/15/2028 | 1,017,000 | 1,250,183 | ||||||
| ||||||||
5.38%, 11/15/2029(b) | 1,927,000 | 2,319,626 | ||||||
| ||||||||
Tencent Music Entertainment Group (China), |
| |||||||
1.38%, 09/03/2025 | 1,560,000 | 1,564,400 | ||||||
| ||||||||
2.00%, 09/03/2030 | 2,480,000 | 2,469,662 | ||||||
| ||||||||
8,262,697 | ||||||||
| ||||||||
Multi-line Insurance–1.11% |
| |||||||
American International Group, Inc., |
| |||||||
3.40%, 06/30/2030 | 5,006,000 | 5,552,048 | ||||||
| ||||||||
4.50%, 07/16/2044 | 2,160,000 | 2,541,432 | ||||||
| ||||||||
Fairfax Financial Holdings Ltd. (Canada), |
| |||||||
4.85%, 04/17/2028 | 2,877,000 | 3,191,566 | ||||||
| ||||||||
4.63%, 04/29/2030(b) | 6,945,000 | 7,659,729 | ||||||
| ||||||||
Massachusetts Mutual Life Insurance Co., 3.38%, 04/15/2050(b) | 1,724,000 | 1,786,842 | ||||||
| ||||||||
Nationwide Mutual Insurance Co., 4.95%, 04/22/2044(b) | 3,068,000 | 3,266,429 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Multi-line Insurance–(continued) |
| |||||||
XLIT Ltd. (Bermuda), 5.50%, 03/31/2045 | $ | 1,670,000 | $ | 2,283,668 | ||||
| ||||||||
26,281,714 | ||||||||
| ||||||||
Multi-Utilities–0.46% | ||||||||
CenterPoint Energy, Inc., | ||||||||
2.50%, 09/01/2024 | 3,068,000 | 3,266,700 | ||||||
| ||||||||
Series A, 6.13%(c)(d) | 3,978,000 | 4,049,810 | ||||||
| ||||||||
CMS Energy Corp., 4.75%, 06/01/2050(c) | 1,684,000 | 1,830,500 | ||||||
| ||||||||
DTE Energy Co., Series F, 1.05%, 06/01/2025 | 1,747,000 | 1,757,709 | ||||||
| ||||||||
10,904,719 | ||||||||
| ||||||||
Office REITs–1.09% | ||||||||
Alexandria Real Estate Equities, Inc., |
| |||||||
3.95%, 01/15/2027 | 2,823,000 | 3,222,228 | ||||||
| ||||||||
3.38%, 08/15/2031 | 1,766,000 | 2,004,752 | ||||||
| ||||||||
1.88%, 02/01/2033 | 12,979,000 | 12,865,384 | ||||||
| ||||||||
4.00%, 02/01/2050 | 2,687,000 | 3,270,827 | ||||||
| ||||||||
Boston Properties L.P., 3.25%, 01/30/2031 | 2,180,000 | 2,379,421 | ||||||
| ||||||||
Highwoods Realty L.P., 2.60%, 02/01/2031 | 2,138,000 | 2,129,022 | ||||||
| ||||||||
25,871,634 | ||||||||
| ||||||||
Oil & Gas Drilling–0.01% | ||||||||
Precision Drilling Corp. (Canada), 5.25%, 11/15/2024 | 207,000 | 146,172 | ||||||
| ||||||||
Transocean, Inc., 8.00%, 02/01/2027(b) | 81,000 | 25,211 | ||||||
| ||||||||
171,383 | ||||||||
| ||||||||
Oil & Gas Equipment & Services–0.15% |
| |||||||
Baker Hughes, a GE Co. LLC/Baker Hughes Co-Obligor, Inc., 3.34%, 12/15/2027 | 3,324,000 | 3,622,907 | ||||||
| ||||||||
Oil & Gas Exploration & Production–1.86% |
| |||||||
Apache Corp., | ||||||||
4.38%, 10/15/2028 | 98,000 | 97,506 | ||||||
| ||||||||
5.10%, 09/01/2040 | 350,000 | 341,098 | ||||||
| ||||||||
4.75%, 04/15/2043 | 466,000 | 440,114 | ||||||
| ||||||||
Cameron LNG LLC, | ||||||||
3.30%, 01/15/2035(b) | 4,052,000 | 4,570,639 | ||||||
| ||||||||
3.40%, 01/15/2038(b) | 4,365,000 | 4,689,057 | ||||||
| ||||||||
Canadian Natural Resources Ltd. (Canada), 2.05%, 07/15/2025 | 6,959,000 | 7,139,353 | ||||||
| ||||||||
Concho Resources, Inc., | ||||||||
4.38%, 01/15/2025 | 6,682,000 | 6,904,890 | ||||||
| ||||||||
2.40%, 02/15/2031 | 1,247,000 | 1,223,135 | ||||||
| ||||||||
Continental Resources, Inc., | ||||||||
5.00%, 09/15/2022 | 9,670,000 | 9,672,417 | ||||||
| ||||||||
4.50%, 04/15/2023 | 508,000 | 512,105 | ||||||
| ||||||||
Diamondback Energy, Inc., 4.75%, 05/31/2025 | 44,000 | 48,330 | ||||||
| ||||||||
Endeavor Energy Resources L.P./EER Finance, Inc., 5.75%, 01/30/2028(b) | 312,000 | 319,742 | ||||||
| ||||||||
EQT Corp., | ||||||||
7.88%, 02/01/2025 | 203,000 | 233,313 | ||||||
| ||||||||
3.90%, 10/01/2027 | 62,000 | 59,744 | ||||||
| ||||||||
8.75%, 02/01/2030 | 260,000 | 313,898 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Oil & Gas Exploration & Production–(continued) |
| |||||||
Genesis Energy L.P./Genesis Energy Finance Corp., | ||||||||
6.25%, 05/15/2026 | $ | 255,000 | $ | 216,480 | ||||
| ||||||||
7.75%, 02/01/2028 | 304,000 | 270,846 | ||||||
| ||||||||
Hilcorp Energy I L.P./Hilcorp Finance Co., 6.25%, | 256,000 | 241,526 | ||||||
| ||||||||
MEG Energy Corp. (Canada), 6.50%, 01/15/2025(b) | 82,000 | 83,704 | ||||||
| ||||||||
Murphy Oil Corp., | ||||||||
4.95%, 12/01/2022 | 248,000 | 248,153 | ||||||
| ||||||||
6.38%, 12/01/2042 | 180,000 | 154,673 | ||||||
| ||||||||
PDC Energy, Inc., 5.75%, 05/15/2026 | 186,000 | 190,859 | ||||||
| ||||||||
Pioneer Natural Resources Co., 1.90%, 08/15/2030 | 5,189,000 | 5,029,166 | ||||||
| ||||||||
QEP Resources, Inc., 5.63%, 03/01/2026 | 162,000 | 104,596 | ||||||
| ||||||||
Southwestern Energy Co., |
| |||||||
7.50%, 04/01/2026 | 100,000 | 100,806 | ||||||
| ||||||||
7.75%, 10/01/2027 | 281,000 | 288,025 | ||||||
| ||||||||
Whiting Petroleum Corp., |
| |||||||
5.75%, 03/15/2021(e) | 241,000 | 54,526 | ||||||
| ||||||||
6.63%, 01/15/2026(e) | 172,000 | 40,725 | ||||||
| ||||||||
WPX Energy, Inc., | ||||||||
5.75%, 06/01/2026 | 398,000 | 407,084 | ||||||
| ||||||||
5.25%, 10/15/2027 | 45,000 | 44,838 | ||||||
| ||||||||
5.88%, 06/15/2028 | 24,000 | 24,390 | ||||||
| ||||||||
4.50%, 01/15/2030 | 25,000 | 23,921 | ||||||
| ||||||||
44,089,659 | ||||||||
| ||||||||
Oil & Gas Refining & Marketing–0.47% |
| |||||||
Calumet Specialty Products Partners L.P./Calumet Finance Corp., | ||||||||
7.63%, 01/15/2022 | 123,000 | 122,202 | ||||||
| ||||||||
9.25%, 07/15/2024(b) | 224,000 | 240,520 | ||||||
| ||||||||
EnLink Midstream Partners L.P., | ||||||||
4.85%, 07/15/2026 | 371,000 | 324,595 | ||||||
| ||||||||
5.60%, 04/01/2044 | 327,000 | 217,225 | ||||||
| ||||||||
NuStar Logistics L.P., 6.00%, 06/01/2026 | 556,000 | 582,847 | ||||||
| ||||||||
Parkland Corp. (Canada), | ||||||||
6.00%, 04/01/2026(b) | 406,000 | 429,294 | ||||||
| ||||||||
5.88%, 07/15/2027(b) | 3,025,000 | 3,236,190 | ||||||
| ||||||||
PBF Holding Co. LLC/PBF Finance Corp., 6.00%, 02/15/2028(b) | 317,000 | 267,905 | ||||||
| ||||||||
Petronas Capital Ltd. (Malaysia), | ||||||||
3.50%, 04/21/2030(b) | 1,158,000 | 1,314,943 | ||||||
| ||||||||
4.55%, 04/21/2050(b) | 2,820,000 | 3,727,617 | ||||||
| ||||||||
Sunoco L.P./Sunoco Finance Corp., 5.88%, 03/15/2028 | 723,000 | 759,916 | ||||||
| ||||||||
11,223,254 | ||||||||
| ||||||||
Oil & Gas Storage & Transportation–8.52% |
| |||||||
Antero Midstream Partners L.P./Antero Midstream Finance Corp., 5.38%, 09/15/2024 | 232,000 | 214,600 | ||||||
| ||||||||
Boardwalk Pipelines L.P., 3.40%, 02/15/2031 | 3,261,000 | 3,301,988 | ||||||
| ||||||||
Cheniere Energy Partners L.P., 5.63%, 10/01/2026 | 236,000 | 247,774 | ||||||
| ||||||||
Crestwood Midstream Partners L.P./Crestwood Midstream Finance Corp., 5.75%, 04/01/2025 | 241,000 | 231,309 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Oil & Gas Storage & Transportation–(continued) |
| |||||||
DCP Midstream Operating L.P., |
| |||||||
5.38%, 07/15/2025 | $ | 162,000 | $ | 174,442 | ||||
| ||||||||
5.13%, 05/15/2029 | 394,000 | 418,310 | ||||||
| ||||||||
Energy Transfer Operating L.P., | ||||||||
5.88%, 01/15/2024 | 508,000 | 564,684 | ||||||
| ||||||||
2.90%, 05/15/2025 | 4,157,000 | 4,275,808 | ||||||
| ||||||||
3.75%, 05/15/2030 | 6,812,000 | 6,765,732 | ||||||
| ||||||||
4.90%, 03/15/2035 | 8,311,000 | 8,266,663 | ||||||
| ||||||||
5.00%, 05/15/2050 | 7,495,000 | 7,188,485 | ||||||
| ||||||||
Series A, 6.25%(c)(d) | 515,000 | 376,179 | ||||||
| ||||||||
Enterprise Products Operating LLC, |
| |||||||
3.13%, 07/31/2029 | 3,743,000 | 4,091,947 | ||||||
| ||||||||
4.80%, 02/01/2049 | 2,264,000 | 2,657,510 | ||||||
| ||||||||
4.20%, 01/31/2050 | 2,663,000 | 2,907,135 | ||||||
| ||||||||
3.70%, 01/31/2051 | 12,852,000 | 13,071,722 | ||||||
| ||||||||
3.95%, 01/31/2060 | 6,914,000 | 7,032,164 | ||||||
| ||||||||
Series D, 6.88%, 03/01/2033 | 2,543,000 | 3,427,322 | ||||||
| ||||||||
4.88%, 08/16/2077(c) | 10,130,000 | 8,960,036 | ||||||
| ||||||||
EQM Midstream Partners L.P., 5.50%, 07/15/2028 | 541,000 | 561,715 | ||||||
| ||||||||
Hess Midstream Operations L.P., 5.63%, 02/15/2026(b) | 389,000 | 405,618 | ||||||
| ||||||||
Holly Energy Partners L.P./Holly Energy Finance Corp., 5.00%, 02/01/2028(b) | 95,000 | 95,280 | ||||||
| ||||||||
Kinder Morgan Energy Partners L.P., 4.30%, 05/01/2024 | 2,289,000 | 2,540,402 | ||||||
| ||||||||
Kinder Morgan, Inc., | ||||||||
2.00%, 02/15/2031 | 6,503,000 | 6,370,325 | ||||||
| ||||||||
7.80%, 08/01/2031 | 9,092,000 | 12,734,884 | ||||||
| ||||||||
7.75%, 01/15/2032 | 7,333,000 | 10,531,196 | ||||||
| ||||||||
3.25%, 08/01/2050 | 13,965,000 | 13,150,822 | ||||||
| ||||||||
MPLX L.P., | ||||||||
1.21%, (3 mo. USD LIBOR + 0.90%), 09/09/2021(f) | 7,864,000 | 7,863,776 | ||||||
| ||||||||
1.41%, (3 mo. USD LIBOR + 1.10%), 09/09/2022(f) | 5,688,000 | 5,688,594 | ||||||
| ||||||||
1.75%, 03/01/2026 | 3,544,000 | 3,547,552 | ||||||
| ||||||||
4.80%, 02/15/2029 | 2,251,000 | 2,607,971 | ||||||
| ||||||||
2.65%, 08/15/2030 | 3,734,000 | 3,706,504 | ||||||
| ||||||||
4.70%, 04/15/2048 | 2,658,000 | 2,837,454 | ||||||
| ||||||||
5.50%, 02/15/2049 | 3,582,000 | 4,235,887 | ||||||
| ||||||||
NGL Energy Partners L.P./NGL Energy Finance Corp., 7.50%, 04/15/2026 | 357,000 | 238,240 | ||||||
| ||||||||
NGPL PipeCo. LLC, 7.77%, 12/15/2037(b) | 6,930,000 | 8,482,183 | ||||||
| ||||||||
ONEOK, Inc., | ||||||||
5.85%, 01/15/2026 | 1,336,000 | 1,541,524 | ||||||
| ||||||||
6.35%, 01/15/2031 | 5,289,000 | 6,255,812 | ||||||
| ||||||||
Plains All American Pipeline L.P., Series B, 6.13%(c)(d) | 385,000 | 269,888 | ||||||
| ||||||||
Plains All American Pipeline L.P./PAA Finance Corp., | ||||||||
3.55%, 12/15/2029 | 13,108,000 | 13,072,023 | ||||||
| ||||||||
3.80%, 09/15/2030 | 2,024,000 | 2,039,783 | ||||||
| ||||||||
Sabine Pass Liquefaction LLC, |
| |||||||
5.75%, 05/15/2024 | 362,000 | 414,910 | ||||||
| ||||||||
4.50%, 05/15/2030(b) | 1,339,000 | 1,535,243 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Oil & Gas Storage & Transportation–(continued) |
| |||||||
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., | ||||||||
5.25%, 05/01/2023 | $ | 2,398,000 | $ | 2,416,716 | ||||
| ||||||||
5.13%, 02/01/2025 | 439,000 | 449,705 | ||||||
| ||||||||
5.88%, 04/15/2026 | 677,000 | 713,812 | ||||||
| ||||||||
5.00%, 01/15/2028 | 201,000 | 206,062 | ||||||
| ||||||||
5.50%, 03/01/2030(b) | 63,000 | 66,504 | ||||||
| ||||||||
Western Midstream Operating L.P., | ||||||||
4.00%, 07/01/2022 | 2,782,000 | 2,837,640 | ||||||
| ||||||||
2.12%, (3 mo. USD LIBOR + 1.85%), 01/13/2023(f) | 3,109,000 | 2,954,752 | ||||||
| ||||||||
4.10%, 02/01/2025 | 122,000 | 121,904 | ||||||
| ||||||||
4.50%, 03/01/2028 | 190,000 | 191,425 | ||||||
| ||||||||
4.75%, 08/15/2028 | 288,000 | 293,553 | ||||||
| ||||||||
5.45%, 04/01/2044 | 367,000 | 340,279 | ||||||
| ||||||||
Williams Cos., Inc. (The), | ||||||||
7.88%, 09/01/2021 | 140,000 | 150,034 | ||||||
| ||||||||
3.60%, 03/15/2022 | 3,508,000 | 3,644,442 | ||||||
| ||||||||
4.55%, 06/24/2024 | 399,000 | 448,364 | ||||||
| ||||||||
3.50%, 11/15/2030 | 2,057,000 | 2,264,038 | ||||||
| ||||||||
202,000,626 | ||||||||
| ||||||||
Other Diversified Financial Services–1.06% |
| |||||||
Blackstone Holdings Finance Co. LLC, 5.00%, | 4,174,000 | 5,363,130 | ||||||
| ||||||||
Carlyle Finance LLC, 5.65%, 09/15/2048(b) | 10,799,000 | 13,882,112 | ||||||
| ||||||||
eG Global Finance PLC (United Kingdom), 4.91% (1 mo. USD LIBOR + 4.75%), 02/07/2025(b) | 259,000 | 268,254 | ||||||
| ||||||||
Equitable Holdings, Inc., Series B, 4.95%(c)(d) | 2,058,000 | 2,120,666 | ||||||
| ||||||||
Football Trust V, 5.35%, 10/05/2020(b) | 450,269 | 451,304 | ||||||
| ||||||||
ILFC E-Capital Trust II, 3.27% (3 mo. USD LIBOR +1.80%), 12/21/2065(b)(f) | 620,000 | 342,113 | ||||||
| ||||||||
KKR Group Finance Co. VIII LLC, 3.50%, 08/25/2050(b) | 2,248,000 | 2,269,985 | ||||||
| ||||||||
Lions Gate Capital Holdings LLC, 6.38%, 02/01/2024(b) | 242,000 | 248,199 | ||||||
| ||||||||
LPL Holdings, Inc., 5.75%, 09/15/2025(b) | 241,000 | 251,390 | ||||||
| ||||||||
25,197,153 | ||||||||
| ||||||||
Packaged Foods & Meats–0.25% |
| |||||||
B&G Foods, Inc., 5.25%, 09/15/2027 | 96,000 | 102,750 | ||||||
| ||||||||
Conagra Brands, Inc., 5.30%, 11/01/2038 | 300,000 | 386,724 | ||||||
| ||||||||
Hershey Co. (The), 3.13%, 11/15/2049 | 2,708,000 | 2,963,978 | ||||||
| ||||||||
JBS USA LUX S.A./JBS USA Food Co./JBS USA Finance, Inc., 5.50%, 01/15/2030(b) | 217,000 | 241,395 | ||||||
| ||||||||
Kraft Heinz Foods Co. (The), | ||||||||
6.88%, 01/26/2039 | 340,000 | 462,706 | ||||||
| ||||||||
5.00%, 06/04/2042 | 352,000 | 388,837 | ||||||
| ||||||||
4.38%, 06/01/2046 | 472,000 | 482,740 | ||||||
| ||||||||
5.50%, 06/01/2050(b) | 179,000 | 211,551 | ||||||
| ||||||||
Pilgrim’s Pride Corp., 5.88%, 09/30/2027(b) | 398,000 | 423,372 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Packaged Foods & Meats–(continued) |
| |||||||
TreeHouse Foods, Inc., 6.00%, 02/15/2024(b) | $ | 223,000 | $ | 230,304 | ||||
| ||||||||
5,894,357 | ||||||||
| ||||||||
Paper Packaging–0.15% | ||||||||
Cascades, Inc./Cascades USA, Inc. (Canada), 5.38%, | 3,254,000 | 3,475,841 | ||||||
| ||||||||
Paper Products–0.17% | ||||||||
Georgia-Pacific LLC, 2.10%, 04/30/2027(b) | 3,157,000 | 3,327,642 | ||||||
| ||||||||
Mercer International, Inc. (Germany), | ||||||||
6.50%, 02/01/2024 | 157,000 | 158,357 | ||||||
| ||||||||
5.50%, 01/15/2026 | 88,000 | 85,308 | ||||||
| ||||||||
Schweitzer-Mauduit International, Inc., 6.88%, 10/01/2026(b) | 485,000 | 523,102 | ||||||
| ||||||||
4,094,409 | ||||||||
| ||||||||
Pharmaceuticals–2.29% | ||||||||
AstraZeneca PLC | ||||||||
0.70%, 04/08/2026 | 6,667,000 | 6,616,542 | ||||||
| ||||||||
1.38%, 08/06/2030 | 3,454,000 | 3,390,883 | ||||||
| ||||||||
Bausch Health Cos., Inc., | ||||||||
6.13%, 04/15/2025(b) | 188,000 | 193,593 | ||||||
| ||||||||
5.50%, 11/01/2025(b) | 177,000 | 182,876 | ||||||
| ||||||||
9.00%, 12/15/2025(b) | 202,000 | 221,372 | ||||||
| ||||||||
Bayer US Finance II LLC (Germany), | ||||||||
1.32%, (3 mo. USD LIBOR + 1.01%), 12/15/2023(b)(f) | 5,692,000 | 5,747,150 | ||||||
| ||||||||
3.88%, 12/15/2023(b) | 1,964,000 | 2,155,471 | ||||||
| ||||||||
Bristol-Myers Squibb Co., 3.40%, 07/26/2029 | 300,000 | 350,368 | ||||||
| ||||||||
Endo DAC/Endo Finance LLC/Endo Finco, Inc., | ||||||||
9.50%, 07/31/2027(b) | 72,000 | 78,075 | ||||||
| ||||||||
6.00%, 06/30/2028(b) | 91,000 | 70,589 | ||||||
| ||||||||
HLF Financing S.a.r.l. LLC/Herbalife International, Inc., 7.25%, 08/15/2026(b) | 245,000 | 256,409 | ||||||
| ||||||||
Merck & Co., Inc., | ||||||||
0.75%, 02/24/2026 | 3,400,000 | 3,418,785 | ||||||
| ||||||||
2.35%, 06/24/2040 | 2,581,000 | 2,628,572 | ||||||
| ||||||||
Par Pharmaceutical, Inc., 7.50%, 04/01/2027(b) | 241,000 | 257,583 | ||||||
| ||||||||
Royalty Pharma PLC, | ||||||||
1.20%, 09/02/2025(b) | 882,000 | 880,552 | ||||||
| ||||||||
1.75%, 09/02/2027(b) | 1,295,000 | 1,293,575 | ||||||
| ||||||||
2.20%, 09/02/2030(b) | 1,675,000 | 1,656,607 | ||||||
| ||||||||
3.55%, 09/02/2050(b) | 1,930,000 | 1,858,055 | ||||||
| ||||||||
Takeda Pharmaceutical Co. Ltd. (Japan), | ||||||||
2.05%, 03/31/2030 | 2,565,000 | 2,608,248 | ||||||
| ||||||||
3.03%, 07/09/2040 | 1,689,000 | 1,753,792 | ||||||
| ||||||||
3.18%, 07/09/2050 | 2,465,000 | 2,514,198 | ||||||
| ||||||||
3.38%, 07/09/2060 | 3,584,000 | 3,718,054 | ||||||
| ||||||||
Upjohn, Inc., | ||||||||
1.65%, 06/22/2025(b) | 1,284,000 | 1,320,312 | ||||||
| ||||||||
2.70%, 06/22/2030(b) | 4,251,000 | 4,441,947 | ||||||
| ||||||||
3.85%, 06/22/2040(b) | 2,174,000 | 2,362,200 | ||||||
| ||||||||
4.00%, 06/22/2050(b) | 3,918,000 | 4,281,291 | ||||||
| ||||||||
54,257,099 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Property & Casualty Insurance–0.42% |
| |||||||
Allstate Corp. (The), 4.20%, 12/15/2046 | $ | 1,439,000 | $ | 1,813,500 | ||||
| ||||||||
AmWINS Group, Inc., 7.75%, 07/01/2026(b) | 107,000 | 115,673 | ||||||
| ||||||||
Arch Capital Group Ltd., 3.64%, 06/30/2050 | 2,158,000 | 2,310,519 | ||||||
| ||||||||
Fidelity National Financial, Inc., 3.40%, 06/15/2030 | 2,693,000 | 2,909,359 | ||||||
| ||||||||
W.R. Berkley Corp., 4.00%, 05/12/2050 | 2,478,000 | 2,863,888 | ||||||
| ||||||||
10,012,939 | ||||||||
| ||||||||
Publishing–0.01% | ||||||||
Meredith Corp., 6.88%, 02/01/2026 | 285,000 | 248,182 | ||||||
| ||||||||
Railroads–1.93% | ||||||||
Canadian Pacific Railway Co. (Canada), 6.13%, 09/15/2115 | 11,432,000 | 17,443,626 | ||||||
| ||||||||
CSX Corp., 4.65%, 03/01/2068 | 3,310,000 | 4,347,424 | ||||||
| ||||||||
Empresa de los Ferrocarriles del Estado (Chile), 3.07%, 08/18/2050(b) | 1,535,000 | 1,546,781 | ||||||
| ||||||||
Kenan Advantage Group, Inc. (The), 7.88%, 07/31/2023(b) | 270,000 | 258,108 | ||||||
| ||||||||
Norfolk Southern Corp., | ||||||||
2.55%, 11/01/2029 | 2,675,000 | 2,929,314 | ||||||
| ||||||||
3.40%, 11/01/2049 | 3,411,000 | 3,819,888 | ||||||
| ||||||||
3.05%, 05/15/2050 | 3,200,000 | 3,391,148 | ||||||
| ||||||||
Union Pacific Corp., | ||||||||
2.15%, 02/05/2027 | 3,612,000 | 3,857,903 | ||||||
| ||||||||
2.40%, 02/05/2030(g) | 4,511,000 | 4,883,946 | ||||||
| ||||||||
3.95%, 08/15/2059 | 2,761,000 | 3,270,808 | ||||||
| ||||||||
45,748,946 | ||||||||
| ||||||||
Real Estate Development–0.11% |
| |||||||
Piedmont Operating Partnership L.P., 3.15%, 08/15/2030 | 2,578,000 | 2,531,382 | ||||||
| ||||||||
Regional Banks–1.92% | ||||||||
CIT Group, Inc., 5.00%, 08/01/2023 | 311,000 | 329,870 | ||||||
| ||||||||
Citizens Bank N.A., 2.25%, 04/28/2025 | 2,836,000 | 3,029,027 | ||||||
| ||||||||
Citizens Financial Group, Inc., | ||||||||
2.38%, 07/28/2021 | 5,719,000 | 5,810,235 | ||||||
| ||||||||
2.50%, 02/06/2030 | 3,492,000 | 3,698,551 | ||||||
| ||||||||
3.25%, 04/30/2030 | 1,872,000 | 2,081,539 | ||||||
| ||||||||
Series A, 4.26% (3 mo. USD LIBOR + 3.96%)(d)(f) | 1,100,000 | 1,035,601 | ||||||
| ||||||||
Fifth Third Bancorp, | ||||||||
4.30%, 01/16/2024 | 2,610,000 | 2,892,461 | ||||||
| ||||||||
2.38%, 01/28/2025 | 7,346,000 | 7,811,370 | ||||||
| ||||||||
2.55%, 05/05/2027 | 2,252,000 | 2,442,838 | ||||||
| ||||||||
First Niagara Financial Group, Inc., 7.25%, 12/15/2021 | 1,300,000 | 1,403,017 | ||||||
| ||||||||
KeyCorp, 2.25%, 04/06/2027 | 5,075,000 | 5,371,983 | ||||||
| ||||||||
M&T Bank Corp., Series F, 5.13%(c)(d) | 1,306,000 | 1,376,896 | ||||||
| ||||||||
Synovus Financial Corp., 3.13%, 11/01/2022 | 2,349,000 | 2,427,915 | ||||||
| ||||||||
Truist Bank, 2.25%, 03/11/2030 | 1,312,000 | 1,363,430 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Regional Banks–(continued) |
| |||||||
Zions Bancorporation N.A., 3.25%, 10/29/2029 | $ | 4,390,000 | $ | 4,395,141 | ||||
| ||||||||
45,469,874 | ||||||||
| ||||||||
Renewable Electricity–0.29% |
| |||||||
Northern States Power Co., 2.60%, 06/01/2051 | 6,674,000 | 6,819,837 | ||||||
| ||||||||
Research & Consulting Services–0.00% |
| |||||||
Dun & Bradstreet Corp. (The), 10.25%, 02/15/2027(b) | 34,000 | 38,839 | ||||||
| ||||||||
Residential REITs–0.89% |
| |||||||
Camden Property Trust, 2.80%, 05/15/2030 | 1,458,000 | 1,597,406 | ||||||
| ||||||||
Essex Portfolio L.P., | ||||||||
3.63%, 08/15/2022 | 3,441,000 | 3,625,396 | ||||||
| ||||||||
1.65%, 01/15/2031 | 1,761,000 | 1,712,704 | ||||||
| ||||||||
2.65%, 09/01/2050 | 3,139,000 | 2,917,533 | ||||||
| ||||||||
Mid-America Apartments L.P., | 1,395,000 | 1,374,395 | ||||||
| ||||||||
Spirit Realty L.P., | ||||||||
4.00%, 07/15/2029 | 1,711,000 | 1,793,269 | ||||||
| ||||||||
3.40%, 01/15/2030 | 5,071,000 | 5,051,600 | ||||||
| ||||||||
UDR, Inc., 3.00%, 08/15/2031 | 2,730,000 | 2,996,768 | ||||||
| ||||||||
21,069,071 | ||||||||
| ||||||||
Restaurants–0.22% | ||||||||
1011778 BC ULC/New Red Finance, Inc. (Canada), 5.00%, 10/15/2025(b) | 489,000 | 502,988 | ||||||
| ||||||||
Aramark Services, Inc., 5.00%, 04/01/2025(b) | 215,000 | 217,798 | ||||||
| ||||||||
IRB Holding Corp., 6.75%, 02/15/2026(b) | 239,000 | 243,457 | ||||||
| ||||||||
Starbucks Corp., 4.45%, 08/15/2049 | 3,461,000 | 4,204,251 | ||||||
| ||||||||
5,168,494 | ||||||||
| ||||||||
Retail REITs–1.12% | ||||||||
Brixmor Operating Partnership L.P., 4.05%, 07/01/2030 | 2,946,000 | 3,165,805 | ||||||
| ||||||||
Kimco Realty Corp., | ||||||||
1.90%, 03/01/2028 | 4,402,000 | 4,337,387 | ||||||
| ||||||||
2.70%, 10/01/2030 | 2,522,000 | 2,583,979 | ||||||
| ||||||||
Realty Income Corp., 3.25%, 01/15/2031 | 3,236,000 | 3,602,172 | ||||||
| ||||||||
Regency Centers L.P., 4.13%, 03/15/2028 | 2,290,000 | 2,553,922 | ||||||
| ||||||||
Retail Properties of America, Inc., 4.75%, 09/15/2030 | 2,698,000 | 2,675,992 | ||||||
| ||||||||
Simon Property Group L.P., | ||||||||
3.50%, 09/01/2025 | 1,188,000 | 1,306,991 | ||||||
| ||||||||
2.65%, 07/15/2030 | 3,516,000 | 3,528,384 | ||||||
| ||||||||
3.80%, 07/15/2050 | 2,619,000 | 2,715,559 | ||||||
| ||||||||
26,470,191 | ||||||||
| ||||||||
Security & Alarm Services–0.02% |
| |||||||
Brink’s Co. (The), 4.63%, 10/15/2027(b) | 201,000 | 209,231 | ||||||
| ||||||||
Prime Security Services Borrower LLC/Prime Finance, Inc., 5.75%, 04/15/2026(b) | 240,000 | 265,732 | ||||||
| ||||||||
474,963 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Semiconductor Equipment–0.08% |
| |||||||
NXP B.V./NXP Funding LLC/NXP USA, Inc. (Netherlands), 3.40%, 05/01/2030(b) | $ | 1,769,000 | $ | 1,962,467 | ||||
| ||||||||
Semiconductors–1.91% | ||||||||
Analog Devices, Inc., | ||||||||
3.13%, 12/05/2023 | 2,313,000 | 2,495,103 | ||||||
| ||||||||
2.95%, 04/01/2025 | 1,380,000 | 1,512,527 | ||||||
| ||||||||
Broadcom Corp./Broadcom Cayman Finance Ltd., | ||||||||
3.88%, 01/15/2027 | 5,702,000 | 6,323,779 | ||||||
| ||||||||
3.50%, 01/15/2028 | 6,453,000 | 6,993,595 | ||||||
| ||||||||
Broadcom, Inc., | ||||||||
4.70%, 04/15/2025 | 475,000 | 543,161 | ||||||
| ||||||||
5.00%, 04/15/2030 | 4,626,000 | 5,506,533 | ||||||
| ||||||||
4.30%, 11/15/2032 | 4,525,000 | 5,228,319 | ||||||
| ||||||||
Micron Technology, Inc., | ||||||||
4.98%, 02/06/2026 | 1,945,000 | 2,269,679 | ||||||
| ||||||||
4.19%, 02/15/2027 | 6,229,000 | 7,143,081 | ||||||
| ||||||||
NXP B.V./NXP Funding LLC (Netherlands), 3.88%, 09/01/2022(b) | 6,859,000 | 7,279,400 | ||||||
| ||||||||
45,295,177 | ||||||||
| ||||||||
Soft Drinks–0.86% | ||||||||
Coca-Cola Co. (The), | ||||||||
2.60%, 06/01/2050 | 4,042,000 | 4,108,494 | ||||||
| ||||||||
2.75%, 06/01/2060 | 2,739,000 | 2,765,507 | ||||||
| ||||||||
Coca-Cola FEMSA S.A.B. de C.V. (Mexico), 1.85%, 09/01/2032 | 3,205,000 | 3,211,282 | ||||||
| ||||||||
Fomento Economico Mexicano, S.A.B. de C.V. (Mexico), 3.50%, 01/16/2050 | 9,464,000 | 10,115,996 | ||||||
| ||||||||
Keurig Dr Pepper, Inc., 4.60%, 05/25/2028 | 250,000 | 302,442 | ||||||
| ||||||||
20,503,721 | ||||||||
| ||||||||
Sovereign Debt–0.81% | ||||||||
Abu Dhabi Government International Bond (United Arab Emirates), 3.88%, 04/16/2050(b) | 2,515,000 | 3,073,597 | ||||||
| ||||||||
Banque Ouest Africaine de Developpement (Supranational), 5.00%, 07/27/2027(b) | 8,000,000 | 8,630,232 | ||||||
| ||||||||
Saudi Government International Bond (Saudi Arabia), 3.75%, 01/21/2055(b) | 6,865,000 | 7,479,417 | ||||||
| ||||||||
19,183,246 | ||||||||
| ||||||||
Specialized Consumer Services–0.03% |
| |||||||
ServiceMaster Co. LLC (The), | ||||||||
5.13%, 11/15/2024(b) | 235,000 | 240,312 | ||||||
| ||||||||
7.45%, 08/15/2027 | 463,000 | 504,582 | ||||||
| ||||||||
744,894 | ||||||||
| ||||||||
Specialized Finance–0.54% |
| |||||||
Mitsubishi UFJ Lease & Finance Co. Ltd. (Japan), 3.64%, 04/13/2025(b) | 6,132,000 | 6,728,696 | ||||||
| ||||||||
National Rural Utilities Cooperative Finance Corp., 2.40%, 03/15/2030 | 5,582,000 | 6,110,344 | ||||||
| ||||||||
12,839,040 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Specialized REITs–0.92% |
| |||||||
Agree L.P., 2.90%, 10/01/2030 | $ | 1,143,000 | $ | 1,174,991 | ||||
| ||||||||
American Tower Corp., 3.10%, 06/15/2050 | 4,943,000 | 5,100,240 | ||||||
| ||||||||
Crown Castle International Corp., | ||||||||
4.15%, 07/01/2050 | 1,215,000 | 1,431,804 | ||||||
| ||||||||
3.25%, 01/15/2051 | 6,036,000 | 6,256,689 | ||||||
| ||||||||
Equinix, Inc., 3.20%, 11/18/2029 | 120,000 | 132,575 | ||||||
| ||||||||
GLP Capital L.P./GLP Financing II, Inc., 5.38%, 04/15/2026 | 247,000 | 274,570 | ||||||
| ||||||||
Iron Mountain, Inc., | ||||||||
5.25%, 03/15/2028(b) | 456,000 | 480,713 | ||||||
| ||||||||
4.88%, 09/15/2029(b) | 991,000 | 1,030,640 | ||||||
| ||||||||
5.25%, 07/15/2030(b) | 2,553,000 | 2,714,260 | ||||||
| ||||||||
4.50%, 02/15/2031(b) | 2,368,000 | 2,436,080 | ||||||
| ||||||||
Rayonier A.M. Products, Inc., 5.50%, 06/01/2024(b) | 409,000 | 276,075 | ||||||
| ||||||||
SBA Communications Corp., 4.88%, 09/01/2024 | 507,000 | 521,424 | ||||||
| ||||||||
21,830,061 | ||||||||
| ||||||||
Specialty Chemicals–0.24% |
| |||||||
Ashland LLC, 4.75%, 08/15/2022 | 20,000 | 21,013 | ||||||
| ||||||||
Avient Corp., 5.25%, 03/15/2023 | 219,000 | 238,091 | ||||||
| ||||||||
Braskem Idesa S.A.P.I. (Mexico), 7.45%, | 4,585,000 | 4,295,572 | ||||||
| ||||||||
Element Solutions, Inc., 5.88%, 12/01/2025(b) | 232,000 | 241,570 | ||||||
| ||||||||
GCP Applied Technologies, Inc., 5.50%, | 349,000 | 364,202 | ||||||
| ||||||||
Sherwin-Williams Co. (The), 2.95%, 08/15/2029 | 469,000 | 516,663 | ||||||
| ||||||||
5,677,111 | ||||||||
| ||||||||
Steel–0.87% | ||||||||
Cleveland-Cliffs, Inc., 9.88%, 10/17/2025(b) | 50,000 | 55,216 | ||||||
| ||||||||
POSCO (South Korea), | ||||||||
2.38%, 01/17/2023(b) | 13,785,000 | 14,137,339 | ||||||
| ||||||||
2.50%, 01/17/2025(b) | 6,160,000 | 6,421,878 | ||||||
| ||||||||
Steel Dynamics, Inc., 3.25%, 01/15/2031 | 42,000 | 45,192 | ||||||
| ||||||||
20,659,625 | ||||||||
| ||||||||
Systems Software–1.04% | ||||||||
Boxer Parent Co., Inc., 9.13%, 03/01/2026(b) | 191,000 | 206,161 | ||||||
| ||||||||
Microsoft Corp., 2.53%, 06/01/2050 | 1,786,000 | 1,876,294 | ||||||
| ||||||||
Oracle Corp., | ||||||||
3.60%, 04/01/2040 | 3,869,000 | 4,372,921 | ||||||
| ||||||||
3.60%, 04/01/2050 | 11,650,000 | 13,049,793 | ||||||
| ||||||||
3.85%, 04/01/2060 | 4,505,000 | 5,219,938 | ||||||
| ||||||||
24,725,107 | ||||||||
| ||||||||
Technology Distributors–0.10% |
| |||||||
Avnet, Inc., 4.63%, 04/15/2026 | 2,151,000 | 2,397,544 | ||||||
| ||||||||
CDW LLC/CDW Finance Corp., 5.00%, 09/01/2025 | 80,000 | 83,101 | ||||||
| ||||||||
2,480,645 | ||||||||
| ||||||||
Technology Hardware, Storage & Peripherals–0.96% |
| |||||||
Apple, Inc., 2.65%, 05/11/2050 | 4,452,000 | 4,592,176 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
Technology Hardware, Storage & Peripherals–(continued) |
| |||||||
Dell International LLC/EMC Corp., | ||||||||
7.13%, 06/15/2024(b) | $ | 708,000 | $ | 735,817 | ||||
| ||||||||
4.00%, 07/15/2024(b) | 3,021,000 | 3,263,838 | ||||||
| ||||||||
5.85%, 07/15/2025(b) | 1,195,000 | 1,403,657 | ||||||
| ||||||||
6.02%, 06/15/2026(b) | 4,064,000 | 4,788,020 | ||||||
| ||||||||
4.90%, 10/01/2026(b) | 1,778,000 | 2,013,268 | ||||||
| ||||||||
8.10%, 07/15/2036(b) | 249,000 | 331,177 | ||||||
| ||||||||
8.35%, 07/15/2046(b) | 4,240,000 | 5,726,638 | ||||||
| ||||||||
22,854,591 | ||||||||
| ||||||||
Textiles–0.01% |
| |||||||
Eagle Intermediate Global Holding B.V./Ruyi US Finance LLC (China), 7.50%, 05/01/2025(b) | 214,000 | 153,010 | ||||||
| ||||||||
Thrifts & Mortgage Finance–0.00% |
| |||||||
Nationstar Mortgage Holdings, Inc., 6.00%, | 67,000 | 71,156 | ||||||
| ||||||||
Tobacco–0.78% | ||||||||
Altria Group, Inc., | ||||||||
3.80%, 02/14/2024 | 4,170,000 | 4,576,071 | ||||||
| ||||||||
4.40%, 02/14/2026 | 6,730,000 | 7,797,781 | ||||||
| ||||||||
4.80%, 02/14/2029 | 5,066,000 | 6,062,793 | ||||||
| ||||||||
18,436,645 | ||||||||
| ||||||||
Trading Companies & Distributors–1.41% |
| |||||||
AerCap Global Aviation Trust (Ireland), 6.50%, | 11,506,000 | 9,780,100 | ||||||
| ||||||||
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland), | ||||||||
3.50%, 05/26/2022 | 1,468,000 | 1,476,350 | ||||||
| ||||||||
4.50%, 09/15/2023 | 3,254,000 | 3,347,005 | ||||||
| ||||||||
Air Lease Corp., | ||||||||
3.88%, 04/01/2021 | 3,660,000 | 3,698,981 | ||||||
| ||||||||
3.38%, 06/01/2021 | 3,865,000 | 3,913,260 | ||||||
| ||||||||
3.00%, 09/15/2023 | 1,878,000 | 1,890,168 | ||||||
| ||||||||
2.30%, 02/01/2025 | 300,000 | 295,703 | ||||||
| ||||||||
Aircastle Ltd., | ||||||||
5.00%, 04/01/2023 | 534,000 | 537,256 | ||||||
| ||||||||
4.40%, 09/25/2023 | 3,823,000 | 3,797,341 | ||||||
| ||||||||
BMC East LLC, 5.50%, | 370,000 | 385,224 | ||||||
| ||||||||
BOC Aviation Ltd. (Singapore), 1.41% (3 mo. USD LIBOR + 1.13%), 09/26/2023(b)(f) | 2,446,000 | 2,412,588 | ||||||
| ||||||||
Herc Holdings, Inc., 5.50%, 07/15/2027(b) | 245,000 | 257,250 | ||||||
| ||||||||
United Rentals North America, Inc., | ||||||||
5.88%, 09/15/2026 | 704,000 | 750,052 | ||||||
| ||||||||
5.50%, 05/15/2027 | 129,000 | 138,414 | ||||||
| ||||||||
5.25%, 01/15/2030 | 343,000 | 381,577 | ||||||
| ||||||||
WESCO Distribution, Inc., 7.25%, 06/15/2028(b) | 231,000 | 258,051 | ||||||
| ||||||||
33,319,320 | ||||||||
| ||||||||
Trucking–1.23% | ||||||||
Aviation Capital Group LLC, | ||||||||
0.94%, (3 mo. USD LIBOR + 0.67%), 07/30/2021(b)(f) | 1,914,000 | 1,853,219 | ||||||
| ||||||||
4.13%, 08/01/2025(b) | 5,346,000 | 5,163,923 | ||||||
| ||||||||
3.50%, 11/01/2027(b) | 15,235,000 | 13,535,212 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Trucking–(continued) | ||||||||
Avis Budget Car Rental LLC/Avis Budget Finance, Inc., 10.50%, 05/15/2025(b) | $ | 107,000 | $ | 124,505 | ||||
| ||||||||
Penske Truck Leasing Co. L.P./PTL Finance Corp., | ||||||||
3.90%, 02/01/2024(b) | 3,281,000 | 3,577,938 | ||||||
| ||||||||
3.40%, 11/15/2026(b) | 405,000 | 445,115 | ||||||
| ||||||||
Ryder System, Inc., | ||||||||
4.63%, 06/01/2025 | 3,480,000 | 4,017,480 | ||||||
| ||||||||
2.90%, 12/01/2026 | 303,000 | 325,940 | ||||||
| ||||||||
29,043,332 | ||||||||
| ||||||||
Wireless Telecommunication Services–2.30% |
| |||||||
Colombia Telecomunicaciones S.A. ESP (Colombia), 4.95%, 07/17/2030(b) | 2,600,000 | 2,757,950 | ||||||
| ||||||||
Digicel Group 0.5 Ltd. (Jamaica), 2.00% PIK Rate, 8.00% Cash Rate, | 102,569 | 77,952 | ||||||
| ||||||||
3.00% PIK Rate, 5.00% Cash Rate, | 33,280 | 11,981 | ||||||
| ||||||||
Conv. 2.00% PIK Rate, 5.00% Cash Rate(b)(d)(h) | 5,512 | 717 | ||||||
| ||||||||
Oztel Holdings SPC Ltd. (Oman), 5.63%, 10/24/2023(b) | 299,000 | 303,762 | ||||||
| ||||||||
Rogers Communications, Inc. (Canada), | ||||||||
4.50%, 03/15/2043 | 330,000 | 402,712 | ||||||
| ||||||||
5.00%, 03/15/2044 | 4,622,000 | 6,038,303 | ||||||
| ||||||||
4.35%, 05/01/2049 | 832,000 | 1,037,071 | ||||||
| ||||||||
SoftBank Group Corp. (Japan), 5.13%, | 267,000 | 281,638 | ||||||
| ||||||||
Sprint Capital Corp., | ||||||||
6.88%, 11/15/2028 | 378,000 | 484,261 | ||||||
| ||||||||
8.75%, 03/15/2032 | 315,000 | 476,103 | ||||||
| ||||||||
Sprint Corp., | ||||||||
7.88%, 09/15/2023 | 414,000 | 482,310 | ||||||
| ||||||||
7.63%, 03/01/2026 | 389,000 | 478,987 | ||||||
| ||||||||
Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC/Sprint Spectrum Co. III LLC, Class A-1, 3.36%, 09/20/2021(b) | 5,875,313 | 5,953,249 | ||||||
| ||||||||
4.74%, 03/20/2025(b) | 10,966,000 | 11,933,804 | ||||||
| ||||||||
5.15%, 03/20/2028(b) | 10,994,000 | 12,963,685 | ||||||
| ||||||||
T-Mobile USA, Inc., | ||||||||
6.50%, 01/15/2026 | 1,352,000 | 1,417,065 | ||||||
| ||||||||
4.50%, 04/15/2050(b) | 2,695,000 | 3,298,626 | ||||||
| ||||||||
VEON Holdings B.V. (Netherlands), 4.00%, 04/09/2025(b) | 5,446,000 | 5,672,363 | ||||||
| ||||||||
Vodafone Group PLC (United Kingdom), 7.00%, 04/04/2079(c) | 285,000 | 343,125 | ||||||
| ||||||||
54,415,664 | ||||||||
| ||||||||
Total U.S. Dollar Denominated Bonds & Notes |
| 2,187,185,458 | ||||||
U.S. Treasury Securities–3.54% |
| |||||||
U.S. Treasury Bills–0.76% |
| |||||||
0.10% - 0.40%, 09/03/2020(i)(j) | 6,785,000 | 6,784,939 | ||||||
| ||||||||
0.10% - 0.12%, | 11,115,000 | 11,110,183 | ||||||
| ||||||||
17,895,122 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 Invesco Corporate Bond Fund
Principal Amount | Value | |||||||
| ||||||||
U.S. Treasury Bonds–1.09% |
| |||||||
1.13%, 08/15/2040 | $ | 1,038,800 | $ | 1,015,508 | ||||
| ||||||||
2.00%, 02/15/2050 | 188,400 | 212,083 | ||||||
| ||||||||
1.25%, 05/15/2050 | 26,211,500 | 24,726,864 | ||||||
| ||||||||
25,954,455 | ||||||||
| ||||||||
U.S. Treasury Notes–1.69% |
| |||||||
0.25%, 08/31/2025 | 5,578,800 | 5,573,352 | ||||||
| ||||||||
0.50%, 08/31/2027 | 6,575,500 | 6,579,096 | ||||||
| ||||||||
0.63%, 08/15/2030 | 28,143,900 | 27,913,032 | ||||||
| ||||||||
40,065,480 | ||||||||
| ||||||||
Total U.S. Treasury Securities |
| 83,915,057 | ||||||
| ||||||||
Shares | ||||||||
Preferred Stocks–1.46% |
| |||||||
Diversified Banks–0.85% |
| |||||||
Bank of America Corp., 7.25%, Series L, | 100 | 149,503 | ||||||
| ||||||||
Wells Fargo & Co., 7.50%, Class A, Series L, Conv. Pfd. | 14,554 | 20,091,797 | ||||||
| ||||||||
20,241,300 | ||||||||
| ||||||||
Investment Banking & Brokerage–0.50% |
| |||||||
Morgan Stanley, 7.13%, | 265,000 | 7,642,600 | ||||||
| ||||||||
Morgan Stanley, 6.88%, | 150,000 | 4,231,500 | ||||||
| ||||||||
11,874,100 | ||||||||
| ||||||||
Regional Banks–0.11% |
| |||||||
PNC Financial Services Group, Inc. (The), 6.13%, | 95,000 | 2,521,300 | ||||||
| ||||||||
Total Preferred Stocks |
| 34,636,700 | ||||||
| ||||||||
Principal Amount | ||||||||
Asset-Backed Securities–0.87% |
| |||||||
Jimmy Johns Funding LLC, Series 2017-1A, Class A2II, 4.85%, 07/30/2047(b) | $ | 4,243,847 | 4,345,551 | |||||
| ||||||||
Sonic Capital LLC, Series 2020-1A, Class A2I, 3.85%, 01/20/2050(b) | 10,916,145 | 11,676,500 | ||||||
| ||||||||
Wendy’s Funding LLC, Series 2018-1A, Class A2II, 3.88%, 03/15/2048(b) | 4,436,250 | 4,681,841 | ||||||
| ||||||||
Total Asset-Backed Securities |
| 20,703,892 | ||||||
| ||||||||
Non-U.S. Dollar Denominated Bonds & Notes–0.51%(l) |
| |||||||
Construction & Engineering–0.00% |
| |||||||
Sarens Finance Co. N.V. (Belgium), | EUR | 130,000 | 133,691 | |||||
| ||||||||
Diversified Banks–0.01% |
| |||||||
Erste Group Bank AG (Austria), | EUR | 200,000 | 256,210 | |||||
| ||||||||
Food Retail–0.01% |
| |||||||
Iceland Bondco PLC (United Kingdom), | GBP | 200,000 | 252,892 | |||||
| ||||||||
Integrated Telecommunication Services–0.22% |
| |||||||
AT&T, Inc., Series B, 2.88%(c)(d) | EUR | 4,400,000 | 5,156,380 | |||||
| ||||||||
Movies & Entertainment–0.15% |
| |||||||
Netflix, Inc., 3.88%, 11/15/2029(b) | EUR | 2,600,000 | 3,494,167 | |||||
|
Principal Amount | Value | |||||||
| ||||||||
Sovereign Debt–0.12% |
| |||||||
Ukraine Government International Bond (Ukraine), 4.38%, 01/27/2030(b) | EUR | 2,765,000 | $ | 2,858,666 | ||||
| ||||||||
Total Non-U.S. Dollar Denominated Bonds & Notes |
| 12,152,006 | ||||||
| ||||||||
Variable Rate Senior Loan Interests–0.46%(m) |
| |||||||
Diversified REITs–0.46% |
| |||||||
Asterix, Inc. (Canada), Term Loan, 3.90%, 03/31/2023 | $14,121,993 | 10,826,843 | ||||||
| ||||||||
Shares | ||||||||
Exchange-Traded Funds–0.25% |
| |||||||
Invesco Total Return Bond ETF | 100,000 | 5,803,000 | ||||||
| ||||||||
Principal Amount | ||||||||
Municipal Obligations–0.20% |
| |||||||
Florida Development Finance Corp. (Palm Bay Academy, Inc.), | ||||||||
Series 2017, Ref. RB, 9.00%, 05/15/2024(b) | $ | 735,000 | 730,965 | |||||
| ||||||||
Series 2017, Ref. RB, 0.00%, | 360,000 | 3,600 | ||||||
| ||||||||
Series 2017, Ref. RB, 0.00%, | 350,000 | 230,730 | ||||||
| ||||||||
Maryland (State of) Health & Higher Educational Facilities Authority (University of MD Medical System), | ||||||||
Series 2020 D, Ref. RB, 3.05%, 07/01/2040 | 1,495,000 | 1,562,604 | ||||||
| ||||||||
Series 2020 D, Ref. RB, 3.20%, 07/01/2050 | 2,035,000 | 2,163,449 | ||||||
| ||||||||
Total Municipal Obligations |
| 4,691,348 | ||||||
| ||||||||
Shares | ||||||||
Money Market Funds–0.02% |
| |||||||
Invesco Liquid Assets Portfolio, Institutional Class, 0.12% | 582,741 | 583,091 | ||||||
| ||||||||
Options Purchased–0.13% |
| $ | 3,160,148 | |||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.70% |
| 2,363,657,543 | ||||||
| ||||||||
Shares | ||||||||
Investments Purchased with Cash Collateral from Securities on Loan |
| |||||||
Money Market Funds–0.08% |
| |||||||
Invesco Private Government Fund, 0.03%(o)(q)(s) | 1,416,030 | 1,416,030 | ||||||
| ||||||||
Invesco Private Prime Fund, 0.14%(o)(q)(s) | 471,916 | 472,010 | ||||||
| ||||||||
Total Investments Purchased with Cash Collateral from Securities on Loan |
| 1,888,040 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES-99.78% |
| 2,365,545,583 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–0.22% |
| 5,191,606 | ||||||
| ||||||||
NET ASSETS-100.00% |
| $ | 2,370,737,189 | |||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20 Invesco Corporate Bond Fund
Investment Abbreviations: | ||
Conv. | - Convertible | |
ETF | - Exchange-Traded Fund | |
EUR | - Euro | |
GBP | - British Pound Sterling | |
LIBOR | - London Interbank Offered Rate | |
Pfd. | - Preferred | |
PIK | - Pay-in-Kind | |
RB | - Revenue Bonds | |
Ref. | - Refunding | |
USD | - U.S. Dollar |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2020 was $696,673,813, which represented 29.39% of the Fund’s Net Assets. |
(c) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
(d) | Perpetual bond with no specified maturity date. |
(e) | Defaulted security. Currently, the issuer is in default with respect to principal and/or interest payments. The aggregate value of these securities at August 31, 2020 was $409,575, which represented less than 1% of the Fund’s Net Assets. |
(f) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2020. |
(g) | All or a portion of this security was out on loan at August 31, 2020. |
(h) | All or a portion of this security is Pay-in-Kind. Pay-in-Kind securities pay interest income in the form of securities. |
(i) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1L. |
(j) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(k) | All or a portion of the value was designated as collateral to cover margin requirements for swap agreements. See Note 1N. |
(l) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
(m) | Variable rate senior loan interests are, at present, not readily marketable, not registered under the 1933 Act and may be subject to contractual and legal restrictions on sale. Variable rate senior loan interests in the Fund’s portfolio generally have variable rates which adjust to a base, such as the London Interbank Offered Rate (“LIBOR”), on set dates, typically every 30 days, but not greater than one year, and/or have interest rates that float at margin above a widely recognized base lending rate such as the Prime Rate of a designated U.S. bank. |
(n) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(o) | Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended August 31, 2020. |
Value February 29, 2020 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation (Depreciation) | Realized Gain (Loss) | Value August 31, 2020 | Dividend Income | |||||||||||||||||||||||||||||
Invesco Total Return Bond ETF | $ | - | $ | 5,830,000 | $ | - | $ | (27,000) | $ | - | $ | 5,803,000 | $ | 10,537 | |||||||||||||||||||||
Investments in Affiliated Money Market Funds: |
| ||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | 23,166,314 | 166,487,271 | (189,653,585) | - | - | - | 18,097 | ||||||||||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 14,693,899 | 128,506,975 | (142,606,731) | (1,175) | (9,877) | 583,091 | 28,038 | ||||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 26,475,788 | 190,271,166 | (216,746,954) | - | - | - | 19,221 | ||||||||||||||||||||||||||||
Investments Purchased with Cash Collateral from Securities on Loan: |
| ||||||||||||||||||||||||||||||||||
Invesco Private Government Fund | - | 19,697,519 | (18,281,489) | - | - | 1,416,030 | 319* | ||||||||||||||||||||||||||||
Invesco Private Prime Fund | - | 4,968,397 | (4,496,387) | - | - | 472,010 | 243* | ||||||||||||||||||||||||||||
Total | $ | 64,336,001 | $ | 515,761,328 | $ | (571,785,146 | ) | $ | (28,175 | ) | $ | (9,877 | ) | $ | 8,274,131 | $ | 76,455 |
* | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
(p) | Zero coupon bond issued at a discount. |
(q) | The rate shown is the 7-day SEC standardized yield as of August 31, 2020. |
(r) | The table below details options purchased. |
(s) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21 Invesco Corporate Bond Fund
Open Exchange-Traded Equity Options Purchased | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
Description | Type of Contract | Expiration Date | Number of Contracts | Exercise Price | Notional Value* | Value | ||||||||||||||||||
| ||||||||||||||||||||||||
Equity Risk | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
Amazon.com, Inc. | Call | 01/21/2022 | 2 | $ | 3,650.00 | $ | 730,000 | $ | 112,900 | |||||||||||||||
| ||||||||||||||||||||||||
Apple, Inc. | Call | 09/17/2021 | 384 | 135.00 | 5,184,000 | 736,320 | ||||||||||||||||||
| ||||||||||||||||||||||||
Microsoft Corp. | Call | 09/17/2021 | 35 | 245.00 | 857,500 | 86,013 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total Open Exchange-Traded Equity Options Purchased |
| 421 | $ | 935,233 | ||||||||||||||||||||
|
* | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Exchange-Traded Index Options Purchased | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
Description | Type of Contract | Expiration Date | Number of Contracts | Exercise Price | Notional Value* | Value | ||||||||||||||||||
| ||||||||||||||||||||||||
Equity Risk | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
S&P 500 Index | Call | 09/17/2021 | 77 | $ | 3,525.00 | $ | 27,142,500 | $ | 2,224,915 | |||||||||||||||
|
* | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Exchange-Traded Index Options Written | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
Description | Type of Contract | Expiration Date | Number of Contracts | Exercise Price | Premiums Received | Notional Value* | Value | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
Equity Risk | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||
S&P 500 Index | Call | 06/18/2021 | 10 | $3,700.00 | $(51,950) | $3,700,000 | $(164,700) | $(112,750) | ||||||||||||||||||||||
|
* | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Futures Contracts | ||||||||||||||||||
| ||||||||||||||||||
Long Futures Contracts | Number of Contracts | Expiration Month | Notional Value | Value | Unrealized Appreciation (Depreciation) | |||||||||||||
| ||||||||||||||||||
Interest Rate Risk | ||||||||||||||||||
| ||||||||||||||||||
U.S. Treasury 2 Year Notes | 3,626 | December-2020 | $ | 801,147,702 | $ | 304,461 | $ | 304,461 | ||||||||||
| ||||||||||||||||||
U.S. Treasury 5 Year Notes | 893 | December-2020 | 112,545,906 | 77,719 | 77,719 | |||||||||||||
| ||||||||||||||||||
U.S. Treasury Long Bonds | 197 | December-2020 | 34,616,594 | (228,209 | ) | (228,209 | ) | |||||||||||
| ||||||||||||||||||
Subtotal-Long Futures Contracts | 153,971 | 153,971 | ||||||||||||||||
| ||||||||||||||||||
Short Futures Contracts | ||||||||||||||||||
| ||||||||||||||||||
Interest Rate Risk | ||||||||||||||||||
| ||||||||||||||||||
U.S. Treasury 10 Year Notes | 230 | December-2020 | (32,027,500 | ) | (20,253 | ) | (20,253 | ) | ||||||||||
| ||||||||||||||||||
U.S. Treasury 10 Year Ultra Notes | 1,096 | December-2020 | (174,743,500 | ) | 168,926 | 168,926 | ||||||||||||
| ||||||||||||||||||
U.S. Treasury Ultra Bonds | 675 | December-2020 | (149,111,719 | ) | 1,085,197 | 1,085,197 | ||||||||||||
| ||||||||||||||||||
Subtotal-Short Futures Contracts | 1,233,870 | 1,233,870 | ||||||||||||||||
| ||||||||||||||||||
Total Futures Contracts | $ | 1,387,841 | $1,387,841 | |||||||||||||||
|
Open Forward Foreign Currency Contracts | ||||||||||||||
| ||||||||||||||
Settlement | Contract to | Unrealized Appreciation | ||||||||||||
Date | Counterparty | Deliver | Receive | (Depreciation) | ||||||||||
| ||||||||||||||
Currency Risk | ||||||||||||||
| ||||||||||||||
11/20/2020 | Canadian Imperial Bank of Commerce | GBP | 150,888 | USD | 197,126 | $ (4,659 | ) | |||||||
| ||||||||||||||
11/20/2020 | Goldman Sachs International | CAD | 19,863,000 | USD | 15,016,897 | (214,293 | ) | |||||||
| ||||||||||||||
11/20/2020 | Goldman Sachs International | EUR | 9,933,788 | USD | 11,737,356 | (137,236 | ) | |||||||
| ||||||||||||||
Total Forward Foreign Currency Contracts | $(356,188 | ) | ||||||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
22 Invesco Corporate Bond Fund
Open Centrally Cleared Credit Default Swap Agreements | ||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Reference Entity | Buy/Sell Protection | (Pay)/ Receive Fixed Rate | Payment Frequency | Maturity Date | Implied Credit Spread(a) | Notional Value | Upfront Payments Paid | Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Credit Risk | ||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
Markit CDX North America High Yield Index, Series 34, Version 8 | Buy | (5.00 | )% | Quarterly | 06/20/2025 | 3.645% | USD | 100,014,990 | $(4,120,843 | ) | $(5,717,957 | ) | $(1,597,113 | ) | ||||||||||||||||||||
|
(a) | Implied credit spreads represent the current level, as of August 31, 2020, at which protection could be bought or sold given the terms of the existing credit default swap agreement and serve as an indicator of the current status of the payment/performance risk of the credit default swap agreement. An implied credit spread that has widened or increased since entry into the initial agreement may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets generally. |
Investment Abbreviations:
CAD -Canadian Dollar |
EUR -Euro |
GBP -British Pound Sterling |
USD -U.S. Dollar |
Portfolio Composition
By security type, based on Net Assets
as of August 31, 2020
U.S. Dollar Denominated Bonds & Notes | 92.26% | |||
| ||||
U.S. Treasury Securities | 3.54 | |||
| ||||
Preferred Stocks | 1.46 | |||
| ||||
Security Types Each Less Than 1% of Portfolio | 2.29 | |||
| ||||
Money Market Funds Plus Other Assets Less Liabilities | 0.45 | |||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
23 Invesco Corporate Bond Fund
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 2,357,271,452 | ||
| ||||
Investments in affiliates, at value | 8,274,131 | |||
| ||||
Foreign currencies, at value (Cost $4,710,886) | 4,733,338 | |||
| ||||
Receivable for: | ||||
Investments sold | 37,017,936 | |||
| ||||
Fund shares sold | 3,297,611 | |||
| ||||
Dividends | 274,935 | |||
| ||||
Interest | 19,780,079 | |||
| ||||
Investments matured, at value | 9,165 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 225,762 | |||
| ||||
Other assets | 163,260 | |||
| ||||
Total assets | 2,431,047,669 | |||
| ||||
Liabilities: | ||||
Other investments: | ||||
Options written, at value (premiums received $51,950) | 164,700 | |||
| ||||
Variation margin payable - futures contracts | 2,165,420 | |||
| ||||
Variation margin payable — centrally cleared swap agreements | 138,871 | |||
| ||||
Unrealized depreciation on forward foreign currency contracts outstanding | 356,188 | |||
| ||||
Payable for: | ||||
Investments purchased | 40,365,847 | |||
| ||||
Dividends | 979,182 | |||
| ||||
Fund shares reacquired | 1,872,190 | |||
| ||||
Amount due custodian | 10,788,596 | |||
| ||||
Collateral upon return of securities loaned | 1,888,040 | |||
| ||||
Accrued fees to affiliates | 897,883 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 4,529 | |||
| ||||
Accrued other operating expenses | 445,750 | |||
| ||||
Trustee deferred compensation and retirement plans | 243,284 | |||
| ||||
Total liabilities | 60,310,480 | |||
| ||||
Net assets applicable to shares outstanding | $ | 2,370,737,189 | ||
|
Net assets consist of: | ||||
Shares of beneficial interest | $ | 2,186,920,115 | ||
| ||||
Distributable earnings | 183,817,074 | |||
| ||||
$ | 2,370,737,189 | |||
| ||||
Net Assets: | ||||
Class A | $ | 1,262,562,775 | ||
| ||||
Class C | $ | 67,646,940 | ||
| ||||
Class R | $ | 11,738,559 | ||
| ||||
Class Y | $ | 443,581,411 | ||
| ||||
Class R5 | $ | 8,375,014 | ||
| ||||
Class R6 | $ | 576,832,490 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 159,793,087 | |||
| ||||
Class C | 8,493,914 | |||
| ||||
Class R | 1,484,839 | |||
| ||||
Class Y | 56,020,801 | |||
| ||||
Class R5 | 1,058,537 | |||
| ||||
Class R6 | 72,833,978 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 7.90 | ||
| ||||
Maximum offering price per share | $ | 8.25 | ||
| ||||
Class C: | $ | 7.96 | ||
| ||||
Class R: | $ | 7.91 | ||
| ||||
Class Y: | $ | 7.92 | ||
| ||||
Class R5: | $ | 7.91 | ||
| ||||
Class R6: | $ | 7.92 | ||
|
* | At August 31, 2020, securities with an aggregate value of $1,836,477 were on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
24 Invesco Corporate Bond Fund
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Interest (net of foreign withholding taxes of $787) | $ | 40,606,551 | ||
| ||||
Dividends | 987,056 | |||
| ||||
Dividends from affiliates (includes securities lending income of $4,019) | 79,912 | |||
| ||||
Total investment income | 41,673,519 | |||
| ||||
Expenses: | ||||
Advisory fees | 3,396,874 | |||
| ||||
Administrative services fees | 149,739 | |||
| ||||
Custodian fees | 24,974 | |||
| ||||
Distribution fees: | ||||
Class A | 1,490,311 | |||
| ||||
Class C | 316,083 | |||
| ||||
Class R | 29,807 | |||
| ||||
Transfer agent fees — A, C, R and Y | 1,240,954 | |||
| ||||
Transfer agent fees — R5 | 4,008 | |||
| ||||
Transfer agent fees — R6 | 53,806 | |||
| ||||
Trustees’ and officers’ fees and benefits | 15,604 | |||
| ||||
Registration and filing fees | 75,910 | |||
| ||||
Reports to shareholders | 186,609 | |||
| ||||
Professional services fees | 32,712 | |||
| ||||
Other | 29,538 | |||
| ||||
Total expenses | 7,046,929 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (18,184 | ) | ||
| ||||
Net expenses | 7,028,745 | |||
| ||||
Net investment income | 34,644,774 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | 27,418,034 | |||
| ||||
Foreign currencies | 158,671 | |||
| ||||
Forward foreign currency contracts | (910,716 | ) | ||
| ||||
Futures contracts | 1,954,688 | |||
| ||||
Option contracts written | (1,509,060 | ) | ||
| ||||
Swap agreements | 467,911 | |||
| ||||
27,579,528 | ||||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 1,652,031 | |||
| ||||
Foreign currencies | 31,737 | |||
| ||||
Forward foreign currency contracts | (341,027 | ) | ||
| ||||
Futures contracts | (561,925 | ) | ||
| ||||
Option contracts written | 517,704 | |||
| ||||
Swap agreements | (3,685,050 | ) | ||
| ||||
(2,386,530 | ) | |||
| ||||
Net realized and unrealized gain | 25,192,998 | |||
| ||||
Net increase in net assets resulting from operations | $ | 59,837,772 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
25 Invesco Corporate Bond Fund
Statement of Changes in Net Assets
For the six months ended August 31, 2020 and the year ended February 29, 2020
(Unaudited)
August 31, 2020 | February 29, 2020 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 34,644,774 | $ | 61,627,455 | ||||
| ||||||||
Net realized gain | 27,579,528 | 41,272,185 | ||||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (2,386,530 | ) | 152,321,122 | |||||
| ||||||||
Net increase in net assets resulting from operations | 59,837,772 | 255,220,762 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (19,541,367 | ) | (39,207,717 | ) | ||||
| ||||||||
Class C | (846,838 | ) | (1,423,644 | ) | ||||
| ||||||||
Class R | (180,698 | ) | (314,228 | ) | ||||
| ||||||||
Class Y | (6,219,101 | ) | (7,404,773 | ) | ||||
| ||||||||
Class R5 | (143,037 | ) | (299,295 | ) | ||||
| ||||||||
Class R6 | (9,906,294 | ) | (18,464,031 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (36,837,335 | ) | (67,113,688 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | 25,034,491 | 142,684,257 | ||||||
| ||||||||
Class C | 253,434 | 24,316,590 | ||||||
| ||||||||
Class R | (758,756 | ) | 4,577,992 | |||||
| ||||||||
Class Y | 96,874,599 | 237,103,282 | ||||||
| ||||||||
Class R5 | (227,400 | ) | 902,229 | |||||
| ||||||||
Class R6 | 12,233,035 | 122,588,233 | ||||||
| ||||||||
Net increase in net assets resulting from share transactions | 133,409,403 | 532,172,583 | ||||||
| ||||||||
Net increase in net assets | 156,409,840 | 720,279,657 | ||||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 2,214,327,349 | 1,494,047,692 | ||||||
| ||||||||
End of period | $ | 2,370,737,189 | $ | 2,214,327,349 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
26 Invesco Corporate Bond Fund
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period | Net investment income(a) | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends from net investment income | Distributions from net realized gains | Total distributions | Net asset value, end of period | Total return (b) | Net assets, end of period (000’s omitted) | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | Ratio of net investment income to average net assets | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $ | 7.80 | $ | 0.12 | $ | 0.10 | $ | 0.22 | $ | (0.12 | ) | $ | – | $ | (0.12 | ) | $ | 7.90 | 2.96 | % | $ | 1,262,563 | 0.76 | %(d) | 0.76 | %(d) | 3.06 | %(d) | 114 | % | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 7.02 | 0.25 | 0.80 | 1.05 | (0.27 | ) | – | (0.27 | ) | 7.80 | 15.20 | 1,224,248 | 0.80 | 0.80 | 3.30 | 192 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 7.20 | 0.28 | (0.17 | ) | 0.11 | (0.29 | ) | (0.00 | ) | (0.29 | ) | 7.02 | 1.65 | 968,160 | 0.83 | 0.83 | 4.00 | 145 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 7.31 | 0.26 | (0.06 | ) | 0.20 | (0.27 | ) | (0.04 | ) | (0.31 | ) | 7.20 | 2.68 | 1,001,173 | 0.85 | 0.85 | 3.58 | 180 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 6.89 | 0.26 | 0.42 | 0.68 | (0.26 | ) | – | (0.26 | ) | 7.31 | 9.97 | 948,305 | 0.90 | 0.90 | 3.60 | 212 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 7.40 | 0.27 | (0.52 | ) | (0.25 | ) | (0.26 | ) | – | (0.26 | ) | 6.89 | (3.37 | ) | 873,526 | 0.90 | 0.90 | 3.79 | 202 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 7.87 | 0.09 | 0.10 | 0.19 | (0.10 | ) | – | (0.10 | ) | 7.96 | 2.45 | (e) | 67,647 | 1.47 | (d)(e) | 1.47 | (d)(e) | 2.35 | (d)(e) | 114 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 7.08 | 0.19 | 0.82 | 1.01 | (0.22 | ) | – | (0.22 | ) | 7.87 | 14.43 | 66,662 | 1.55 | 1.55 | 2.55 | 192 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 7.26 | 0.23 | (0.17 | ) | 0.06 | (0.24 | ) | (0.00 | ) | (0.24 | ) | 7.08 | 0.91 | (e) | 37,280 | 1.53 | (e) | 1.53 | (e) | 3.30 | (e) | 145 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 7.36 | 0.21 | (0.06 | ) | 0.15 | (0.21 | ) | (0.04 | ) | (0.25 | ) | 7.26 | 2.07 | (e) | 82,939 | 1.58 | (e) | 1.58 | (e) | 2.85 | (e) | 180 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 6.92 | 0.21 | 0.42 | 0.63 | (0.19 | ) | – | (0.19 | ) | 7.36 | 9.17 | 85,127 | 1.65 | 1.65 | 2.85 | 212 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 7.42 | 0.22 | (0.53 | ) | (0.31 | ) | (0.19 | ) | – | (0.19 | ) | 6.92 | (4.18 | )(e) | 68,853 | 1.64 | (e) | 1.64 | (e) | 3.05 | (e) | 202 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 7.81 | 0.11 | 0.11 | 0.22 | (0.12 | ) | – | (0.12 | ) | 7.91 | 2.83 | 11,739 | 1.01 | (d) | 1.01 | (d) | 2.81 | (d) | 114 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 7.02 | 0.23 | 0.81 | 1.04 | (0.25 | ) | – | (0.25 | ) | 7.81 | 15.06 | 12,435 | 1.05 | 1.05 | 3.05 | 192 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 7.21 | 0.26 | (0.17 | ) | 0.09 | (0.28 | ) | (0.00 | ) | (0.28 | ) | 7.02 | 1.30 | 6,889 | 1.08 | 1.08 | 3.75 | 145 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 7.31 | 0.25 | (0.06 | ) | 0.19 | (0.25 | ) | (0.04 | ) | (0.29 | ) | 7.21 | 2.57 | 7,196 | 1.10 | 1.10 | 3.33 | 180 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 6.89 | 0.24 | 0.42 | 0.66 | (0.24 | ) | – | (0.24 | ) | 7.31 | 9.70 | 6,742 | 1.15 | 1.15 | 3.35 | 212 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 7.40 | 0.26 | (0.52 | ) | (0.26 | ) | (0.25 | ) | – | (0.25 | ) | 6.89 | (3.62 | ) | 6,847 | 1.15 | 1.15 | 3.54 | 202 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 7.82 | 0.13 | 0.10 | 0.23 | (0.13 | ) | – | (0.13 | ) | 7.92 | 3.08 | 443,581 | 0.51 | (d) | 0.51 | (d) | 3.31 | (d) | 114 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 7.03 | 0.27 | 0.81 | 1.08 | (0.29 | ) | – | (0.29 | ) | 7.82 | 15.62 | 343,580 | 0.55 | 0.55 | 3.55 | 192 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 7.22 | 0.30 | (0.18 | ) | 0.12 | (0.31 | ) | (0.00 | ) | (0.31 | ) | 7.03 | 1.76 | 86,657 | 0.58 | 0.58 | 4.25 | 145 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 7.32 | 0.28 | (0.05 | ) | 0.23 | (0.29 | ) | (0.04 | ) | (0.33 | ) | 7.22 | 3.08 | 87,895 | 0.60 | 0.60 | 3.83 | 180 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 6.90 | 0.28 | 0.42 | 0.70 | (0.28 | ) | – | (0.28 | ) | 7.32 | 10.23 | 235,464 | 0.65 | 0.65 | 3.85 | 212 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 7.41 | 0.29 | (0.52 | ) | (0.23 | ) | (0.28 | ) | – | (0.28 | ) | 6.90 | (3.11 | ) | 26,500 | 0.65 | 0.65 | 4.04 | 202 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 7.81 | 0.13 | 0.11 | 0.24 | (0.14 | ) | – | (0.14 | ) | 7.91 | 3.11 | 8,375 | 0.46 | (d) | 0.46 | (d) | 3.36 | (d) | 114 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 7.03 | 0.27 | 0.80 | 1.07 | (0.29 | ) | – | (0.29 | ) | 7.81 | 15.55 | 8,537 | 0.49 | 0.49 | 3.61 | 192 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 7.21 | 0.30 | (0.17 | ) | 0.13 | (0.31 | ) | (0.00 | ) | (0.31 | ) | 7.03 | 2.00 | 6,841 | 0.49 | 0.49 | 4.34 | 145 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 7.31 | 0.29 | (0.06 | ) | 0.23 | (0.29 | ) | (0.04 | ) | (0.33 | ) | 7.21 | 3.16 | 3,829 | 0.53 | 0.53 | 3.90 | 180 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 6.89 | 0.29 | 0.42 | 0.71 | (0.29 | ) | – | (0.29 | ) | 7.31 | 10.34 | 5,222 | 0.56 | 0.56 | 3.94 | 212 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 7.40 | 0.29 | (0.51 | ) | (0.22 | ) | (0.29 | ) | – | (0.29 | ) | 6.89 | (2.98 | ) | 4,547 | 0.54 | 0.54 | 4.15 | 202 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 7.82 | 0.13 | 0.11 | 0.24 | (0.14 | ) | – | (0.14 | ) | 7.92 | 3.15 | 576,832 | 0.38 | (d) | 0.38 | (d) | 3.44 | (d) | 114 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 7.04 | 0.28 | 0.80 | 1.08 | (0.30 | ) | – | (0.30 | ) | 7.82 | 15.62 | 558,866 | 0.41 | 0.41 | 3.69 | 192 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 7.22 | 0.31 | (0.17 | ) | 0.14 | (0.32 | ) | (0.00 | ) | (0.32 | ) | 7.04 | 2.01 | 388,221 | 0.43 | 0.43 | 4.40 | 145 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 7.32 | 0.30 | (0.06 | ) | 0.24 | (0.30 | ) | (0.04 | ) | (0.34 | ) | 7.22 | 3.25 | 413,844 | 0.44 | 0.44 | 3.99 | 180 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 6.90 | 0.29 | 0.42 | 0.71 | (0.29 | ) | – | (0.29 | ) | 7.32 | 10.43 | 29,232 | 0.47 | 0.47 | 4.03 | 212 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 7.40 | 0.30 | (0.50 | ) | (0.20 | ) | (0.30 | ) | – | (0.30 | ) | 6.90 | (2.80 | ) | 22,567 | 0.46 | 0.46 | 4.23 | 202 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $1,186,039, $65,554, $11,838, $354,838, $7,955 and $538,942 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.96% for the six months ended August 31, 2020 and 0.95%, 0.98% and 0.99% for the years ended February 28, 2019, February 28, 2018 and February 29, 2016, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
27 Invesco Corporate Bond Fund
August 31, 2020
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Corporate Bond Fund (the “Fund”), is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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 primary investment objective is to seek to provide current income with preservation of capital. Capital appreciation is a secondary objective that is sought only when consistent with the Fund’s primary investment objective.
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. 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. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares. Effective November 30, 2020, the automatic conversion pursuant to the Conversion Feature will change from ten years to eight years. The first conversion of Class C shares to Class A shares would occur at the end of December 2020 for all Class C shares that were held for more than eight years as of November 30, 2020.
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. |
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.
Variable rate senior loan interests are fair valued using quotes provided by an independent pricing service. Quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
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.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
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, 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
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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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and 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 realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions – Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications – Under the Fund’s organizational documents, each Trustee, officer, employee or other agent of the Fund 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. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar |
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amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
L. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
M. | Call Options Purchased and Written – The Fund may write covered call options and/or buy call options. A covered call option gives the purchaser of such option the right to buy, and the writer the obligation to sell, the underlying security or foreign currency at the stated exercise price during the option period. Options written by the Fund normally will have expiration dates between three and nine months from the date written. The exercise price of a call option may be below, equal to, or above the current market value of the underlying security at the time the option is written. |
When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded as an asset and an equivalent liability in the Statement of Assets and Liabilities. The amount of the liability is subsequently “marked-to-market” to reflect the current market value of the option written. If a written covered call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written covered call option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. Realized and unrealized gains and losses on call options written are included in the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written. A risk in writing a covered call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
When the Fund buys a call option, an amount equal to the premium paid by the Fund is recorded as an investment on the Statement of Assets and Liabilities. The amount of the investment is subsequently “marked-to-market” to reflect the current value of the option purchased. Realized and unrealized gains and losses on call options purchased are included in the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities. A risk in buying an option is that the Fund pays a premium whether or not the option is exercised. In addition, there can be no assurance that a liquid secondary market will exist for any option purchased.
N. | Swap Agreements – The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. Such transactions are agreements between Counterparties. A swap agreement may be negotiated bilaterally and traded over-the-counter (“OTC”) between two parties (“uncleared/ OTC”) or, in some instances, must be transacted through a future commission merchant (“FCM”) and cleared through a clearinghouse that serves as a central Counterparty (“centrally cleared swap”). These agreements may contain among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/ or provide limits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.
In a centrally cleared swap, the Fund’s ultimate Counterparty is a central clearinghouse. The Fund initially will enter into centrally cleared swaps through an executing broker. When a fund enters into a centrally cleared swap, it must deliver to the central Counterparty (via the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the central Counterparty, but an FCM may require additional initial margin above the amount required by the central Counterparty. Initial margin deposits required upon entering into centrally cleared swaps are satisfied by cash or securities as collateral at the FCM.
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Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the Statement of Assets and Liabilities. During the term of a cleared swap agreement, a “variation margin” amount may be required to be paid by the Fund or may be received by the Fund, based on the daily change in price of the underlying reference instrument subject to the swap agreement and is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities until the centrally cleared swap is terminated at which time a realized gain or loss is recorded.
A CDS is an agreement between Counterparties to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the “par value”, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer “par value” or the full notional value of the referenced obligation, and the Fund would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its Counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund’s maximum risk of loss from Counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the Counterparty and by the designation of collateral by the Counterparty to cover the Fund’s exposure to the Counterparty.
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets.
An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified notional amount.
Changes in the value of centrally cleared and OTC swap agreements are recognized as unrealized gains (losses) in the Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Statement of Operations. The Fund segregates cash or liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Cash held as collateral is recorded as deposits with brokers on the Statement of Assets and Liabilities. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. A short position in a security poses more risk than holding the same security long. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited.
Notional amounts of each individual credit default swap agreement outstanding as of August 31, 2020 for which the Fund is the seller of protection are disclosed in the open swap agreements table. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into by the Fund for the same referenced entity or entities.
O. | LIBOR Risk – The Fund may invest in instruments that use or may use a floating reference rate based on LIBOR. On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021. There remains uncertainty regarding the future utilization of LIBOR and the nature of any replacement rate. As a result, any impact of a transition away from LIBOR on the Fund or the instruments in which the Fund invests cannot yet be determined. Industry initiatives are underway to identify alternative reference rates; however, there is no assurance that the composition or characteristics of any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. As a result, the transition process might lead to increased volatility and reduced liquidity in markets that currently rely on LIBOR to determine interest rates; a reduction in the value of some LIBOR-based investments; and/or costs incurred in connection with closing out positions and entering into new agreements. These effects could occur prior to the end of 2021 as the utility of LIBOR as a reference rate could deteriorate during the transition period. |
P. | Other Risks – Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
The current low interest rate environment was created in part by the Federal Reserve Board (FRB) and certain foreign central banks keeping the federal funds and equivalent foreign rates near historical lows. Increases in the federal funds and equivalent foreign rates may expose fixed income markets to heightened volatility and reduced liquidity for certain fixed income investments, particularly those with longer maturities. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price may decline. Changes in central bank policies could also result in higher than normal shareholder redemptions, which could potentially increase portfolio turnover and the Fund’s transaction costs.
Q. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
R. | Collateral–To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
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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 | |||
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First $500 million | 0.420% | |||
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Next $750 million | 0.350% | |||
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Over $1.25 billion | 0.220% | |||
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For the six months ended August 31, 2020, the effective advisory fee rate incurred by the Fund was 0.31%.
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. (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).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.50%, 2.25%, 1.75%, 1.25%, 1.25% and 1.25%, 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 the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waivers without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limit.
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 (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended August 31, 2020, the Adviser waived advisory fees of $16,579.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A shares, Class C shares and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets and up to 1.00% of Class C average daily net assets and 0.50% of Class R average daily net assets. The fees are accrued daily and paid monthly.
With respect to Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
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 August 31, 2020, IDI advised the Fund that IDI retained $79,846 in front-end sales commissions from the sale of Class A shares and $13,105 and $3,572 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
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 August 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.
32 Invesco Corporate Bond Fund
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| ||||||||||||||||
Investments in Securities | ||||||||||||||||
| ||||||||||||||||
U.S. Dollar Denominated Bonds & Notes | $ | – | $ | 2,187,185,458 | $ | – | $ | 2,187,185,458 | ||||||||
| ||||||||||||||||
U.S. Treasury Securities | – | 83,915,057 | – | 83,915,057 | ||||||||||||
| ||||||||||||||||
Preferred Stocks | 34,636,700 | – | – | 34,636,700 | ||||||||||||
| ||||||||||||||||
Asset-Backed Securities | – | 20,703,892 | – | 20,703,892 | ||||||||||||
| ||||||||||||||||
Non-U.S. Dollar Denominated Bonds & Notes | – | 12,152,006 | – | 12,152,006 | ||||||||||||
| ||||||||||||||||
Variable Rate Senior Loan Interests | – | – | 10,826,843 | 10,826,843 | ||||||||||||
| ||||||||||||||||
Exchange-Traded Funds | 5,803,000 | – | – | 5,803,000 | ||||||||||||
| ||||||||||||||||
Municipal Obligations | – | 4,457,018 | 234,330 | 4,691,348 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 583,091 | 1,888,040 | – | 2,471,131 | ||||||||||||
| ||||||||||||||||
Options Purchased | 3,160,148 | – | – | 3,160,148 | ||||||||||||
| ||||||||||||||||
Total Investments in Securities | 44,182,939 | 2,310,301,471 | 11,061,173 | 2,365,545,583 | ||||||||||||
| ||||||||||||||||
Other Investments - Assets* | ||||||||||||||||
| ||||||||||||||||
Investments Matured | – | 9,165 | – | 9,165 | ||||||||||||
| ||||||||||||||||
Futures Contracts | 1,636,303 | – | – | 1,636,303 | ||||||||||||
| ||||||||||||||||
1,636,303 | 9,165 | – | 1,645,468 | |||||||||||||
| ||||||||||||||||
Other Investments - Liabilities* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | (248,462 | ) | – | – | (248,462 | ) | ||||||||||
| ||||||||||||||||
Forward Foreign Currency Contracts | – | (356,188 | ) | – | (356,188 | ) | ||||||||||
| ||||||||||||||||
Options Written | (164,700 | ) | – | – | (164,700 | ) | ||||||||||
| ||||||||||||||||
Swap Agreements | – | (1,597,113 | ) | – | (1,597,113 | ) | ||||||||||
| ||||||||||||||||
(413,162 | ) | (1,953,301 | ) | – | (2,366,463 | ) | ||||||||||
| ||||||||||||||||
Total Other Investments | 1,223,141 | (1,944,136 | ) | – | (720,995 | ) | ||||||||||
| ||||||||||||||||
Total Investments | $ | 45,406,080 | $ | 2,308,357,335 | $ | 11,061,173 | $ | 2,364,824,588 | ||||||||
|
* | Forward foreign currency contracts, futures contracts and swap agreements are valued at unrealized appreciation (depreciation). Investments matured and options written are shown at value. |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of August 31, 2020:
Value | ||||||||||||||||||||
Derivative Assets | Credit Risk | Currency Risk | Equity Risk | Interest Rate Risk | Total | |||||||||||||||
| ||||||||||||||||||||
Unrealized appreciation on futures contracts – Exchange-Traded(a) | $ | - | $ | - | $ | - | $ | 1,636,303 | $ | 1,636,303 | ||||||||||
| ||||||||||||||||||||
Options purchased, at value – Exchange-Traded | - | - | 3,160,148 | - | 3,160,148 | |||||||||||||||
| ||||||||||||||||||||
Total Derivative Assets | - | - | 3,160,148 | 1,636,303 | 4,796,451 | |||||||||||||||
| ||||||||||||||||||||
Derivatives not subject to master netting agreements | - | - | (3,160,148 | ) | (1,636,303 | ) | (4,796,451 | ) | ||||||||||||
| ||||||||||||||||||||
Total Derivative Assets subject to master netting agreements | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
|
Value | ||||||||||||||||||||
Derivative Liabilities | Credit Risk | Currency Risk | Equity Risk | Interest Rate Risk | Total | |||||||||||||||
| ||||||||||||||||||||
Unrealized depreciation on futures contracts – Exchange-Traded(a) | $ | - | $ | - | $ | - | $ | (248,462 | ) | $ | (248,462 | ) | ||||||||
| ||||||||||||||||||||
Unrealized depreciation on swap agreements – Centrally Cleared(a) | (1,597,113 | ) | - | - | - | (1,597,113 | ) | |||||||||||||
| ||||||||||||||||||||
Unrealized depreciation on forward foreign currency contracts outstanding | - | (356,188 | ) | - | - | (356,188 | ) | |||||||||||||
| ||||||||||||||||||||
Options written, at value – Exchange-Traded | - | - | (164,700 | ) | - | (164,700 | ) | |||||||||||||
| ||||||||||||||||||||
Total Derivative Liabilities | (1,597,113 | ) | (356,188 | ) | (164,700 | ) | (248,462 | ) | (2,366,463 | ) | ||||||||||
| ||||||||||||||||||||
Derivatives not subject to master netting agreements | 1,597,113 | - | 164,700 | 248,462 | 2,010,275 | |||||||||||||||
| ||||||||||||||||||||
Total Derivative Liabilities subject to master netting agreements | $ | - | $(356,188 | ) | $ | - | $ | - | $ | (356,188 | ) | |||||||||
|
(a) | The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
33 Invesco Corporate Bond Fund
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of August 31, 2020.
Financial Derivative Assets | Financial Derivative Liabilities | Collateral (Received)/Pledged | ||||||||||||||||
Counterparty | Forward Foreign Currency Contracts | Forward Foreign Currency Contracts | Net Value of Derivatives | Non-Cash | Cash | Net Amount | ||||||||||||
| ||||||||||||||||||
Canadian Imperial Bank of Commerce | $– | $ (4,659 | ) | $ (4,659 | ) | $– | $– | $ (4,659 | ) | |||||||||
| ||||||||||||||||||
Goldman Sachs International | – | (351,529 | ) | (351,529 | ) | – | – | (351,529 | ) | |||||||||
| ||||||||||||||||||
Total | $– | $(356,188 | ) | $(356,188 | ) | $– | $– | $(356,188 | ) | |||||||||
|
Effect of Derivative Investments for the six months ended August 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations | ||||||||||||||||||||
Credit Risk | Currency Risk | Equity Risk | Interest Rate Risk | Total | ||||||||||||||||
| ||||||||||||||||||||
Realized Gain (Loss): | ||||||||||||||||||||
Forward foreign currency contracts | $ | - | $ | (910,716 | ) | $ | - | $ | - | $ | (910,716 | ) | ||||||||
| ||||||||||||||||||||
Futures contracts | - | - | - | 1,954,688 | 1,954,688 | |||||||||||||||
| ||||||||||||||||||||
Options purchased(a) | - | - | 4,178,541 | - | 4,178,541 | |||||||||||||||
| ||||||||||||||||||||
Options written | (1,727,864 | ) | - | 218,804 | - | (1,509,060 | ) | |||||||||||||
| ||||||||||||||||||||
Swap agreements | 467,911 | - | - | - | 467,911 | |||||||||||||||
| ||||||||||||||||||||
Change in Net Unrealized Appreciation (Depreciation): | ||||||||||||||||||||
Forward foreign currency contracts | - | (341,027 | ) | - | - | (341,027 | ) | |||||||||||||
| ||||||||||||||||||||
Futures contracts | - | - | - | (561,925 | ) | (561,925 | ) | |||||||||||||
| ||||||||||||||||||||
Options purchased(a) | - | - | 819,436 | - | 819,436 | |||||||||||||||
| ||||||||||||||||||||
Options written | 630,454 | - | (112,750 | ) | - | 517,704 | ||||||||||||||
| ||||||||||||||||||||
Swap agreements | (3,685,050 | ) | - | - | - | (3,685,050 | ) | |||||||||||||
| ||||||||||||||||||||
Total | $ | (4,314,549 | ) | $ | (1,251,743 | ) | $ | 5,104,031 | $ | 1,392,763 | $ | 930,502 | ||||||||
|
(a) | Options purchased are included in the net realized gain (loss) from investment securities and the change in net unrealized appreciation (depreciation) of investment securities. |
The table below summarizes the average notional value of derivatives held during the period.
Forward Foreign Currency Contracts | Futures Contracts | Equity Options Purchased | Index Options Purchased | Equity Options Written | Index Options Written | Swap Agreements | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Average notional value | $26,056,351 | $950,275,233 | $2,889,917 | $25,775,000 | $179,775 | $13,830,000 | $100,014,990 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Average Contracts | – | – | 145 | 81 | 12 | 42 | – | |||||||||||||||||||||
|
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,605.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, 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
34 Invesco Corporate Bond Fund
by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of February 29, 2020.
NOTE 9—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 August 31, 2020 was $1,361,547,000 and $1,135,443,469, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $1,265,698,593 and $1,308,228,792, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $ | 157,472,679 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (25,482,033 | ) | ||
| ||||
Net unrealized appreciation of investments | $ | 131,990,646 | ||
|
Cost of investments for tax purposes is $ 2,232,833,942.
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2020(a) | Year ended February 29, 2020 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 20,776,614 | $ | 158,444,974 | 35,473,678 | $ | 265,742,466 | ||||||||||
| ||||||||||||||||
Class C | 1,784,793 | 13,583,140 | 4,995,520 | 37,734,235 | ||||||||||||
| ||||||||||||||||
Class R | 478,400 | 3,622,959 | 846,111 | 6,311,286 | ||||||||||||
| ||||||||||||||||
Class Y | 38,015,980 | 288,633,271 | 36,561,873 | 274,343,654 | ||||||||||||
| ||||||||||||||||
Class R5 | 264,765 | 1,990,481 | 240,168 | 1,800,871 | ||||||||||||
| ||||||||||||||||
Class R6 | 10,464,097 | 79,356,810 | 24,644,498 | 184,754,126 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 2,210,522 | 16,777,906 | 4,531,180 | 33,863,830 | ||||||||||||
| ||||||||||||||||
Class C | 84,828 | 648,717 | 144,917 | 1,094,634 | ||||||||||||
| ||||||||||||||||
Class R | 23,296 | 176,512 | 41,726 | 312,904 | ||||||||||||
| ||||||||||||||||
Class Y | 560,744 | 4,297,192 | 704,707 | 5,325,759 | ||||||||||||
| ||||||||||||||||
Class R5 | 18,776 | 142,558 | 39,872 | 298,388 | ||||||||||||
| ||||||||||||||||
Class R6 | 1,192,003 | 9,068,830 | 2,262,580 | 16,973,096 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 453,510 | 3,549,584 | 430,893 | 3,202,034 | ||||||||||||
| ||||||||||||||||
Class C | (449,650 | ) | (3,549,584 | ) | (427,339 | ) | (3,202,034 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (20,557,568 | ) | (153,737,973 | ) | (21,473,851 | ) | (160,124,073 | ) | ||||||||
| ||||||||||||||||
Class C | (1,401,089 | ) | (10,428,839 | ) | (1,503,420 | ) | (11,310,245 | ) | ||||||||
| ||||||||||||||||
Class R | (609,703 | ) | (4,558,227 | ) | (276,033 | ) | (2,046,198 | ) | ||||||||
| ||||||||||||||||
Class Y | (26,490,733 | ) | (196,055,864 | ) | (5,650,686 | ) | (42,566,131 | ) | ||||||||
| ||||||||||||||||
Class R5 | (317,650 | ) | (2,360,439 | ) | (160,791 | ) | (1,197,030 | ) | ||||||||
| ||||||||||||||||
Class R6 | (10,280,249 | ) | (76,192,605 | ) | (10,627,583 | ) | (79,138,989 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | 16,221,686 | $ | 133,409,403 | 70,798,020 | $ | 532,172,583 | ||||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 62% 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. |
35 Invesco Corporate Bond 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.
36 Invesco Corporate Bond Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Beginning Account Value (03/01/20) | ACTUAL | HYPOTHETICAL (5% annual return before expenses) | Annualized Expense Ratio | |||||||||
Ending Account Value (08/31/20)1 | Expenses Paid During Period2 | Ending Account Value (08/31/20) | Expenses Paid During Period2 | |||||||||
Class A | $1,000.00 | $1,029.60 | $3.89 | $1,021.37 | $3.87 | 0.76% | ||||||
Class C | 1,000.00 | 1,024.50 | 7.50 | 1,017.80 | 7.48 | 1.47 | ||||||
Class R | 1,000.00 | 1,028.30 | 5.16 | 1,020.11 | 5.14 | 1.01 | ||||||
Class Y | 1,000.00 | 1,030.80 | 2.61 | 1,022.63 | 2.60 | 0.51 | ||||||
Class R5 | 1,000.00 | 1,031.10 | 2.35 | 1,022.89 | 2.35 | 0.46 | ||||||
Class R6 | 1,000.00 | 1,031.50 | 1.95 | 1,023.29 | 1.94 | 0.38 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
37 Invesco Corporate Bond Fund
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Corporate Bond Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate
sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment
analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2019 to the performance of funds in the Broadridge performance universe and against the Bloomberg Barclays U.S. Credit Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one and five year periods and the second quintile for the three year period (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was above the performance of the Index for the one and five year periods and reasonably comparable to the performance of the Index for the three year period. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the
38 Invesco Corporate Bond Fund
Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board also considered the fees charged by Invesco Advisers and the Affiliated Sub-Advisers to other similarly managed client accounts. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain Funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The
Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. Invesco Advisers noted that the Fund does not execute brokerage transactions through “soft dollar” arrangements to any significant degree.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers pursuant to procedures approved by the Board. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the costs to the Fund of such investments. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
39 Invesco Corporate Bond Fund
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Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
With eDelivery, you can elect to have any or all of the following materials delivered straight to your inbox to download, save and print from your own computer:
∎ | Fund reports and prospectuses |
∎ | Quarterly statements |
∎ | Daily confirmations |
∎ | Tax forms |
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-PORT filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246, or at invesco.com/ proxy guidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. | ||||||
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. | ||||||
SEC file numbers: 811-05686 and 033-39519 | Invesco Distributors, Inc. | VK-CBD-SAR-1 |
| ||||
Semiannual Report to Shareholders
| August 31, 2020 | |||
| ||||
Invesco Global Real Estate Fund | ||||
Nasdaq: | ||||
A: AGREX ∎ C: CGREX ∎ R: RGREX ∎ Y: ARGYX ∎ R5: IGREX ∎ R6: FGREX |
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.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco | ||
provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee. |
On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
| Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. | |
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us. |
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 | Invesco Global Real Estate Fund |
Performance summary
|
| |||
Fund vs. Indexes |
| |||
Cumulative total returns, 2/29/20 to 8/31/20, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. |
| |||
Class A Shares | -9.80 | % | ||
Class C Shares | -10.21 | |||
Class R Shares | -9.94 | |||
Class Y Shares | -9.75 | |||
Class R5 Shares | -9.73 | |||
Class R6 Shares | -9.68 | |||
MSCI World Indexq (Broad Market Index) | 15.77 | |||
Custom Invesco Global Real Estate Index∎ (Style-Specific Index) | -10.39 | |||
Lipper Global Real Estate Funds Classification Average¨ (Peer Group) | -6.44 | |||
Source(s): qRIMES Technologies Corp.; ∎Invesco, RIMES Technologies Corp.; ¨Lipper Inc. |
| |||
The MSCI World Index (Net) is an unmanaged index considered representative of stocks of developed countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors. The Custom Invesco Global Real Estate Index is composed of the FTSE EPRA/NAREIT Developed Index (gross) from fund inception through February 17, 2005; the FTSE EPRA/NAREIT Developed Index (net) from February 18, 2005, through June 30, 2014; and the FTSE/EPRA NAREIT Global Index (net) thereafter. The FTSE EPRA/NAREIT Developed Index is considered representative of global real estate companies and REITs. The FTSE EPRA/NAREIT Global Index is designed to track the performance of listed real estate companies and REITS in developed and emerging markets. The net version of indexes is computed using the net return, which withholds taxes for non-resident investors. The Lipper Global Real Estate Funds Classification Average represents an average of all funds in the Lipper Global Real Estate Funds classification. The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
|
For more information about your Fund |
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance. |
Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends. |
3 | Invesco Global Real Estate Fund |
Average Annual Total Returns |
| |||
As of 8/31/20, including maximum applicable sales charges |
| |||
Class A Shares |
| |||
Inception (4/29/05) | 4.17 | % | ||
10 Years | 4.92 | |||
5 Years | 1.73 | |||
1 Year | -16.78 | |||
Class C Shares |
| |||
Inception (4/29/05) | 4.06 | % | ||
10 Years | 4.70 | |||
5 Years | 2.09 | |||
1 Year | -13.45 | |||
Class R Shares |
| |||
Inception (4/29/05) | 4.29 | % | ||
10 Years | 5.22 | |||
5 Years | 2.61 | |||
1 Year | -12.18 | |||
Class Y Shares |
| |||
Inception (10/3/08) | 5.16 | % | ||
10 Years | 5.75 | |||
5 Years | 3.12 | |||
1 Year | -11.75 | |||
Class R5 Shares |
| |||
Inception (4/29/05) | 5.04 | % | ||
10 Years | 5.99 | |||
5 Years | 3.27 | |||
1 Year | -11.70 | |||
Class R6 Shares |
| |||
10 Years | 5.93 | % | ||
5 Years | 3.35 | |||
1 Year | -11.61 |
Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
4 | Invesco Global Real Estate Fund |
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. 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 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. |
5 | Invesco Global Real Estate Fund |
August 31, 2020
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests-98.97% |
| |||||||
Australia-3.04% | ||||||||
Charter Hall Long Wale REIT | 939,315 | $ | 3,405,544 | |||||
Dexus | 997,077 | 6,427,849 | ||||||
Scentre Group | 5,047,285 | 8,225,443 | ||||||
18,058,836 | ||||||||
Belgium-1.09% | ||||||||
Cofinimmo S.A. | 26,325 | 3,857,778 | ||||||
Montea C.V.A | 22,026 | 2,612,062 | ||||||
6,469,840 | ||||||||
Brazil-0.51% | ||||||||
BR Properties S.A. | 325,907 | 544,913 | ||||||
Cyrela Brazil Realty S.A. Empreendimentos e Participacoes | 548,204 | 2,412,558 | ||||||
MRV Engenharia e Participacoes S.A. | 24,083 | 78,995 | ||||||
3,036,466 | ||||||||
Canada-2.47% | ||||||||
Allied Properties REIT | 185,192 | 5,224,875 | ||||||
Canadian Apartment Properties REIT | 177,870 | 6,136,505 | ||||||
Killam Apartment REIT | 252,160 | 3,356,076 | ||||||
14,717,456 | ||||||||
China-6.67% | ||||||||
China Resources Land Ltd. | 2,013,377 | 9,224,441 | ||||||
China SCE Group Holdings Ltd. | 2,360,000 | 1,225,366 | ||||||
CIFI Holdings Group Co. Ltd. | 6,700,000 | 5,687,047 | ||||||
Country Garden Holdings Co. Ltd. | 2,402,000 | 2,951,052 | ||||||
Longfor Group Holdings Ltd.(a) | 2,377,000 | 12,547,641 | ||||||
Shimao Group Holdings Ltd. | 1,434,000 | 6,435,052 | ||||||
Yuexiu Property Co. Ltd. | 8,486,000 | 1,616,642 | ||||||
39,687,241 | ||||||||
France-2.25% | ||||||||
Covivio | 41,088 | 3,042,748 | ||||||
Gecina S.A. | 50,697 | 6,966,352 | ||||||
Unibail-Rodamco-Westfield | 72,880 | 3,405,799 | ||||||
13,414,899 | ||||||||
Germany-6.97% | ||||||||
Deutsche Wohnen SE | 120,780 | 6,428,524 | ||||||
Grand City Properties S.A. | 205,736 | 5,282,053 | ||||||
Vonovia SE | 415,202 | 29,727,991 | ||||||
41,438,568 | ||||||||
Hong Kong-6.01% | ||||||||
Hang Lung Properties Ltd. | 3,175,000 | 8,922,102 | ||||||
Link REIT | 377,800 | 2,978,553 | ||||||
New World Development Co. Ltd. | 346,700 | 1,793,720 | ||||||
Sun Hung Kai Properties Ltd. | 997,600 | 13,289,473 | ||||||
Swire Properties Ltd. | 2,154,400 | 5,826,189 | ||||||
Wharf Holdings Ltd. (The) | 1,517,000 | 2,950,714 | ||||||
35,760,751 | ||||||||
India-0.21% | ||||||||
DLF Ltd. | 575,475 | 1,234,664 |
Shares | Value | |||||||
Indonesia-0.20% | ||||||||
PT Pakuwon Jati Tbk | 42,538,000 | $ | 1,189,374 | |||||
Japan-10.18% | ||||||||
Activia Properties, Inc. | 1,467 | 5,505,888 | ||||||
GLP J-REIT | 4,081 | 6,294,975 | ||||||
Japan Prime Realty Investment Corp. | 1,932 | 5,828,382 | ||||||
Japan Retail Fund Investment Corp. | 3,990 | 6,004,408 | ||||||
LaSalle Logiport REIT | 2,818 | 4,727,542 | ||||||
Mitsui Fudosan Co. Ltd. | 494,800 | 8,942,295 | ||||||
Mitsui Fudosan Logistics Park, Inc. | 960 | 4,792,750 | ||||||
ORIX JREIT, Inc. | 4,322 | 6,416,634 | ||||||
Sumitomo Realty & Development Co. Ltd. | 280,200 | 8,253,620 | ||||||
Tokyu Fudosan Holdings Corp. | 885,200 | 3,796,711 | ||||||
60,563,205 | ||||||||
Malta-0.00% | ||||||||
BGP Holdings PLC (Acquired 08/06/2009; Cost $0)(a)(b)(c) | 9,888,325 | 0 | ||||||
Mexico-0.34% | ||||||||
Macquarie Mexico Real Estate Management S.A. de C.V.(a) | 1,741,300 | 2,023,639 | ||||||
Philippines-0.82% | ||||||||
Ayala Land, Inc. | 3,699,200 | 2,187,276 | ||||||
Megaworld Corp. | 44,880,200 | 2,690,143 | ||||||
4,877,419 | ||||||||
Singapore-3.29% | ||||||||
Ascendas India Trust | 1,845,600 | 1,809,209 | ||||||
Ascendas REIT | 2,870,200 | 6,974,912 | ||||||
CapitaLand Ltd. | 3,103,100 | 6,286,412 | ||||||
Keppel DC REIT | 1,349,400 | 2,886,111 | ||||||
Mapletree Industrial Trust | 728,500 | 1,628,331 | ||||||
19,584,975 | ||||||||
South Africa-0.23% | ||||||||
Growthpoint Properties Ltd. | 1,641,021 | 1,178,803 | ||||||
SA Corporate Real Estate Ltd. | 3,397,340 | 211,992 | ||||||
1,390,795 | ||||||||
Spain-0.89% | ||||||||
Merlin Properties SOCIMI S.A. | 589,883 | 5,316,861 | ||||||
Sweden-1.45% | ||||||||
Fabege AB | 333,028 | 4,058,815 | ||||||
Wihlborgs Fastigheter AB | 285,022 | 4,559,514 | ||||||
8,618,329 | ||||||||
Thailand-0.61% | ||||||||
Central Pattana PCL, Foreign Shares | 1,122,500 | 1,689,343 | ||||||
WHA Corp. PCL, Foreign Shares | 18,769,700 | 1,920,829 | ||||||
3,610,172 | ||||||||
United Kingdom-3.87% | ||||||||
Assura PLC | 3,690,835 | 3,996,316 | ||||||
GCP Student Living PLC | 970,845 | 1,790,933 | ||||||
Land Securities Group PLC | 873,072 | 6,746,884 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Global Real Estate Fund |
Shares | Value | |||||||
United Kingdom-(continued) |
| |||||||
Segro PLC | 184,638 | $ | 2,351,652 | |||||
Tritax Big Box REIT PLC | 3,206,160 | 6,677,330 | ||||||
Workspace Group PLC | 194,566 | 1,465,585 | ||||||
23,028,700 | ||||||||
United States-47.87% | ||||||||
Agree Realty Corp. | 30,101 | 2,014,359 | ||||||
Alexandria Real Estate Equities, Inc. | 93,772 | 15,789,329 | ||||||
American Assets Trust, Inc. | 108,221 | 2,765,047 | ||||||
American Tower Corp. | 39,331 | 9,799,319 | ||||||
Americold Realty Trust | 85,597 | 3,282,645 | ||||||
Apartment Investment & Management Co., Class A | 132,917 | 4,789,000 | ||||||
Apple Hospitality REIT, Inc. | 472,793 | 4,808,305 | ||||||
Brandywine Realty Trust | 374,434 | 4,167,450 | ||||||
CubeSmart | 96,149 | 3,040,231 | ||||||
CyrusOne, Inc. | 140,653 | 11,748,745 | ||||||
Digital Realty Trust, Inc. | 19,154 | 2,981,320 | ||||||
Duke Realty Corp. | 384,674 | 14,829,183 | ||||||
Equity LifeStyle Properties, Inc. | 43,412 | 2,877,782 | ||||||
Equity Residential | 340,626 | 19,228,338 | ||||||
Essential Properties Realty Trust, Inc. | 263,636 | 4,473,903 | ||||||
Extra Space Storage, Inc. | 44,592 | 4,751,278 | ||||||
First Industrial Realty Trust, Inc. | 101,451 | 4,326,885 | ||||||
Gaming and Leisure Properties, Inc. | 178,686 | 6,495,236 | ||||||
Healthcare Realty Trust, Inc. | 205,826 | 5,938,080 | ||||||
Healthcare Trust of America, Inc., Class A | 239,416 | 6,318,188 | ||||||
Healthpeak Properties, Inc. | 525,406 | 14,522,222 | ||||||
Host Hotels & Resorts, Inc. | 644,058 | 7,232,771 | ||||||
Invitation Homes, Inc. | 643,609 | 18,426,526 | ||||||
Kimco Realty Corp. | 173,152 | 2,076,092 | ||||||
National Retail Properties, Inc. | 260,245 | 9,223,083 |
Shares | Value | |||||||
United States-(continued) |
| |||||||
NETSTREIT Corp. | 73,836 | $ | 1,354,152 | |||||
Prologis, Inc. | 33,334 | 3,395,401 | ||||||
QTS Realty Trust, Inc., Class A | 88,381 | 5,993,999 | ||||||
Realty Income Corp. | 94,301 | 5,849,491 | ||||||
Regency Centers Corp. | 215,728 | 8,566,559 | ||||||
Retail Opportunity Investments Corp. | 548,300 | 6,102,579 | ||||||
Rexford Industrial Realty, Inc. | 146,380 | 7,023,312 | ||||||
Sabra Health Care REIT, Inc. | 352,329 | 5,225,039 | ||||||
STAG Industrial, Inc. | 209,220 | 6,757,806 | ||||||
Sun Communities, Inc. | 46,715 | 6,964,272 | ||||||
UDR, Inc. | 356,954 | 12,425,569 | ||||||
Ventas, Inc. | 38,744 | 1,596,640 | ||||||
VEREIT, Inc. | 1,529,410 | 10,277,635 | ||||||
VICI Properties, Inc. | 586,799 | 13,109,090 | ||||||
Weyerhaeuser Co. | 138,362 | 4,193,752 | ||||||
284,740,613 | ||||||||
Total Common Stocks & Other Equity Interests |
| 588,762,803 | ||||||
Money Market Funds-0.65% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(d)(e) | 1,334,357 | 1,334,357 | ||||||
Invesco Liquid Assets Portfolio, Institutional Class, 0.12%(d)(e) | 981,538 | 982,127 | ||||||
Invesco Treasury Portfolio, Institutional Class, 0.02%(d)(e) | 1,524,980 | 1,524,980 | ||||||
Total Money Market Funds |
| 3,841,464 | ||||||
TOTAL INVESTMENTS IN SECURITIES-99.62% |
| 592,604,267 | ||||||
OTHER ASSETS LESS LIABILITIES-0.38% |
| 2,256,721 | ||||||
NET ASSETS-100.00% |
| $ | 594,860,988 |
Investment Abbreviations:
REIT - Real Estate Investment Trust
Notes to Schedule of Investments:
(a) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2020 was $14,571,280, which represented 2.45% of the Fund’s Net Assets. |
(b) | Non-income producing security. |
(c) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(d) | Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended August 31, 2020. |
Value February 29, 2020 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation (Depreciation) | Realized Gain | Value August 31, 2020 | Dividend Income | |||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: |
| ||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | 2,763,063 | $ | 26,993,662 | $ | (28,422,368 | ) | $ | - | $ | - | $ | 1,334,357 | $ | (277 | ) | |||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 1,973,814 | 19,378,445 | (20,372,771 | ) | (254 | ) | 2,893 | 982,127 | 4,672 | ||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 3,157,786 | 30,849,900 | (32,482,706 | ) | - | - | 1,524,980 | 2,897 | |||||||||||||||||||||||||||
Total | $ | 7,894,663 | $ | 77,222,007 | $ | (81,277,845 | ) | $ | (254 | ) | $ | 2,893 | $ | 3,841,464 | $ | 7,292 |
(e) | The rate shown is the 7-day SEC standardized yield as of August 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Global Real Estate Fund |
Portfolio Composition
By country, based on Net Assets
as of August 31, 2020
United States | 47.87 | % | ||
Japan | 10.18 | |||
Germany | 6.97 | |||
China | 6.67 | |||
Hong Kong | 6.01 | |||
United Kingdom | 3.87 | |||
Singapore | 3.29 | |||
Australia | 3.04 | |||
Canada | 2.47 | |||
France | 2.25 | |||
Countries each less than 2% of portfolio | 6.35 | |||
Money Market Funds Plus Other Assets Less Liabilities | 1.03 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Global Real Estate Fund |
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 588,762,803 | ||
Investments in affiliated money market funds, at value | 3,841,464 | |||
Foreign currencies, at value | 1,335,137 | |||
Receivable for: | ||||
Investments sold | 10,982,618 | |||
Fund shares sold | 283,671 | |||
Dividends | 1,229,448 | |||
Investment for trustee deferred compensation and retirement plans | 165,951 | |||
Other assets | 76,740 | |||
Total assets | 606,677,832 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 10,046,511 | |||
Fund shares reacquired | 1,088,048 | |||
Accrued foreign taxes | 62,163 | |||
Accrued fees to affiliates | 234,200 | |||
Accrued trustees’ and officers’ fees and benefits | 4,074 | |||
Accrued other operating expenses | 201,506 | |||
Trustee deferred compensation and retirement plans | 180,342 | |||
Total liabilities | 11,816,844 | |||
Net assets applicable to shares outstanding | $ | 594,860,988 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 593,925,887 | ||
Distributable earnings | 935,101 | |||
$ | 594,860,988 |
Net Assets: | ||||
Class A | $ | 114,647,085 | ||
Class C | $ | 8,169,822 | ||
Class R | $ | 22,027,362 | ||
Class Y | $ | 123,908,500 | ||
Class R5 | $ | 138,018,055 | ||
Class R6 | $ | 188,090,164 | ||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 11,018,673 | |||
Class C | 784,596 | |||
Class R | 2,117,978 | |||
Class Y | 11,913,530 | |||
Class R5 | 13,316,625 | |||
Class R6 | 18,150,550 | |||
Class A: | ||||
Net asset value per share | $ | 10.40 | ||
Maximum offering price per share | $ | 11.01 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 10.41 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 10.40 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 10.40 | ||
Class R5: | ||||
Net asset value and offering price per share | $ | 10.36 | ||
Class R6: | ||||
Net asset value and offering price per share | $ | 10.36 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Global Real Estate Fund |
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $409,576) | $ | 9,477,118 | ||
Dividends from affiliated money market funds | 7,292 | |||
Total investment income | 9,484,410 | |||
Expenses: | ||||
Advisory fees | 2,181,971 | |||
Administrative services fees | 46,553 | |||
Custodian fees | 64,342 | |||
Distribution fees: | ||||
Class A | 143,660 | |||
Class C | 45,074 | |||
Class R | 52,100 | |||
Transfer agent fees – A, C, R and Y | 297,518 | |||
Transfer agent fees – R5 | 67,380 | |||
Transfer agent fees – R6 | 10,150 | |||
Trustees’ and officers’ fees and benefits | 11,046 | |||
Registration and filing fees | 44,680 | |||
Reports to shareholders | 58,185 | |||
Professional services fees | 28,385 | |||
Other | 20,646 | |||
Total expenses | 3,071,690 | |||
Less: Fees waived and/or expense offset arrangement(s) | (3,879 | ) | ||
Net expenses | 3,067,811 | |||
Net investment income | 6,416,599 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities (net of foreign taxes of $4,944) | (32,814,896 | ) | ||
Foreign currencies | 36,111 | |||
(32,778,785 | ) | |||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities (net of foreign taxes of $62,093) | (43,165,428 | ) | ||
Foreign currencies | 11,999 | |||
(43,153,429 | ) | |||
Net realized and unrealized gain (loss) | (75,932,214 | ) | ||
Net increase (decrease) in net assets resulting from operations | $ | (69,515,615 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Global Real Estate Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2020 and the year ended February 29, 2020
(Unaudited)
August 31, 2020 | February 29, 2020 | |||||||
Operations: | ||||||||
Net investment income | $ | 6,416,599 | $ | 16,811,136 | ||||
Net realized gain (loss) | (32,778,785 | ) | 69,996,970 | |||||
Change in net unrealized appreciation (depreciation) | (43,153,429 | ) | (55,352,123 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (69,515,615 | ) | 31,455,983 | |||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (982,194 | ) | (16,229,157 | ) | ||||
Class C | (41,570 | ) | (1,318,000 | ) | ||||
Class R | (140,586 | ) | (2,418,883 | ) | ||||
Class Y | (1,275,297 | ) | (20,721,453 | ) | ||||
Class R5 | (1,407,104 | ) | (19,388,296 | ) | ||||
Class R6 | (1,872,902 | ) | (23,170,603 | ) | ||||
Total distributions from distributable earnings | (5,719,653 | ) | (83,246,392 | ) | ||||
Share transactions-net: | ||||||||
Class A | (12,762,312 | ) | (35,816 | ) | ||||
Class C | (2,454,870 | ) | (1,640,150 | ) | ||||
Class R | 1,666,331 | (67,751 | ) | |||||
Class Y | (22,791,956 | ) | (13,153,212 | ) | ||||
Class R5 | (7,979,120 | ) | (33,727,538 | ) | ||||
Class R6 | 6,439,249 | 7,961,247 | ||||||
Net increase (decrease) in net assets resulting from share transactions | (37,882,678 | ) | (40,663,220 | ) | ||||
Net increase (decrease) in net assets | (113,117,946 | ) | (92,453,629 | ) | ||||
Net assets: | ||||||||
Beginning of period | 707,978,934 | 800,432,563 | ||||||
End of period | $ | 594,860,988 | $ | 707,978,934 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco Global Real Estate Fund |
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period | Net investment income(a) | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends from net investment income | Distributions from net realized gains | Total distributions | Net asset value, end of period | Total return (b) | Net assets, end of period (000’s omitted) | Ratio of net assets | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | Ratio of net investment income to average net assets | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $ | 11.65 | $ | 0.09 | $ | (1.26 | ) | $ | (1.17 | ) | $ | (0.08 | ) | $ | – | $ | (0.08 | ) | $ | 10.40 | (9.89 | )% | $ | 114,647 | 1.31 | %(d) | 1.31 | %(d) | 1.92 | %(d) | 84 | % | ||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 12.59 | 0.24 | 0.22 | 0.46 | (0.54 | ) | (0.86 | ) | (1.40 | ) | 11.65 | 3.20 | 143,448 | 1.27 | 1.27 | 1.87 | 60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 12.76 | 0.29 | 0.84 | 1.13 | (0.60 | ) | (0.70 | ) | (1.30 | ) | 12.59 | 9.46 | 154,173 | 1.26 | 1.26 | 2.26 | 47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 12.83 | 0.30 | (e) | (0.01 | ) | 0.29 | (0.28 | ) | (0.08 | ) | (0.36 | ) | 12.76 | 2.17 | 156,543 | 1.27 | 1.27 | 2.31 | (e) | 51 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 11.94 | 0.20 | 1.16 | 1.36 | (0.47 | ) | – | (0.47 | ) | 12.83 | 11.54 | 221,942 | 1.36 | 1.36 | 1.54 | 57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 13.51 | 0.19 | (1.53 | ) | (1.34 | ) | (0.23 | ) | – | (0.23 | ) | 11.94 | (10.00 | ) | 254,298 | 1.43 | 1.43 | 1.47 | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 11.65 | 0.06 | (1.26 | ) | (1.20 | ) | (0.04 | ) | – | (0.04 | ) | 10.41 | (10.21 | ) | 8,170 | 2.06 | (d) | 2.06 | (d) | 1.17 | (d) | 84 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 12.59 | 0.15 | 0.21 | 0.36 | (0.44 | ) | (0.86 | ) | (1.30 | ) | 11.65 | 2.43 | 12,169 | 2.02 | 2.02 | 1.12 | 60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 12.75 | 0.20 | 0.84 | 1.04 | (0.50 | ) | (0.70 | ) | (1.20 | ) | 12.59 | 8.71 | 14,673 | 2.01 | 2.01 | 1.51 | 47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 12.83 | 0.21 | (e) | (0.03 | ) | 0.18 | (0.18 | ) | (0.08 | ) | (0.26 | ) | 12.75 | 1.33 | 27,654 | 2.02 | 2.02 | 1.56 | (e) | 51 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 11.95 | 0.10 | 1.16 | 1.26 | (0.38 | ) | – | (0.38 | ) | 12.83 | 10.62 | 33,299 | 2.11 | 2.11 | 0.79 | 57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 13.52 | 0.09 | (1.53 | ) | (1.44 | ) | (0.13 | ) | – | (0.13 | ) | 11.95 | (10.67 | ) | 36,419 | 2.18 | 2.18 | 0.72 | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 11.64 | 0.08 | (1.25 | ) | (1.17 | ) | (0.07 | ) | – | (0.07 | ) | 10.40 | (9.94 | ) | 22,027 | 1.56 | (d) | 1.56 | (d) | 1.67 | (d) | 84 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 12.58 | 0.21 | 0.21 | 0.42 | (0.50 | ) | (0.86 | ) | (1.36 | ) | 11.64 | 2.94 | 22,293 | 1.52 | 1.52 | 1.62 | 60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 12.75 | 0.26 | 0.84 | 1.10 | (0.57 | ) | (0.70 | ) | (1.27 | ) | 12.58 | 9.18 | 24,003 | 1.51 | 1.51 | 2.01 | 47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 12.83 | 0.27 | (e) | (0.02 | ) | 0.25 | (0.25 | ) | (0.08 | ) | (0.33 | ) | 12.75 | 1.84 | 23,658 | 1.52 | 1.52 | 2.06 | (e) | 51 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 11.95 | 0.17 | 1.15 | 1.32 | (0.44 | ) | – | (0.44 | ) | 12.83 | 11.17 | 19,718 | 1.61 | 1.61 | 1.29 | 57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 13.52 | 0.16 | (1.53 | ) | (1.37 | ) | (0.20 | ) | – | (0.20 | ) | 11.95 | (10.22 | ) | 17,999 | 1.68 | 1.68 | 1.22 | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 11.65 | 0.11 | (1.26 | ) | (1.15 | ) | (0.10 | ) | – | (0.10 | ) | 10.40 | (9.75 | ) | 123,909 | 1.06 | (d) | 1.06 | (d) | 2.17 | (d) | 84 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 12.59 | 0.28 | 0.21 | 0.49 | (0.57 | ) | (0.86 | ) | (1.43 | ) | 11.65 | 3.46 | 166,069 | 1.02 | 1.02 | 2.12 | 60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 12.76 | 0.33 | 0.83 | 1.16 | (0.63 | ) | (0.70 | ) | (1.33 | ) | 12.59 | 9.74 | 191,757 | 1.01 | 1.01 | 2.51 | 47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 12.83 | 0.34 | (e) | (0.02 | ) | 0.32 | (0.31 | ) | (0.08 | ) | (0.39 | ) | 12.76 | 2.42 | 623,470 | 1.02 | 1.02 | 2.56 | (e) | 51 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 11.95 | 0.23 | 1.15 | 1.38 | (0.50 | ) | – | (0.50 | ) | 12.83 | 11.72 | 1,167,799 | 1.11 | 1.11 | 1.79 | 57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 13.52 | 0.22 | (1.53 | ) | (1.31 | ) | (0.26 | ) | – | (0.26 | ) | 11.95 | (9.77 | ) | 1,199,430 | 1.18 | 1.18 | 1.72 | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 11.61 | 0.11 | (1.26 | ) | (1.15 | ) | (0.10 | ) | – | (0.10 | ) | 10.36 | (9.73 | ) | 138,018 | 0.94 | (d) | 0.94 | (d) | 2.29 | (d) | 84 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 12.55 | 0.29 | 0.21 | 0.50 | (0.58 | ) | (0.86 | ) | (1.44 | ) | 11.61 | 3.59 | 164,048 | 0.91 | 0.91 | 2.23 | 60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 12.72 | 0.34 | 0.84 | 1.18 | (0.65 | ) | (0.70 | ) | (1.35 | ) | 12.55 | 9.87 | 208,742 | 0.92 | 0.92 | 2.60 | 47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 12.81 | 0.35 | (e) | (0.03 | ) | 0.32 | (0.33 | ) | (0.08 | ) | (0.41 | ) | 12.72 | 2.40 | 260,397 | 0.93 | 0.93 | 2.65 | (e) | 51 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 11.93 | 0.26 | 1.15 | 1.41 | (0.53 | ) | – | (0.53 | ) | 12.81 | 12.00 | 264,906 | 0.88 | 0.88 | 2.02 | 57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 13.49 | 0.25 | (1.52 | ) | (1.27 | ) | (0.29 | ) | – | (0.29 | ) | 11.93 | (9.47 | ) | 296,506 | 0.91 | 0.91 | 1.99 | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 11.61 | 0.12 | (1.26 | ) | (1.14 | ) | (0.11 | ) | – | (0.11 | ) | 10.36 | (9.68 | ) | 188,090 | 0.85 | (d) | 0.85 | (d) | 2.38 | (d) | 84 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 12.55 | 0.30 | 0.22 | 0.52 | (0.60 | ) | (0.86 | ) | (1.46 | ) | 11.61 | 3.68 | 199,952 | 0.82 | 0.82 | 2.32 | 60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 12.72 | 0.35 | 0.84 | 1.19 | (0.66 | ) | (0.70 | ) | (1.36 | ) | 12.55 | 9.97 | 207,085 | 0.83 | 0.83 | 2.69 | 47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 12.81 | 0.36 | (e) | (0.03 | ) | 0.33 | (0.34 | ) | (0.08 | ) | (0.42 | ) | 12.72 | 2.49 | 197,835 | 0.85 | 0.85 | 2.73 | (e) | 51 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 11.93 | 0.27 | 1.15 | 1.42 | (0.54 | ) | – | (0.54 | ) | 12.81 | 12.07 | 54,547 | 0.81 | 0.81 | 2.09 | 57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 13.49 | 0.26 | (1.52 | ) | (1.26 | ) | (0.30 | ) | – | (0.30 | ) | 11.93 | (9.41 | ) | 86,307 | 0.84 | 0.84 | 2.06 | 84 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $114,073, $8,946, $20,691, $128,140, $133,802 and $177,001 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | Net investment income per share and the ratio of net investment income to average net assets includes significant dividends received during the year ended February 28, 2018. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividends are $0.25 and 1.92%, $0.16 and 1.17%, $0.22 and 1.67%, $0.29 and 2.17%, $0.30 and 2.26%, $0.31 and 2.34% for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco Global Real Estate Fund |
August 31, 2020
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Global Real Estate Fund (the “Fund”), is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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 total return through growth of capital and current income.
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. 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. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares. Effective November 30, 2020, the automatic conversion pursuant to the Conversion Feature will change from ten years to eight years. The first conversion of Class C shares to Class A shares would occur at the end of December 2020 for all Class C shares that were held for more than eight years as of November 30, 2020.
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, 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.
13 | Invesco Global Real Estate Fund |
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and 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.
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available on a timely basis from the REIT, the recharacterization will be based on available information which may include the previous year’s allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital as a reduction of the cost of the related investment. These recharacterizations are reflected in the accompanying financial statements.
C. | Country Determination - For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions - Distributions from net investment income, if any, are declared and paid quarterly and are recorded on the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes - The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses - Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications - Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
I. | Foreign Currency Translations - Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
J. | Forward Foreign Currency Contracts - The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and
14 | Invesco Global Real Estate Fund |
reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
K. | Other Risks - The Fund’s investments are concentrated in a comparatively narrow segment of the economy. Consequently, the Fund may tend to be more volatile than other mutual funds, and the value of the Fund’s investments may tend to rise and fall more rapidly. |
Because the Fund concentrates its assets in the real estate industry, an investment in the Fund will be closely linked to the performance of the real estate markets. Property values may fall due to increasing vacancies or declining rents resulting from economic, legal, cultural or technological developments.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more developed markets. In addition, companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed markets. Securities law in many emerging market countries is relatively new and unsettled. Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder rights may change quickly and unpredictably. In addition, the enforcement of systems of taxation at federal, regional and local levels in emerging market countries may be inconsistent, and subject to sudden change. Other risks of investing in emerging markets securities may include additional transaction costs, delays in settlement procedures, and lack of timely information.
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 $250 million | 0.750 | % | ||||
Next $250 million | 0.740 | % | ||||
Next $500 million | 0.730 | % | ||||
Next $1.5 billion | 0.720 | % | ||||
Next $2.5 billion | 0.710 | % | ||||
Next $2.5 billion | 0.700 | % | ||||
Next $2.5 billion | 0.690 | % | ||||
Over $10 billion | 0.680 | % |
For the six months ended August 31, 2020, the effective advisory fee rate incurred by the Fund was 0.74%.
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).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.25%, 1.75%, 1.75% and 1.75%, 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 the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waivers without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limit.
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 August 31, 2020, the Adviser waived advisory fees of $3,370.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. 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 Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended August 31, 2020, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the
15 | Invesco Global Real Estate Fund |
shareholder. During the six months ended August 31, 2020, IDI advised the Fund that IDI retained $0 in front-end sales commissions from the sale of Class A shares and $184 and $683 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
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 August 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 | Total | |||||||||||||
| ||||||||||||||||
Investments in Securities | ||||||||||||||||
| ||||||||||||||||
Australia | $ | – | $ | 18,058,836 | $– | $ | 18,058,836 | |||||||||
| ||||||||||||||||
Belgium | – | 6,469,840 | – | 6,469,840 | ||||||||||||
| ||||||||||||||||
Brazil | 3,036,466 | – | – | 3,036,466 | ||||||||||||
| ||||||||||||||||
Canada | 14,717,456 | – | – | 14,717,456 | ||||||||||||
| ||||||||||||||||
China | – | 39,687,241 | – | 39,687,241 | ||||||||||||
| ||||||||||||||||
France | 3,405,799 | 10,009,100 | – | 13,414,899 | ||||||||||||
| ||||||||||||||||
Germany | – | 41,438,568 | – | 41,438,568 | ||||||||||||
| ||||||||||||||||
Hong Kong | – | 35,760,751 | – | 35,760,751 | ||||||||||||
| ||||||||||||||||
India | – | 1,234,664 | – | 1,234,664 | ||||||||||||
| ||||||||||||||||
Indonesia | – | 1,189,374 | – | 1,189,374 | ||||||||||||
| ||||||||||||||||
Japan | – | 60,563,205 | – | 60,563,205 | ||||||||||||
| ||||||||||||||||
Malta | – | – | 0 | 0 | ||||||||||||
| ||||||||||||||||
Mexico | 2,023,639 | – | – | 2,023,639 | ||||||||||||
| ||||||||||||||||
Philippines | – | 4,877,419 | – | 4,877,419 | ||||||||||||
| ||||||||||||||||
Singapore | – | 19,584,975 | – | 19,584,975 | ||||||||||||
| ||||||||||||||||
South Africa | – | 1,390,795 | – | 1,390,795 | ||||||||||||
| ||||||||||||||||
Spain | – | 5,316,861 | – | 5,316,861 | ||||||||||||
| ||||||||||||||||
Sweden | – | 8,618,329 | – | 8,618,329 | ||||||||||||
| ||||||||||||||||
Thailand | – | 3,610,172 | – | 3,610,172 | ||||||||||||
| ||||||||||||||||
United Kingdom | 23,028,700 | – | – | 23,028,700 | ||||||||||||
| ||||||||||||||||
United States | 284,740,613 | – | – | 284,740,613 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 3,841,464 | – | – | 3,841,464 | ||||||||||||
| ||||||||||||||||
Total Investments | $ | 334,794,137 | $ | 257,810,130 | $0 | $ | 592,604,267 | |||||||||
|
NOTE 4–Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $509.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, 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
16 | Invesco Global Real Estate Fund |
by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of February 29, 2020.
NOTE 8–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 August 31, 2020 was $492,577,961 and $518,951,535, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis
| ||||
Aggregate unrealized appreciation of investments | $ | 46,239,925 | ||
Aggregate unrealized (depreciation) of investments | (28,173,272 | ) | ||
Net unrealized appreciation of investments | $ | 18,066,653 |
Cost of investments for tax purposes is $574,537,614.
NOTE 9–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2020(a) | Year ended February 29, 2020 | |||||||||||||||
|
|
|
| |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 789,958 | $ | 7,280,346 | 1,760,818 | $ | 22,777,589 | ||||||||||
| ||||||||||||||||
Class C | 48,815 | 492,816 | 173,924 | 2,281,093 | ||||||||||||
| ||||||||||||||||
Class R | 593,462 | 5,500,775 | 541,461 | 7,037,148 | ||||||||||||
| ||||||||||||||||
Class Y | 2,371,812 | 22,499,396 | 3,394,041 | 43,782,059 | ||||||||||||
| ||||||||||||||||
Class R5 | 1,581,798 | 15,121,088 | 2,239,175 | 29,026,282 | ||||||||||||
| ||||||||||||||||
Class R6 | 2,982,851 | 26,560,072 | 3,369,073 | 43,574,823 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 101,333 | 883,266 | 1,205,299 | 14,851,940 | ||||||||||||
| ||||||||||||||||
Class C | 4,151 | 36,000 | 93,998 | 1,156,416 | ||||||||||||
| ||||||||||||||||
Class R | 15,941 | 140,553 | 196,327 | 2,417,775 | ||||||||||||
| ||||||||||||||||
Class Y | 86,305 | 744,994 | 1,071,649 | 13,209,094 | ||||||||||||
| ||||||||||||||||
Class R5 | 152,817 | 1,331,748 | 1,466,494 | 18,054,391 | ||||||||||||
| ||||||||||||||||
Class R6 | 212,267 | 1,855,059 | 1,871,716 | 23,015,529 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 111,535 | 1,072,854 | 106,558 | 1,397,846 | ||||||||||||
| ||||||||||||||||
Class C | (111,325 | ) | (1,072,854 | ) | (106,495 | ) | (1,397,846 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (2,293,945 | ) | (21,998,778 | ) | (3,009,415 | ) | (39,063,191 | ) | ||||||||
| ||||||||||||||||
Class C | (201,306 | ) | (1,910,832 | ) | (282,806 | ) | (3,679,813 | ) | ||||||||
| ||||||||||||||||
Class R | (405,794 | ) | (3,974,997 | ) | (731,407 | ) | (9,522,674 | ) | ||||||||
| ||||||||||||||||
Class Y | (4,798,157 | ) | (46,036,346 | ) | (5,446,309 | ) | (70,144,365 | ) | ||||||||
| ||||||||||||||||
Class R5 | (2,545,933 | ) | (24,431,956 | ) | (6,211,721 | ) | (80,808,211 | ) | ||||||||
| ||||||||||||||||
Class R6 | (2,265,681 | ) | (21,975,882 | ) | (4,522,828 | ) | (58,629,105 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (3,569,096 | ) | $ | (37,882,678 | ) | (2,820,448 | ) | $ | (40,663,220 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 58% 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. |
17 | Invesco Global Real Estate Fund |
NOTE 10–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.
18 | Invesco Global Real Estate Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
ACTUAL | HYPOTHETICAL (5% annual return before expenses) | Annualized Expense Ratio | ||||||||||
Beginning Account Value (03/01/20) | Ending Account Value (08/31/20)1 | Expenses Paid During Period2 | Ending Account Value (08/31/20) | Expenses Paid During Period2 | ||||||||
Class A | $1,000.00 | $902.00 | $6.28 | $1,018.60 | $6.67 | 1.31% | ||||||
Class C | 1,000.00 | 897.90 | 9.85 | 1,014.82 | 10.46 | 2.06 | ||||||
Class R | 1,000.00 | 900.60 | 7.47 | 1,017.34 | 7.93 | 1.56 | ||||||
Class Y | 1,000.00 | 902.50 | 5.08 | 1,019.86 | 5.40 | 1.06 | ||||||
Class R5 | 1,000.00 | 902.70 | 4.51 | 1,020.47 | 4.79 | 0.94 | ||||||
Class R6 | 1,000.00 | 903.20 | 4.08 | 1,020.92 | 4.33 | 0.85 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
19 | Invesco Global Real Estate Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Global Real Estate Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory contracts with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also
discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world.
As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement as well as the sub-advisory contracts for the Fund, as Invesco Asset Management Limited currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2019 to the performance of funds in the Broadridge performance universe and against the Custom Invesco Global Real Estate Index. The Board noted that performance of Class A shares of the Fund was in the fourth quintile of its performance universe for the one and five year periods and the third quintile for the three year period (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was reasonably comparable to the performance of the Index for the one and three year periods and below the performance of the Index for the five year period. The Board noted that the Fund’s high quality bias, overweight exposure to and security selection in certain countries and its cash holdings negatively impacted the Fund’s relative performance. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information
20 | Invesco Global Real Estate Fund |
regarding the Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board also considered the fees charged by Invesco Advisers and the Affiliated Sub-Advisers to other similarly managed client accounts. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations.
The Board also compared the Fund’s effective advisory fee rate (the advisory fee rate after advisory fee waivers and before other expense limitations/ waivers) to the effective advisory fee rates of other similarly managed third-party mutual funds advised or sub-advised by Invesco Advisers and its affiliates, based on asset balances as of December 31, 2019.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts. The Board noted that Invesco Advisers retains overall responsibility for, and provides services to, sub-advised Invesco Funds, including oversight of the Affiliated Sub-Advisers as well as the additional services described herein other than day-to-day portfolio management.
D. Economies of Scale and Breakpoints
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the
Invesco Funds in the aggregate and to certain Funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from Invesco representing that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers pursuant to procedures approved by the Board. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the costs to the Fund of such investments. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
The Board also considered that an affiliated broker may receive commissions for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers may use the affiliated broker to, among other things, control order routing and minimize information leakage, and the Board was advised that such trades are executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
21 | Invesco Global Real Estate Fund |
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Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
With eDelivery, you can elect to have any or all of the following materials delivered straight to your inbox to download, save and print from your own computer:
∎ | Fund reports and prospectuses |
∎ | Quarterly statements |
∎ | Daily confirmations |
∎ | Tax forms |
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-PORT filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246, or at invesco.com/ proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-05686 and 033-39519 | Invesco Distributors, Inc. | GRE-SAR-1 |
| ||||
Semiannual Report to Shareholders
| August 31, 2020 | |||
| ||||
Invesco Government Money Market Fund | ||||
Nasdaq: | ||||
Invesco Cash Reserve: AIMXX ∎ A: ADAXX ∎ AX: ACZXX ∎ C: ACNXX ∎ CX: ACXXX ∎ R: AIRXX
∎ Y: AIYXX ∎ Investor: INAXX ∎ R6: INVXX |
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.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
You could lose money by investing in the Fund. Although the Fund seeks to preserve your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risks associated with an investment in the Fund.
Team managed by Invesco Advisers, Inc.
2 | Invesco Government Money Market Fund |
| ||
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges | ||
for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs. |
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
| Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. | |
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. | ||
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us. |
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
3 | Invesco Government Money Market Fund |
August 31, 2020
(Unaudited)
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||
| ||||||||||||||||
U.S. Treasury Securities-43.75% | ||||||||||||||||
U.S. Treasury Bills-30.43%(a) | ||||||||||||||||
U.S. Treasury Bills | 0.14% | 09/01/2020 | $ | 35,000 | $ | 35,000,000 | ||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.14%-1.02% | 09/03/2020 | 20,000 | 19,998,878 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.13% | 09/08/2020 | 7,000 | 6,999,809 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.13%-0.20% | 09/10/2020 | 25,000 | 24,998,490 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.14%-0.18% | 09/17/2020 | 40,000 | 39,997,278 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.14% | 09/29/2020 | 25,000 | 24,997,375 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.13%-0.17% | 10/01/2020 | 65,000 | 64,991,333 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.14% | 10/06/2020 | 50,000 | 49,993,194 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.16% | 10/08/2020 | 20,000 | 19,996,711 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.15% | 10/13/2020 | 45,000 | 44,992,265 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.18% | 10/15/2020 | 20,000 | 19,995,600 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.15% | 10/22/2020 | 10,000 | 9,997,946 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.15% | 10/27/2020 | 30,000 | 29,993,000 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.15%-0.16% | 10/29/2020 | 80,000 | 79,980,224 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.15%-0.18% | 11/10/2020 | 66,718 | 66,696,155 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.15%-0.16% | 11/12/2020 | 50,000 | 49,984,700 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.15% | 11/19/2020 | 110,000 | 109,963,792 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.19% | 11/24/2020 | 10,000 | 9,995,683 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.16% | 11/27/2020 | 20,000 | 19,992,267 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.10% | 12/03/2020 | 90,000 | 89,976,466 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.16% | 12/08/2020 | 30,000 | 29,987,342 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.18% | 12/10/2020 | 10,000 | 9,994,931 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.16% | 12/15/2020 | 10,000 | 9,995,479 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.17%-1.47% | 12/31/2020 | 45,000 | 44,931,769 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.17% | 01/07/2021 | 10,000 | 9,994,133 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.15% | 01/14/2021 | 15,000 | 14,991,844 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.12% | 02/18/2021 | 40,000 | 39,977,333 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.18% | 02/25/2021 | 30,000 | 29,973,450 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.12% | 03/04/2021 | 40,000 | 39,976,744 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.17% | 04/22/2021 | 10,000 | 9,989,321 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.18% | 05/20/2021 | 10,000 | 9,987,313 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Bills | 0.16% | 07/15/2021 | 18,000 | 17,975,433 | ||||||||||||
| ||||||||||||||||
1,086,316,258 | ||||||||||||||||
| ||||||||||||||||
U.S. Treasury Notes-13.32% | ||||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill | 0.15% | 10/31/2020 | 62,000 | 61,996,305 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill | 0.22% | 01/31/2021 | 88,000 | 87,988,849 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill | 0.24% | 04/30/2021 | 82,000 | 81,987,585 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill | 0.33% | 07/31/2021 | 17,000 | 16,998,340 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill | 0.41% | 10/31/2021 | 41,000 | 41,040,128 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill | 0.26% | 01/31/2022 | 16,000 | 15,996,732 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill | 0.22% | 04/30/2022 | 15,000 | 15,004,533 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill | 0.16% | 07/31/2022 | 8,000 | 8,000,290 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Notes | 1.38% | 09/15/2020 | 20,000 | 19,999,123 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Notes | 1.38% | 09/30/2020 | 25,000 | 25,006,845 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Notes | 2.75% | 09/30/2020 | 29,000 | 29,029,419 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Notes | 1.63% | 10/15/2020 | 20,000 | 20,014,450 | ||||||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 | Invesco Government Money Market Fund |
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||
| ||||||||||||||||
U.S. Treasury Notes-(continued) | ||||||||||||||||
U.S. Treasury Notes | 2.50% | 12/31/2020 | $ | 5,000 | $ | 5,034,623 | ||||||||||
| ||||||||||||||||
U.S. Treasury Notes | 2.00% | 01/15/2021 | 2,000 | 2,012,576 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Notes | 2.13% | 01/31/2021 | 5,000 | 5,036,594 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Notes | 3.63% | 02/15/2021 | 5,000 | 5,074,335 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Notes | 2.25% | 04/30/2021 | 35,000 | 35,490,220 | ||||||||||||
| ||||||||||||||||
475,710,947 | ||||||||||||||||
| ||||||||||||||||
Total U.S. Treasury Securities (Cost $1,562,027,205) | 1,562,027,205 | |||||||||||||||
| ||||||||||||||||
U.S. Government Sponsored Agency Securities-37.96% | ||||||||||||||||
Federal Farm Credit Bank (FFCB)-1.49% | ||||||||||||||||
Federal Farm Credit Bank(a) | 0.25% | 09/01/2020 | 7,000 | 7,000,000 | ||||||||||||
| ||||||||||||||||
Federal Farm Credit Bank(a) | 0.15%-0.40% | 12/31/2020 | 9,000 | 8,987,900 | ||||||||||||
| ||||||||||||||||
Federal Farm Credit Bank (1 mo. USD LIBOR + 0.08%)(b) | 0.23% | 02/01/2021 | 10,000 | 10,003,729 | ||||||||||||
| ||||||||||||||||
Federal Farm Credit Bank (1 mo. USD LIBOR + 0.00%)(b) | 0.16% | 03/17/2021 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
Federal Farm Credit Bank (SOFR + 0.08%)(b) | 0.17% | 06/10/2021 | 2,000 | 2,000,000 | ||||||||||||
| ||||||||||||||||
Federal Farm Credit Bank (SOFR + 0.08%)(b) | 0.17% | 07/09/2021 | 4,000 | 4,000,000 | ||||||||||||
| ||||||||||||||||
Federal Farm Credit Bank (SOFR + 0.15%)(b) | 0.24% | 07/28/2022 | 6,000 | 6,000,000 | ||||||||||||
| ||||||||||||||||
Federal Farm Credit Bank (SOFR + 0.07%)(b) | 0.16% | 08/11/2022 | 10,000 | 10,000,000 | ||||||||||||
| ||||||||||||||||
52,991,629 | ||||||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (FHLB)-29.32% | ||||||||||||||||
Federal Home Loan Bank(a) | 0.15% | 09/01/2020 | 2,000 | 2,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.14%-0.29% | 09/04/2020 | 14,000 | 13,999,662 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.09%)(b) | 0.18% | 09/11/2020 | 20,000 | 20,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.16% | 09/18/2020 | 1,100 | 1,099,917 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.08%)(b) | 0.17% | 09/22/2020 | 20,000 | 20,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.14% | 09/23/2020 | 3,000 | 2,999,468 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.05%)(b) | 0.14% | 09/28/2020 | 15,000 | 15,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank | 1.38% | 09/28/2020 | 1,455 | 1,455,901 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (1 mo. USD LIBOR - 0.05%)(b) | 0.12% | 10/15/2020 | 40,000 | 40,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.30% | 10/15/2020 | 8,000 | 7,997,067 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (3 mo. USD LIBOR - 0.21%)(b) | 0.07% | 10/16/2020 | 11,000 | 11,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.10%)(b) | 0.19% | 10/19/2020 | 50,000 | 50,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.03%)(b) | 0.12% | 10/22/2020 | 20,000 | 20,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.02%)(b) | 0.11% | 10/23/2020 | 50,000 | 50,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.08%)(b) | 0.17% | 10/23/2020 | 10,000 | 10,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.01%)(b) | 0.10% | 11/06/2020 | 40,000 | 40,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.03%)(b) | 0.12% | 11/06/2020 | 4,000 | 4,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.15%-0.52% | 11/09/2020 | 62,000 | 61,938,207 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.15%-0.26% | 11/13/2020 | 40,500 | 40,483,007 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (3 mo. USD LIBOR - 0.20%)(b) | 0.09% | 11/16/2020 | 16,000 | 16,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.15%-0.30% | 11/16/2020 | 43,000 | 42,972,767 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.30% | 11/17/2020 | 20,000 | 19,987,167 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.17% | 11/18/2020 | 35,000 | 34,987,487 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.02%)(b) | 0.11% | 11/25/2020 | 60,000 | 60,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.34% | 11/25/2020 | 30,000 | 29,975,917 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.09%)(b) | 0.18% | 12/04/2020 | 31,000 | 31,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank(a) | 0.15%-0.27% | 12/14/2020 | 14,000 | 13,989,080 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (1 mo. USD LIBOR - 0.04%)(b) | 0.11% | 12/18/2020 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.10%)(b) | 0.19% | 12/23/2020 | 16,000 | 16,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.10%)(b) | 0.19% | 12/24/2020 | 10,000 | 10,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.14%)(b) | 0.23% | 01/08/2021 | 25,000 | 25,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.05%)(b) | 0.14% | 01/22/2021 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.05%)(b) | 0.14% | 01/28/2021 | 10,000 | 10,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.04%)(b) | 0.13% | 02/09/2021 | 15,000 | 15,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank | 1.38% | 02/18/2021 | 3,000 | 3,012,388 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.04%)(b) | 0.13% | 02/25/2021 | 16,000 | 16,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.07%)(b) | 0.16% | 02/26/2021 | 14,000 | 14,000,000 | ||||||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco Government Money Market Fund |
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (FHLB)-(continued) | ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.13%)(b) | 0.22% | 03/11/2021 | $ | 15,000 | $ | 15,000,000 | ||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.07%)(b) | 0.16% | 03/12/2021 | 40,000 | 40,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.11%)(b) | 0.20% | 03/25/2021 | 40,000 | 40,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (3 mo. USD LIBOR - 0.11%)(b) | 0.16% | 04/09/2021 | 12,000 | 12,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.17%)(b) | 0.26% | 04/09/2021 | 14,000 | 14,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (3 mo. USD LIBOR - 0.11%)(b) | 0.16% | 04/13/2021 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (3 mo. USD LIBOR - 0.14%)(b) | 0.13% | 04/14/2021 | 12,000 | 12,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (3 mo. USD LIBOR - 0.14%)(b) | 0.13% | 04/19/2021 | 16,000 | 16,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.07%)(b) | 0.16% | 04/21/2021 | 20,000 | 20,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.16%)(b) | 0.25% | 05/07/2021 | 10,000 | 10,001,724 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.10%)(b) | 0.19% | 07/09/2021 | 25,000 | 25,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.08%)(b) | 0.17% | 07/23/2021 | 10,000 | 10,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.14%)(b) | 0.23% | 08/18/2021 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.06%)(b) | 0.15% | 08/24/2021 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.09%)(b) | 0.18% | 09/10/2021 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.15%)(b) | 0.24% | 11/15/2021 | 3,000 | 3,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.13%)(b) | 0.22% | 08/05/2022 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.09%)(b) | 0.18% | 08/19/2022 | 25,000 | 25,000,000 | ||||||||||||
| ||||||||||||||||
1,046,899,759 | ||||||||||||||||
| ||||||||||||||||
Federal Home Loan Mortgage Corp. (FHLMC)-3.13% | ||||||||||||||||
Federal Home Loan Mortgage Corp.(a) | 0.19% | 10/19/2020 | 10,000 | 9,997,466 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Mortgage Corp. | 1.88% | 11/17/2020 | 1,500 | 1,504,150 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Mortgage Corp. (SOFR + 0.04%)(b) | 0.13% | 12/14/2020 | 15,000 | 15,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Mortgage Corp. (SOFR + 0.03%)(b) | 0.12% | 02/05/2021 | 7,000 | 7,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Mortgage Corp. (SOFR + 0.03%)(b) | 0.12% | 02/19/2021 | 4,000 | 4,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Mortgage Corp. (SOFR + 0.03%)(b) | 0.12% | 02/24/2021 | 30,000 | 30,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Mortgage Corp. (SOFR + 0.12%)(b) | 0.21% | 06/04/2021 | 8,000 | 8,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Mortgage Corp. (SOFR + 0.32%)(b) | 0.41% | 09/30/2021 | 10,000 | 10,000,000 | ||||||||||||
| ||||||||||||||||
Federal Home Loan Mortgage Corp. (SOFR + 0.07%)(b) | 0.16% | 08/12/2022 | 26,000 | 26,000,000 | ||||||||||||
| ||||||||||||||||
111,501,616 | ||||||||||||||||
| ||||||||||||||||
Federal National Mortgage Association (FNMA)-3.33% | ||||||||||||||||
Federal National Mortgage Association(a) | 0.25% | 09/23/2020 | 30,000 | 29,995,435 | ||||||||||||
| ||||||||||||||||
Federal National Mortgage Association (SOFR + 0.04%)(b) | 0.13% | 01/29/2021 | 23,000 | 22,989,084 | ||||||||||||
| ||||||||||||||||
Federal National Mortgage Association (SOFR + 0.25%)(b) | 0.34% | 03/24/2021 | 20,000 | 20,000,000 | ||||||||||||
| ||||||||||||||||
Federal National Mortgage Association (SOFR + 0.21%)(b) | 0.30% | 07/01/2021 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
Federal National Mortgage Association (SOFR + 0.23%)(b) | 0.32% | 07/06/2021 | 19,000 | 19,000,000 | ||||||||||||
| ||||||||||||||||
Federal National Mortgage Association (SOFR + 0.30%)(b) | 0.39% | 01/07/2022 | 17,000 | 17,000,000 | ||||||||||||
| ||||||||||||||||
Federal National Mortgage Association (SOFR + 0.20%)(b) | 0.29% | 06/15/2022 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
118,984,519 | ||||||||||||||||
| ||||||||||||||||
U.S. International Development Finance Corp. (DFC)-0.69% | ||||||||||||||||
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | 0.18% | 06/15/2025 | 5,000 | 5,000,000 | ||||||||||||
| ||||||||||||||||
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | 0.16% | 02/15/2028 | 8,157 | 8,157,400 | ||||||||||||
| ||||||||||||||||
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | 0.18% | 02/15/2028 | 8,333 | 8,333,333 | ||||||||||||
| ||||||||||||||||
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | 0.14% | 10/15/2040 | 3,200 | 3,200,000 | ||||||||||||
| ||||||||||||||||
24,690,733 | ||||||||||||||||
| ||||||||||||||||
Total U.S. Government Sponsored Agency Securities | 1,355,068,256 | |||||||||||||||
| ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES (excluding Repurchase Agreements)-81.71% | 2,917,095,461 | |||||||||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Government Money Market Fund |
Interest Rate | Maturity Date | Repurchase Amount | Value | |||||||||||||
| ||||||||||||||||
Repurchase Agreements-20.53%(d) | ||||||||||||||||
BNP Paribas Securities Corp., joint term agreement dated 08/05/2020, aggregate maturing value of $2,355,215,875 (collateralized by domestic agency mortgage-backed securities, U.S. government sponsored agency obligations and U.S. Treasury obligations valued at $2,402,100,000; 0.00% - 7.63%; 09/10/2020 - 10/20/2067)(e) | 0.11% | 09/04/2020 | $ | 155,014,208 | $ | 155,000,000 | ||||||||||
| ||||||||||||||||
ING Financial Markets, LLC, joint term agreement dated 07/23/2020, aggregate maturing value of $150,041,875 (collateralized by domestic agency mortgage-backed securities valued at $153,000,002; 2.50% -4.50%; 04/01/2038 - 01/01/2057) | 0.15% | 09/28/2020 | 20,005,583 | 20,000,000 | ||||||||||||
| ||||||||||||||||
ING Financial Markets, LLC, joint term agreement dated 08/20/2020, aggregate maturing value of $300,026,667 (collateralized by domestic agency mortgage-backed securities valued at $306,000,000; 3.00% -5.00%; 09/01/2042 - 06/01/2056) | 0.10% | 09/21/2020 | 25,002,222 | 25,000,000 | ||||||||||||
| ||||||||||||||||
J.P. Morgan Securities LLC, joint agreement dated 08/31/2020, aggregate maturing value of $500,001,250 (collateralized by domestic agency mortgage-backed securities valued at $510,000,000; 0.81% - 5.50%; 04/01/2026 - 07/01/2056) | 0.09% | 09/01/2020 | 46,984,720 | 46,984,603 | ||||||||||||
| ||||||||||||||||
J.P. Morgan Securities LLC, joint open agreement dated 03/27/2020 (collateralized by U.S. Treasury obligations valued at $867,000,195; 0.13% - 2.75%; 04/30/2021 - 11/15/2023)(f) | 0.07% | - | - | 15,000,000 | ||||||||||||
| ||||||||||||||||
J.P. Morgan Securities LLC, joint open agreement dated 05/02/2019 (collateralized by domestic agency mortgage-backed securities and a U.S. treasury obligation valued at $510,000,087; 0.00% - 7.50%; 12/03/2020 - 09/01/2050)(f) | 0.08% | - | - | 28,000,000 | ||||||||||||
| ||||||||||||||||
J.P. Morgan Securities LLC, joint open agreement dated 05/15/2019 (collateralized by domestic agency mortgage-backed securities and a U.S. treasury obligation valued at $295,800,007; 0.00% - 8.13%; 08/15/2021 - 09/01/2057)(f) | 0.12% | - | - | 15,000,000 | ||||||||||||
| ||||||||||||||||
J.P. Morgan Securities LLC, joint open agreement dated 10/15/2019 (collateralized by domestic agency mortgage-backed securities and a U.S. treasury obligation valued at $408,000,043; 0.61% - 8.50%; 12/01/2020 - 02/16/2058)(f) | 0.09% | - | - | 25,000,000 | ||||||||||||
| ||||||||||||||||
Lloyds Bank PLC, joint term agreement dated 07/22/2020, aggregate maturing value of $500,230,000 (collateralized by U.S. Treasury obligations valued at $504,122,044; 2.00% - 2.63%; 12/31/2023 - 01/31/2026) | 0.18% | 10/23/2020 | 15,006,900 | 15,000,000 | ||||||||||||
| ||||||||||||||||
Lloyds Bank PLC, joint term agreement dated 07/22/2020, aggregate maturing value of $500,245,000 (collateralized by U.S. Treasury obligations valued at $505,508,022; 1.63% - 2.88%; 11/15/2022 - 08/15/2028) | 0.18% | 10/30/2020 | 25,012,250 | 25,000,000 | ||||||||||||
| ||||||||||||||||
Metropolitan Life Insurance Co., joint term agreement dated 08/27/2020, aggregate maturing value of $350,014,288 (collateralized by U.S. Treasury obligations valued at $354,295,526; 0.00%; 11/15/2027 - 05/15/2046)(e) | 0.09% | 09/03/2020 | 25,004,962 | 25,004,525 | ||||||||||||
| ||||||||||||||||
Mitsubishi UFJ Trust & Banking Corp., joint term agreement dated 08/27/2020, aggregate maturing value of $1,051,268,397 (collateralized by U.S. Treasury obligations valued at $1,072,650,430; 2.00%; 04/30/2024)(e) | 0.09% | 09/03/2020 | 63,076,104 | 63,075,000 | ||||||||||||
| ||||||||||||||||
RBC Capital Markets LLC, joint term agreement dated 08/31/2020, aggregate maturing value of $1,250,000,000 (collateralized by U.S. Treasury obligations, U.S. government sponsored agency obligations, domestic agency mortgage-backed securities and a foreign corporate obligation valued at $1,275,000,249; 0.00% - 8.00%; 09/01/2020 - 08/20/2065)(b)(e) | 0.14% | 11/02/2020 | 85,000,000 | 85,000,000 | ||||||||||||
| ||||||||||||||||
RBC Dominion Securities Inc., joint agreement dated 08/31/2020, aggregate maturing value of $1,000,002,500 (collateralized by U.S. Treasury obligations and domestic agency mortgage-backed securities valued at $1,020,000,000; 0.00% - 3.00%; 05/15/2045 - 09/01/2050) | 0.09% | 09/01/2020 | 175,000,438 | 175,000,000 | ||||||||||||
| ||||||||||||||||
Societe Generale, joint open agreement dated 08/05/2020 (collateralized by U.S. Treasury obligations valued at $1,530,000,000; 0.00% - 8.13%; 09/10/2020 - 02/15/2050)(f) | 0.07% | - | - | 15,000,000 | ||||||||||||
| ||||||||||||||||
Total Repurchase Agreements (Cost $733,064,128) | 733,064,128 | |||||||||||||||
| ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES(g)-102.24% | 3,650,159,589 | |||||||||||||||
| ||||||||||||||||
OTHER ASSETS LESS LIABILITIES-(2.24)% | (79,925,978 | ) | ||||||||||||||
| ||||||||||||||||
NET ASSETS-100.00% | $ | 3,570,233,611 | ||||||||||||||
|
Investment Abbreviations:
| ||
LIBOR | -London Interbank Offered Rate | |
SOFR | -Secured Overnight Financing Rate | |
USD | -U.S. Dollar | |
VRD | -Variable Rate Demand |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Government Money Market Fund |
Notes to Schedule of Investments:
(a) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(b) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2020. |
(c) | Demand security payable upon demand by the Fund at specified time intervals no greater than thirteen months. Interest rate is redetermined periodically based on current market interest rates. Rate shown is the rate in effect on August 31, 2020. |
(d) | Principal amount equals value at period end. See Note 1I. |
(e) | The Fund may demand payment of the term repurchase agreement upon one to seven business days’ notice depending on the timing of the demand. |
(f) | Either party may terminate the agreement upon demand. Interest rates, principal amount and collateral are redetermined daily. |
(g) | Also represents cost for federal income tax purposes. |
Portfolio Composition by Maturity*
In days, as of 08/31/2020
1-7 | 13.4 | % | ||
8-30 | 13.6 | |||
31-60 | 16.2 | |||
61-90 | 18.8 | |||
91-180 | 18.5 | |||
181+ | 19.5 |
* | The number of days to maturity of each holding is determined in accordance with the provisions of Rule 2a-7 under the Investment Company Act of 1940. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Government Money Market Fund |
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, excluding repurchase agreements, at value and cost | $ | 2,917,095,461 | ||
| ||||
Repurchase agreements, at value and cost | 733,064,128 | |||
| ||||
Receivable for: | ||||
Fund shares sold | 9,044,445 | |||
| ||||
Interest | 1,385,930 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 386,064 | |||
| ||||
Other assets | 300,057 | |||
| ||||
Total assets | 3,661,276,085 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 79,966,128 | |||
| ||||
Fund shares reacquired | 9,587,190 | |||
| ||||
Amount due custodian | 207,231 | |||
| ||||
Dividends | 397 | |||
| ||||
Accrued fees to affiliates | 854,749 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 15,113 | |||
| ||||
Trustee deferred compensation and retirement plans | 411,666 | |||
| ||||
Total liabilities | 91,042,474 | |||
| ||||
Net assets applicable to shares outstanding | $ | 3,570,233,611 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 3,569,949,555 | ||
| ||||
Distributable earnings | 284,056 | |||
| ||||
$3,570,233,611 | ||||
|
Net Assets: | ||||
Invesco Cash Reserve | $ | 2,545,069,427 | ||
| ||||
Class A | $ | 415,704,699 | ||
| ||||
Class AX | $ | 74,862,448 | ||
| ||||
Class C | $ | 169,578,900 | ||
| ||||
Class CX | $ | 457,706 | ||
| ||||
Class R | $ | 176,236,156 | ||
| ||||
Class Y | $ | 62,642,084 | ||
| ||||
Investor Class | $ | 125,569,539 | ||
| ||||
Class R6 | $ | 112,652 | ||
| ||||
Shares outstanding, no par value, | ||||
Invesco Cash Reserve | 2,545,194,367 | |||
| ||||
Class A | 415,724,837 | |||
| ||||
Class AX | 74,866,147 | |||
| ||||
Class C | 169,587,196 | |||
| ||||
Class CX | 457,728 | |||
| ||||
Class R | 176,244,532 | |||
| ||||
Class Y | 62,645,188 | |||
| ||||
Investor Class | 125,575,603 | |||
| ||||
Class R6 | 112,657 | |||
| ||||
Net asset value and offering price per share for each class | $ | 1.00 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Government Money Market Fund |
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Interest | $ 7,321,634 | |||
| ||||
Expenses: | ||||
Advisory fees | 2,647,243 | |||
| ||||
Administrative services fees | 782,059 | |||
| ||||
Custodian fees | 22,800 | |||
| ||||
Distribution fees: | ||||
Invesco Cash Reserve | 2,077,299 | |||
| ||||
Class A | 249,942 | |||
| ||||
Class AX | 56,951 | |||
| ||||
Class C | 506,875 | |||
| ||||
Class CX | 2,178 | |||
| ||||
Class R | 230,535 | |||
| ||||
Transfer agent fees - Invesco Cash Reserve, A, AX, C, CX, R, Y and Investor | 2,103,677 | |||
| ||||
Transfer agent fees - R6 | 38 | |||
| ||||
Trustees’ and officers’ fees and benefits | 26,889 | |||
| ||||
Reports to shareholders | 128,232 | |||
| ||||
Professional services fees | 57,015 | |||
| ||||
Other | (28,493 | ) | ||
| ||||
Total expenses | 8,863,240 | |||
| ||||
Less: Fees waived and expense offset arrangement(s) | (3,229,317 | ) | ||
| ||||
Net expenses | 5,633,923 | |||
| ||||
Net investment income | 1,687,711 | |||
| ||||
Net realized gain from investment securities | 36,172 | |||
| ||||
Net increase in net assets resulting from operations | $ 1,723,883 | |||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Government Money Market Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2020 and the year ended February 29, 2020
(Unaudited)
August 31, | February 29, | |||||||
2020 | 2020 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 1,687,711 | $ | 34,932,076 | ||||
| ||||||||
Net realized gain | 36,172 | 9,188 | ||||||
| ||||||||
Net increase in net assets resulting from operations | 1,723,883 | 34,941,264 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Invesco Cash Reserve | (1,472,172 | ) | (30,342,270 | ) | ||||
| ||||||||
Class A | (12,336 | ) | - | |||||
| ||||||||
Class AX | (42,684 | ) | (1,262,786 | ) | ||||
| ||||||||
Class C | (9,136 | ) | (350,056 | ) | ||||
| ||||||||
Class CX | (56 | ) | (5,071 | ) | ||||
| ||||||||
Class R | (15,119 | ) | (402,873 | ) | ||||
| ||||||||
Class Y | (41,841 | ) | (572,434 | ) | ||||
| ||||||||
Investor Class | (94,347 | ) | (2,011,585 | ) | ||||
| ||||||||
Class R6 | (20 | ) | (343 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (1,687,711 | ) | (34,947,418 | ) | ||||
| ||||||||
Share transactions-net: | ||||||||
Invesco Cash Reserve | 138,925,873 | 1,106,837,803 | ||||||
| ||||||||
Class A | 415,604,533 | - | ||||||
| ||||||||
Class AX | (1,303,722 | ) | (4,941,382 | ) | ||||
| ||||||||
Class C | 126,079,007 | 4,777,928 | ||||||
| ||||||||
Class CX | (48,847 | ) | (162,552 | ) | ||||
| ||||||||
Class R | 143,913,991 | 6,425,067 | ||||||
| ||||||||
Class Y | 19,958,915 | 8,581,230 | ||||||
| ||||||||
Investor Class | 14,367,213 | (14,679,384 | ) | |||||
| ||||||||
Class R6 | 92,417 | 8,026 | ||||||
| ||||||||
Net increase in net assets resulting from share transactions | 857,589,380 | 1,106,846,736 | ||||||
| ||||||||
Net increase in net assets | 857,625,552 | 1,106,840,582 | ||||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 2,712,608,059 | 1,605,767,477 | ||||||
| ||||||||
End of period | $ | 3,570,233,611 | $ | 2,712,608,059 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco Government Money Market Fund |
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
to average | to average net | investment | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net gains | Dividends | net assets | assets without | income | ||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | (losses) | Total from | from net | Net asset | Net assets, | with fee waivers | fee waivers | (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | on securities | investment | investment | value, end | Total | end of period | and/or expenses | and/or expenses | to average | |||||||||||||||||||||||||||||||||||||||||||||
of period | income(a) | (realized) | operations | income | of period | return(b) | (000’s omitted) | absorbed | absorbed | net assets | |||||||||||||||||||||||||||||||||||||||||||||
Invesco Cash Reserve | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $1.00 | $0.00 | $ 0.00 | $0.00 | $(0.00 | ) | $1.00 | 0.06 | % | $2,545,069 | 0.32 | %(c) | 0.47 | %(c) | 0.07 | %(c) | |||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 1.00 | 0.02 | 0.00 | 0.02 | (0.02 | ) | 1.00 | 1.61 | 2,406,243 | 0.51 | 0.51 | 1.55 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 1.00 | 0.02 | (0.00 | ) | 0.02 | (0.02 | ) | 1.00 | 1.50 | 1,299,414 | 0.58 | 0.58 | 1.52 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.40 | 815,631 | 0.68 | 0.68 | 0.39 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.06 | 841,039 | 0.43 | 0.68 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.06 | 796,108 | 0.23 | 0.85 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period ended 08/31/20(d) | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.00 | 415,705 | 0.33 | (c) | 0.58 | (c) | 0.06 | (c) | ||||||||||||||||||||||||||||||||||||||||
Class AX | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.06 | 74,862 | 0.32 | (c) | 0.47 | (c) | 0.07 | (c) | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 1.00 | 0.02 | 0.00 | 0.02 | (0.02 | ) | 1.00 | 1.61 | 76,169 | 0.51 | 0.51 | 1.55 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 1.00 | 0.02 | (0.00 | ) | 0.02 | (0.02 | ) | 1.00 | 1.50 | 81,110 | 0.58 | 0.58 | 1.52 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.40 | 91,906 | 0.68 | 0.68 | 0.39 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.06 | 102,748 | 0.43 | 0.68 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.06 | 117,923 | 0.23 | 0.85 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.01 | 169,579 | 0.33 | (c) | 1.10 | (c) | 0.06 | (c) | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 1.00 | 0.01 | 0.00 | 0.01 | (0.01 | ) | 1.00 | 0.85 | 43,478 | 1.26 | 1.26 | 0.80 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | �� | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | 1.00 | 0.76 | 38,700 | 1.31 | 1.33 | 0.79 | |||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.27 | 65,411 | 0.81 | 1.43 | 0.26 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.05 | 88,605 | 0.43 | 1.43 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.06 | 90,970 | 0.23 | 1.60 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||
Class CX | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.01 | 458 | 0.41 | (c) | 1.22 | (c) | (0.02 | )(c) | |||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 1.00 | 0.01 | 0.00 | 0.01 | (0.01 | ) | 1.00 | 0.85 | 507 | 1.26 | 1.26 | 0.80 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | 1.00 | 0.77 | 669 | 1.31 | 1.33 | 0.79 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.27 | 4,114 | 0.81 | 1.43 | 0.26 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.05 | 4,959 | 0.43 | 1.43 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.06 | 6,509 | 0.23 | 1.60 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||
Class R | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.03 | 176,236 | 0.30 | (c) | 0.72 | (c) | 0.09 | (c) | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 1.00 | 0.01 | 0.00 | 0.01 | (0.01 | ) | 1.00 | 1.35 | 32,297 | 0.76 | 0.76 | 1.30 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | 1.00 | 1.25 | 25,871 | 0.83 | 0.83 | 1.27 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.27 | 27,387 | 0.80 | 0.93 | 0.27 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.05 | 34,794 | 0.43 | 0.93 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.06 | 38,241 | 0.23 | 1.10 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||
Class Y | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.08 | 62,642 | 0.27 | (c) | 0.32 | (c) | 0.12 | (c) | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 1.00 | 0.02 | 0.00 | 0.02 | (0.02 | ) | 1.00 | 1.76 | 42,686 | 0.36 | 0.36 | 1.70 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 1.00 | 0.02 | (0.00 | ) | 0.02 | (0.02 | ) | 1.00 | 1.65 | 34,105 | 0.43 | 0.43 | 1.67 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | 1.00 | 0.55 | 30,080 | 0.53 | 0.53 | 0.54 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.09 | 27,738 | 0.40 | 0.53 | 0.09 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.06 | 22,602 | 0.23 | 0.70 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||
Investor Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.08 | 125,570 | 0.27 | (c) | 0.32 | (c) | 0.12 | (c) | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 1.00 | 0.02 | 0.00 | 0.02 | (0.02 | ) | 1.00 | 1.76 | 111,208 | 0.36 | 0.36 | 1.70 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 1.00 | 0.02 | (0.00 | ) | 0.02 | (0.02 | ) | 1.00 | 1.65 | 125,886 | 0.43 | 0.43 | 1.67 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | 1.00 | 0.55 | 117,630 | 0.53 | 0.53 | 0.54 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.09 | 123,466 | 0.40 | 0.53 | 0.09 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.06 | 152,042 | 0.23 | 0.70 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||
Class R6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.09 | 113 | 0.26 | (c) | 0.31 | (c) | 0.13 | (c) | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 1.00 | 0.02 | 0.00 | 0.02 | (0.02 | ) | 1.00 | 1.81 | 20 | 0.32 | 0.32 | 1.74 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 1.00 | 0.02 | (0.00 | ) | 0.02 | (0.02 | ) | 1.00 | 1.80 | 12 | 0.36 | 0.38 | 1.74 | ||||||||||||||||||||||||||||||||||||||||||
Period ended 02/28/18(e) | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | 1.00 | 0.69 | 10 | 0.37 | (f) | 0.37 | (f) | 0.70 | (f) |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Ratios are annualized and based on average daily net assets (000’s omitted) of $2,747,152, $430,324, $75,315, $128,538, $480, $114,328, $62,477, $124,617, and $74 for Invesco Cash Reserve Shares, Class A, Class AX, Class C, Class CX, Class R, Class Y, Investor Class, and Class R6 shares, respectively. |
(d) | Commencement date of May 15, 2020. |
(e) | Commencement date of April 04, 2017. |
(f) | Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco Government Money Market Fund |
August 31, 2020
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Government Money Market Fund (the “Fund”), is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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 provide current income consistent with preservation of capital and liquidity.
The Fund currently consists of nine different classes of shares: Invesco Cash Reserve, Class A , Class AX, Class C, Class CX, Class R, Class Y, Investor Class and Class R6. Class A, Class AX and Class CX shares are closed to new investors. Class Y and Investor Class shares are available only to certain investors. Class C and Class CX shares are sold with a contingent deferred sales charges (“CDSC”). Invesco Cash Reserve, Class A, Class AX, Class R, Class Y, Investor Class and Class R6 shares are sold at net asset value. Class C shares held for ten years after purchase are eligible for automatic conversion into Invesco Cash Reserve shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares. Effective November 30, 2020, the automatic conversion pursuant to the Conversion Feature will change from ten years to eight years. The first conversion of Class C and Class CX shares to Invesco Cash Reserve shares would occur at the end of December 2020 for all Class C and Class CX shares that were held for more than eight years as of November 30, 2020.
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 Fund is a “government money market fund” as defined in Rule 2a-7 under the 1940 Act and seeks to maintain a stable or constant NAV of $1.00 per share using an amortized cost method of valuation. “Government money market funds” are required to invest at least 99.5% of their total assets in cash, Government Securities (as defined in the 1940 Act), and/ or repurchase agreements collateralized fully by cash or Government Securities. The Board of Trustees has elected not to subject the Fund to the liquidity fee and redemption gate requirement at this time, as permitted by Rule 2a-7.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations - The Fund’s securities are recorded on the basis of amortized cost which approximates value as permitted by Rule 2a-7 under the 1940 Act. This method values a security at its cost on the date of purchase and, thereafter, assumes a constant amortization to maturity of any premiums or accretion of any discounts. |
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.
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.
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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. |
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 gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized 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 realized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination - For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions - Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. |
E. | Federal Income Taxes - The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses - Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R6 are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America |
13 | Invesco Government Money Market Fund |
(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications - Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
I. | Repurchase Agreements - The Fund may enter into repurchase agreements. Collateral on repurchase agreements, including the Fund’s pro-rata interest in joint repurchase agreements, is taken into possession by the Fund upon entering into the repurchase agreement. Collateral consisting of U.S. Government Securities and U.S. Government Sponsored Agency Securities is marked to market daily to ensure its market value is at least 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements, pursuant to procedures approved by the Board of Trustees, are through participation with other mutual funds, private accounts and certain non-registered investment companies managed by the investment adviser or its affiliates (“Joint repurchase agreements”). The principal amount of the repurchase agreement is equal to the value at period-end. If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, the Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the collateral and loss of income. |
J. | Other Risks - Investments in obligations issued by agencies and instrumentalities of the U.S. Government may vary in the level of support they receive from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the Fund may not be able to recover its investment in such issuer from the U.S. Government. |
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 0.15% of the Fund’s average daily net assets.
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. (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).
The Adviser has contractually agreed, through at least May 31, 2021, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses after fee waivers and/or expense reimbursements (excluding certain items discussed below) of Invesco Cash Reserve, Class A, Class AX, Class C, Class CX, Class R, Class Y, Investor Class and Class R6 shares to 0.79%, 0.89%, 0.89%, 1.44%, 1.44%, 1.19%, 0.64%, 0.64% and 0.54%, respectively, of 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 the total annual operating expenses after fee waivers and/or expense reimbursements to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on 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. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, Invesco and/or Invesco Distributors, Inc. (“IDI”) voluntarily waived fees and/or reimbursed expenses in order to increase the Fund’s yield. Voluntary fee waivers and/or reimbursements may be modified or discontinued at any time upon consultation with the Board of Trustees without further notice to investors.
For the six months ended August 31, 2020, IDI contractually waived fees of $249,942, $381,492 and $198,570 of Class A, Class C and Class R shares, respectfully. In addition, Invesco voluntarily waived Fund level expenses of $842,504 and reimbursed class level expenses of $1,410,035, $0, $39,014, $86,882 $1,832, $15,275, $0, $0 and $0 of Invesco Cash Reserve, Class A, Class AX, Class C, Class CX, Class R, Class Y, Investor Class and Class R6 shares, respectively, in order to increase the Fund’s yield.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Also, Invesco has entered into a sub-administration agreement whereby The Bank of New York Mellon (“BNY Mellon”) serves as custodian and fund accountant and provides certain administrative services 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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with IDI to serve as the distributor for the Invesco Cash Reserve, Class A, Class AX, Class C, Class CX, Class R, Class Y, Investor Class 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 Invesco Cash Reserve, Class A, Class AX, Class C, Class CX and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.15% of the Fund’s average daily net assets of Invesco Cash Reserve shares, 0.75% of the Fund’s average daily net assets of Class C shares and 0.40% of the Fund’s average daily net assets of Class R shares. Prior to May 15, 2020, the rate for Class C shares was 0.90% of the Fund’s average daily net assets. The Fund, pursuant to the Plans, reimburses IDI for its allocated share of expenses incurred for the period, up to a maximum annual rate of 0.20% of the Fund’s average daily net assets of Class A shares, up to a maximum annual rate of 0.15% of the Fund’s average daily net assets of Class AX shares and up to a maximum annual rate of 0.90% of the average daily net assets of Class CX 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 Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. Effective May 15, 2020, IDI has contractually agreed, through at least June 30, 2021, to limit 12b-1 fees to 0.00% of average daily net assets for Class A, Class C and Class R shares. 12b-1 fees before fee waivers under this agreement are shown as Distribution fees in the Statement of Operations For the six months ended August 31, 2020, 12b-1 fees incurred for Class A, Class C and Class R shares were $0, $125,383 and $31,965, respectively, after contractual waivers of $249,942, $381,492 and $198,570 for Class A, Class C and Class R shares, respectively.
CDSC are not recorded as expenses of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended August 31, 2020, IDI advised the Fund that IDI retained $33,911, $12,583 and $342 from Invesco Cash Reserve Shares, Class C and Class CX shares, respectively, for CDSC imposed on redemptions by shareholders.
14 | Invesco Government Money Market Fund |
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 August 31, 2020, all of the securities in this Fund were valued based on Level 2 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–Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $3,771.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with BNY Mellon, 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–Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of February 29, 2020, as follows:
Capital Loss Carryforward* | ||||||
| ||||||
Expiration | Short-Term | Long-Term | Total | |||
| ||||||
Not subject to expiration | $22,196 | $20,271 | $42,467 | |||
|
* | Capital loss carryforwards are reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
15 | Invesco Government Money Market Fund |
NOTE 8–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2020(a) | February 29, 2020 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Invesco Cash Reserve | 1,956,912,941 | $ | 1,956,912,941 | 3,219,840,068 | $ | 3,219,840,068 | ||||||||||
| ||||||||||||||||
Class A(b) | 42,212,607 | 42,212,607 | - | - | ||||||||||||
| ||||||||||||||||
Class AX | 6,119,359 | 6,119,359 | 9,084,309 | 9,084,309 | ||||||||||||
| ||||||||||||||||
Class C | 84,813,473 | 84,813,473 | 62,381,745 | 62,381,745 | ||||||||||||
| ||||||||||||||||
Class CX | 19,212 | 19,212 | 88,034 | 88,034 | ||||||||||||
| ||||||||||||||||
Class R | 54,457,531 | 54,457,531 | 26,996,158 | 26,996,158 | ||||||||||||
| ||||||||||||||||
Class Y | 46,998,542 | 46,998,542 | 52,296,157 | 52,296,157 | ||||||||||||
| ||||||||||||||||
Investor Class | 42,116,657 | 42,116,657 | 35,406,235 | 35,406,235 | ||||||||||||
| ||||||||||||||||
Class R6 | 20,307 | 20,307 | 78,922 | 78,922 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Invesco Cash Reserve | 1,472,035 | 1,472,035 | 27,747,430 | 27,747,430 | ||||||||||||
| ||||||||||||||||
Class A | 4,910 | 4,910 | - | - | ||||||||||||
| ||||||||||||||||
Class AX | 40,785 | 40,785 | 1,223,418 | 1,223,418 | ||||||||||||
| ||||||||||||||||
Class C | 9,136 | 9,136 | 330,434 | 330,434 | ||||||||||||
| ||||||||||||||||
Class CX | 43 | 43 | 4,961 | 4,961 | ||||||||||||
| ||||||||||||||||
Class R | 15,119 | 15,119 | 402,873 | 402,873 | ||||||||||||
| ||||||||||||||||
Class Y | 41,841 | 41,841 | 568,606 | 568,606 | ||||||||||||
| ||||||||||||||||
Investor Class | 94,347 | 94,347 | 1,979,601 | 1,979,601 | ||||||||||||
| ||||||||||||||||
Class R6 | 12 | 12 | 152 | 152 | ||||||||||||
| ||||||||||||||||
Automatic Conversion of Class C and CX shares to Invesco Cash Reserve shares: | ||||||||||||||||
Invesco Cash Reserve | 5,066,889 | 5,066,889 | 2,691,606 | 2,691,606 | ||||||||||||
| ||||||||||||||||
Class C | (5,031,581 | ) | (5,031,581 | ) | (2,504,019 | ) | (2,504,019 | ) | ||||||||
| ||||||||||||||||
Class CX | (35,308 | ) | (35,308 | ) | (187,587 | ) | (187,587 | ) | ||||||||
| ||||||||||||||||
Issued in connection with acquisitions:(c) | ||||||||||||||||
Class A | 451,606,343 | 451,486,039 | - | - | ||||||||||||
| ||||||||||||||||
Class C | 110,567,396 | 110,537,809 | - | - | ||||||||||||
| ||||||||||||||||
Class R | 127,042,511 | 127,008,626 | - | - | ||||||||||||
| ||||||||||||||||
Class Y | 358,538 | 358,442 | - | - | ||||||||||||
| ||||||||||||||||
Class R6 | 101,127 | 101,102 | - | - | ||||||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Invesco Cash Reserve | (1,824,525,992 | ) | (1,824,525,992 | ) | (2,143,441,301 | ) | (2,143,441,301 | ) | ||||||||
| ||||||||||||||||
Class A | (78,099,023 | ) | (78,099,023 | ) | - | - | ||||||||||
| ||||||||||||||||
Class AX | (7,463,866 | ) | (7,463,866 | ) | (15,249,109 | ) | (15,249,109 | ) | ||||||||
| ||||||||||||||||
Class C | (64,249,830 | ) | (64,249,830 | ) | (55,430,232 | ) | (55,430,232 | ) | ||||||||
| ||||||||||||||||
Class CX | (32,794 | ) | (32,794 | ) | (67,960 | ) | (67,960 | ) | ||||||||
| ||||||||||||||||
Class R | (37,567,285 | ) | (37,567,285 | ) | (20,973,964 | ) | (20,973,964 | ) | ||||||||
| ||||||||||||||||
Class Y | (27,439,910 | ) | (27,439,910 | ) | (44,283,533 | ) | (44,283,533 | ) | ||||||||
| ||||||||||||||||
Investor Class | (27,843,791 | ) | (27,843,791 | ) | (52,065,220 | ) | (52,065,220 | ) | ||||||||
| ||||||||||||||||
Class R6 | (29,004 | ) | (29,004 | ) | (71,048 | ) | (71,048 | ) | ||||||||
| ||||||||||||||||
Net increase in share activity | 857,773,277 | $ | 857,589,380 | 1,106,846,736 | $ | 1,106,846,736 | ||||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 42% 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. |
(b) | Commencement date of May 15, 2020. |
(c) | After the close of business on May 15, 2020, the Fund acquired all the net assets of Invesco Oppenheimer Government Cash Reserves Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Board of Trustees of the Fund on February 14, 2020. The reorganization was executed in order to reduce overlap and increase efficiencies in the Adviser’s product line. The acquisition was accomplished by a tax-free exchange of 689,675,915 shares of the Fund for 689,675,915 shares outstanding of the Target Fund as of the close of business on May 15, 2020. Shares of the Target Fund were exchanged for the like class of shares of the Fund, based on the relative net asset value of the Target Fund to the net asset value of the Fund on the close of business, May 15, 2020. The Target Fund’s net assets as of the close of business on May 15, 2020 of $689,492,018, including $0 of unrealized appreciation (depreciation), were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $3,297,363,876 and $3,986,855,894 immediately after the acquisition. |
The pro forma results of operations for the six months ended August 31, 2020 assuming the reorganization had been completed on March 1, 2020, the beginning of the semi-annual reporting period are as follows:
16 | Invesco Government Money Market Fund |
Net investment income | $1,893,601 | |||
| ||||
Net realized gain from investment securities | 45,109 | |||
| ||||
Net increase in net assets resulting from operations | $1,938,710 | |||
|
As the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Target Fund that has been included in the Fund’s Statement of Operations since May 16, 2020.
NOTE 9–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.
17 | Invesco Government Money Market Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020. The actual ending account value and expenses for the Class A shares in the example below are based on an investment of $1,000 invested as of close of business May 15, 2020 (commencement date) and held through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period (as of close of business May 15, 2020 through August 31, 2020 for the Class A shares). Because the Class A shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||
ACTUAL | (5% annual return before expenses) | |||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||
Class | (03/01/20) | (08/31/20)1 | Period2 | (08/31/20) | Period2, 3 | Ratio | ||||||
Invesco Cash Reserve | $1,000.00 | $1,000.60 | $1.61 | $1,023.59 | $1.63 | 0.32% | ||||||
A | 1,000.00 | 1,000.00 | 0.96 | 1,023.54 | 1.68 | 0.33 | ||||||
AX | 1,000.00 | 1,000.60 | 1.61 | 1,023.59 | 1.63 | 0.32 | ||||||
C | 1,000.00 | 1,000.10 | 1.66 | 1,023.54 | 1.68 | 0.33 | ||||||
CX | 1,000.00 | 1,000.10 | 2.07 | 1,023.14 | 2.09 | 0.41 | ||||||
R | 1,000.00 | 1,000.30 | 1.51 | 1,023.69 | 1.53 | 0.30 | ||||||
Y | 1,000.00 | 1,000.80 | 1.36 | 1,023.84 | 1.38 | 0.27 | ||||||
Investor | 1,000.00 | 1,000.80 | 1.36 | 1,023.84 | 1.38 | 0.27 | ||||||
R6 | 1,000.00 | 1,000.90 | 1.31 | 1,023.89 | 1.33 | 0.26 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020 (as of close of business May 15, 2020, through August 31, 2020 for the Class A shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Actual expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. For the Class A shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 106 (as of close of business May 15, 2020 through August 31, 2020)/365. Because the Class A shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. |
3 | Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class A shares of the Fund and other funds because such data is based on a full six month period. |
18 | Invesco Government Money Market Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Government Money Market Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate
sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist
with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2019 to the performance of funds in the Broadridge performance universe and against the T-Bill 3 Month Index. The Board noted that performance of Cash Reserve shares of the Fund was in the third quintile of its performance universe for the one and three year periods and the second quintile for the five year period (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Cash Reserve shares of the Fund was below the performance of the Index for the one, three and five year periods. The Board acknowledged limitations regarding the Broadridge data, in particular that differences may exist between a Fund’s investment objective, principal investment strategies and/or investment restrictions and those of its performance peer funds. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Cash Reserve shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components. The Board noted that the Fund’s total expense ratio was in the fourth quintile of its expense group and discussed with management reasons for such relative total expenses.
19 | Invesco Government Money Market Fund |
The Board also considered the fees charged by Invesco Advisers and the Affiliated Sub-Advisers to other similarly managed client accounts. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board noted that the Fund does not benefit from economies of scale through contractual breakpoints, but does share directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain Funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The
Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
20 | Invesco Government Money Market Fund |
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Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings in various monthly and quarterly regulatory filings. The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) monthly on Form N-MFP. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. The most recent list of portfolio holdings is available at invesco.com/us. Shareholders can also look up the Fund’s Form N-MFP filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services Department at 800 959 4246, or at invesco.com/ proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-05686 and 033-39519 Invesco Distributors, Inc. GMKT-SAR-1
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Semiannual Report to Shareholders
| August 31, 2020
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| ||||
Invesco High Yield Fund | ||||
Nasdaq: | ||||
A: AMHYX ∎ C: AHYCX ∎ Y: AHHYX ∎ Investor: HYINX ∎ R5: AHIYX ∎ R6: HYIFX |
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.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Bruce Crockett | Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent |
sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Andrew Schlossberg | Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. |
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco High Yield Fund
Performance summary
| ||||
Fund vs. Indexes | ||||
Cumulative total returns, 2/29/20 to 8/31/20, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. |
| |||
Class A Shares | 0.96 | % | ||
Class C Shares | 0.57 | |||
Class Y Shares | 1.09 | |||
Investor Class Shares | 0.96 | |||
Class R5 Shares | 1.37 | |||
Class R6 Shares | 1.42 | |||
Bloomberg Barclays U.S. Aggregate Bond Index▼ (Broad Market Index) | 2.98 | |||
Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Index ▼ | 3.04 | |||
Lipper High Current Yield Bond Funds Index∎ (Peer Group Index) | 0.94 | |||
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. | ||||
The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment grade, fixed-rate bond market. |
| |||
The Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Index is an unmanaged index considered representative of the US high-yield, fixed-rate corporate bond market. Index weights for each issuer are capped at 2%. |
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The Lipper High Current Yield Bond Funds Index is an unmanaged index considered representative of high-yield bond funds tracked by Lipper. |
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The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). |
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A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
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For more information about your Fund
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.
Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
3 Invesco High Yield Fund
Average Annual Total Returns As of 8/31/20, including maximum applicable sales charges
|
| |||
Class A Shares |
| |||
Inception (7/11/78) | 7.18 | % | ||
10 Years | 4.84 | |||
5 Years | 3.23 | |||
1 Year | –2.91 | |||
Class C Shares |
| |||
Inception (8/4/97) | 3.36 | % | ||
10 Years | 4.50 | |||
5 Years | 3.32 | |||
1 Year | –0.34 | |||
Class Y Shares |
| |||
Inception (10/3/08) | 7.60 | % | ||
10 Years | 5.55 | |||
5 Years | 4.37 | |||
1 Year | 1.66 | |||
Investor Class Shares |
| |||
Inception (9/30/03) | 6.42 | % | ||
10 Years | 5.30 | |||
5 Years | 4.13 | |||
1 Year | 1.39 | |||
Class R5 Shares |
| |||
Inception (4/30/04) | 6.42 | % | ||
10 Years | 5.63 | |||
5 Years | 4.47 | |||
1 Year | 1.96 | |||
Class R6 Shares |
| |||
10 Years | 5.64 | % | ||
5 Years | 4.59 | |||
1 Year | 2.06 |
Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Class A share performance reflects the maximum 4.25% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class Y, Investor Class, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
4 Invesco High Yield Fund
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. 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 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. |
5 Invesco High Yield Fund
August 31, 2020
(Unaudited)
Principal Amount | Value | |||||||
| ||||||||
U.S. Dollar Denominated Bonds & Notes–89.70% |
| |||||||
Aerospace & Defense–2.77% |
| |||||||
Bombardier, Inc. (Canada), | ||||||||
8.75%, 12/01/2021(b) | $ | 1,508,000 | $ | 1,442,651 | ||||
| ||||||||
5.75%, 03/15/2022(b) | 1,901,000 | 1,698,543 | ||||||
| ||||||||
6.00%, 10/15/2022(b) | 1,750,000 | 1,496,250 | ||||||
| ||||||||
7.50%, 03/15/2025(b) | 4,192,000 | 3,086,360 | ||||||
| ||||||||
7.88%, 04/15/2027(b) | 2,207,000 | 1,602,790 | ||||||
| ||||||||
BWX Technologies, Inc., 4.13%, | 726,000 | 759,578 | ||||||
| ||||||||
Spirit AeroSystems, Inc., 7.50%, | 879,000 | 888,889 | ||||||
| ||||||||
TransDigm UK Holdings PLC, 6.88%, 05/15/2026 | 4,877,000 | 4,993,755 | ||||||
TransDigm, Inc., | ||||||||
6.50%, 07/15/2024 | 1,184,000 | 1,192,809 | ||||||
| ||||||||
6.50%, 05/15/2025 | 2,744,000 | 2,771,440 | ||||||
| ||||||||
6.25%, 03/15/2026(b) | 1,463,000 | 1,545,608 | ||||||
Triumph Group, Inc., | ||||||||
5.25%, 06/01/2022 | 2,243,000 | 1,757,424 | ||||||
| ||||||||
8.88%, 06/01/2024(b) | 1,227,000 | 1,298,319 | ||||||
| ||||||||
7.75%, 08/15/2025 | 3,004,000 | 1,794,890 | ||||||
| ||||||||
26,329,306 | ||||||||
| ||||||||
Agricultural & Farm Machinery–0.67% |
| |||||||
Titan International, Inc., 6.50%, | 8,534,000 | 6,400,500 | ||||||
| ||||||||
Airlines–0.49% |
| |||||||
Delta Air Lines, Inc., | ||||||||
7.00%, 05/01/2025(b) | 2,571,000 | 2,817,351 | ||||||
| ||||||||
7.38%, 01/15/2026 | 1,794,000 | 1,868,724 | ||||||
| ||||||||
4,686,075 | ||||||||
| ||||||||
Alternative Carriers–0.83% |
| |||||||
CenturyLink, Inc., Series Y, 7.50%, 04/01/2024 | 4,012,000 | 4,553,620 | ||||||
Level 3 Financing, Inc., | ||||||||
5.25%, 03/15/2026 | 1,589,000 | 1,658,678 | ||||||
| ||||||||
3.63%, 01/15/2029(b) | 1,687,000 | 1,696,658 | ||||||
| ||||||||
7,908,956 | ||||||||
| ||||||||
Aluminum–0.23% |
| |||||||
Novelis Corp., 4.75%, 01/30/2030(b) | 2,120,000 | 2,152,828 | ||||||
| ||||||||
Apparel Retail–1.13% |
| |||||||
L Brands, Inc., | ||||||||
6.88%, 11/01/2035 | 4,092,000 | 4,195,118 | ||||||
| ||||||||
6.75%, 07/01/2036 | 1,392,000 | 1,424,503 | ||||||
| ||||||||
Michaels Stores, Inc., 8.00%, 07/15/2027(b) | 5,027,000 | 5,085,766 | ||||||
| ||||||||
10,705,387 | ||||||||
| ||||||||
Apparel, Accessories & Luxury Goods–0.22% |
| |||||||
William Carter Co. (The), | ||||||||
5.50%, 05/15/2025(b) | 344,000 | 367,432 | ||||||
| ||||||||
5.63%, 03/15/2027(b) | 1,629,000 | 1,735,349 | ||||||
| ||||||||
2,102,781 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Auto Parts & Equipment–1.35% |
| |||||||
Adient Global Holdings Ltd., 4.88%, 08/15/2026(b) | $ | 2,047,000 | $ | 1,922,901 | ||||
| ||||||||
Adient US LLC, 9.00%, 04/15/2025(b) | 870,000 | 967,331 | ||||||
| ||||||||
Clarios Global L.P., 6.75%, | 1,147,000 | 1,230,777 | ||||||
| ||||||||
Clarios Global L.P./Clarios US Finance Co., 8.50%, 05/15/2027(b) | 2,529,000 | 2,689,433 | ||||||
Dana, Inc., | ||||||||
5.50%, 12/15/2024 | 1,236,000 | 1,265,225 | ||||||
| ||||||||
5.38%, 11/15/2027 | 2,172,000 | 2,309,032 | ||||||
| ||||||||
5.63%, 06/15/2028 | 479,000 | 506,128 | ||||||
| ||||||||
Tenneco, Inc., 5.00%, 07/15/2026 | 2,585,000 | 1,901,668 | ||||||
| ||||||||
12,792,495 | ||||||||
| ||||||||
Automobile Manufacturers–2.34% |
| |||||||
Ford Motor Co., | ||||||||
8.50%, 04/21/2023 | 1,537,000 | 1,701,459 | ||||||
| ||||||||
9.00%, 04/22/2025 | 1,433,000 | 1,678,831 | ||||||
| ||||||||
9.63%, 04/22/2030 | 772,000 | 1,013,157 | ||||||
| ||||||||
4.75%, 01/15/2043 | 2,204,000 | 2,045,588 | ||||||
Ford Motor Credit Co. LLC, | ||||||||
5.13%, 06/16/2025 | 1,418,000 | 1,492,076 | ||||||
| ||||||||
4.39%, 01/08/2026 | 2,323,000 | 2,366,510 | ||||||
| ||||||||
5.11%, 05/03/2029 | 3,690,000 | 3,902,175 | ||||||
| ||||||||
J.B. Poindexter & Co., Inc., 7.13%, 04/15/2026(b) | 7,519,000 | 8,018,563 | ||||||
| ||||||||
Motors Liquidation Co., 8.38%, | 14,770,000 | 0 | ||||||
| ||||||||
22,218,359 | ||||||||
| ||||||||
Automotive Retail–1.99% |
| |||||||
Asbury Automotive Group, Inc., 4.75%, 03/01/2030(b) | 538,000 | 558,907 | ||||||
| ||||||||
Capitol Investment Merger Sub 2 LLC, 10.00%, 08/01/2024(b) | 7,198,000 | 7,557,900 | ||||||
| ||||||||
Group 1 Automotive, Inc., 4.00%, 08/15/2028(b) | 1,229,000 | 1,228,502 | ||||||
| ||||||||
Lithia Motors, Inc., | ||||||||
5.25%, 08/01/2025(b) | 1,930,000 | 2,007,200 | ||||||
| ||||||||
4.63%, 12/15/2027(b) | 1,157,000 | 1,223,527 | ||||||
| ||||||||
Murphy Oil USA, Inc., | ||||||||
5.63%, 05/01/2027 | 1,038,000 | 1,103,975 | ||||||
| ||||||||
4.75%, 09/15/2029 | 994,000 | 1,076,895 | ||||||
| ||||||||
Penske Automotive Group, Inc., | 3,959,000 | 4,131,078 | ||||||
| ||||||||
18,887,984 | ||||||||
| ||||||||
Broadcasting–2.06% |
| |||||||
AMC Networks, Inc., | ||||||||
5.00%, 04/01/2024 | 997,000 | 1,017,563 | ||||||
| ||||||||
4.75%, 08/01/2025 | 1,362,000 | 1,411,720 | ||||||
| ||||||||
Clear Channel Worldwide Holdings, Inc., | 7,360,000 | 7,231,973 | ||||||
| ||||||||
Gray Television, Inc., | 2,563,000 | 2,787,391 | ||||||
| ||||||||
iHeartCommunications, Inc., | 5,588,000 | 5,626,082 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco High Yield Fund
Principal Amount | Value | |||||||
| ||||||||
Broadcasting–(continued) |
| |||||||
TV Azteca S.A.B. de C.V. (Mexico), 8.25%, 08/09/2024(b) | $ | 2,704,000 | $ | 1,510,576 | ||||
| ||||||||
19,585,305 | ||||||||
| ||||||||
Building Products–0.36% |
| |||||||
Standard Industries, Inc., | ||||||||
6.00%, 10/15/2025(b) | 2,075,000 | 2,145,135 | ||||||
| ||||||||
3.38%, 01/15/2031(b) | 1,280,000 | 1,275,200 | ||||||
| ||||||||
3,420,335 | ||||||||
| ||||||||
Cable & Satellite–5.54% |
| |||||||
Altice Financing S.A. (Luxembourg), 7.50%, 05/15/2026(b) | 3,281,000 | 3,505,585 | ||||||
| ||||||||
CCO Holdings LLC/CCO Holdings Capital Corp., | ||||||||
5.75%, 02/15/2026(b) | 6,913,000 | 7,253,880 | ||||||
| ||||||||
4.50%, 08/15/2030(b) | 4,931,000 | 5,239,212 | ||||||
| ||||||||
CSC Holdings LLC, | ||||||||
6.50%, 02/01/2029(b) | 1,924,000 | 2,171,715 | ||||||
| ||||||||
5.75%, 01/15/2030(b) | 826,000 | 901,377 | ||||||
| ||||||||
4.63%, 12/01/2030(b) | 7,073,000 | 7,243,424 | ||||||
| ||||||||
DISH DBS Corp., | ||||||||
5.88%, 11/15/2024 | 5,753,000 | 6,089,191 | ||||||
| ||||||||
7.75%, 07/01/2026 | 2,600,000 | 2,980,289 | ||||||
| ||||||||
DISH Network Corp., Conv., | 3,693,000 | 3,651,542 | ||||||
| ||||||||
Intelsat Jackson Holdings S.A. (Luxembourg), | ||||||||
5.50%, 08/01/2023(c) | 2,970,000 | 1,982,549 | ||||||
| ||||||||
8.50%, 10/15/2024(b)(c) | 3,410,000 | 2,326,984 | ||||||
| ||||||||
9.75%, 07/15/2025(b)(c) | 2,428,000 | 1,679,205 | ||||||
| ||||||||
Telenet Finance Luxembourg Notes S.a.r.l. (Belgium), | 2,200,000 | 2,349,600 | ||||||
| ||||||||
UPC Holding B.V. (Netherlands), 5.50%, 01/15/2028(b) | 1,000,000 | 1,046,155 | ||||||
| ||||||||
Virgin Media Secured Finance PLC (United Kingdom), | 3,273,000 | 3,457,106 | ||||||
| ||||||||
Ziggo B.V. (Netherlands), | 225,000 | 236,892 | ||||||
| ||||||||
Ziggo Bond Co B.V. (Netherlands), 5.13%, 02/28/2030(b) | 488,000 | 517,890 | ||||||
| ||||||||
52,632,596 | ||||||||
| ||||||||
Casinos & Gaming–2.90% |
| |||||||
Boyd Gaming Corp., | ||||||||
8.63%, 06/01/2025(b) | 1,150,000 | 1,269,313 | ||||||
| ||||||||
6.38%, 04/01/2026 | 683,000 | 712,984 | ||||||
| ||||||||
6.00%, 08/15/2026 | 1,400,000 | 1,473,234 | ||||||
| ||||||||
Caesars Entertainment, Inc., | 1,712,000 | 1,816,954 | ||||||
| ||||||||
Caesars Resort Collection LLC/CRC Finco, Inc., | 597,000 | 626,104 | ||||||
| ||||||||
Cirsa Finance International S.a.r.l. (Spain), | 1,368,000 | 1,244,880 | ||||||
| ||||||||
Codere Finance 2 (Luxembourg) S.A. (Spain), | 2,114,000 | 1,295,353 | ||||||
| ||||||||
Melco Resorts Finance Ltd. (Hong Kong), | 1,606,000 | 1,668,907 | ||||||
| ||||||||
MGM China Holdings Ltd. (Macau), | 851,000 | 903,200 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Casinos & Gaming–(continued) |
| |||||||
MGM Resorts International, | ||||||||
7.75%, 03/15/2022 | $ | 4,762,000 | $ | 5,062,601 | ||||
| ||||||||
6.75%, 05/01/2025 | 2,958,000 | 3,169,719 | ||||||
| ||||||||
Scientific Games International, Inc., | ||||||||
8.63%, 07/01/2025(b) | 1,222,000 | 1,276,171 | ||||||
| ||||||||
8.25%, 03/15/2026(b) | 1,176,000 | 1,213,438 | ||||||
| ||||||||
7.00%, 05/15/2028(b) | 1,734,000 | 1,702,632 | ||||||
| ||||||||
Station Casinos LLC, 4.50%, 02/15/2028(b) | 1,918,000 | 1,828,046 | ||||||
| ||||||||
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 5.50%, 03/01/2025(b) | 2,344,000 | 2,324,955 | ||||||
| ||||||||
27,588,491 | ||||||||
| ||||||||
Coal & Consumable Fuels–0.91% |
| |||||||
Parsley Energy LLC/Parsley Finance Corp., | ||||||||
5.38%, 01/15/2025(b) | 1,043,000 | 1,065,696 | ||||||
| ||||||||
4.13%, 02/15/2028(b) | 765,000 | 741,973 | ||||||
| ||||||||
SunCoke Energy Partners L.P./SunCoke Energy Partners Finance Corp., | 7,578,000 | 6,815,388 | ||||||
| ||||||||
8,623,057 | ||||||||
| ||||||||
Commodity Chemicals–0.74% |
| |||||||
Koppers, Inc., | 3,437,000 | 3,542,207 | ||||||
| ||||||||
Olin Corp., | 3,504,000 | 3,508,397 | ||||||
| ||||||||
7,050,604 | ||||||||
| ||||||||
Communications Equipment–0.35% |
| |||||||
Hughes Satellite Systems Corp., | ||||||||
7.63%, 06/15/2021 | 1,971,000 | 2,047,376 | ||||||
| ||||||||
5.25%, 08/01/2026 | 1,169,000 | 1,284,217 | ||||||
| ||||||||
3,331,593 | ||||||||
| ||||||||
Construction & Engineering–0.71% |
| |||||||
New Enterprise Stone & Lime Co., Inc., | 2,047,000 | 2,227,852 | ||||||
| ||||||||
Pike Corp., | 1,581,000 | 1,596,810 | ||||||
| ||||||||
Valmont Industries, Inc., | 2,627,000 | 2,889,163 | ||||||
| ||||||||
6,713,825 | ||||||||
| ||||||||
Construction Materials–0.20% |
| |||||||
Cemex S.A.B. de C.V. (Mexico), | 1,819,000 | 1,871,860 | ||||||
| ||||||||
Consumer Finance–1.46% |
| |||||||
Navient Corp., | ||||||||
7.25%, 01/25/2022 | 2,466,000 | 2,594,787 | ||||||
| ||||||||
7.25%, 09/25/2023 | 5,428,000 | 5,748,659 | ||||||
| ||||||||
5.00%, 03/15/2027 | 1,773,000 | 1,714,917 | ||||||
| ||||||||
OneMain Finance Corp., | 3,347,000 | 3,779,934 | ||||||
| ||||||||
13,838,297 | ||||||||
| ||||||||
Copper–1.91% |
| |||||||
First Quantum Minerals Ltd. (Zambia), | 4,660,000 | 4,759,165 | ||||||
| ||||||||
Freeport-McMoRan, Inc., | 7,317,000 | 8,292,319 | ||||||
| ||||||||
Taseko Mines Ltd. (Canada), | 5,538,000 | 5,114,426 | ||||||
| ||||||||
18,165,910 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco High Yield Fund
Principal Amount | Value | |||||||
| ||||||||
Data Processing & Outsourced Services–0.48% |
| |||||||
Alliance Data Systems Corp., | $ | 2,713,000 | $ | 2,599,393 | ||||
| ||||||||
Cardtronics, Inc./Cardtronics USA, Inc., | 1,958,000 | 1,984,717 | ||||||
| ||||||||
4,584,110 | ||||||||
| ||||||||
Department Stores–0.93% |
| |||||||
Kohl’s Corp., | ||||||||
9.50%, 05/15/2025 | 295,000 | 355,478 | ||||||
| ||||||||
5.55%, 07/17/2045 | 2,617,000 | 2,388,207 | ||||||
| ||||||||
Macy’s, Inc., | 3,010,000 | 3,163,691 | ||||||
| ||||||||
Nordstrom, Inc., | 2,640,000 | 2,914,547 | ||||||
| ||||||||
8,821,923 | ||||||||
| ||||||||
Distributors–0.73% |
| |||||||
Core & Main Holdings L.P., 9.38% PIK Rate, 8.63% Cash Rate, 09/15/2024(b)(e) | 6,738,000 | 6,902,946 | ||||||
| ||||||||
Diversified Banks–0.88% |
| |||||||
Barclays Bank PLC (United Kingdom), | 1,212,000 | 1,347,998 | ||||||
| ||||||||
Credit Agricole S.A. (France), 8.13%(b)(f)(g) | 2,881,000 | 3,426,589 | ||||||
| ||||||||
Societe Generale S.A. (France), 7.38%(b)(f)(g) | 1,804,000 | 1,872,678 | ||||||
| ||||||||
Standard Chartered PLC (United Kingdom), 7.50%(b)(f)(g) | 1,635,000 | 1,725,816 | ||||||
| ||||||||
8,373,081 | ||||||||
| ||||||||
Diversified Chemicals–0.37% |
| |||||||
Chemours Co. (The), | 1,621,000 | 1,659,093 | ||||||
| ||||||||
Trinseo Materials Operating S.C.A./Trinseo Materials Finance, Inc., | 1,885,000 | 1,896,169 | ||||||
| ||||||||
3,555,262 | ||||||||
| ||||||||
Diversified Metals & Mining–0.40% |
| |||||||
Hudbay Minerals, Inc. (Peru), | ||||||||
7.25%, 01/15/2023(b) | 1,028,000 | 1,044,597 | ||||||
| ||||||||
7.63%, 01/15/2025(b) | 2,666,000 | 2,771,147 | ||||||
| ||||||||
3,815,744 | ||||||||
| ||||||||
Diversified REITs–1.22% |
| |||||||
Colony Capital, Inc.,Conv., | ||||||||
3.88%, 01/15/2021 | 224,000 | 224,612 | ||||||
| ||||||||
5.00%, 04/15/2023 | 2,624,000 | 2,529,242 | ||||||
| ||||||||
iStar, Inc., | 5,841,000 | 5,807,560 | ||||||
| ||||||||
VICI Properties L.P./VICI Note Co., Inc., | ||||||||
3.50%, 02/15/2025(b) | 1,002,000 | 1,006,013 | ||||||
| ||||||||
3.75%, 02/15/2027(b) | 1,007,000 | 1,006,215 | ||||||
| ||||||||
4.13%, 08/15/2030(b) | 1,007,000 | 1,010,474 | ||||||
| ||||||||
11,584,116 | ||||||||
| ||||||||
Electric Utilities–0.75% |
| |||||||
DPL, Inc., 4.35%, 04/15/2029 | 2,376,000 | 2,606,935 | ||||||
| ||||||||
NRG Energy, Inc., | ||||||||
6.63%, 01/15/2027 | 416,000 | 445,811 | ||||||
| ||||||||
5.25%, 06/15/2029(b) | �� | 2,205,000 | 2,408,555 | |||||
|
Principal Amount | Value | |||||||
| ||||||||
Electric Utilities–(continued) |
| |||||||
Talen Energy Supply LLC, 7.63%, 06/01/2028(b) | $ | 1,594,000 | $ | 1,653,129 | ||||
| ||||||||
7,114,430 | ||||||||
| ||||||||
Electrical Components & Equipment–0.37% |
| |||||||
EnerSys, | 3,225,000 | 3,358,370 | ||||||
| ||||||||
4.38%, 12/15/2027(b) | 180,000 | 185,737 | ||||||
| ||||||||
3,544,107 | ||||||||
| ||||||||
Electronic Components–0.08% |
| |||||||
Sensata Technologies, Inc., | 737,000 | 737,921 | ||||||
| ||||||||
Electronic Equipment & Instruments–0.39% |
| |||||||
MTS Systems Corp., | 3,653,000 | 3,713,055 | ||||||
| ||||||||
Environmental & Facilities Services–0.41% |
| |||||||
Covanta Holding Corp., | 595,000 | 610,797 | ||||||
| ||||||||
GFL Environmental, Inc. (Canada), 7.00%, 06/01/2026(b) | 584,000 | 614,660 | ||||||
| ||||||||
Waste Pro USA, Inc., | 2,603,000 | 2,681,416 | ||||||
| ||||||||
3,906,873 | ||||||||
| ||||||||
Fertilizers & Agricultural Chemicals–0.22% |
| |||||||
OCI N.V. (Netherlands), | 2,022,000 | 2,107,935 | ||||||
| ||||||||
Food Retail–1.14% |
| |||||||
Albertsons Cos., Inc./Safeway, Inc./New Albertsons L.P./Albertson’s LLC, | 1,891,000 | 2,117,239 | ||||||
| ||||||||
4.63%, 01/15/2027(b) | 296,000 | 313,078 | ||||||
| ||||||||
5.88%, 02/15/2028(b) | 2,047,000 | 2,214,219 | ||||||
| ||||||||
3.50%, 03/15/2029(b) | 2,408,000 | 2,432,080 | ||||||
| ||||||||
Simmons Foods, Inc., | 3,672,000 | 3,772,264 | ||||||
| ||||||||
10,848,880 | ||||||||
| ||||||||
Forest Products–0.44% |
| |||||||
Norbord, Inc. (Canada), | 3,894,000 | 4,170,708 | ||||||
| ||||||||
Gas Utilities–0.59% |
| |||||||
AmeriGas Partners L.P./AmeriGas Finance Corp., | 2,322,000 | 2,636,654 | ||||||
| ||||||||
Suburban Propane Partners L.P./Suburban Energy Finance Corp., 5.50%, 06/01/2024 | 2,509,000 | 2,556,257 | ||||||
| ||||||||
Superior Plus L.P./Superior General Partner, Inc. (Canada), | 398,000 | 429,267 | ||||||
| ||||||||
5,622,178 | ||||||||
| ||||||||
Health Care Facilities–2.37% |
| |||||||
Acadia Healthcare Co., Inc., | ||||||||
5.63%, 02/15/2023 | 2,000 | 2,030 | ||||||
| ||||||||
6.50%, 03/01/2024 | 3,042,000 | 3,144,348 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco High Yield Fund
Principal Amount | Value | |||||||
| ||||||||
Health Care Facilities–(continued) |
| |||||||
Community Health Systems, Inc., | ||||||||
9.88%, 06/30/2023(b)(h) | $ | 1,551,000 | $ | 1,308,493 | ||||
| ||||||||
6.63%, 02/15/2025(b) | 2,318,000 | 2,369,923 | ||||||
| ||||||||
8.00%, 03/15/2026(b) | 3,018,000 | 3,130,421 | ||||||
| ||||||||
Encompass Health Corp., | 1,152,000 | 1,203,840 | ||||||
| ||||||||
HCA, Inc., | ||||||||
5.38%, 02/01/2025 | 2,458,000 | 2,771,727 | ||||||
| ||||||||
5.88%, 02/15/2026 | 699,000 | 801,229 | ||||||
| ||||||||
5.38%, 09/01/2026 | 1,344,000 | 1,528,733 | ||||||
| ||||||||
5.50%, 06/15/2047 | 1,056,000 | 1,337,793 | ||||||
| ||||||||
Tenet Healthcare Corp., | ||||||||
8.13%, 04/01/2022 | 2,967,000 | 3,206,585 | ||||||
| ||||||||
7.50%, 04/01/2025(b) | 1,077,000 | 1,183,208 | ||||||
| ||||||||
4.63%, 06/15/2028(b) | 467,000 | 485,596 | ||||||
| ||||||||
22,473,926 | ||||||||
| ||||||||
Health Care REITs–0.32% |
| |||||||
MPT Operating Partnership L.P./MPT Finance Corp., | 2,851,000 | 3,019,993 | ||||||
| ||||||||
Health Care Services–1.17% |
| |||||||
DaVita, Inc., | ||||||||
4.63%, 06/01/2030(b) | 1,589,000 | 1,671,429 | ||||||
| ||||||||
3.75%, 02/15/2031(b) | 2,045,000 | 2,023,569 | ||||||
| ||||||||
Hadrian Merger Sub, Inc., | ||||||||
8.50%, 05/01/2026(b) | 5,422,000 | 5,227,838 | ||||||
| ||||||||
Team Health Holdings, Inc., | ||||||||
6.38%, 02/01/2025(b) | 3,167,000 | 2,169,395 | ||||||
| ||||||||
11,092,231 | ||||||||
| ||||||||
Homebuilding–2.12% |
| |||||||
Ashton Woods USA LLC/Ashton Woods Finance Co., | ||||||||
9.88%, 04/01/2027(b) | 4,016,000 | 4,441,937 | ||||||
| ||||||||
KB Home, | ||||||||
4.80%, 11/15/2029 | 2,081,000 | 2,259,186 | ||||||
| ||||||||
Lennar Corp., | ||||||||
8.38%, 01/15/2021 | 811,000 | 833,303 | ||||||
| ||||||||
5.25%, 06/01/2026 | 926,000 | 1,048,315 | ||||||
| ||||||||
Mattamy Group Corp. (Canada), | ||||||||
5.25%, 12/15/2027(b) | 1,925,000 | 2,017,641 | ||||||
| ||||||||
Meritage Homes Corp., | ||||||||
5.13%, 06/06/2027 | 2,606,000 | 2,849,817 | ||||||
| ||||||||
PulteGroup, Inc., | ||||||||
6.38%, 05/15/2033 | 81,000 | 102,174 | ||||||
| ||||||||
Taylor Morrison Communities, Inc., | ||||||||
6.63%, 07/15/2027(b) | 4,118,000 | 4,466,753 | ||||||
| ||||||||
5.75%, 01/15/2028(b) | 1,901,000 | 2,139,252 | ||||||
| ||||||||
20,158,378 | ||||||||
| ||||||||
Hotel & Resort REITs–0.25% |
| |||||||
Service Properties Trust, | 2,617,000 | 2,345,486 | ||||||
| ||||||||
Hotels, Resorts & Cruise Lines–0.87% |
| |||||||
Carnival Corp., | ||||||||
11.50%, 04/01/2023(b) | 2,099,000 | 2,344,572 | ||||||
| ||||||||
10.50%, 02/01/2026(b) | 686,000 | 722,015 | ||||||
| ||||||||
Royal Caribbean Cruises Ltd., | ||||||||
10.88%, 06/01/2023(b) | 1,440,000 | 1,588,887 | ||||||
| ||||||||
9.13%, 06/15/2023(b) | 1,377,000 | 1,451,014 | ||||||
| ||||||||
11.50%, 06/01/2025(b) | 359,000 | 416,573 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Hotels, Resorts & Cruise Lines–(continued) |
| |||||||
Sabre GLBL, Inc., | ||||||||
7.38%, 09/01/2025(b) | $ | 1,671,520 | $ | 1,754,511 | ||||
| ||||||||
8,277,572 | ||||||||
| ||||||||
Household Products–0.55% |
| |||||||
Energizer Holdings, Inc., | ||||||||
6.38%, 07/15/2026(b) | 540,000 | 573,756 | ||||||
| ||||||||
7.75%, 01/15/2027(b) | 1,946,000 | 2,135,735 | ||||||
| ||||||||
4.75%, 06/15/2028(b) | 479,000 | 500,459 | ||||||
| ||||||||
Spectrum Brands, Inc., | ||||||||
5.75%, 07/15/2025 | 1,970,000 | 2,038,950 | ||||||
| ||||||||
5,248,900 | ||||||||
| ||||||||
Housewares & Specialties–0.14% |
| |||||||
Newell Brands, Inc., | 1,254,000 | 1,360,302 | ||||||
| ||||||||
Independent Power Producers & Energy Traders–0.43% |
| |||||||
AES Corp. (The), | ||||||||
5.50%, 04/15/2025 | 1,466,000 | 1,514,671 | ||||||
| ||||||||
AES Panama Generation Holdings SRL (Panama), | ||||||||
4.38%, 05/31/2030(b) | 1,465,000 | 1,527,153 | ||||||
| ||||||||
Calpine Corp., | ||||||||
5.00%, 02/01/2031(b) | 993,000 | 1,039,765 | ||||||
| ||||||||
4,081,589 | ||||||||
| ||||||||
Industrial Machinery–1.93% |
| |||||||
Clark Equipment Co. (South Korea), 5.88%, 06/01/2025(b) | 1,046,000 | 1,104,184 | ||||||
| ||||||||
Cleaver-Brooks, Inc., | ||||||||
7.88%, 03/01/2023(b) | 7,160,000 | 7,024,998 | ||||||
| ||||||||
EnPro Industries, Inc., | ||||||||
5.75%, 10/15/2026 | 4,670,000 | 4,896,775 | ||||||
| ||||||||
Mueller Industries, Inc., | ||||||||
6.00%, 03/01/2027 | 5,206,000 | 5,297,105 | ||||||
| ||||||||
18,323,062 | ||||||||
| ||||||||
Integrated Oil & Gas–2.35% |
| |||||||
Cenovus Energy, Inc. (Canada), | 3,598,000 | 3,457,132 | ||||||
| ||||||||
Occidental Petroleum Corp., | ||||||||
2.70%, 08/15/2022 | 3,877,000 | 3,818,845 | ||||||
| ||||||||
2.90%, 08/15/2024 | 2,342,000 | 2,159,019 | ||||||
| ||||||||
3.20%, 08/15/2026 | 5,000,000 | 4,394,400 | ||||||
| ||||||||
6.38%, 09/01/2028 | 1,202,000 | 1,218,678 | ||||||
| ||||||||
3.50%, 08/15/2029 | 1,303,000 | 1,122,665 | ||||||
| ||||||||
6.20%, 03/15/2040 | 2,474,000 | 2,356,485 | ||||||
| ||||||||
4.10%, 02/15/2047 | 3,430,000 | 2,623,333 | ||||||
| ||||||||
Petroleos Mexicanos (Mexico), | ||||||||
5.95%, 01/28/2031(b) | 1,243,000 | 1,124,480 | ||||||
| ||||||||
22,275,037 | ||||||||
| ||||||||
Integrated Telecommunication Services–2.96% |
| |||||||
Altice France Holding S.A. (Luxembourg), | ||||||||
10.50%, 05/15/2027(b) | 2,752,000 | 3,159,640 | ||||||
| ||||||||
Altice France S.A. (France), | ||||||||
7.38%, 05/01/2026(b) | 4,493,000 | 4,774,711 | ||||||
| ||||||||
CommScope, Inc., | ||||||||
8.25%, 03/01/2027(b) | 5,590,000 | 6,058,134 | ||||||
| ||||||||
Embarq Corp., | ||||||||
8.00%, 06/01/2036 | 2,986,000 | 3,587,530 | ||||||
| ||||||||
Frontier Communications Corp., | ||||||||
10.50%, 09/15/2022(c) | 9,954,000 | 4,439,633 | ||||||
| ||||||||
11.00%, 09/15/2025(c) | 4,028,000 | 1,732,040 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco High Yield Fund
Principal Amount | Value | |||||||
| ||||||||
Integrated Telecommunication Services–(continued) |
| |||||||
Telecom Italia Capital S.A. (Italy), 6.38%, 11/15/2033 | $ | 683,000 | $ | 851,718 | ||||
| ||||||||
7.20%, 07/18/2036 | 2,637,000 | 3,475,962 | ||||||
| ||||||||
28,079,368 | ||||||||
| ||||||||
Interactive Media & Services–0.96% |
| |||||||
Cumulus Media New Holdings, Inc., 6.75%, 07/01/2026(b) | 3,521,000 | 3,174,939 | ||||||
| ||||||||
Diamond Sports Group LLC/Diamond Sports Finance Co., | ||||||||
5.38%, 08/15/2026(b) | 3,230,000 | 2,527,200 | ||||||
| ||||||||
6.63%, 08/15/2027(b) | 6,115,000 | 3,447,331 | ||||||
| ||||||||
9,149,470 | ||||||||
| ||||||||
Internet & Direct Marketing Retail–0.28% |
| |||||||
QVC, Inc., 5.45%, 08/15/2034 | 2,617,000 | 2,617,000 | ||||||
| ||||||||
Internet Services & Infrastructure–0.03% |
| |||||||
EIG Investors Corp., 10.88%, 02/01/2024 | 302,000 | 313,671 | ||||||
| ||||||||
Investment Banking & Brokerage–0.32% |
| |||||||
NFP Corp., 6.88%, 08/15/2028(b) | 2,875,000 | 3,009,694 | ||||||
| ||||||||
Leisure Facilities–0.05% |
| |||||||
Viking Cruises Ltd., 13.00%, 05/15/2025(b) | 452,000 | 502,850 | ||||||
| ||||||||
Leisure Products–0.32% |
| |||||||
Mattel, Inc., 6.75%, 12/31/2025(b) | 2,842,000 | 3,018,915 | ||||||
| ||||||||
Managed Health Care–0.57% |
| |||||||
Centene Corp., | 2,165,000 | 2,292,194 | ||||||
| ||||||||
5.38%, 08/15/2026(b) | 1,185,000 | 1,259,436 | ||||||
| ||||||||
4.63%, 12/15/2029 | 1,697,000 | 1,861,838 | ||||||
| ||||||||
5,413,468 | ||||||||
| ||||||||
Metal & Glass Containers–0.47% |
| |||||||
Ardagh Packaging Finance |
| |||||||
Holdings USA, Inc., 6.00%, 02/15/2025(b) | 343,000 | 358,135 | ||||||
| ||||||||
Flex Acquisition Co., Inc., 7.88%, 07/15/2026(b) | 2,955,000 | 3,108,941 | ||||||
| ||||||||
Owens–Brockway Glass Container, Inc., 6.63%, 05/13/2027(b) | 899,000 | 990,585 | ||||||
| ||||||||
4,457,661 | ||||||||
| ||||||||
Movies & Entertainment–1.64% |
| |||||||
AMC Entertainment Holdings, Inc., 10.50%, 04/15/2025(b) | 5,131,000 | 4,528,107 | ||||||
| ||||||||
10.50%, 04/24/2026(b) | 1,323,000 | 1,144,395 | ||||||
| ||||||||
6.00% PIK Rate, 5.00% Cash Rate, 06/15/2026(b)(e) | 6,488,000 | 2,450,518 | ||||||
| ||||||||
Netflix, Inc., | 2,737,000 | 3,364,553 | ||||||
| ||||||||
5.38%, 11/15/2029(b) | 3,407,000 | 4,101,176 | ||||||
| ||||||||
15,588,749 | ||||||||
| ||||||||
Oil & Gas Drilling–0.57% |
| |||||||
Diamond Offshore Drilling, Inc., 4.88%, 11/02/2043(c) | 1,582,000 | 164,995 | ||||||
| ||||||||
Ensign Drilling, Inc. (Canada), 9.25%, 04/15/2024(b) | 2,614,000 | 1,053,743 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Oil & Gas Drilling–(continued) |
| |||||||
Nabors Industries, Inc., 5.75%, 02/01/2025 | $ | 2,027,000 | $ | 590,151 | ||||
| ||||||||
Precision Drilling Corp. (Canada), 7.75%, 12/15/2023 | 666,000 | 521,907 | ||||||
| ||||||||
5.25%, 11/15/2024 | 2,437,000 | 1,720,875 | ||||||
| ||||||||
Transocean, Inc., | 873,000 | 271,721 | ||||||
| ||||||||
7.50%, 04/15/2031 | 3,905,000 | 800,525 | ||||||
| ||||||||
Valaris PLC (Saudi Arabia), 7.75%, 02/01/2026(c) | 3,841,000 | 285,790 | ||||||
| ||||||||
5,409,707 | ||||||||
| ||||||||
Oil & Gas Equipment & Services–0.07% |
| |||||||
SESI LLC, 7.13%, 12/15/2021(b) | 1,758,000 | 654,855 | ||||||
| ||||||||
Oil & Gas Exploration & Production–5.19% |
| |||||||
Antero Resources Corp., | 1,486,000 | 1,183,228 | ||||||
| ||||||||
5.00%, 03/01/2025 | 744,000 | 515,015 | ||||||
| ||||||||
Apache Corp., | 3,002,000 | 2,925,644 | ||||||
| ||||||||
4.75%, 04/15/2043 | 653,000 | 616,726 | ||||||
| ||||||||
Ascent Resources Utica Holdings LLC/ |
| |||||||
ARU Finance Corp., 10.00%, 04/01/2022(b) | 2,496,000 | 2,341,535 | ||||||
| ||||||||
Callon Petroleum Co., | 2,173,000 | 716,411 | ||||||
| ||||||||
6.38%, 07/01/2026 | 1,341,000 | 403,721 | ||||||
| ||||||||
Centennial Resource Production LLC, | 818,000 | 337,756 | ||||||
| ||||||||
CNX Resources Corp., 7.25%, 03/14/2027(b) | 1,052,000 | 1,095,416 | ||||||
| ||||||||
Comstock Resources, Inc., 9.75%, 08/15/2026 | 1,330,000 | 1,410,432 | ||||||
| ||||||||
Continental Resources, Inc., | 3,709,000 | 3,738,969 | ||||||
| ||||||||
3.80%, 06/01/2024 | 568,000 | 561,485 | ||||||
| ||||||||
Endeavor Energy Resources L.P./EER |
| |||||||
Finance, Inc., 6.63%, 07/15/2025(b) | 600,000 | 626,814 | ||||||
| ||||||||
5.75%, 01/30/2028(b) | 1,136,000 | 1,164,190 | ||||||
| ||||||||
EP Energy LLC/Everest Acquisition Finance, Inc., 8.00%, 11/29/2024(b)(c) | 3,430,000 | 4,288 | ||||||
| ||||||||
EQT Corp., | 838,000 | 963,134 | ||||||
| ||||||||
3.90%, 10/01/2027 | 1,040,000 | 1,002,165 | ||||||
| ||||||||
8.75%, 02/01/2030 | 1,070,000 | 1,291,811 | ||||||
| ||||||||
Genesis Energy L.P./Genesis Energy Finance Corp., | ||||||||
6.25%, 05/15/2026 | 6,459,000 | 5,483,303 | ||||||
| ||||||||
7.75%, 02/01/2028 | 1,313,000 | 1,169,804 | ||||||
| ||||||||
Gulfport Energy Corp., | 1,514,000 | 928,854 | ||||||
| ||||||||
6.00%, 10/15/2024 | 1,303,000 | 779,357 | ||||||
| ||||||||
Hilcorp Energy I L.P./Hilcorp Finance Co., 6.25%, 11/01/2028(b) | 1,682,000 | 1,586,900 | ||||||
| ||||||||
Laredo Petroleum, Inc., 10.13%, 01/15/2028 | 1,164,000 | 832,144 | ||||||
| ||||||||
Matador Resources Co., 5.88%, 09/15/2026 | 1,200,000 | 1,046,844 | ||||||
| ||||||||
MEG Energy Corp. (Canada), 6.50%, 01/15/2025(b) | 1,784,000 | 1,821,072 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco High Yield Fund
Principal Amount | Value | |||||||
| ||||||||
Oil & Gas Exploration & Production–(continued) |
| |||||||
Oasis Petroleum, Inc., 6.88%, 03/15/2022 | $ | 1,028,000 | $ | 203,030 | ||||
| ||||||||
PDC Energy, Inc., 5.75%, 05/15/2026 | 790,000 | 810,639 | ||||||
| ||||||||
QEP Resources, Inc., | 1,458,000 | 1,199,205 | ||||||
| ||||||||
5.63%, 03/01/2026 | 1,158,000 | 747,668 | ||||||
| ||||||||
Range Resources Corp., 4.88%, 05/15/2025 | 2,396,000 | 2,241,518 | ||||||
| ||||||||
SM Energy Co., | 1,585,000 | 782,293 | ||||||
| ||||||||
6.63%, 01/15/2027 | 1,985,000 | 978,416 | ||||||
| ||||||||
Southwestern Energy Co., | 1,394,000 | 1,405,229 | ||||||
| ||||||||
7.75%, 10/01/2027 | 1,495,000 | 1,532,375 | ||||||
| ||||||||
Whiting Petroleum Corp., | 2,920,000 | 660,650 | ||||||
| ||||||||
6.25%, 04/01/2023(c) | 2,971,000 | 677,759 | ||||||
| ||||||||
6.63%, 01/15/2026(c) | 3,760,000 | 890,274 | ||||||
| ||||||||
WPX Energy, Inc., | 1,734,000 | 1,773,579 | ||||||
| ||||||||
5.25%, 10/15/2027 | 432,000 | 430,440 | ||||||
| ||||||||
5.88%, 06/15/2028 | 233,000 | 236,791 | ||||||
| ||||||||
4.50%, 01/15/2030 | 206,000 | 197,110 | ||||||
| ||||||||
49,313,994 | ||||||||
| ||||||||
Oil & Gas Refining & Marketing–1.86% |
| |||||||
Calumet Specialty Products Partners |
| |||||||
L.P./Calumet Finance Corp., 7.63%, 01/15/2022 | 1,825,000 | 1,813,165 | ||||||
| ||||||||
9.25%, 07/15/2024(b) | 3,360,000 | 3,607,800 | ||||||
| ||||||||
EnLink Midstream Partners L.P., 5.60%, 04/01/2044 | 1,978,000 | 1,313,976 | ||||||
| ||||||||
NuStar Logistics L.P., 6.00%, 06/01/2026 | 4,343,000 | 4,552,702 | ||||||
| ||||||||
Parkland Corp. (Canada), 6.00%, 04/01/2026(b) | 4,021,000 | 4,251,705 | ||||||
| ||||||||
PBF Holding Co. LLC/PBF Finance Corp., 6.00%, 02/15/2028(b) | 2,548,000 | 2,153,378 | ||||||
| ||||||||
17,692,726 | ||||||||
| ||||||||
Oil & Gas Storage & Transportation–3.16% |
| |||||||
Antero Midstream Partners L.P./Antero |
| |||||||
Midstream Finance Corp., 5.75%, 01/15/2028(b) | 3,890,000 | 3,447,902 | ||||||
| ||||||||
Crestwood Midstream Partners | ||||||||
L.P./Crestwood Midstream Finance Corp., 5.75%, 04/01/2025 | 1,313,000 | 1,260,204 | ||||||
| ||||||||
DCP Midstream Operating L.P., 5.38%, 07/15/2025 | 2,742,000 | 2,952,586 | ||||||
| ||||||||
5.63%, 07/15/2027 | 719,000 | 777,239 | ||||||
| ||||||||
EQM Midstream Partners L.P., 6.50%, 07/01/2027(b) | 2,416,000 | 2,648,939 | ||||||
| ||||||||
5.50%, 07/15/2028 | 2,474,000 | 2,568,729 | ||||||
| ||||||||
Holly Energy Partners L.P./Holly Energy Finance Corp., 5.00%, 02/01/2028(b) | 1,024,000 | 1,027,016 | ||||||
| ||||||||
NGL Energy Partners L.P./NGL Energy Finance Corp., 7.50%, 04/15/2026 | 5,387,000 | 3,594,961 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Oil & Gas Storage & Transportation–(continued) |
| |||||||
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., 5.13%, 02/01/2025 | $ | 2,819,000 | $ | 2,887,741 | ||||
| ||||||||
5.88%, 04/15/2026 | 2,465,000 | 2,599,034 | ||||||
| ||||||||
5.50%, 03/01/2030(b) | 697,000 | 735,771 | ||||||
| ||||||||
4.88%, 02/01/2031(b) | 728,000 | 735,316 | ||||||
| ||||||||
Western Midstream Operating L.P., 4.10%, 02/01/2025 | 1,183,000 | 1,182,065 | ||||||
| ||||||||
4.50%, 03/01/2028 | 692,000 | 697,190 | ||||||
| ||||||||
4.75%, 08/15/2028 | 2,815,000 | 2,869,273 | ||||||
| ||||||||
29,983,966 | ||||||||
| ||||||||
Other Diversified Financial Services–1.54% |
| |||||||
eG Global Finance PLC (United Kingdom), 4.91%, (1 mo. USD LIBOR + 4.75%), 02/07/2025(b) | 3,100,000 | 3,210,763 | ||||||
| ||||||||
8.50%, 10/30/2025(b) | 1,474,000 | 1,580,098 | ||||||
| ||||||||
Lions Gate Capital Holdings LLC, 6.38%, 02/01/2024(b) | 3,512,000 | 3,601,960 | ||||||
| ||||||||
LPL Holdings, Inc., 5.75%, 09/15/2025(b) | 2,807,000 | 2,928,024 | ||||||
| ||||||||
Tempo Acquisition LLC/Tempo | 3,254,000 | 3,333,349 | ||||||
| ||||||||
14,654,194 | ||||||||
| ||||||||
Packaged Foods & Meats–2.86% |
| |||||||
B&G Foods, Inc., 5.25%, 09/15/2027 | 927,000 | 992,177 | ||||||
| ||||||||
JBS USA LUX S.A./JBS USA Food Co./JBS | 3,943,000 | 4,386,273 | ||||||
| ||||||||
Kraft Heinz Foods Co. (The), 6.88%, 01/26/2039 | 2,800,000 | 3,810,522 | ||||||
| ||||||||
5.00%, 06/04/2042 | 2,720,000 | 3,004,646 | ||||||
| ||||||||
5.50%, 06/01/2050(b) | 3,526,000 | 4,167,194 | ||||||
| ||||||||
Pilgrim’s Pride Corp., 5.88%, 09/30/2027(b) | 2,427,000 | 2,581,721 | ||||||
| ||||||||
Post Holdings, Inc., | 2,469,000 | 2,644,114 | ||||||
| ||||||||
4.63%, 04/15/2030(b) | 2,189,000 | 2,287,505 | ||||||
| ||||||||
TreeHouse Foods, Inc., | 1,986,000 | 2,051,052 | ||||||
| ||||||||
4.00%, 09/01/2028 | 1,201,000 | 1,225,248 | ||||||
| ||||||||
27,150,452 | ||||||||
| ||||||||
Paper Packaging–0.22% |
| |||||||
Cascades, Inc./Cascades USA, Inc. |
| |||||||
(Canada), 5.38%, 01/15/2028(b) | 1,495,000 | 1,596,922 | ||||||
| ||||||||
Graham Packaging Co., Inc., 7.13%, 08/15/2028(b) | 508,000 | 534,563 | ||||||
| ||||||||
2,131,485 | ||||||||
| ||||||||
Paper Products–0.88% |
| |||||||
Mercer International, Inc. (Germany), 5.50%, 01/15/2026 | 1,881,000 | 1,823,451 | ||||||
| ||||||||
Schweitzer-Mauduit International, Inc., 6.88%, 10/01/2026(b) | 6,086,000 | 6,564,116 | ||||||
| ||||||||
8,387,567 | ||||||||
| ||||||||
Personal Products–0.41% |
| |||||||
Edgewell Personal Care Co., 5.50%, 06/01/2028(b) | 1,129,000 | 1,206,783 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco High Yield Fund
Principal Amount | Value | |||||||
| ||||||||
Personal Products–(continued) |
| |||||||
Herbalife Nutrition Ltd./HLF Financing, Inc., 7.88%, 09/01/2025(b) | $ | 2,447,000 | $ | 2,700,876 | ||||
| ||||||||
3,907,659 | ||||||||
| ||||||||
Pharmaceuticals–2.05% |
| |||||||
AdaptHealth LLC, 6.13%, 08/01/2028(b) | 778,000 | 816,900 | ||||||
| ||||||||
Bausch Health Americas, Inc., 9.25%, 04/01/2026(b) | 2,442,000 | 2,710,693 | ||||||
| ||||||||
Bausch Health Cos., Inc., | 1,701,000 | 1,757,473 | ||||||
| ||||||||
9.00%, 12/15/2025(b) | 3,216,000 | 3,524,415 | ||||||
| ||||||||
5.75%, 08/15/2027(b) | 1,021,000 | 1,098,851 | ||||||
| ||||||||
6.25%, 02/15/2029(b) | 2,818,000 | 2,949,854 | ||||||
| ||||||||
Endo DAC/Endo Finance LLC/Endo Finco, Inc., 9.50%, 07/31/2027(b) | 1,933,000 | 2,096,097 | ||||||
| ||||||||
HLF Financing S.a.r.l. LLC/Herbalife International, Inc., 7.25%, 08/15/2026(b) 1,135,000 |
| 1,187,851 | ||||||
| ||||||||
Par Pharmaceutical, Inc., 7.50%, 04/01/2027(b) | 3,133,000 | 3,348,582 | ||||||
| ||||||||
19,490,716 | ||||||||
| ||||||||
Property & Casualty Insurance–0.13% |
| |||||||
AmWINS Group, Inc., 7.75%, 07/01/2026(b) | 1,170,000 | 1,264,840 | ||||||
| ||||||||
Publishing–0.47% |
| |||||||
Meredith Corp., 6.88%, 02/01/2026 | 5,106,000 | 4,446,369 | ||||||
| ||||||||
Railroads–1.00% |
| |||||||
Kenan Advantage Group, Inc. (The), 7.88%, 07/31/2023(b) | 9,978,000 | 9,538,518 | ||||||
| ||||||||
Real Estate Development–0.02% |
| |||||||
China Evergrande Group (China), 8.25%, 03/23/2022(b) | 240,000 | 231,000 | ||||||
| ||||||||
Research & Consulting Services–0.13% |
| |||||||
Dun & Bradstreet Corp. (The), 10.25%, 02/15/2027(b) | 1,042,000 | 1,190,292 | ||||||
| ||||||||
Restaurants–0.80% |
| |||||||
1011778 BC ULC/New Red Finance, |
| |||||||
Inc. (Canada), 5.00%, 10/15/2025(b) | 2,489,000 | 2,560,198 | ||||||
| ||||||||
IRB Holding Corp., | 791,000 | 845,796 | ||||||
| ||||||||
6.75%, 02/15/2026(b) | 4,143,000 | 4,220,267 | ||||||
| ||||||||
7,626,261 | ||||||||
| ||||||||
Security & Alarm Services–0.77% |
| |||||||
Brink’s Co. (The), 5.50%, 07/15/2025(b) | 478,000 | 505,186 | ||||||
| ||||||||
4.63%, 10/15/2027(b) | 3,723,000 | 3,875,457 | ||||||
| ||||||||
Garda World Security Corp. (Canada), 9.50%, 11/01/2027(b) | 1,408,000 | 1,530,060 | ||||||
| ||||||||
Prime Security Services Borrower LLC/ Prime Finance, Inc., 5.75%, 04/15/2026(b) | 1,248,000 | 1,381,804 | ||||||
| ||||||||
7,292,507 | ||||||||
| ||||||||
Specialized Consumer Services–0.58% |
| |||||||
ServiceMaster Co. LLC (The), 7.45%, 08/15/2027 | 5,036,000 | 5,488,283 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Specialized REITs–1.35% |
| |||||||
Iron Mountain, Inc., | $ | 1,362,000 | $ | 1,435,814 | ||||
| ||||||||
5.25%, 07/15/2030(b) | 3,587,000 | 3,813,573 | ||||||
| ||||||||
4.50%, 02/15/2031(b) | 2,414,000 | 2,483,402 | ||||||
| ||||||||
Rayonier A.M. Products, Inc., 5.50%, 06/01/2024(b) | 7,512,000 | 5,070,600 | ||||||
| ||||||||
12,803,389 | ||||||||
| ||||||||
Specialty Chemicals–0.87% |
| |||||||
Element Solutions, Inc., | 3,531,000 | 3,676,654 | ||||||
| ||||||||
3.88%, 09/01/2028(b) | 986,000 | 1,008,875 | ||||||
| ||||||||
GCP Applied Technologies, Inc., 5.50%, 04/15/2026(b) | 3,448,000 | 3,598,195 | ||||||
| ||||||||
8,283,724 | ||||||||
| ||||||||
Steel–0.15% |
| |||||||
Cleveland-Cliffs, Inc., 9.88%, 10/17/2025(b) | 1,301,000 | 1,436,733 | ||||||
| ||||||||
Systems Software–0.33% |
| |||||||
Boxer Parent Co., Inc., | 987,000 | 1,073,599 | ||||||
| ||||||||
9.13%, 03/01/2026(b) | 1,946,000 | 2,100,464 | ||||||
| ||||||||
3,174,063 | ||||||||
| ||||||||
Technology Hardware, Storage & Peripherals–0.47% |
| |||||||
Dell International LLC/EMC Corp., 7.13%, 06/15/2024(b) | 3,270,000 | 3,398,478 | ||||||
| ||||||||
8.10%, 07/15/2036(b) | 765,000 | 1,017,471 | ||||||
| ||||||||
4,415,949 | ||||||||
| ||||||||
Textiles–0.36% |
| |||||||
Eagle Intermediate Global Holding | ||||||||
B.V./Ruyi US Finance LLC (China), 7.50%, 05/01/2025(b) | 4,761,000 | 3,404,115 | ||||||
| ||||||||
Thrifts & Mortgage Finance–0.08% |
| |||||||
Nationstar Mortgage Holdings, Inc., 6.00%, 01/15/2027(b) | 723,000 | 767,848 | ||||||
| ||||||||
Trading Companies & Distributors–1.77% |
| |||||||
AerCap Global Aviation Trust (Ireland), 6.50%, 06/15/2045(b)(f) | 3,073,000 | 2,612,050 | ||||||
| ||||||||
BMC East LLC, 5.50%, 10/01/2024(b) | 4,225,000 | 4,398,838 | ||||||
| ||||||||
Herc Holdings, Inc., 5.50%, 07/15/2027(b) | 4,436,000 | 4,657,800 | ||||||
| ||||||||
United Rentals North America, Inc., 5.25%, 01/15/2030 | 2,316,000 | 2,576,481 | ||||||
| ||||||||
WESCO Distribution, Inc., 7.25%, 06/15/2028(b) | 2,281,000 | 2,548,116 | ||||||
| ||||||||
16,793,285 | ||||||||
| ||||||||
Trucking–0.13% |
| |||||||
Avis Budget Car Rental LLC/Avis Budget Finance, Inc., 10.50%, 05/15/2025(b) | 1,062,000 | 1,235,738 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco High Yield Fund
Principal Amount | Value | |||||||
Wireless Telecommunication Services-2.82% |
| |||||||
Digicel Group 0.5 Ltd. (Jamaica), | $ | 1,597,818 | $ | 1,214,342 | ||||
3.00% PIK Rate, 5.00% Cash Rate, 04/01/2025(b)(e) | 512,640 | 184,550 | ||||||
Conv. 2.00% PIK Rate, 5.00% Cash Rate(b)(e)(g) | 84,906 | 11,038 | ||||||
Intelsat (Luxembourg) S.A. (Luxembourg), 7.75%, 06/01/2021(c) | 2,609,000 | 130,450 | ||||||
Intelsat Connect Finance S.A. (Luxembourg), 9.50%, 02/15/2023(b)(c) | 1,873,000 | 642,673 | ||||||
Oztel Holdings SPC Ltd. (Oman), | 2,980,000 | 3,027,456 | ||||||
SoftBank Group Corp. (Japan), 5.13%, 09/19/2027(b) | 2,600,000 | 2,742,538 | ||||||
Sprint Communications, Inc., 11.50%, 11/15/2021 | 2,804,000 | 3,129,614 | ||||||
Sprint Corp., | 8,467,000 | 9,864,055 | ||||||
7.63%, 02/15/2025 | 1,428,000 | 1,712,708 | ||||||
7.63%, 03/01/2026 | 1,250,000 | 1,539,163 | ||||||
T-Mobile USA, Inc., 6.50%, | 2,438,000 | 2,555,329 | ||||||
26,753,916 | ||||||||
Total U.S. Dollar Denominated Bonds & Notes (Cost $878,593,295) |
| 852,141,286 | ||||||
Asset-Backed Securities-2.03% |
| |||||||
Apidos CLO XV, Series 2013-15A, Class CRR, 2.12% (3 mo. USD LIBOR | 3,478,000 | 3,330,048 | ||||||
Bain Capital Credit CLO Ltd. (Cayman Islands), | 3,280,000 | 3,258,832 | ||||||
Series 2019-3A, Class C, 3.12% (3 mo. USD LIBOR + 2.85%), 10/21/2032(b)(i) | 2,319,000 | 2,320,946 | ||||||
Magnetite XXIII Ltd., Series 2019-23A, Class C, 2.64% (3 mo. USD LIBOR + 2.40%), 10/25/2032(b)(i) | 3,469,000 | 3,462,509 | ||||||
Neuberger Berman Loan Advisers CLO | 3,455,000 | 3,464,451 | ||||||
Sonic Capital LLC, Series 2020-1A, Class A2I, 3.85%, 01/20/2050(b) | 3,215,840 | 3,439,837 | ||||||
Total Asset-Backed Securities (Cost $19,103,250) |
| 19,276,623 | ||||||
Non-U.S. Dollar Denominated Bonds & Notes-1.01%(j) |
| |||||||
Casinos & Gaming-0.06% | ||||||||
Codere Finance 2 (Luxembourg) S.A. (Spain), 12.75%, 09/30/2023(b) | | EUR 470,000 | | 562,013 | ||||
Construction & Engineering-0.14% |
| |||||||
Sarens Finance Co. N.V. | | EUR 1,325,000 | | 1,362,621 | ||||
Diversified Banks-0.24% | ||||||||
Erste Group Bank AG (Austria), 6.50%(b)(f)(g) | | EUR 1,800,000 | | 2,305,894 |
Principal Amount | Value | |||||||||||
Food Retail-0.29% | ||||||||||||
Iceland Bondco PLC (United Kingdom), 4.63%, 03/15/2025(b) | GBP | 2,196,000 | $ | 2,776,751 | ||||||||
Highways & Railtracks-0.10% |
| |||||||||||
Rubis Terminal Infra S.A.S (France), 5.63%, 05/15/2025(b) | EUR | 750,000 | 935,575 | |||||||||
Other Diversified Financial Services-0.03% |
| |||||||||||
eG Global Finance PLC (United | EUR | 200,000 | 240,518 | |||||||||
Paper Packaging-0.06% | ||||||||||||
M&G Finance Luxembourg S.A. (Italy), 5.27% (3 mo. EURIBOR + 5.63%)(c)(g)(i) | EUR | 4,100,000 | 587,128 | |||||||||
Pharmaceuticals-0.07% | ||||||||||||
Nidda Healthcare Holding GmbH (Germany), 3.50%, 09/30/2024(b) | EUR | 550,000 | 657,328 | |||||||||
Textiles-0.02% | ||||||||||||
Eagle Intermediate Global Holding B.V./Ruyi US Finance LLC (China), 5.38%, 05/01/2023(b) | EUR | 200,000 | 161,102 | |||||||||
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost $9,475,719) |
| 9,588,930 | ||||||||||
Variable Rate Senior Loan Interests-0.87%(k) |
| |||||||||||
Cable & Satellite-0.25% | ||||||||||||
Altice Financing S.A. (Luxembourg), Term Loan, 2.91% (1 mo. USD LIBOR + 2.75%), 07/15/2025(i) |
| $ | 2,431,154 | 2,326,104 | ||||||||
Internet Services & Infrastructure-0.16% |
| |||||||||||
Rackspace Hosting, Inc., Term Loan B, 4.00% (2 mo. USD LIBOR + 3.00%), 11/03/2023(i) |
| 1,488,472 | 1,475,916 | |||||||||
Personal Products-0.14% |
| |||||||||||
KIK Custom Products, Inc. (Canada), 5.00% (3 mo. USD LIBOR + 4.00%), 05/15/2023(i) |
| 1,361,900 | 1,355,520 | |||||||||
Pharmaceuticals-0.32% |
| |||||||||||
Bausch Health Americas, Inc. (Canada), First Lien Incremental Term Loan, 2.93% (1 mo. USD LIBOR + 2.75%), 11/27/2025(i) |
| 3,125,943 | 3,070,676 | |||||||||
Total Variable Rate Senior Loan Interests (Cost $7,882,685) |
| 8,228,216 | ||||||||||
U.S. Treasury Securities-0.74% |
| |||||||||||
U.S. Treasury Bills-0.74% | ||||||||||||
0.10% - 0.40%, 09/03/2020 |
| 7,011,000 | 7,010,971 | |||||||||
Agency Credit Risk Transfer Notes-0.07% |
| |||||||||||
Freddie Mac Multifamily Connecticut Avenue Securities Trust, |
| 747,000 | 701,599 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco High Yield Fund
Shares | Value | |||||||
Common Stocks & Other Equity Interests-0.00% |
| |||||||
Integrated Telecommunication Services-0.00% |
| |||||||
Ventelo Ltd. (United Kingdom)(d)(n) | 73,021 | $ | 0 | |||||
Leisure Products-0.00% |
| |||||||
HF Holdings, Inc.(d)(n) | 36,820 | 0 | ||||||
Total Common Stocks & Other Equity Interests |
| 0 | ||||||
Money Market Funds-3.83% |
| |||||||
Invesco Government & Agency Portfolio, | 11,030,314 | 11,030,314 |
Shares | Value | |||||||
Money Market Funds-(continued) |
| |||||||
Invesco Liquid Assets Portfolio, | 12,718,037 | $ 12,725,668 | ||||||
Invesco Treasury Portfolio, Institutional | 12,606,073 | 12,606,073 | ||||||
Total Money Market Funds (Cost $36,364,010) |
| 36,362,055 | ||||||
TOTAL INVESTMENTS IN SECURITIES-98.25% |
| 933,309,680 | ||||||
OTHER ASSETS LESS LIABILITIES–1.75% |
| 16,636,027 | ||||||
NET ASSETS–100.00% | $949,945,707 |
Investment Abbreviations:
CLO | - Collateralized Loan Obligation | |
Conv. | - Convertible | |
EUR | - Euro | |
EURIBOR | - Euro Interbank Offered Rate | |
GBP | - British Pound Sterling | |
LIBOR | - London Interbank Offered Rate | |
PIK | - Pay-in-Kind | |
REIT | - Real Estate Investment Trust | |
USD | - U.S. Dollar |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2020 was $524,619,359, which represented 55.23% of the Fund’s Net Assets. |
(c) | Defaulted security. Currently, the issuer is in default with respect to principal and/or interest payments. The aggregate value of these securities at August 31, 2020 was $16,204,418, which represented 1.71% of the Fund’s Net Assets. |
(d) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(e) | All or a portion of this security is Pay-in-Kind. Pay-in-Kind securities pay interest income in the form of securities. |
(f) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
(g) | Perpetual bond with no specified maturity date. |
(h) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
(i) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2020. |
(j) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
(k) | Variable rate senior loan interests are, at present, not readily marketable, not registered under the 1933 Act and may be subject to contractual and legal restrictions on sale. Variable rate senior loan interests in the Fund’s portfolio generally have variable rates which adjust to a base, such as the London Interbank Offered Rate (“LIBOR”), on set dates, typically every 30 days, but not greater than one year, and/or have interest rates that float at margin above a widely recognized base lending rate such as the Prime Rate of a designated U.S. bank. |
(l) | All or a portion of the value was designated as collateral to cover margin requirements for swap agreements. See Note 1L. |
(m) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(n) | Non-income producing security. |
(o) | Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended August 31, 2020. |
Value February 29, 2020 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation (Depreciation) | Realized Gain (Loss) | Value August 31, 2020 | Dividend Income | ||||||||||||||||||||||
Invesco Senior Loan ETF | $16,338,570 | $ | - | $(14,197,599) | $ | 520,100 | $(2,661,071) | $ | - | $ 59,269 | ||||||||||||||||||
Investments in Affiliated Money Market Funds: | ||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | 12,220,019 | 115,163,361 | (116,353,066 | ) | - | - | 11,030,314 | 11,320 | ||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional | 9,419,290 | 88,223,750 | (84,919,891 | ) | (2,876 | ) | 5,395 | 12,725,668 | 23,245 | |||||||||||||||||||
Invesco Treasury Portfolio, Institutional | 13,965,736 | 131,615,270 | (132,974,933 | ) | - | - | 12,606,073 | 10,966 | ||||||||||||||||||||
Total | $51,943,615 | $335,002,381 | $(348,445,489 | ) | $517,224 | $(2,655,676) | $36,362,055 | $104,800 |
(p) The rate shown is the 7-day SEC standardized yield as of August 31, 2020.
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco High Yield Fund
Open Forward Foreign Currency Contracts | ||||||||||||||||
Settlement Date | Contract to | Unrealized (Depreciation) | ||||||||||||||
Counterparty | Deliver | Receive | ||||||||||||||
Currency Risk | ||||||||||||||||
11/20/2020 | Canadian Imperial Bank of Commerce | GBP 853,000 | USD 1,114,393 | $ (26,339 | ) | |||||||||||
11/20/2020 | Goldman Sachs International | EUR 5,843,000 | USD 6,903,849 | (80,721 | ) | |||||||||||
Total Forward Foreign Currency Contracts | $(107,060 | ) |
Open Centrally Cleared Credit Default Swap Agreements | ||||||||||||||||||||||||||||||||||||||
Reference Entity | Buy/Sell Protection | (Pay)/ Receive Fixed Rate | Payment Frequency | Maturity Date | Implied Credit Spread(a) | Notional Value | Upfront (Received) | Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||||
Credit Risk |
| |||||||||||||||||||||||||||||||||||||
Markit CDX North America High Yield | Buy | (5.00 | )% | Quarterly | 06/20/2025 | 3.645 | % | USD 18,600,000 | $ | (119,730 | ) | $ | (1,063,381 | ) | $(943,651 | ) |
(a) | Implied credit spreads represent the current level, as of August 31, 2020, at which protection could be bought or sold given the terms of the existing credit default swap agreement and serve as an indicator of the current status of the payment/performance risk of the credit default swap agreement. An implied credit spread that has widened or increased since entry into the initial agreement may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets generally. |
Abbreviations:
EUR –Euro
GBP –British Pound Sterling
USD –U.S. Dollar
Portfolio Composition*
By credit quality, based on total investments
as of August 31, 2020
AAA | 1.65 | % | ||
AA | 0.09 | |||
A | 1.67 | |||
BBB | 7.78 | |||
BB | 43.52 | |||
B | 26.47 | |||
CCC | 13.35 | |||
CC | 0.02 | |||
D | 0.03 | |||
Non-Rated | 2.83 | |||
Cash | 2.59 |
* | Source: Standard & Poor’s. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice. “Non- Rated” indicates the debtor was not rated, and should not be interpreted as indicating low quality. For more information on Standard & Poor’s rating methodology, please visit standardandpoors.com and select “Understanding Ratings” under Rating Resources on the homepage. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco High Yield Fund
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 896,947,625 | ||
| ||||
Investments in affiliated money market funds, at value | 36,362,055 | |||
| ||||
Foreign currencies, at value (Cost $368,050) | 369,165 | |||
| ||||
Receivable for: | ||||
Investments sold | 4,818,707 | |||
| ||||
Fund shares sold | 598,207 | |||
| ||||
Dividends | 2,612 | |||
| ||||
Interest | 17,029,873 | |||
| ||||
Investments matured, at value (Cost $453,584) | 107,630 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 349,300 | |||
| ||||
Other assets | 101,804 | |||
| ||||
Total assets | 956,686,978 | |||
| ||||
Liabilities: | ||||
Other investments: | ||||
Variation margin payable – centrally cleared swap agreements | 21,167 | |||
| ||||
Unrealized depreciation on forward foreign currency contracts outstanding | 107,060 | |||
| ||||
Payable for: | ||||
Investments purchased | 3,574,414 | |||
| ||||
Dividends | 1,076,186 | |||
| ||||
Fund shares reacquired | 745,184 | |||
| ||||
Amount due custodian | 15,406 | |||
| ||||
Accrued fees to affiliates | 490,046 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 4,482 | |||
| ||||
Accrued other operating expenses | 284,973 | |||
| ||||
Trustee deferred compensation and retirement plans | 422,353 | |||
| ||||
Total liabilities | 6,741,271 | |||
| ||||
Net assets applicable to shares outstanding | $ | 949,945,707 | ||
|
Net assets consist of: | ||||
Shares of beneficial interest | $ | 1,195,992,731 | ||
| ||||
Distributable earnings (loss) | (246,047,024 | ) | ||
| ||||
$ | 949,945,707 | |||
| ||||
Net Assets: | ||||
Class A | $ | 643,768,210 | ||
| ||||
Class C | $ | 32,052,257 | ||
| ||||
Class Y | $ | 61,782,244 | ||
| ||||
Investor Class | $ | 74,834,551 | ||
| ||||
Class R5 | $ | 42,389,387 | ||
| ||||
Class R6 | $ | 95,119,058 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 166,358,752 | |||
| ||||
Class C | 8,302,225 | |||
| ||||
Class Y | 15,922,818 | |||
| ||||
Investor Class | 19,351,903 | |||
| ||||
Class R5 | 10,996,485 | |||
| ||||
Class R6 | 24,609,755 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 3.87 | ||
| ||||
Maximum offering price per share (Net asset value of $3.87 ÷ 95.75%) | $ | 4.04 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 3.86 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 3.88 | ||
| ||||
Investor Class: | ||||
Net asset value and offering price per share | $ | 3.87 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 3.85 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 3.87 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco High Yield Fund
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Interest | $ | 32,595,802 | ||
| ||||
Dividends | 157,673 | |||
| ||||
Dividends from affiliates | 104,800 | |||
| ||||
Total investment income | 32,858,275 | |||
| ||||
Expenses: | ||||
Advisory fees | 2,624,157 | |||
| ||||
Administrative services fees | 72,884 | |||
| ||||
Custodian fees | 9,322 | |||
| ||||
Distribution fees: | ||||
Class A | 756,285 | |||
| ||||
Class C | 159,467 | |||
| ||||
Investor Class | 91,976 | |||
| ||||
Transfer agent fees – A, C, Y and Investor | 684,624 | |||
| ||||
Transfer agent fees – R5 | 21,960 | |||
| ||||
Transfer agent fees – R6 | 9,624 | |||
| ||||
Trustees’ and officers’ fees and benefits | 14,839 | |||
| ||||
Registration and filing fees | 53,498 | |||
| ||||
Reports to shareholders | 72,181 | |||
| ||||
Professional services fees | 194,441 | |||
| ||||
Other | 16,389 | |||
| ||||
Total expenses | 4,781,647 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (15,522 | ) | ||
| ||||
Net expenses | 4,766,125 | |||
| ||||
Net investment income | 28,092,150 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (32,616,456 | ) | ||
| ||||
Foreign currencies | 125,064 | |||
| ||||
Forward foreign currency contracts | (618,587 | ) | ||
| ||||
Option contracts written | 127,167 | |||
| ||||
Swap agreements | (5,775,643 | ) | ||
| ||||
(38,758,455 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 15,251,901 | |||
| ||||
Foreign currencies | 49,005 | |||
| ||||
Forward foreign currency contracts | 41,555 | |||
| ||||
Swap agreements | (549,605 | ) | ||
| ||||
14,792,856 | ||||
| ||||
Net realized and unrealized gain (loss) | (23,965,599 | ) | ||
| ||||
Net increase in net assets resulting from operations | $ | 4,126,551 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco High Yield Fund
Statement of Changes in Net Assets
For the six months ended August 31, 2020 and the year ended February 29, 2020
(Unaudited)
August 31, 2020 | February 29, 2020 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 28,092,150 | $ | 58,632,597 | ||||
| ||||||||
Net realized gain (loss) | (38,758,455 | ) | (21,825,278 | ) | ||||
| ||||||||
Change in net unrealized appreciation | 14,792,856 | 2,747,356 | ||||||
| ||||||||
Net increase in net assets resulting from operations | 4,126,551 | 39,554,675 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (19,555,020 | ) | (38,994,977 | ) | ||||
| ||||||||
Class C | (911,518 | ) | (1,808,858 | ) | ||||
| ||||||||
Class Y | (2,002,522 | ) | (4,886,397 | ) | ||||
| ||||||||
Investor Class | (2,374,811 | ) | (4,667,659 | ) | ||||
| ||||||||
Class R5 | (1,493,204 | ) | (3,764,959 | ) | ||||
| ||||||||
Class R6 | (5,348,555 | ) | (11,783,723 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (31,685,630 | ) | (65,906,573 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (3,676,311 | ) | (5,464,341 | ) | ||||
| ||||||||
Class C | (2,756,827 | ) | (1,015,015 | ) | ||||
| ||||||||
Class Y | 1,639,475 | (49,924,429 | ) | |||||
| ||||||||
Investor Class | (3,452,485 | ) | 2,533,035 | |||||
| ||||||||
Class R5 | (11,411,434 | ) | (7,920,168 | ) | ||||
| ||||||||
Class R6 | (88,790,929 | ) | 7,796,010 | |||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (108,448,511 | ) | (53,994,908 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (136,007,590 | ) | (80,346,806 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 1,085,953,297 | 1,166,300,103 | ||||||
| ||||||||
End of period | $ | 949,945,707 | $ | 1,085,953,297 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco High Yield Fund
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset of period | Net income(a) | Net gains realized and | Total from investment operations | Dividends from net income | Return of capital | Total distributions | Net asset value, end of period | Total return (b) | Net assets, (000’s omitted) | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | Ratio of net | Ratio of net to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $ | 3.96 | $ | 0.11 | $ | (0.08 | ) | $ | 0.03 | $ | (0.12 | ) | $ | – | $ | (0.12 | ) | $ | 3.87 | 0.96 | % | $ | 643,768 | 1.06 | %(d) | 1.06 | %(d) | 5.72 | %(d) | 34 | % | |||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 4.05 | 0.21 | (0.07 | ) | 0.14 | (0.23 | ) | – | (0.23 | ) | 3.96 | 3.53 | 663,578 | 1.01 | 1.02 | 5.09 | 62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 4.13 | 0.20 | (0.07 | ) | 0.13 | (0.21 | ) | – | (0.21 | ) | 4.05 | 3.28 | 685,222 | 1.15 | 1.15 | 4.96 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 4.21 | 0.20 | (0.07 | ) | 0.13 | (0.21 | ) | – | (0.21 | ) | 4.13 | 3.07 | 701,560 | 1.07 | 1.08 | 4.69 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 3.83 | 0.21 | 0.39 | 0.60 | (0.21 | ) | (0.01 | ) | (0.22 | ) | 4.21 | 15.91 | 828,560 | 1.00 | 1.01 | 5.10 | 99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 4.38 | 0.23 | (0.54 | ) | (0.31 | ) | (0.24 | ) | – | (0.24 | ) | 3.83 | (7.43 | ) | 744,564 | 1.03 | 1.03 | 5.39 | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 3.95 | 0.09 | (0.08 | ) | 0.01 | (0.10 | ) | – | (0.10 | ) | 3.86 | 0.57 | 32,052 | 1.81 | (d) | 1.81 | (d) | 4.97 | (d) | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 4.04 | 0.18 | (0.07 | ) | 0.11 | (0.20 | ) | – | (0.20 | ) | 3.95 | 2.75 | 35,743 | 1.76 | 1.77 | 4.34 | 62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 4.12 | 0.17 | (0.07 | ) | 0.10 | (0.18 | ) | – | (0.18 | ) | 4.04 | 2.50 | 37,607 | 1.90 | 1.90 | 4.21 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 4.20 | 0.16 | (0.06 | ) | 0.10 | (0.18 | ) | – | (0.18 | ) | 4.12 | 2.29 | 88,812 | 1.82 | 1.83 | 3.94 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 3.82 | 0.18 | 0.39 | 0.57 | (0.18 | ) | (0.01 | ) | (0.19 | ) | 4.20 | 15.09 | 101,572 | 1.75 | 1.76 | 4.35 | 99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 4.37 | 0.19 | (0.54 | ) | (0.35 | ) | (0.20 | ) | – | (0.20 | ) | 3.82 | (8.18 | ) | 92,310 | 1.78 | 1.78 | 4.64 | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 3.97 | 0.11 | (0.08 | ) | 0.03 | �� | (0.12 | ) | – | (0.12 | ) | 3.88 | 1.09 | 61,782 | 0.81 | (d) | 0.81 | (d) | 5.97 | (d) | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 4.07 | 0.22 | (0.08 | ) | 0.14 | (0.24 | ) | – | (0.24 | ) | 3.97 | 3.54 | 61,065 | 0.76 | 0.77 | 5.34 | 62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 4.14 | 0.21 | (0.06 | ) | 0.15 | (0.22 | ) | – | (0.22 | ) | 4.07 | 3.79 | 112,350 | 0.90 | 0.90 | 5.21 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 4.23 | 0.21 | (0.08 | ) | 0.13 | (0.22 | ) | – | (0.22 | ) | 4.14 | 3.09 | 116,954 | 0.82 | 0.83 | 4.94 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 3.84 | 0.22 | 0.40 | 0.62 | (0.22 | ) | (0.01 | ) | (0.23 | ) | 4.23 | 16.44 | 201,080 | 0.75 | 0.76 | 5.35 | 99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 4.39 | 0.24 | (0.54 | ) | (0.30 | ) | (0.25 | ) | – | (0.25 | ) | 3.84 | (7.18 | ) | 88,893 | 0.78 | 0.78 | 5.64 | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 3.96 | 0.11 | (0.08 | ) | 0.03 | (0.12 | ) | – | (0.12 | ) | 3.87 | 0.96 | 74,835 | 1.06 | (d) | 1.06 | (d) | 5.72 | (d) | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 4.05 | 0.21 | (0.07 | ) | 0.14 | (0.23 | ) | – | (0.23 | ) | 3.96 | 3.53 | 80,043 | 1.01 | 1.02 | 5.09 | 62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 4.13 | 0.20 | (0.07 | ) | 0.13 | (0.21 | ) | – | (0.21 | ) | 4.05 | 3.31 | 79,404 | 1.15 | 1.15 | 4.96 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 4.21 | 0.20 | (0.07 | ) | 0.13 | (0.21 | ) | – | (0.21 | ) | 4.13 | 3.11 | (e) | 97,913 | 1.01 | (e) | 1.02 | (e) | 4.75 | (e) | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 3.83 | 0.21 | 0.39 | 0.60 | (0.21 | ) | (0.01 | ) | (0.22 | ) | 4.21 | 15.95 | (e) | 105,545 | 0.96 | (e) | 0.97 | (e) | 5.14 | (e) | 99 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 4.38 | 0.23 | (0.54 | ) | (0.31 | ) | (0.24 | ) | – | (0.24 | ) | 3.83 | (7.40 | )(e) | 100,212 | 1.01 | (e) | 1.01 | (e) | 5.41 | (e) | 84 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 3.94 | 0.11 | (0.08 | ) | 0.03 | (0.12 | ) | – | (0.12 | ) | 3.85 | 1.11 | 42,389 | 0.73 | (d) | 0.73 | (d) | 6.05 | (d) | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 4.04 | 0.22 | (0.07 | ) | 0.15 | (0.25 | ) | – | (0.25 | ) | 3.94 | 3.75 | 55,520 | 0.68 | 0.69 | 5.42 | 62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 4.12 | 0.21 | (0.07 | ) | 0.14 | (0.22 | ) | – | (0.22 | ) | 4.04 | 3.59 | 64,804 | 0.84 | 0.84 | 5.27 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 4.20 | 0.21 | (0.07 | ) | 0.14 | (0.22 | ) | – | (0.22 | ) | 4.12 | 3.40 | 75,185 | 0.75 | 0.76 | 5.01 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 3.82 | 0.22 | 0.39 | 0.61 | (0.22 | ) | (0.01 | ) | (0.23 | ) | 4.20 | 16.32 | 88,644 | 0.66 | 0.67 | 5.44 | 99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 4.37 | 0.24 | (0.54 | ) | (0.30 | ) | (0.25 | ) | – | (0.25 | ) | 3.82 | (7.15 | ) | 86,239 | 0.69 | 0.69 | 5.73 | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 3.95 | 0.11 | (0.06 | ) | 0.05 | (0.13 | ) | – | (0.13 | ) | 3.87 | 1.42 | 95,119 | 0.64 | (d) | 0.64 | (d) | 6.14 | (d) | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 4.05 | 0.22 | (0.07 | ) | 0.15 | (0.25 | ) | – | (0.25 | ) | 3.95 | 3.70 | 190,003 | 0.59 | 0.60 | 5.51 | 62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 4.12 | 0.22 | (0.06 | ) | 0.16 | (0.23 | ) | – | (0.23 | ) | 4.05 | 3.94 | 186,913 | 0.75 | 0.75 | 5.36 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 4.20 | 0.21 | (0.07 | ) | 0.14 | (0.22 | ) | – | (0.22 | ) | 4.12 | 3.49 | 195,027 | 0.66 | 0.67 | 5.10 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 3.82 | 0.23 | 0.39 | 0.62 | (0.23 | ) | (0.01 | ) | (0.24 | ) | 4.20 | 16.42 | 157,367 | 0.57 | 0.58 | 5.53 | 99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 4.37 | 0.24 | (0.54 | ) | (0.30 | ) | (0.25 | ) | – | (0.25 | ) | 3.82 | (7.07 | ) | 125,310 | 0.60 | 0.60 | 5.82 | 84 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $600,309, $31,646, $59,195, $73,009 , $43,573 and $153,375 for Class A, Class C, Class Y, Investor Class, Class R5 and Class R6 shares, respectively. |
(e) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.19%, 0.21% and 0.23% for the years ended February 28, 2018, February 28, 2017 and February 29, 2016, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 Invesco High Yield Fund
August 31, 2020
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco High Yield Fund (the “Fund”), is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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 total return through growth of capital and current income.
The Fund currently consists of six different classes of shares: Class A, Class C, Class Y, Investor Class, Class R5 and Class R6. Class Y and Investor Class 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 Y, Investor Class, Class R5 and Class R6 shares are sold at net asset value. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares. Effective November 30, 2020, the automatic conversion pursuant to the Conversion Feature will change from ten years to eight years. The first conversion of Class C shares to Class A shares would occur at the end of December 2020 for all Class C shares that were held for more than eight years as of November 30, 2020.
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. |
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.
Variable rate senior loan interests are fair valued using quotes provided by an independent pricing service. Quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
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.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
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, 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
20 Invesco High Yield Fund
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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and 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 realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination - For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions - Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes - The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses - Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications - Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
I. | Foreign Currency Translations - Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
J. | Forward Foreign Currency Contracts - The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement
21 Invesco High Yield Fund
based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
K. | Put Options Purchased and Written - The Fund may purchase and write put options including options on securities indexes, or foreign currency and/or futures contracts. By purchasing a put option, the Fund obtains the right (but not the obligation) to sell the option’s underlying instrument at a fixed strike price. In return for this right, the Fund pays an option premium. The option’s underlying instrument may be a security, securities index, or a futures contract. Put options may be used by the Fund to hedge securities it owns by locking in a minimum price at which the Fund can sell. If security prices fall, the put option could be exercised to offset all or a portion of the Fund’s resulting losses. At the same time, because the maximum the Fund has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Fund to profit from an increase in the value of the underlying portfolio securities. The Fund may write put options to earn additional income in the form of option premiums if it expects the price of the underlying instrument to remain stable or rise during the option period so that the option will not be exercised. The risk in this strategy is that the price of the underlying securities may decline by an amount greater than the premium received. Put options written are reported as a liability in the Statement of Assets and Liabilities. Realized and unrealized gains and losses on put options purchased and put options written are included in the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities and Option contracts written, respectively. A risk in buying an option is that the Fund pays a premium whether or not the option is exercised. In addition, there can be no assurance that a liquid secondary market will exist for any option purchased. |
L. | Swap Agreements - The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. Such transactions are agreements between Counterparties. A swap agreement may be negotiated bilaterally and traded over-the-counter (“OTC”) between two parties (“uncleared/ OTC”) or, in some instances, must be transacted through a future commission merchant (“FCM”) and cleared through a clearinghouse that serves as a central Counterparty (“centrally cleared swap”). These agreements may contain among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/ or provide limits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.
In a centrally cleared swap, the Fund’s ultimate Counterparty is a central clearinghouse. The Fund initially will enter into centrally cleared swaps through an executing broker. When a fund enters into a centrally cleared swap, it must deliver to the central Counterparty (via the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the central Counterparty, but an FCM may require additional initial margin above the amount required by the central Counterparty. Initial margin deposits required upon entering into centrally cleared swaps are satisfied by cash or securities as collateral at the FCM. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the Statement of Assets and Liabilities. During the term of a cleared swap agreement, a “variation margin” amount may be required to be paid by the Fund or may be received by the Fund, based on the daily change in price of the underlying reference instrument subject to the swap agreement and is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities until the centrally cleared swap is terminated at which time a realized gain or loss is recorded.
A CDS is an agreement between Counterparties to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the “par value”, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer “par value” or the full notional value of the referenced obligation, and the Fund would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its Counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund’s maximum risk of loss from Counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the Counterparty and by the designation of collateral by the Counterparty to cover the Fund’s exposure to the Counterparty.
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets.
An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified notional amount.
Changes in the value of centrally cleared and OTC swap agreements are recognized as unrealized gains (losses) in the Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Statement of Operations. The Fund segregates cash or liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Cash held as collateral is recorded as deposits with brokers on the Statement of Assets and Liabilities. Entering into these agreements involves, to varying degrees, lack of
22 Invesco High Yield Fund
liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. A short position in a security poses more risk than holding the same security long. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited.
Notional amounts of each individual credit default swap agreement outstanding as of August 31, 2020 for which the Fund is the seller of protection are disclosed in the open swap agreements table. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into by the Fund for the same referenced entity or entities.
M. | Other Risks - The current low interest rate environment was created in part by the Federal Reserve Board (FRB) and certain foreign central banks keeping the federal funds and equivalent foreign rates near historical lows. Increases in the federal funds and equivalent foreign rates may expose fixed income markets to heightened volatility and reduced liquidity for certain fixed income investments, particularly those with longer maturities. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price may decline. Changes in central bank policies could also result in higher than normal shareholder redemptions, which could potentially increase portfolio turnover and the Fund’s transaction costs. |
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorbs losses from the defaults before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk.
The market values of convertible securities are affected by market interest rates, the risk of actual issuer default on interest or principal payments and the value of the underlying common stock into which the convertible security may be converted. Additionally, a convertible security is subject to the same types of market and issuer risks as apply to the underlying common stock. In addition, certain convertible securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain triggering events, and, as a result, are subject to an increased risk of loss. Convertible securities may be rated below investment grade.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more developed markets. In addition, companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed markets. Securities law in many emerging market countries is relatively new and unsettled. Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder rights may change quickly and unpredictably. In addition, the enforcement of systems of taxation at federal, regional and local levels in emerging market countries may be inconsistent, and subject to sudden change. Other risks of investing in emerging markets securities may include additional transaction costs, delays in settlement procedures, and lack of timely information.
The Fund’s foreign investments may be adversely affected by political and social instability, changes in economic or taxation policies, difficulty in enforcing obligations, decreased liquidity or increased volatility. Foreign investments also involve the risk of the possible seizure, nationalization or expropriation of the issuer or foreign deposits (in which the Fund could lose its entire investments in a certain market) and the possible adoption of foreign governmental restrictions such as exchange controls. Unless the Fund has hedged its foreign securities risk, foreign securities risk also involves the risk of negative foreign currency rate fluctuations, which may cause the value of securities denominated in such foreign currency (or other instruments through which the Fund has exposure to foreign currencies) to decline in value. Currency exchange rates may fluctuate significantly over short periods of time. Currency hedging strategies, if used, are not always successful.
The Fund may invest in lower-quality debt securities, i.e., “junk bonds”. Investments in lower-rated securities or unrated securities of comparable quality tend to be more sensitive to economic conditions than higher rated securities. Junk bonds involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other creditors’ claim.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject to prepayment or call risk, which is the risk that a borrower’s payments may be received earlier or later than expected due to changes in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby reducing the Fund’s income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
The risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the security. Failure of a municipal security issuer to comply with applicable tax requirements may make income paid thereon taxable, resulting in a decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that reduce or eliminate the current federal income tax exemption on municipal securities or otherwise adversely affect the current federal or state tax status of municipal securities.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred securities also may be subordinated to bonds or other debt instruments, subjecting them to a greater risk of non-payment, may be less liquid than many other securities, such as common stocks, and generally offer no voting rights with respect to the issuer.
N. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
O. | Collateral –To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
23 Invesco High Yield Fund
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund 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 $ 200 million | 0.625 | % | ||
Next $300 million | 0.550 | % | ||
Next $500 million | 0.500 | % | ||
Over $1 billion | 0.450 | % |
For the six months ended August 31, 2020, the effective advisory fee rate incurred by the Fund was 0.54%.
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).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class Y, Investor Class, Class R5 and Class R6 shares to 1.50%, 2.25%, 1.25%, 1.50%, 1.25% and 1.25%, 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 the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waivers without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limit.
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 August 31, 2020, the Adviser waived advisory fees of $13,693.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class Y, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. The Fund, pursuant to the Investor Class Plan, reimburses IDI for its allocated share of expenses incurred pursuant to the Investor Class Plan for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Investor Class shares. 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 Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended August 31, 2020, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended August 31, 2020, IDI advised the Fund that IDI retained $27,718 in front-end sales commissions from the sale of Class A shares and $7,378 and $582 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
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. |
24 Invesco High Yield Fund
The following is a summary of the tiered valuation input levels, as of August 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 | Total | |||||||||||
Investments in Securities | ||||||||||||||
U.S. Dollar Denominated Bonds & Notes | $ – | $852,141,286 | $0 | $852,141,286 | ||||||||||
Asset-Backed Securities | – | 19,276,623 | – | 19,276,623 | ||||||||||
Non-U.S. Dollar Denominated Bonds & Notes | – | 9,588,930 | – | 9,588,930 | ||||||||||
Variable Rate Senior Loan Interests | – | 8,228,216 | – | 8,228,216 | ||||||||||
U.S. Treasury Securities | – | 7,010,971 | – | 7,010,971 | ||||||||||
Agency Credit Risk Transfer Notes | – | 701,599 | – | 701,599 | ||||||||||
Common Stocks & Other Equity Interests | – | – | 0 | 0 | ||||||||||
Money Market Funds | 36,362,055 | – | – | 36,362,055 | ||||||||||
Total Investments in Securities | 36,362,055 | 896,947,625 | 0 | 933,309,680 | ||||||||||
Other Investments - Assets* | ||||||||||||||
Investments Matured | – | 107,630 | 0 | 107,630 | ||||||||||
Other Investments - Liabilities* | ||||||||||||||
Forward Foreign Currency Contracts | – | (107,060 | ) | – | (107,060 | ) | ||||||||
Swap Agreements | – | (943,651 | ) | – | (943,651 | ) | ||||||||
– | (1,050,711 | ) | – | (1,050,711 | ) | |||||||||
Total Other Investments | – | (943,081 | ) | 0 | (943,081 | ) | ||||||||
Total Investments | �� | $36,362,055 | $896,004,544 | $0 | $932,366,599 |
* | Forward foreign currency contracts and swap agreements are valued at unrealized appreciation (depreciation). Investments matured are shown at value. |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of August 31, 2020:
Value | ||||||||||||
Derivative Liabilities | Credit Risk | Currency Risk | Total | |||||||||
Unrealized depreciation on swap agreements — Centrally Cleared(a) | $ | (943,651 | ) | $ | - | $ | (943,651 | ) | ||||
Unrealized depreciation on forward foreign currency contracts outstanding | - | (107,060 | ) | (107,060 | ) | |||||||
Total Derivative Liabilities | (943,651 | ) | (107,060 | ) | (1,050,711 | ) | ||||||
Derivatives not subject to master netting agreements | 943,651 | - | 943,651 | |||||||||
Total Derivative Liabilities subject to master netting agreements | $ | - | $ | (107,060 | ) | $ | (107,060 | ) |
(a) | The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of August 31, 2020.
Financial Derivative Assets | Financial Derivative Liabilities | Collateral (Received)/Pledged | ||||||||||||||||||||||||||||
Counterparty | Forward Foreign Currency Contracts | Forward Foreign Currency Contracts | Net Value of Derivatives | Non-Cash | Cash | Net Amount | ||||||||||||||||||||||||
Canadian Imperial Bank of Commerce | $- | $ (26,339 | ) | $ (26,339 | ) | $- | $- | $ | (26,339) | |||||||||||||||||||||
Goldman Sachs International | - | (80,721 | ) | (80,721 | ) | - | - | (80,721 | ) | |||||||||||||||||||||
Total | $- | $(107,060 | ) | $(107,060 | ) | $- | $- | $ | (107,060 | ) |
25 Invesco High Yield Fund
Effect of Derivative Investments for the six months ended August 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations | ||||||||||||||||||||
Credit Risk | Currency Risk | Equity Risk | Interest Rate Risk | Total | ||||||||||||||||
Realized Gain (Loss): | ||||||||||||||||||||
Forward foreign currency contracts | $ | - | $ | (618,587 | ) | $ | - | $ | - | $ (618,587 | ) | |||||||||
Options written | - | - | - | 127,167 | 127,167 | |||||||||||||||
Swap agreements | (2,239,682 | ) | - | (3,535,961 | ) | - | (5,775,643 | ) | ||||||||||||
Change in Net Unrealized Appreciation (Depreciation): | ||||||||||||||||||||
Forward foreign currency contracts | - | 41,555 | - | - | 41,555 | |||||||||||||||
Swap agreements | (943,651 | ) | - | - | 394,046 | (549,605 | ) | |||||||||||||
Total | $ | (3,183,333 | ) | $ | (577,032 | ) | $ | (3,535,961 | ) | $ | 521,213 | $ | (6,775,113 | ) |
The table below summarizes the average notional value of derivatives held during the period.
Forward Foreign Currency Contracts | Swaptions Written | Swap Agreements | ||||||||||
Average notional value | $ | 11,002,924 | $ | 19,000,000 | $ | 93,794,400 |
NOTE 5–Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,829.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund may borrow for leveraging in an amount up to 5% of the Fund’s total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, 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. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of February 29, 2020, as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
Not subject to expiration | $ | 56,282,480 | $ | 110,216,014 | $ | 166,498,494 |
* | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
26 Invesco High Yield Fund
NOTE 9—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 August 31, 2020 was $314,462,735 and $443,236,836, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $ | 52,585,264 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (93,871,278 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (41,286,014 | ) | |
|
Cost of investments for tax purposes is $973,652,613.
NOTE 10—Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2020(a) | Year ended February 29, 2020 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 16,667,884 | $ | 60,830,127 | 23,841,441 | $ | 97,035,143 | ||||||||||
| ||||||||||||||||
Class C | 1,510,476 | 5,401,154 | 3,327,980 | 13,502,209 | ||||||||||||
| ||||||||||||||||
Class Y | 9,997,161 | 35,099,655 | 7,578,729 | 30,934,255 | ||||||||||||
| ||||||||||||||||
Investor Class | 6,284,539 | 23,084,902 | 12,534,765 | 50,900,080 | ||||||||||||
| ||||||||||||||||
Class R5 | 767,050 | 2,780,086 | 4,044,966 | 16,396,532 | ||||||||||||
| ||||||||||||||||
Class R6 | 4,558,975 | 16,300,269 | 10,619,933 | 43,170,211 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 3,965,802 | 14,441,096 | 7,073,317 | 28,695,757 | ||||||||||||
| ||||||||||||||||
Class C | 177,429 | 644,711 | 324,143 | 1,311,503 | ||||||||||||
| ||||||||||||||||
Class Y | 391,424 | 1,430,979 | 872,444 | 3,550,538 | ||||||||||||
| ||||||||||||||||
Investor Class | 529,660 | 1,927,812 | 956,579 | 3,878,323 | ||||||||||||
| ||||||||||||||||
Class R5 | 412,345 | 1,492,775 | 931,449 | 3,764,899 | ||||||||||||
| ||||||||||||||||
Class R6 | 1,403,500 | 5,066,400 | 2,850,554 | 11,540,297 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 673,165 | 2,506,578 | 1,137,000 | 4,626,129 | ||||||||||||
| ||||||||||||||||
Class C | (674,802 | ) | (2,506,578 | ) | (1,139,802 | ) | (4,626,129 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (22,554,829 | ) | (81,454,112 | ) | (33,465,100 | ) | (135,821,370 | ) | ||||||||
| ||||||||||||||||
Class C | (1,761,037 | ) | (6,296,114 | ) | (2,762,570 | ) | (11,202,598 | ) | ||||||||
| ||||||||||||||||
Class Y | (9,849,022 | ) | (34,891,159 | ) | (20,705,904 | ) | (84,409,222 | ) | ||||||||
| ||||||||||||||||
Investor Class | (7,688,672 | ) | (28,465,199 | ) | (12,851,746 | ) | (52,245,368 | ) | ||||||||
| ||||||||||||||||
Class R5 | (4,264,014 | ) | (15,684,295 | ) | (6,925,624 | ) | (28,081,599 | ) | ||||||||
| ||||||||||||||||
Class R6 | (29,443,404 | ) | (110,157,598 | ) | (11,587,672 | ) | (46,914,498 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (28,896,370 | ) | $ | (108,448,511 | ) | (13,345,118 | ) | $ | (53,994,908 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 39% 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 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.
27 Invesco High Yield Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||
(5% annual return before | ||||||||||||
ACTUAL | expenses) | |||||||||||
Beginning Account Value (03/01/20) | Ending Account Value (08/31/20)1 | Expenses Paid During Period2 | Ending Account Value (08/31/20) | Expenses Paid During Period2 | Annualized Expense Ratio | |||||||
Class A | $1,000.00 | $1,009.60 | $5.37 | $1,019.86 | $5.40 | 1.06% | ||||||
Class C | 1,000.00 | 1,005.70 | 9.15 | 1,016.08 | 9.20 | 1.81 | ||||||
Class Y | 1,000.00 | 1,010.90 | 4.11 | 1,021.12 | 4.13 | 0.81 | ||||||
Investor Class | 1,000.00 | 1,009.60 | 5.37 | 1,019.86 | 5.40 | 1.06 | ||||||
Class R5 | 1,000.00 | 1,013.70 | 3.71 | 1,021.53 | 3.72 | 0.73 | ||||||
Class R6 | 1,000.00 | 1,014.20 | 3.25 | 1,021.98 | 3.26 | 0.64 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
28 Invesco High Yield Fund
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco High Yield Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory contracts with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also
discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world.
As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2019 to the performance of funds in the Broadridge performance universe and against the Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Index. The Board noted that performance of Class A shares of the Fund was in the fourth quintile of its performance universe for the one, three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was below the performance of the Index for the one, three and five year periods. The Board noted that the Fund’s security selection in and underweight exposure to certain industries and sectors negatively impacted Fund performance. Additionally, the Board noted that an underweight allocation to BB-rated bonds also negatively impacted Fund performance. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its
29 Invesco High Yield Fund
various components. The Board noted that the Fund’s total expense ratio was in the fifth quintile of its expense group and discussed with management reasons for such relative total expenses.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board also considered the fees charged by Invesco Advisers and the Affiliated Sub-Advisers to other similarly managed client accounts. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain Funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. Invesco Advisers noted that the Fund does not execute brokerage transactions through “soft dollar” arrangements to any significant degree.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers pursuant to procedures approved by the Board. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the costs to the Fund of such investments. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
30 Invesco High Yield Fund
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Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
With eDelivery, you can elect to have any or all of the following materials delivered straight to your inbox to download, save and print from your own computer:
∎ Fund reports and prospectuses
∎ Quarterly statements
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Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-PORT filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246, or at invesco.com/ proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers:811-05686 and 033-39519 Invesco Distributors, Inc. HYI-SAR-1
| ||||
Semiannual Report to Shareholders
| August 31, 2020
| |||
| ||||
Invesco High Yield Bond Factor Fund | ||||
Nasdaq: | ||||
A: OGYAX ∎ C: OGYCX ∎ R: OGYNX ∎ Y: OGYYX ∎ R5: GBHYX ∎ R6: OGYIX |
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.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required |
by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. |
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 | Invesco High Yield Bond Factor Fund |
Performance summary
| ||||
Fund vs. Indexes | ||||
Cumulative total returns, 2/29/20 to 8/31/20, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. |
| |||
Class A Shares | 2.66 | % | ||
Class C Shares | 2.27 | |||
Class R Shares | 2.53 | |||
Class Y Shares | 2.78 | |||
Class R5 Shares | 2.78 | |||
Class R6 Shares | 2.78 | |||
Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Index▼ (Broad Market/Style-Specific Index) | 3.04 | |||
Source(s): ▼RIMES Technologies Corp. | ||||
The Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Index is an unmanaged index considered representative of the US high-yield, fixed-rate corporate bond market. Index weights for each issuer are capped at 2%. The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
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For more information about your Fund
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.
Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
3 | Invesco High Yield Bond Factor Fund |
Average Annual Total Returns |
| |||
As of 8/31/20, including maximum applicable sales charges |
| |||
Class A Shares |
| |||
Inception (11/8/13) | 2.93 | % | ||
5 Years | 3.68 | |||
1 Year | -0.16 | |||
Class C Shares |
| |||
Inception (11/8/13) | 2.86 | % | ||
5 Years | 3.85 | |||
1 Year | 2.51 | |||
Class R Shares |
| |||
Inception (11/8/13) | 3.33 | % | ||
5 Years | 4.32 | |||
1 Year | 3.99 | |||
Class Y Shares |
| |||
Inception (11/8/13) | 3.89 | % | ||
5 Years | 4.89 | |||
1 Year | 4.53 | |||
Class R5 Shares |
| |||
Inception | 3.63 | % | ||
5 Years | 4.64 | |||
1 Year | 4.54 | |||
Class R6 Shares |
| |||
Inception (11/8/13) | 3.93 | % | ||
5 Years | 4.93 | |||
1 Year | 4.44 |
Effective May 24, 2019, Class A, Class C, Class R, Class Y and Class I shares of the Oppenheimer Global High Yield Fund, (the predecessor fund), were reorganized into Class A, Class C, Class R, Class Y and Class R6 shares, respectively, of the Invesco High Yield Bond Factor Fund (the Fund). Returns shown above, prior to May 24, 2019, for Class A, Class C, Class R, Class Y and Class R6 shares are those for Class A, Class C, Class R, Class Y and Class I shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
Class R5 shares incepted on May 24, 2019. Performance shown prior to that date is that of the predecessor fund’s Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Class A share performance reflects the maximum 4.25% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
4 | Invesco High Yield Bond Factor Fund |
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. 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 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. |
5 | Invesco High Yield Bond Factor Fund |
August 31, 2020
(Unaudited)
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
U.S. Dollar Denominated Bonds & Notes-95.85% |
| |||||||
Advertising-1.33% |
| |||||||
Cxloyalty Group, Inc., 15.50% PIK Rate, | $ | 58,521 | $ | 35,112 | ||||
| ||||||||
MDC Partners, Inc., 6.50%, 05/01/2024(b) | 284,000 | 271,649 | ||||||
| ||||||||
National CineMedia LLC, 5.75%, | 200,000 | 133,712 | ||||||
| ||||||||
440,473 | ||||||||
| ||||||||
Aerospace & Defense-2.95% |
| |||||||
Bombardier, Inc. (Canada), | 165,000 | 157,850 | ||||||
| ||||||||
5.75%, 03/15/2022(b) | 70,000 | 62,545 | ||||||
| ||||||||
Howmet Aerospace, Inc., 5.90%, | 100,000 | 113,223 | ||||||
| ||||||||
Signature Aviation US Holdings, Inc., | 100,000 | 103,290 | ||||||
| ||||||||
Spirit AeroSystems, Inc., 3.95%, | 343,000 | 292,407 | ||||||
| ||||||||
SSL Robotics LLC, 9.75%, 12/31/2023(b) | 220,000 | 249,128 | ||||||
| ||||||||
978,443 | ||||||||
| ||||||||
Agricultural Products-0.65% |
| |||||||
JBS Investments II GmbH, 7.00%, | 200,000 | 216,619 | ||||||
| ||||||||
Airlines-1.44% |
| |||||||
Air Canada (Canada), 7.75%, | 180,000 | 180,653 | ||||||
| ||||||||
American Airlines Group, Inc., 5.00%, | 307,000 | 198,948 | ||||||
| ||||||||
United Airlines Holdings, Inc., 4.25%, | 107,000 | 99,142 | ||||||
| ||||||||
478,743 | ||||||||
| ||||||||
Alternative Carriers-0.80% |
| |||||||
Level 3 Financing, Inc., | 98,000 | 102,297 | ||||||
| ||||||||
4.63%, 09/15/2027(b) | 155,000 | 162,641 | ||||||
| ||||||||
264,938 | ||||||||
| ||||||||
Apparel Retail-1.49% |
| |||||||
L Brands, Inc., 6.88%, 11/01/2035 | 313,000 | 320,888 | ||||||
| ||||||||
Michaels Stores, Inc., 8.00%, | 170,000 | 171,987 | ||||||
| ||||||||
492,875 | ||||||||
| ||||||||
Apparel, Accessories & Luxury Goods-0.51% |
| |||||||
Under Armour, Inc., 3.25%, 06/15/2026 | 179,000 | 168,260 | ||||||
| ||||||||
Auto Parts & Equipment-1.29% |
| |||||||
Adient Global Holdings Ltd., 4.88%, | 200,000 | 187,875 | ||||||
| ||||||||
Tenneco, Inc., 5.00%, 07/15/2026 | 326,000 | 239,824 | ||||||
| ||||||||
427,699 | ||||||||
| ||||||||
Automobile Manufacturers-3.31% |
| |||||||
Ford Motor Co., | 75,000 | 85,031 | ||||||
| ||||||||
6.63%, 10/01/2028 | 400,000 | 441,000 | ||||||
|
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Automobile Manufacturers-(continued) |
| |||||||
Ford Motor Credit Co. LLC, 4.13%, | $ | 350,000 | $ | 352,653 | ||||
| ||||||||
General Motors Financial Co., Inc., 4.35%, | 200,000 | 218,949 | ||||||
| ||||||||
1,097,633 | ||||||||
| ||||||||
Automotive Retail-0.43% |
| |||||||
Capitol Investment Merger Sub 2 LLC, | 135,000 | 141,750 | ||||||
| ||||||||
Broadcasting-2.80% |
| |||||||
AMC Networks, Inc., | 157,000 | 160,238 | ||||||
| ||||||||
4.75%, 08/01/2025 | 135,000 | 139,928 | ||||||
| ||||||||
Clear Channel Worldwide Holdings, Inc., | 49,000 | 48,148 | ||||||
| ||||||||
iHeartCommunications, Inc., 8.38%, | 64,671 | 65,112 | ||||||
| ||||||||
TEGNA, Inc., 5.00%, 09/15/2029(b) | 310,000 | 312,108 | ||||||
| ||||||||
Univision Communications, Inc., 5.13%, | 200,000 | 201,750 | ||||||
| ||||||||
927,284 | ||||||||
| ||||||||
Cable & Satellite-3.72% |
| |||||||
CCO Holdings LLC/CCO Holdings Capital Corp., | 175,000 | 183,629 | ||||||
| ||||||||
5.13%, 05/01/2027(b) | 175,000 | 186,612 | ||||||
| ||||||||
CSC Holdings LLC, 6.50%, 02/01/2029(b) | 287,000 | 323,951 | ||||||
| ||||||||
DISH DBS Corp., 7.75%, 07/01/2026 | 220,000 | 252,178 | ||||||
| ||||||||
Liberty Interactive LLC, 8.25%, 02/01/2030 | 195,000 | 210,077 | ||||||
| ||||||||
Telenet Finance Luxembourg Notes S.a.r.l. | 70,000 | 74,760 | ||||||
| ||||||||
1,231,207 | ||||||||
| ||||||||
Casinos & Gaming-2.78% |
| |||||||
Boyd Gaming Corp., 6.38%, 04/01/2026 | 160,000 | 167,024 | ||||||
| ||||||||
MGM Resorts International, | 260,000 | 274,788 | ||||||
| ||||||||
5.75%, 06/15/2025 | 175,000 | 188,040 | ||||||
| ||||||||
Penn National Gaming, Inc., 5.63%, 01/15/2027(b) | 215,000 | 222,815 | ||||||
| ||||||||
Scientific Games International, Inc., 8.25%, | 65,000 | 67,069 | ||||||
| ||||||||
919,736 | ||||||||
| ||||||||
Coal & Consumable Fuels-0.44% |
| |||||||
Murray Energy Corp., 12.00%, | 130,760 | 83 | ||||||
| ||||||||
Peabody Energy Corp., | 173,000 | 80,986 | ||||||
| ||||||||
6.38%, 03/31/2025(b) | 188,000 | 63,567 | ||||||
| ||||||||
144,636 | ||||||||
| ||||||||
Commodity Chemicals-1.21% |
| |||||||
Olin Corp., 5.63%, 08/01/2029 | 400,000 | 400,502 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco High Yield Bond Factor Fund |
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Communications Equipment-1.27% |
| |||||||
CommScope Technologies LLC, | $ | 107,000 | $ | 109,842 | ||||
| ||||||||
Telefonaktiebolaget LM Ericsson (Sweden), | 159,000 | 167,079 | ||||||
| ||||||||
ViaSat, Inc., 5.63%, 04/15/2027(b) | 136,000 | 144,475 | ||||||
| ||||||||
421,396 | ||||||||
| ||||||||
Construction & Engineering-0.38% |
| |||||||
Tutor Perini Corp., | 130,000 | 125,450 | ||||||
| ||||||||
Consumer Finance-3.20% |
| |||||||
Navient Corp., | 74,000 | 77,865 | ||||||
| ||||||||
5.50%, 01/25/2023 | 267,000 | 276,432 | ||||||
| ||||||||
6.75%, 06/25/2025 | 160,000 | 167,068 | ||||||
| ||||||||
OneMain Finance Corp., | 279,000 | 292,887 | ||||||
| ||||||||
5.63%, 03/15/2023 | 233,000 | 247,708 | ||||||
| ||||||||
1,061,960 | ||||||||
| ||||||||
Department Stores-1.34% |
| |||||||
Macy’s Retail Holdings LLC, 3.63%, | 422,000 | 320,754 | ||||||
| ||||||||
Nordstrom, Inc., 4.38%, 04/01/2030 | 151,000 | 121,995 | ||||||
| ||||||||
442,749 | ||||||||
| ||||||||
Distributors-0.27% |
| |||||||
Resideo Funding, Inc., 6.13%, | 88,000 | 88,938 | ||||||
| ||||||||
Diversified Banks-1.57% |
| |||||||
Australia & New Zealand Banking Group Ltd. | 40,000 | 45,883 | ||||||
| ||||||||
Banco Mercantil del Norte, S.A. (Mexico), | 160,000 | 161,351 | ||||||
| ||||||||
Deutsche Bank AG (Germany), | 318,000 | 311,938 | ||||||
| ||||||||
519,172 | ||||||||
| ||||||||
Diversified Chemicals-0.91% |
| |||||||
Chemours Co. (The), 6.63%, | 301,000 | 303,256 | ||||||
| ||||||||
Diversified Metals & Mining-1.36% |
| |||||||
FMG Resources August 2006 Pty. Ltd. | 311,000 | 322,188 | ||||||
| ||||||||
Hudbay Minerals, Inc. (Peru), | 125,000 | 129,930 | ||||||
| ||||||||
452,118 | ||||||||
| ||||||||
Diversified REITs-0.43% |
| |||||||
iStar, Inc., 5.25%, 09/15/2022 REIT | 142,000 | 144,102 | ||||||
| ||||||||
Diversified Support Services-0.62% |
| |||||||
Algeco Global Finance PLC (United Kingdom), | 200,000 | 204,623 | ||||||
| ||||||||
Education Services-0.93% |
| |||||||
Graham Holdings Co., 5.75%, | 290,000 | 308,432 | ||||||
|
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Electric Utilities-0.89% |
| |||||||
Talen Energy Supply LLC, | $ | 102,000 | $ | 71,389 | ||||
| ||||||||
10.50%, 01/15/2026(b) | 116,000 | 93,427 | ||||||
| ||||||||
7.25%, 05/15/2027(b) | 127,000 | 130,390 | ||||||
| ||||||||
295,206 | ||||||||
| ||||||||
Electrical Components & Equipment-0.15% |
| |||||||
EnerSys, 4.38%, 12/15/2027(b) | 47,000 | 48,498 | ||||||
| ||||||||
Electronic Equipment & Instruments-0.15% |
| |||||||
MTS Systems Corp., 5.75%, | 50,000 | 50,822 | ||||||
| ||||||||
Fertilizers & Agricultural Chemicals-0.63% |
| |||||||
OCI N.V. (Netherlands), 6.63%, | 200,000 | 208,500 | ||||||
| ||||||||
Food Retail-0.64% |
| |||||||
Albertsons Cos., Inc./Safeway, Inc./New Albertsons L.P./Albertson’s LLC, 3.50%, 02/15/2023(b) | 143,000 | 146,361 | ||||||
| ||||||||
Ingles Markets, Inc., 5.75%, 06/15/2023 | 64,000 | 65,159 | ||||||
| ||||||||
211,520 | ||||||||
| ||||||||
Gas Utilities-0.39% |
| |||||||
Suburban Propane Partners L.P./Suburban Energy Finance Corp., 5.75%, 03/01/2025 | 125,000 | 128,581 | ||||||
| ||||||||
Health Care Facilities-3.71% |
| |||||||
Community Health Systems, Inc., 8.00%, | 334,000 | 346,441 | ||||||
| ||||||||
HCA, Inc., | 288,000 | 315,779 | ||||||
| ||||||||
7.69%, 06/15/2025 | 163,000 | 196,194 | ||||||
| ||||||||
5.38%, 09/01/2026 | 170,000 | 193,367 | ||||||
| ||||||||
Tenet Healthcare Corp., 8.13%, | 165,000 | 178,324 | ||||||
| ||||||||
1,230,105 | ||||||||
| ||||||||
Health Care Services-2.20% |
| |||||||
AMN Healthcare, Inc., 4.63%, | 197,000 | 206,321 | ||||||
| ||||||||
Envision Healthcare Corp., 8.75%, | 58,000 | 25,727 | ||||||
| ||||||||
MEDNAX, Inc., | 200,000 | 204,001 | ||||||
| ||||||||
6.25%, 01/15/2027(b) | 246,000 | 261,072 | ||||||
| ||||||||
Omnicare, Inc., 4.75%, 12/01/2022 | 30,000 | 32,109 | ||||||
| ||||||||
729,230 | ||||||||
| ||||||||
Homebuilding-1.78% |
| |||||||
Beazer Homes USA, Inc., 6.75%, | 70,000 | 72,180 | ||||||
| ||||||||
Lennar Corp., 4.75%, 04/01/2021 | 152,000 | 153,866 | ||||||
| ||||||||
Taylor Morrison Communities, Inc., | 8,000 | 8,237 | ||||||
| ||||||||
5.88%, 06/15/2027(b) | 130,000 | 146,279 | ||||||
| ||||||||
Toll Brothers Finance Corp., 5.88%, | 200,000 | 209,125 | ||||||
| ||||||||
589,687 | ||||||||
| ||||||||
Hotels, Resorts & Cruise Lines-5.54% |
| |||||||
Carnival Corp., 11.50%, | 340,000 | 379,778 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco High Yield Bond Factor Fund |
Principal Amount | Value | |||||||
| ||||||||
Hotels, Resorts & Cruise Lines-(continued) |
| |||||||
Marriott International, Inc., | $ | 304,000 | $ | 314,775 | ||||
| ||||||||
Series EE, 5.75%, 05/01/2025 | 22,000 | 24,724 | ||||||
| ||||||||
Royal Caribbean Cruises Ltd., | ||||||||
5.25%, 11/15/2022 | 177,000 | 158,719 | ||||||
| ||||||||
9.13%, 06/15/2023(b) | 150,000 | 158,063 | ||||||
| ||||||||
Sabre GLBL, Inc., 5.38%, 04/15/2023(b) | 180,000 | 182,269 | ||||||
| ||||||||
VOC Escrow Ltd., 5.00%, 02/15/2028(b) | 150,000 | 124,847 | ||||||
| ||||||||
Wyndham Destinations, Inc., | ||||||||
4.25%, 03/01/2022 | 309,000 | 312,966 | ||||||
| ||||||||
5.40%, 04/01/2024 | 175,000 | 179,105 | ||||||
| ||||||||
1,835,246 | ||||||||
| ||||||||
Household Products-0.65% |
| |||||||
Central Garden & Pet Co., 6.13%, 11/15/2023 | 210,000 | 215,228 | ||||||
| ||||||||
Independent Power Producers & Energy Traders-0.59% |
| |||||||
TerraForm Power Operating LLC, 4.25%, 01/31/2023(b) | 188,000 | 195,069 | ||||||
| ||||||||
Industrial Conglomerates-0.97% |
| |||||||
Icahn Enterprises L.P./Icahn Enterprises Finance Corp., 6.25%, 02/01/2022 | 317,000 | 321,272 | ||||||
| ||||||||
Industrial Machinery-0.64% |
| |||||||
Cleaver-Brooks, Inc., 7.88%, 03/01/2023(b) | 131,000 | 128,530 | ||||||
EnPro Industries, Inc., 5.75%, 10/15/2026 | 80,000 | 83,885 | ||||||
| ||||||||
212,415 | ||||||||
| ||||||||
Integrated Oil & Gas-1.11% |
| |||||||
Occidental Petroleum Corp., 2.90%, 08/15/2024 | 400,000 | 368,748 | ||||||
| ||||||||
Integrated Telecommunication Services-2.24% |
| |||||||
Altice France S.A. (France), 7.38%, 05/01/2026(b) | 75,000 | 79,703 | ||||||
| ||||||||
Embarq Corp., 8.00%, 06/01/2036 | 272,000 | 326,794 | ||||||
| ||||||||
Telecom Italia S.p.A. (Italy), 5.30%, 05/30/2024(b) | 305,000 | 337,173 | ||||||
| ||||||||
743,670 | ||||||||
| ||||||||
Interactive Media & Services-1.00% |
| |||||||
Diamond Sports Group LLC/Diamond Sports Finance Co., | ||||||||
5.38%, 08/15/2026(b) | 325,000 | 254,285 | ||||||
| ||||||||
6.63%, 08/15/2027(b) | 135,000 | 76,106 | ||||||
| ||||||||
330,391 | ||||||||
| ||||||||
Internet & Direct Marketing Retail-0.91% |
| |||||||
Photo Holdings Merger Sub, Inc., 8.50%, 10/01/2026(b) | 329,000 | 302,937 | ||||||
| ||||||||
Investment Banking & Brokerage-0.31% |
| |||||||
FS Energy and Power Fund, 7.50%, 08/15/2023(b) | 115,000 | 103,800 | ||||||
| ||||||||
Leisure Facilities-0.21% |
| |||||||
Cinemark USA, Inc., 4.88%, 06/01/2023 | 75,000 | 69,195 | ||||||
| ||||||||
Life Sciences Tools & Services-0.50% |
| |||||||
Charles River Laboratories International, Inc., 4.25%, 05/01/2028(b) | 158,000 | 166,562 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Managed Health Care-0.88% |
| |||||||
Centene Corp., 4.75%, 05/15/2022 | $ | 288,000 | $ 291,600 | |||||
| ||||||||
Marine-0.06% |
| |||||||
Navios Maritime Holdings, Inc./Navios Maritime Finance II US, Inc. (Greece), 7.38%, 01/15/2022(b) | 46,000 | 19,464 | ||||||
| ||||||||
Metal & Glass Containers-1.81% |
| |||||||
Ardagh Packaging Finance PLC/Ardagh Holdings USA, Inc., 6.00%, 02/15/2025(b) | 265,000 | 276,693 | ||||||
| ||||||||
Crown Americas LLC/Crown Americas Capital Corp. IV, 4.50%, 01/15/2023 | 306,000 | 322,259 | ||||||
| ||||||||
598,952 | ||||||||
| ||||||||
Mortgage REITs-0.80% |
| |||||||
Starwood Property Trust, Inc., 5.00%, 12/15/2021 | 259,000 | 263,588 | ||||||
| ||||||||
Multi-line Insurance-0.64% |
| |||||||
Acrisure LLC/Acrisure Finance, Inc., 8.13%, 02/15/2024(b) | 200,000 | 211,449 | ||||||
| ||||||||
Office Services & Supplies-1.23% |
| |||||||
ACCO Brands Corp., 5.25%, 12/15/2024(b) | 80,000 | 82,109 | ||||||
| ||||||||
Pitney Bowes, Inc., | ||||||||
5.38%, 05/15/2022 | 219,000 | 217,306 | ||||||
| ||||||||
5.70%, 04/01/2023 | 109,000 | 108,307 | ||||||
| ||||||||
407,722 | ||||||||
| ||||||||
Oil & Gas Drilling-0.10% |
| |||||||
Ensign Drilling, Inc. (Canada), 9.25%, 04/15/2024(b) | 70,000 | 28,218 | ||||||
| ||||||||
Transocean, Inc., 7.50%, 04/15/2031 | 20,000 | 4,100 | ||||||
| ||||||||
32,318 | ||||||||
| ||||||||
Oil & Gas Equipment & Services-0.05% |
| |||||||
Basic Energy Services, Inc., 10.75%, 10/15/2023(b) | 25,000 | 5,063 | ||||||
| ||||||||
SESI LLC, 7.75%, 09/15/2024 | 50,000 | 12,151 | ||||||
| ||||||||
17,214 | ||||||||
| ||||||||
Oil & Gas Exploration & Production-5.83% |
| |||||||
Aker BP A.S.A. (Norway), 6.00%, 07/01/2022(b) | 281,000 | 286,756 | ||||||
| ||||||||
Ascent Resources Utica Holdings LLC/ARU Finance Corp., 10.00%, 04/01/2022(b) | 88,000 | 82,554 | ||||||
| ||||||||
California Resources Corp., 8.00%, 12/15/2022(b)(d) | 32,000 | 860 | ||||||
| ||||||||
Comstock Resources, Inc., 9.75%, 08/15/2026 | 15,000 | 15,907 | ||||||
| ||||||||
Continental Resources, Inc., 5.00%, 09/15/2022 | 200,000 | 200,050 | ||||||
| ||||||||
Denbury Resources, Inc., 9.25%, 03/31/2022(b)(d) | 60,000 | 30,211 | ||||||
| ||||||||
Genesis Energy L.P./Genesis Energy Finance Corp., 6.00%, 05/15/2023 | 137,000 | 128,640 | ||||||
| ||||||||
Gulfport Energy Corp., 6.38%, 05/15/2025 | 135,000 | 80,142 | ||||||
| ||||||||
HighPoint Operating Corp., 8.75%, 06/15/2025 | 16,000 | 4,080 | ||||||
| ||||||||
Hilcorp Energy I L.P./Hilcorp Finance Co., | ||||||||
5.75%, 10/01/2025(b) | 37,000 | 34,915 | ||||||
| ||||||||
6.25%, 11/01/2028(b) | 325,000 | 306,624 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco High Yield Bond Factor Fund |
Principal Amount | Value | |||||||
| ||||||||
Oil & Gas Exploration & Production-(continued) |
| |||||||
Montage Resources Corp., 8.88%, 07/15/2023 | $ | 215,000 | $ | 220,507 | ||||
| ||||||||
Murphy Oil Corp., | ||||||||
4.00%, 06/01/2022 | 141,000 | 140,558 | ||||||
| ||||||||
6.88%, 08/15/2024 | 100,000 | 101,790 | ||||||
| ||||||||
Oasis Petroleum, Inc., 6.88%, 03/15/2022 | 55,000 | 10,863 | ||||||
| ||||||||
Southwestern Energy Co., 4.10%, 03/15/2022 | 290,000 | 286,669 | ||||||
| ||||||||
1,931,126 | ||||||||
| ||||||||
Oil & Gas Refining & Marketing-3.77% |
| |||||||
Calumet Specialty Products Partners L.P./Calumet Finance Corp., 7.63%, 01/15/2022 | 200,000 | 198,703 | ||||||
| ||||||||
EnLink Midstream Partners L.P., | ||||||||
4.15%, 06/01/2025 | 75,000 | 67,037 | ||||||
| ||||||||
4.85%, 07/15/2026 | 175,000 | 153,111 | ||||||
| ||||||||
PBF Holding Co. LLC/PBF Finance Corp., 7.25%, 06/15/2025 | 350,000 | 333,233 | ||||||
| ||||||||
Puma International Financing S.A. (Singapore), 5.00%, 01/24/2026(b) | 200,000 | 176,039 | ||||||
| ||||||||
Sunoco L.P./Sunoco Finance Corp., 4.88%, 01/15/2023 | 314,000 | 320,266 | ||||||
| ||||||||
1,248,389 | ||||||||
| ||||||||
Oil & Gas Storage & Transportation-2.12% |
| |||||||
Blue Racer Midstream LLC/Blue Racer Finance Corp., 6.13%, 11/15/2022(b) | 322,000 | 321,106 | ||||||
| ||||||||
Crestwood Midstream Partners L.P./Crestwood Midstream Finance Corp., 6.25%, 04/01/2023 | 129,000 | 127,374 | ||||||
| ||||||||
EQM Midstream Partners L.P., 4.75%, 07/15/2023 | 250,000 | 255,190 | ||||||
| ||||||||
703,670 | ||||||||
| ||||||||
Other Diversified Financial Services-0.91% |
| |||||||
CNG Holdings, Inc., 12.50%, 06/15/2024(b) | 43,000 | 38,400 | ||||||
| ||||||||
Operadora de Servicios Mega S.A. de C.V. Sofom ER (Mexico), 8.25%, 02/11/2025(b) | 200,000 | 176,625 | ||||||
| ||||||||
Washington Prime Group L.P., 6.45%, 08/15/2024 | 165,000 | 86,830 | ||||||
| ||||||||
301,855 | ||||||||
| ||||||||
Packaged Foods & Meats-1.88% |
| |||||||
Kraft Heinz Foods Co. (The), 3.95%, 07/15/2025 | 175,000 | 190,460 | ||||||
| ||||||||
Pilgrim’s Pride Corp., | ||||||||
5.75%, 03/15/2025(b) | 160,000 | 164,600 | ||||||
| ||||||||
5.88%, 09/30/2027(b) | 140,000 | 148,925 | ||||||
| ||||||||
TreeHouse Foods, Inc., 6.00%, 02/15/2024(b) | 115,000 | 118,767 | ||||||
| ||||||||
622,752 | ||||||||
| ||||||||
Personal Products-0.81% |
| |||||||
Avon International Operations, Inc. (United Kingdom), 7.88%, 08/15/2022(b) | 199,000 | 202,032 | ||||||
| ||||||||
Edgewell Personal Care Co., 4.70%, 05/24/2022 | 65,000 | 68,127 | ||||||
| ||||||||
270,159 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Pharmaceuticals-1.88% |
| |||||||
Bausch Health Americas, Inc., 8.50%, 01/31/2027(b) | $ | 115,000 | $ | 126,663 | ||||
| ||||||||
Bausch Health Cos., Inc., | ||||||||
5.88%, 05/15/2023(b) | 6,000 | 6,004 | ||||||
| ||||||||
9.00%, 12/15/2025(b) | 60,000 | 65,754 | ||||||
| ||||||||
5.75%, 08/15/2027(b) | 175,000 | 188,344 | ||||||
| ||||||||
7.25%, 05/30/2029(b) | 60,000 | 65,951 | ||||||
| ||||||||
Elanco Animal Health, Inc., 5.90%, 08/28/2028 | 142,000 | 170,045 | ||||||
| ||||||||
622,761 | ||||||||
| ||||||||
Precious Metals & Minerals-0.01% |
| |||||||
Northwest Acquisitions ULC/Dominion Finco, Inc., 7.13%, 11/01/2022(b)(d) | 142,000 | 2,450 | ||||||
| ||||||||
Property & Casualty Insurance-0.17% |
| |||||||
MBIA, Inc., 5.70%, 12/01/2034 | 73,000 | 56,575 | ||||||
| ||||||||
Real Estate Services-0.10% |
| |||||||
Realogy Group LLC/Realogy Co-Issuer Corp., 9.38%, 04/01/2027(b) | 31,000 | 32,314 | ||||||
| ||||||||
Security & Alarm Services-0.26% |
| |||||||
ADT Security Corp. (The), 6.25%, 10/15/2021 | 80,000 | 84,730 | ||||||
| ||||||||
Specialized Finance-0.85% |
| |||||||
Alpha Holding S.A. de C.V. (Mexico), 9.00%, 02/10/2025(b) | 355,000 | 281,338 | ||||||
| ||||||||
Specialized REITs-1.70% |
| |||||||
CoreCivic, Inc., 4.63%, 05/01/2023 | 192,000 | 183,000 | ||||||
| ||||||||
GEO Group, Inc. (The), 5.13%, 04/01/2023 | 274,000 | 226,906 | ||||||
| ||||||||
Iron Mountain, Inc., 4.88%, 09/15/2029(b) | 147,000 | 152,880 | ||||||
| ||||||||
562,786 | ||||||||
| ||||||||
Steel-0.93% |
| |||||||
Cleveland-Cliffs, Inc., 6.75%, 03/15/2026(b) | 303,000 | 309,817 | ||||||
| ||||||||
Technology Distributors-0.98% |
| |||||||
Ingram Micro, Inc., 5.45%, 12/15/2024 | 303,000 | 325,226 | ||||||
| ||||||||
Technology Hardware, Storage & Peripherals-1.12% |
| |||||||
Dell International LLC/EMC Corp., 5.88%, 06/15/2021(b) | 84,000 | 84,236 | ||||||
| ||||||||
Xerox Corp., 6.75%, 12/15/2039 | 266,000 | 285,763 | ||||||
| ||||||||
369,999 | ||||||||
| ||||||||
Tires & Rubber-0.60% |
| |||||||
FXI Holdings, Inc., 7.88%, 11/01/2024(b) | 204,000 | 198,515 | ||||||
| ||||||||
Tobacco-0.75% |
| |||||||
Vector Group Ltd., 6.13%, 02/01/2025(b) | 243,000 | 247,228 | ||||||
| ||||||||
Trading Companies & Distributors-0.41% |
| |||||||
Herc Holdings, Inc., 5.50%, 07/15/2027(b) | 130,000 | 136,500 | ||||||
| ||||||||
Trucking-0.16% |
| |||||||
Avis Budget Car Rental LLC/Avis Budget Finance, Inc., 5.50%, 04/01/2023 | 53,000 | 53,486 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco High Yield Bond Factor Fund |
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Wireless Telecommunication Services-2.40% |
| |||||||
Sprint Capital Corp., 8.75%, 03/15/2032 | $ | 57,000 | $ | 86,152 | ||||
| ||||||||
Sprint Corp., 7.63%, 02/15/2025 | 145,000 | 173,910 | ||||||
| ||||||||
United States Cellular Corp., 6.70%, 12/15/2033 | 288,000 | 374,525 | ||||||
| ||||||||
Vodafone Group PLC (United Kingdom), 7.00%, 04/04/2079(e) | 133,000 | 160,125 | ||||||
| ||||||||
794,712 | ||||||||
| ||||||||
Total U.S. Dollar Denominated Bonds & Notes (Cost $31,727,085) |
| 31,758,371 | ||||||
| ||||||||
Asset-Backed Securities-0.73% |
| |||||||
Madison Park Funding XI Ltd., | 250,000 | 240,766 | ||||||
| ||||||||
U.S. Treasury Securities-0.45% |
| |||||||
U.S. Treasury Bills-0.45% |
| |||||||
0.15% - 0.40%, 09/03/2020 | 150,000 | 149,998 | ||||||
| ||||||||
Variable Rate Senior Loan Interests-0.04%(j) |
| |||||||
Apparel, Accessories & Luxury Goods-0.03% |
| |||||||
Claire’s Stores, Inc., Term Loan, 6.81% | 12,549 | 9,996 | ||||||
| ||||||||
Coal & Consumable Fuels-0.01% |
| |||||||
Murray Energy Corp., Term Loan | 138,003 | 3,588 | ||||||
| ||||||||
Total Variable Rate Senior Loan Interests |
| 13,584 | ||||||
|
Investment Abbreviations: |
LIBOR - London Interbank Offered Rate |
Pfd. - Preferred |
PIK - Pay-in-Kind |
REIT - Real Estate Investment Trust |
USD - U.S. Dollar |
Wts. - Warrants |
Shares |
Value | |||||||
| ||||||||
Common Stocks & Other Equity Interests-0.02% |
| |||||||
Advertising-0.00% | ||||||||
Cxloyalty Group, Inc., Wts. Expiring April 10, 2024(l)(m) | 39 | $ | 0 | |||||
| ||||||||
Apparel, Accessories & Luxury Goods-0.02% |
| |||||||
Claire’s Stores, Inc.(l) | 20 | 7,588 | ||||||
| ||||||||
Total Common Stocks & Other Equity Interests |
| 7,588 | ||||||
| ||||||||
Preferred Stocks-0.00% |
| |||||||
Apparel, Accessories & Luxury Goods-0.00% |
| |||||||
Claire’s Stores, Inc., Series A, Pfd. | 5 | 875 | ||||||
| ||||||||
Money Market Funds-0.54% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(n)(o) | 61,863 | 61,863 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional | 44,161 | 44,188 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional | 70,700 | 70,700 | ||||||
| ||||||||
Total Money Market Funds (Cost $176,751) |
| 176,751 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES-97.63% |
| 32,347,933 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–2.37% |
| 785,077 | ||||||
| ||||||||
NET ASSETS-100.00% | $ | 33,133,010 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco High Yield Bond Factor Fund |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2020 was $14,713,857, which represented 44.41% of the Fund’s Net Assets. |
(c) | All or a portion of this security is Pay-in-Kind. Pay-in-Kind securities pay interest income in the form of securities. |
(d) | Defaulted security. Currently, the issuer is in default with respect to principal and/or interest payments. The aggregate value of these securities at August 31, 2020 was $37,192, which represented less than 1% of the Fund’s Net Assets. |
(e) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
(f) | Perpetual bond with no specified maturity date. |
(g) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2020. |
(h) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1L. |
(i) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(j) | Variable rate senior loan interests are, at present, not readily marketable, not registered under the 1933 Act and may be subject to contractual and legal restrictions on sale. Variable rate senior loan interests in the Fund’s portfolio generally have variable rates which adjust to a base, such as the London Interbank Offered Rate (“LIBOR”), on set dates, typically every 30 days, but not greater than one year, and/or have interest rates that float at margin above a widely recognized base lending rate such as the Prime Rate of a designated U.S. bank. |
(k) | The borrower has filed for protection in federal bankruptcy court. |
(l) | Non-income producing security. |
(m) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(n) | Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended August 31, 2020. |
Value February 29, 2020 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain | Value August 31, 2020 | Dividend Income | |||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: | |||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | 2,423,448 | $ | 7,560,548 | $ | (9,922,133 | ) | $ | - | $ | - | $ | 61,863 | $ | 1,177 | ||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | - | 339,348 | (295,160 | ) | - | - | 44,188 | 7 | |||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | - | 542,957 | (472,257 | ) | - | - | 70,700 | 5 | |||||||||||||||||||||||||||
Total | $ | 2,423,448 | $ | 8,442,853 | $ | (10,689,550 | ) | $ | - | $ | - | $ | 176,751 | $ | 1,189 |
(o) | The rate shown is the 7-day SEC standardized yield as of August 31, 2020. |
Open Futures Contracts | |||||||||||||||||||||||||
Long Futures Contracts | Number of Contracts | Expiration Month | Notional Value | Value | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||
Interest Rate Risk | |||||||||||||||||||||||||
U.S. Treasury 5 Year Notes | 2 | December-2020 | $ | 252,063 | $ | 496 | $ | 496 | |||||||||||||||||
U.S. Treasury 10 Year Notes | 4 | December-2020 | 557,000 | 1,304 | 1,304 | ||||||||||||||||||||
U.S. Treasury Long Bonds | 1 | December-2020 | 175,719 | (596 | ) | (596 | ) | ||||||||||||||||||
U.S. Treasury Ultra Bonds | 2 | December-2020 | 441,812 | (1,427 | ) | (1,427 | ) | ||||||||||||||||||
U.S. Treasury 10 Year Ultra Notes | 4 | December-2020 | 637,750 | 673 | 673 | ||||||||||||||||||||
Subtotal–Long Futures Contracts | 450 | 450 | |||||||||||||||||||||||
Short Futures Contracts | |||||||||||||||||||||||||
Interest Rate Risk | |||||||||||||||||||||||||
U.S. Treasury 2 Year Notes | 7 | December-2020 | (1,546,617 | ) | (397 | ) | (397 | ) | |||||||||||||||||
Total Futures Contracts | $ | 53 | $ | 53 |
Open Centrally Cleared Credit Default Swap Agreements(a) | |||||||||||||||||||||||||||||||||||||||||||||
Reference Entity | Buy/Sell Protection | (Pay)/ Receive Fixed Rate | Payment Frequency | Maturity Date | Implied Credit Spread(b) | Notional Value | Upfront Payments Paid (Received) | Value | Unrealized Appreciation | ||||||||||||||||||||||||||||||||||||
Credit Risk | |||||||||||||||||||||||||||||||||||||||||||||
Markit CDX North America High Yield Index, Series 34, | Sell | 5.00 | % | Quarterly | 06/20/2025 | 3.645 | % | USD 651,000 | $ | (29,729 | ) | $ | 37,218 | $ | 66,947 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco High Yield Bond Factor Fund |
(a) | Swaps are collateralized by $20,134 cash held with Citigroup Global Markets, Inc., the Counterparty. |
(b) | Implied credit spreads represent the current level, as of August 31, 2020, at which protection could be bought or sold given the terms of the existing credit default swap agreement and serve as an indicator of the current status of the payment/performance risk of the credit default swap agreement. An implied credit spread that has widened or increased since entry into the initial agreement may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets generally. |
Investment Abbreviations:
USD–U.S. Dollar
Portfolio Composition*
By credit quality, based on total investments
as of August 31, 2020
AAA | 0.57 | % | ||
AA | 0.01 | |||
BBB | 8.03 | |||
BB | 60.17 | |||
B | 23.68 | |||
CCC | 4.36 | |||
CC | 0.08 | |||
Non-Rated | 0.34 | |||
Cash | 2.76 |
* | Source: Standard & Poor’s. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice. “Non- Rated” indicates the debtor was not rated, and should not be interpreted as indicating low quality. For more information on Standard & Poor’s rating methodology, please visit standardandpoors.com and select “Understanding Ratings” under Rating Resources on the homepage. Excluding money market funds, if any. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco High Yield Bond Factor Fund |
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, at value | $32,171,182 | |||
| ||||
Investments in affiliated money market funds, at value | 176,751 | |||
| ||||
Other investments: | ||||
Variation margin receivable - futures contracts | 8,891 | |||
| ||||
Variation margin receivable - centrally cleared swap agreements | 900 | |||
| ||||
Deposits with brokers: | ||||
Cash collateral - centrally cleared swap agreements | 20,134 | |||
| ||||
Cash | 292,072 | |||
| ||||
Receivable for: | ||||
Fund shares sold | 14,372 | |||
| ||||
Dividends | 27 | |||
| ||||
Interest | 528,065 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 11,732 | |||
| ||||
Other assets | 67,417 | |||
| ||||
Total assets | 33,291,543 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Dividends | 24,321 | |||
| ||||
Fund shares reacquired | 503 | |||
| ||||
Accrued fees to affiliates | 32,915 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 5,807 | |||
| ||||
Accrued other operating expenses | 83,255 | |||
| ||||
Trustee deferred compensation and retirement plans | 11,732 | |||
| ||||
Total liabilities | 158,533 | |||
| ||||
Net assets applicable to shares outstanding | $33,133,010 | |||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $37,994,162 | |||
| ||||
Distributable earnings (loss) | (4,861,152 | ) | ||
| ||||
$33,133,010 | ||||
|
Net Assets: | ||||
Class A | $ | 23,343,551 | ||
| ||||
Class C | $ | 5,520,378 | ||
| ||||
Class R | $ | 2,904,707 | ||
| ||||
Class Y | $ | 1,333,880 | ||
| ||||
Class R5 | $ | 9,944 | ||
| ||||
Class R6 | $ | 20,550 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 2,603,516 | |||
| ||||
Class C | 615,885 | |||
| ||||
Class R | 323,875 | |||
| ||||
Class Y | 148,714 | |||
| ||||
Class R5 | 1,109 | |||
| ||||
Class R6 | 2,292 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 8.97 | ||
| ||||
Maximum offering price per share | $ | 9.37 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 8.96 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 8.97 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 8.97 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 8.97 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 8.97 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 | Invesco High Yield Bond Factor Fund |
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Interest | $ | 986,585 | ||
| ||||
Dividends | 1,197 | |||
| ||||
Dividends from affiliated money market funds | 1,189 | |||
| ||||
Total investment income | 988,971 | |||
| ||||
Expenses: | ||||
Advisory fees | 57,932 | |||
| ||||
Administrative services fees | 2,456 | |||
| ||||
Custodian fees | 30,754 | |||
| ||||
Distribution fees: | ||||
Class A | 25,560 | |||
| ||||
Class C | 26,259 | |||
| ||||
Class R | 7,326 | |||
| ||||
Transfer agent fees – A, C, R and Y | 81,905 | |||
| ||||
Transfer agent fees – R5 | 5 | |||
| ||||
Transfer agent fees – R6 | 42 | |||
| ||||
Trustees’ and officers’ fees and benefits | 7,954 | |||
| ||||
Registration and filing fees | 72,187 | |||
| ||||
Reports to shareholders | 15,905 | |||
| ||||
Professional services fees | 45,063 | |||
| ||||
Other | (30,904 | ) | ||
| ||||
Total expenses | 342,444 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (218,043 | ) | ||
| ||||
Net expenses | 124,401 | |||
| ||||
Net investment income | 864,570 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (1,082,916 | ) | ||
| ||||
Foreign currencies | (13,850 | ) | ||
| ||||
Forward foreign currency contracts | (23,047 | ) | ||
| ||||
Futures contracts | 178,768 | |||
| ||||
Swap agreements | (9,142 | ) | ||
| ||||
(950,187 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 701,511 | |||
| ||||
Foreign currencies | 6,367 | |||
| ||||
Forward foreign currency contracts | 3,982 | |||
| ||||
Futures contracts | (21,869 | ) | ||
| ||||
Swap agreements | 66,947 | |||
| ||||
756,938 | ||||
| ||||
Net realized and unrealized gain (loss) | (193,249 | ) | ||
| ||||
Net increase in net assets resulting from operations | $ | 671,321 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 | Invesco High Yield Bond Factor Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2020, period ended February 29, 2020, and the year ended May 31, 2019
(Unaudited)
Six Months Ended August 31, 2020 | Nine Months Ended February 29, 2020 | Year Ended May 31, 2019 | ||||||||||
| ||||||||||||
Operations: | ||||||||||||
Net investment income | $ 864,570 | $ 1,153,534 | $ 2,128,138 | |||||||||
| ||||||||||||
Net realized gain (loss) | (950,187 | ) | 131,149 | (1,159,579 | ) | |||||||
| ||||||||||||
Change in net unrealized appreciation (depreciation) | 756,938 | (10,653 | ) | 128,199 | ||||||||
| ||||||||||||
Net increase in net assets resulting from operations | 671,321 | 1,274,030 | 1,096,758 | |||||||||
| ||||||||||||
Distributions to shareholders from distributable earnings: | ||||||||||||
Class A | (643,807 | ) | (808,286 | ) | (1,229,430 | ) | ||||||
| ||||||||||||
Class C | (134,896 | ) | (172,968 | ) | (323,053 | ) | ||||||
| ||||||||||||
Class R | (82,947 | ) | (98,117 | ) | (132,581 | ) | ||||||
| ||||||||||||
Class Y | (36,931 | ) | (43,829 | ) | (84,453 | ) | ||||||
| ||||||||||||
Class R5 | (291 | ) | (371 | ) | (5 | ) | ||||||
| ||||||||||||
Class R6 | (2,570 | ) | (3,852 | ) | (391,557 | ) | ||||||
| ||||||||||||
Total distributions from distributable earnings | (901,442 | ) | (1,127,423 | ) | (2,161,079 | ) | ||||||
| ||||||||||||
Return of capital: | ||||||||||||
Class A | – | (42,363 | ) | – | ||||||||
| ||||||||||||
Class C | – | (9,065 | ) | – | ||||||||
| ||||||||||||
Class R | – | (5,142 | ) | – | ||||||||
| ||||||||||||
Class Y | – | (2,297 | ) | – | ||||||||
| ||||||||||||
Class R5 | – | (19 | ) | – | ||||||||
| ||||||||||||
Class R6 | – | (202 | ) | – | ||||||||
| ||||||||||||
Total return of capital | – | (59,088 | ) | – | ||||||||
| ||||||||||||
Total distributions | (901,442 | ) | (1,186,511 | ) | – | |||||||
| ||||||||||||
Share transactions–net: | ||||||||||||
Class A | 58,204 | 611,835 | 1,660,139 | |||||||||
| ||||||||||||
Class C | (119,540 | ) | (796,976 | ) | (331,917 | ) | ||||||
| ||||||||||||
Class R | (189,457 | ) | 254,611 | 703,228 | ||||||||
| ||||||||||||
Class Y | 214,874 | (408,281 | ) | 7,237 | ||||||||
| ||||||||||||
Class R5 | – | – | 10,000 | |||||||||
| ||||||||||||
Class R6 | (88,076 | ) | (13,627 | ) | (12,756,849 | ) | ||||||
| ||||||||||||
Net increase (decrease) in net assets resulting from share transactions | (123,995 | ) | (352,438 | ) | (10,708,162 | ) | ||||||
| ||||||||||||
Net increase (decrease) in net assets | (354,116 | ) | (264,919 | ) | (11,772,483 | ) | ||||||
| ||||||||||||
Net assets: | ||||||||||||
Beginning of period | 33,487,126 | 33,752,045 | 45,524,528 | |||||||||
| ||||||||||||
End of period | $33,133,010 | $33,487,126 | $ 33,752,045 | |||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 | Invesco High Yield Bond Factor Fund |
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period | Net investment income(a) | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends from net investment income | Return of capital | Total distributions | Net asset value, end of period | Total return(b) | Net assets, end of period (000’s omitted) | Ratio of fee waivers expenses | Ratio of expenses | Ratio of net to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $ | 8.99 | $ | 0.24 | $ | (0.01 | ) | $ | 0.23 | $ | (0.25 | ) | $ | - | $ | (0.25 | ) | $ | 8.97 | 2.77 | %(d) | $ | 23,344 | 0.64 | %(d)(e) | 2.02 | %(d)(e) | 5.68 | %(d)(e) | 109 | % | |||||||||||||||||||||||||||||||||||||||
Nine months ended 02/29/20 | 8.96 | 0.32 | 0.04 | 0.36 | (0.31 | ) | (0.02 | ) | (0.33 | ) | 8.99 | 4.04 | 23,445 | 2.40 | (f) | 2.40 | (f) | 4.72 | (f) | 127 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/19 | 9.17 | 0.51 | (0.21 | ) | 0.30 | (0.51 | ) | - | (0.51 | ) | 8.96 | 3.42 | 22,791 | 1.78 | 1.78 | 5.61 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/18 | 9.51 | 0.49 | (0.34 | ) | 0.15 | (0.49 | ) | - | (0.49 | ) | 9.17 | 1.61 | 21,669 | 1.68 | 1.68 | 5.19 | 71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/17 | 9.07 | 0.45 | 0.45 | 0.90 | (0.46 | ) | - | (0.46 | ) | 9.51 | 10.08 | 27,376 | 1.59 | 1.59 | 4.85 | 89 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/16 | 9.75 | 0.44 | (0.67 | ) | (0.23 | ) | (0.45 | ) | - | (0.45 | ) | 9.07 | (2.22 | ) | 28,286 | 1.56 | 1.56 | 4.90 | 54 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/15(g) | 10.25 | 0.49 | (0.50 | ) | (0.01 | ) | (0.49 | ) | - | (0.49 | ) | 9.75 | (0.07 | ) | 31,973 | 1.40 | 1.40 | 4.94 | 67 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.98 | 0.21 | (0.01 | ) | 0.20 | (0.22 | ) | - | (0.22 | ) | 8.96 | 2.39 | 5,520 | 1.39 | (e) | 2.79 | (e) | 4.93 | (e) | 109 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Nine months ended 02/29/20 | 8.96 | 0.27 | 0.03 | 0.30 | (0.27 | ) | (0.01 | ) | (0.28 | ) | 8.98 | 3.39 | 5,719 | 3.17 | (f) | 3.17 | (f) | 4.02 | (f) | 127 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/19 | 9.16 | 0.44 | (0.19 | ) | 0.25 | (0.45 | ) | - | (0.45 | ) | 8.96 | 2.81 | 6,484 | 2.57 | 2.57 | 4.91 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/18 | 9.50 | 0.42 | (0.33 | ) | 0.09 | (0.43 | ) | - | (0.43 | ) | 9.16 | 0.90 | 6,972 | 2.47 | 2.47 | 4.50 | 71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/17 | 9.06 | 0.39 | 0.44 | 0.83 | (0.39 | ) | - | (0.39 | ) | 9.50 | 9.33 | 7,070 | 2.55 | 2.55 | 4.18 | 89 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/16 | 9.75 | 0.38 | (0.68 | ) | (0.30 | ) | (0.39 | ) | - | (0.39 | ) | 9.06 | (3.00 | ) | 4,458 | 2.59 | 2.59 | 4.21 | 54 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/15(g) | 10.25 | 0.42 | (0.50 | ) | (0.08 | ) | (0.42 | ) | - | (0.42 | ) | 9.75 | (0.76 | ) | 3,876 | 2.56 | 2.56 | 4.24 | 67 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.99 | 0.23 | (0.01 | ) | 0.22 | (0.24 | ) | - | (0.24 | ) | 8.97 | 2.64 | 2,905 | 0.89 | (e) | 2.29 | (e) | 5.43 | (e) | 109 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Nine months ended 02/29/20 | 8.96 | 0.31 | 0.03 | 0.34 | (0.29 | ) | (0.02 | ) | (0.31 | ) | 8.99 | 3.85 | 3,098 | 2.67 | (f) | 2.67 | (f) | 4.48 | (f) | 127 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/19 | 9.17 | 0.48 | (0.20 | ) | 0.28 | (0.49 | ) | - | (0.49 | ) | 8.96 | 3.17 | 2,839 | 2.20 | 2.20 | 5.36 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/18 | 9.51 | 0.47 | (0.34 | ) | 0.13 | (0.47 | ) | - | (0.47 | ) | 9.17 | 1.36 | 2,185 | 2.07 | 2.07 | 4.96 | 71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/17 | 9.07 | 0.44 | 0.43 | 0.87 | (0.43 | ) | - | (0.43 | ) | 9.51 | 9.81 | 1,542 | 2.39 | 2.39 | 4.66 | 89 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/16 | 9.75 | 0.42 | (0.67 | ) | (0.25 | ) | (0.43 | ) | - | (0.43 | ) | 9.07 | (2.46 | ) | 554 | 2.37 | 2.37 | 4.65 | 54 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/15(g) | 10.25 | 0.46 | (0.50 | ) | (0.04 | ) | (0.46 | ) | - | (0.46 | ) | 9.75 | (0.31 | ) | 379 | 2.45 | 2.45 | 4.68 | 67 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.99 | 0.25 | (0.01 | ) | 0.24 | (0.26 | ) | - | (0.26 | ) | 8.97 | 2.90 | 1,334 | 0.39 | (e) | 1.79 | (e) | 5.93 | (e) | 109 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Nine months ended 02/29/20 | 8.97 | 0.34 | 0.03 | 0.37 | (0.33 | ) | (0.02 | ) | (0.35 | ) | 8.99 | 4.16 | 1,105 | 2.17 | (f) | 2.17 | (f) | 5.01 | (f) | 127 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/19 | 9.17 | 0.53 | (0.19 | ) | 0.34 | (0.54 | ) | - | (0.54 | ) | 8.97 | 3.85 | 1,505 | 1.50 | 1.50 | 5.91 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/18 | 9.51 | 0.52 | (0.34 | ) | 0.18 | (0.52 | ) | - | (0.52 | ) | 9.17 | 1.92 | 1,534 | 1.44 | 1.44 | 5.50 | 71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/17 | 9.07 | 0.48 | 0.45 | 0.93 | (0.49 | ) | - | (0.49 | ) | 9.51 | 10.41 | 2,235 | 1.42 | 1.42 | 5.18 | 89 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/16 | 9.75 | 0.47 | (0.67 | ) | (0.20 | ) | (0.48 | ) | - | (0.48 | ) | 9.07 | (1.92 | ) | 657 | 1.50 | 1.50 | 5.18 | 54 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/15(g) | 10.25 | 0.52 | 0.50 | 0.02 | (0.52 | ) | - | (0.52 | ) | 9.75 | 0.23 | 1,132 | 1.50 | 1.50 | 5.25 | 67 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.99 | 0.25 | (0.01 | ) | 0.24 | (0.26 | ) | - | (0.26 | ) | 8.97 | 2.90 | 10 | 0.39 | (e) | 1.37 | (e) | 5.93 | (e) | 109 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Nine months ended 02/29/20 | 8.97 | 0.34 | 0.03 | 0.37 | (0.33 | ) | (0.02 | ) | (0.35 | ) | 8.99 | 4.16 | 10 | 1.84 | (f) | 1.84 | (f) | 5.02 | (f) | 127 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period ended 05/31/19(h) | 9.02 | 0.01 | (0.06 | ) | (0.05 | ) | - | - | - | 8.97 | 3.48 | 10 | 1.22 | (f) | 1.22 | (f) | 5.91 | (f) | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 9.00 | 0.25 | (0.02 | ) | 0.23 | (0.26 | ) | - | (0.26 | ) | 8.97 | 2.78 | 21 | 0.39 | (e) | 1.37 | (e) | 5.93 | (e) | 109 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Nine months ended 02/29/20 | 8.97 | 0.35 | 0.04 | 0.39 | (0.34 | ) | (0.02 | ) | (0.36 | ) | 9.00 | 4.32 | 110 | 1.81 | (f) | 1.81 | (f) | 5.05 | (f) | 127 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/19 | 9.16 | 0.54 | (0.19 | ) | 0.35 | (0.54 | ) | - | (0.54 | ) | 8.97 | 3.98 | 123 | 1.31 | 1.31 | 5.96 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/18 | 9.50 | 0.52 | (0.33 | ) | 0.19 | (0.53 | ) | - | (0.53 | ) | 9.16 | 1.97 | 13,165 | 1.24 | 1.24 | 5.56 | 71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/17 | 9.07 | 0.48 | 0.44 | 0.92 | (0.49 | ) | - | (0.49 | ) | 9.50 | 10.34 | 9,843 | 1.18 | 1.18 | 5.12 | 89 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/16 | 9.75 | 0.47 | (0.67 | ) | (0.20 | ) | (0.48 | ) | - | (0.48 | ) | 9.07 | (1.87 | ) | 22,186 | 1.27 | 1.27 | 5.26 | 54 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 05/31/15(g) | 10.25 | 0.49 | (0.47 | ) | 0.02 | (0.52 | ) | - | (0.52 | ) | 9.75 | 0.28 | 15,272 | 1.07 | 1.07 | 5.13 | 67 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.23% for Class A for the six months ended August 31, 2020. |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $21,663, $5,209, $2,906, $1,188, $9 and $83 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(f) | Annualized. |
(g) | Represents the last business day of the Fund’s reporting period. |
(h) | Commencement date after the close of business on May 24, 2019. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 | Invesco High Yield Bond Factor Fund |
August 31, 2020
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco High Yield Bond Factor Fund (the “Fund”), is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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. 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. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares. Effective November 30, 2020, the automatic conversion pursuant to the Conversion Feature will change from ten years to eight years. The first conversion of Class C shares to Class A shares would occur at the end of December 2020 for all Class C shares that were held for more than eight years as of November 30, 2020.
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. |
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.
Variable rate senior loan interests are fair valued using quotes provided by an independent pricing service. Quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
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.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
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, 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.
17 | Invesco High Yield Bond Factor Fund |
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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and 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 realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination - For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions - Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Securities Purchased on a When-Issued and Delayed Delivery Basis - The Fund may purchase and sell interests in corporate loans and corporate debt securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date. |
F. | Federal Income Taxes - The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
G. | 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. |
H. | 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. |
I. | Indemnifications - Under the Fund’s organizational documents, each Trustee, officer, employee or other agent of the Fund 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. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
J. | Foreign Currency Translations - Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
18 | Invesco High Yield Bond Factor Fund |
K. | Forward Foreign Currency Contracts - The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
L. | Futures Contracts - The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between Counterparties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
M. | Swap Agreements - The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. Such transactions are agreements between Counterparties. A swap agreement may be negotiated bilaterally and traded over-the-counter (“OTC”) between two parties (“uncleared/ OTC”) or, in some instances, must be transacted through a future commission merchant (“FCM”) and cleared through a clearinghouse that serves as a central Counterparty (“centrally cleared swap”). These agreements may contain among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/ or provide limits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.
In a centrally cleared swap, the Fund’s ultimate Counterparty is a central clearinghouse. The Fund initially will enter into centrally cleared swaps through an executing broker. When a fund enters into a centrally cleared swap, it must deliver to the central Counterparty (via the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the central Counterparty, but an FCM may require additional initial margin above the amount required by the central Counterparty. Initial margin deposits required upon entering into centrally cleared swaps are satisfied by cash or securities as collateral at the FCM. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the Statement of Assets and Liabilities. During the term of a cleared swap agreement, a “variation margin” amount may be required to be paid by the Fund or may be received by the Fund, based on the daily change in price of the underlying reference instrument subject to the swap agreement and is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities until the centrally cleared swap is terminated at which time a realized gain or loss is recorded.
A CDS is an agreement between Counterparties to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the “par value”, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer “par value” or the full notional value of the referenced obligation, and the Fund would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its Counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund’s maximum risk of loss from Counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the Counterparty and by the designation of collateral by the Counterparty to cover the Fund’s exposure to the Counterparty.
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets.
An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified notional amount.
19 | Invesco High Yield Bond Factor Fund |
Changes in the value of centrally cleared and OTC swap agreements are recognized as unrealized gains (losses) in the Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Statement of Operations. The Fund segregates cash or liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Cash held as collateral is recorded as deposits with brokers on the Statement of Assets and Liabilities. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. A short position in a security poses more risk than holding the same security long. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited.
Notional amounts of each individual credit default swap agreement outstanding as of August 31, 2020 for which the Fund is the seller of protection are disclosed in the open swap agreements table. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into by the Fund for the same referenced entity or entities.
N. | Other Risks - The Fund may invest in lower-quality debt securities, i.e., “junk bonds”. Investments in lower-rated securities or unrated securities of comparable quality tend to be more sensitive to economic conditions than higher rated securities. Junk bonds involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other creditors’ claim. |
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
O. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
P. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
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 $2 billion | 0.370% | |
Over $ 2 billion | 0.350% |
For the six months ended August 31, 2020, the effective advisory fee rate incurred by the Fund was 0.37%.
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).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 0.64%, 1.39%, 0.89%, 0.39%, 0.39% and 0.39%, 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 the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waivers without approval of the Board of Trustees.
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 August 31, 2020, the Adviser waived advisory fees of $58,219, reimbursed fund level expenses of $77,495 and reimbursed class level expenses of $57,310, $13,781, $7,689, $3,126, $5 and $42 of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C, Class R and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, reimburses IDI for its allocated share of expenses incurred for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Class A shares and up to a maximum annual rate of 0.25% of the average daily net assets of Investor Class shares. The Fund pursuant to the Class C Plan and Class R Plan, pays IDI compensation at the annual rate of 1.00% of the average daily net assets of Class C shares and at the annual rate of 0.50% of the average daily net assets of Class R shares, respectively. 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 Plans would constitute an asset-based sales charge. Rules of the Financial
20 | Invesco High Yield Bond Factor Fund |
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 August 31, 2020, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended August 31, 2020, IDI advised the Fund that IDI retained $3,356 in front-end sales commissions from the sale of Class A shares and $0 and $47 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
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 August 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 | Total | |||||||||||||
| ||||||||||||||||
Investments in Securities | ||||||||||||||||
| ||||||||||||||||
U.S. Dollar Denominated Bonds & Notes | $ | - | $ | 31,758,371 | $- | $ | 31,758,371 | |||||||||
| ||||||||||||||||
Asset-Backed Securities | - | 240,766 | - | 240,766 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Securities | - | 149,998 | - | 149,998 | ||||||||||||
| ||||||||||||||||
Variable Rate Senior Loan Interests | - | 13,584 | - | 13,584 | ||||||||||||
| ||||||||||||||||
Common Stocks & Other Equity Interests | - | 7,588 | 0 | 7,588 | ||||||||||||
| ||||||||||||||||
Preferred Stocks | - | 875 | - | 875 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 176,751 | - | - | 176,751 | ||||||||||||
| ||||||||||||||||
Total Investments in Securities | 176,751 | 32,171,182 | 0 | 32,347,933 | ||||||||||||
| ||||||||||||||||
Other Investments - Assets* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | 2,473 | - | - | 2,473 | ||||||||||||
| ||||||||||||||||
Swap Agreements | - | 66,947 | - | 66,947 | ||||||||||||
| ||||||||||||||||
2,473 | 66,947 | - | 69,420 | |||||||||||||
| ||||||||||||||||
Other Investments - Liabilities* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | (2,420 | ) | - | - | (2,420 | ) | ||||||||||
| ||||||||||||||||
Total Other Investments | 53 | 66,947 | - | 67,000 | ||||||||||||
| ||||||||||||||||
Total Investments | $ | 176,804 | $ | 32,238,129 | $0 | $ | 32,414,933 | |||||||||
|
* | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
21 | Invesco High Yield Bond Factor Fund |
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of August 31, 2020:
Value | ||||||||||||
Derivative Assets | Credit Risk | Interest Rate Risk | Total | |||||||||
| ||||||||||||
Unrealized appreciation on futures contracts – Exchange-Traded(a) | $ | - | $ | 2,473 | $ | 2,473 | ||||||
| ||||||||||||
Unrealized appreciation on swap agreements – Centrally Cleared(a) | 66,947 | - | 66,947 | |||||||||
| ||||||||||||
Total Derivative Assets | 66,947 | 2,473 | 69,420 | |||||||||
| ||||||||||||
Derivatives not subject to master netting agreements | (66,947 | ) | (2,473 | ) | (69,420 | ) | ||||||
| ||||||||||||
Total Derivative Assets subject to master netting agreements | $ | - | $ | - | $ | - | ||||||
|
(a) | The daily variation margin receivable at period-end is recorded in the Statement of Assets and Liabilities. |
Value | ||||||||||
Derivative Liabilities | Credit Risk | Interest Rate Risk | Total | |||||||
| ||||||||||
Unrealized depreciation on futures contracts – Exchange-Traded(a) | $- | $(2,420) | $ | (2,420 | ) | |||||
| ||||||||||
Derivatives not subject to master netting agreements | - | 2,420 | 2,420 | |||||||
| ||||||||||
Total Derivative Liabilities subject to master netting agreements | $- | $ - | $ | - | ||||||
|
(a) | The daily variation margin receivable at period-end is recorded in the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the six months ended August 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations | ||||||||||||||||
Credit | Currency | Interest | ||||||||||||||
Risk | Risk | Rate Risk | Total | |||||||||||||
| ||||||||||||||||
Realized Gain (Loss): | ||||||||||||||||
Forward foreign currency contracts | $ | - | $ | (23,047 | ) | $ | - | $ | (23,047 | ) | ||||||
| ||||||||||||||||
Futures contracts | - | - | 178,768 | 178,768 | ||||||||||||
| ||||||||||||||||
Swap agreements | (9,142 | ) | - | - | (9,142 | ) | ||||||||||
| ||||||||||||||||
Change in Net Unrealized Appreciation (Depreciation): | ||||||||||||||||
Forward foreign currency contracts | - | 3,982 | - | 3,982 | ||||||||||||
| ||||||||||||||||
Futures contracts | - | - | (21,869 | ) | (21,869 | ) | ||||||||||
| ||||||||||||||||
Swap agreements | 66,947 | - | - | 66,947 | ||||||||||||
| ||||||||||||||||
Total | $ | 57,805 | $ | (19,065 | ) | $ | 156,899 | $ | 195,639 | |||||||
|
The table below summarizes the average notional value of derivatives held during the period.
Forward | ||||||||||
Foreign Currency | Futures | Swap | ||||||||
Contracts | Contracts | Agreements | ||||||||
| ||||||||||
Average notional value | $8,385,618 | $6,877,091 | $8,129,333 | |||||||
|
NOTE 5–Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $376.
NOTE 6–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7–Cash Balances
The Fund may borrow for leveraging in an amount up to 5% of the Fund’s total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, 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
22 | Invesco High Yield Bond Factor Fund |
by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 8–Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of February 29, 2020, as follows:
Capital Loss Carryforward* | ||||||||||||
| ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
| ||||||||||||
Not subject to expiration | $ | 1,134,049 | $ | 2,623,425 | $ | 3,757,474 | ||||||
|
* | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 9–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 August 31, 2020 was $34,100,337 and $32,701,832, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $ | 2,379,321 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (2,483,610 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (104,289 | ) | |
|
Cost of investments for tax purposes is $32,519,222.
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
Six months ended | Nine months ended | Year ended | ||||||||||||||||||||||
August 31, 2020(a) | February 29, 2020 | May 31, 2019 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
| ||||||||||||||||||||||||
Sold: | ||||||||||||||||||||||||
Class A | 370,193 | $ | 3,150,117 | 422,846 | $ | 3,857,665 | 729,132 | $ | 6,596,376 | |||||||||||||||
| ||||||||||||||||||||||||
Class C | 103,252 | 881,790 | 95,431 | 869,158 | 244,929 | 2,206,607 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class R | 56,108 | 470,970 | 78,933 | 719,034 | 111,688 | 1,004,611 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class Y | 42,917 | 364,152 | 39,704 | 362,919 | 48,786 | 440,005 | ||||||||||||||||||
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Class R5(b) | - | - | - | - | 1,109 | 10,000 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class R6 | 42 | 366 | 5,734 | 52,385 | 13,344 | 121,038 | ||||||||||||||||||
| ||||||||||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||||||||||
Class A | 62,290 | 530,228 | 84,797 | 771,421 | 127,447 | 1,146,812 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class C | 12,239 | 104,144 | 19,060 | 173,379 | 34,682 | 312,156 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class R | 9,560 | 81,250 | 11,232 | 102,255 | 14,608 | 131,453 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class Y | 3,471 | 29,620 | 4,971 | 45,278 | 9,355 | 84,298 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class R6 | 138 | 1,158 | 445 | 4,054 | 41,562 | 373,633 | ||||||||||||||||||
| ||||||||||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||||||||||
Class A | 9,552 | 79,038 | 88,060 | 804,928 | - | - | ||||||||||||||||||
| ||||||||||||||||||||||||
Class C | (9,562 | ) | (79,038 | ) | (88,146 | ) | (804,928 | ) | - | - | ||||||||||||||
|
23 | Invesco High Yield Bond Factor Fund |
Summary of Share Activity | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
Six months ended | Nine months ended | Year ended | ||||||||||||||||||||||
August 31, 2020(a) | February 29, 2020 | May 31, 2019 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
| ||||||||||||||||||||||||
Reacquired: | ||||||||||||||||||||||||
Class A | (447,303 | ) | $ | (3,701,179 | ) | (529,837 | ) | $ | (4,822,179 | ) | (677,300 | ) | $ | (6,083,049 | ) | |||||||||
| ||||||||||||||||||||||||
Class C | (126,715 | ) | (1,026,436 | ) | (113,532 | ) | (1,034,585 | ) | (316,686 | ) | (2,850,680 | ) | ||||||||||||
| ||||||||||||||||||||||||
Class R | (86,489 | ) | (741,677 | ) | (62,196 | ) | (566,678 | ) | (47,888 | ) | (432,836 | ) | ||||||||||||
| ||||||||||||||||||||||||
Class Y | (20,592 | ) | (178,898 | ) | (89,562 | ) | (816,478 | ) | (57,586 | ) | (517,066 | ) | ||||||||||||
| ||||||||||||||||||||||||
Class R6 | (10,144 | ) | (89,600 | ) | (7,678 | ) | (70,066 | ) | (1,477,674 | ) | (13,251,520 | ) | ||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) in share activity | (31,043 | ) | $ | (123,995 | ) | (39,738 | ) | $ | (352,438 | ) | (1,200,492 | ) | $ | (10,708,162 | ) | |||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 16% 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. |
(b) | Commencement date after the close of business on May 24, 2019. |
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.
24 | Invesco High Yield Bond Factor Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||
(5% annual return before | ||||||||||||
ACTUAL | expenses) | |||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||
(03/01/20) | (08/31/20)1 | Period2 | (08/31/20) | Period2 | Ratio | |||||||
Class A | $1,000.00 | $1,027.70 | $3.27 | $1,021.98 | $3.26 | 0.64% | ||||||
Class C | 1,000.00 | 1,023.90 | 7.09 | 1,018.20 | 7.07 | 1.39 | ||||||
Class R | 1,000.00 | 1,026.40 | 4.55 | 1,020.72 | 4.53 | 0.89 | ||||||
Class Y | 1,000.00 | 1,029.00 | 1.99 | 1,023.24 | 1.99 | 0.39 | ||||||
Class R5 | 1,000.00 | 1,029.00 | 1.99 | 1,023.24 | 1.99 | 0.39 | ||||||
Class R6 | 1,000.00 | 1,027.80 | 1.99 | 1,023.24 | 1.99 | 0.39 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
25 | Invesco High Yield Bond Factor Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco High Yield Bond Factor Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory contracts with Invesco Capital Management LLC, Invesco Asset Management (India) Private Limited and OppenheimerFunds, Inc. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also
discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world.
As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2019 to the performance of funds in the Broadridge performance universe and against the Fund’s prior index. The Board noted that performance of Class A shares of the Fund was in the third quintile of its performance universe for the one year period and the fourth quintile for the three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was below the performance of the Index for the one, three and five year periods. The Board considered that the Fund was created in connection with the Transaction and that the Fund’s performance prior to the closing of the Transaction after the close of business on May 24, 2019 is that of its predecessor fund. The Board noted that security selection within certain sectors detracted from Fund performance. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board further considered that the Fund had changed its name, investment strategy and index against which future performance will be compared on February 28, 2020 in connection with its repositioning as a factor-based fund, and that performance results prior to such date reflected that of the Fund’s former strategy. As a result, the Board did not consider past performance of the Fund to be particularly relevant. The Board considered information provided regarding the more recent performance of the Fund utilizing the new strategy as well as other metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was above the median contractual management fee rate of funds in its expense group. The Board noted that the Fund’s contractual management fee schedule was reduced at certain breakpoint levels effective
26 | Invesco High Yield Bond Factor Fund |
February 2020 in connection with its repositioning as a factor-based fund and that the Broadridge materials did not reflect this reduced contractual management fee schedule. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components. The Board noted that the Fund’s contractual management fees and total expense ratio were in the fifth quintile of its expense group and discussed with management reasons for such relative contractual management fees and total expenses. The Board also discussed with management any impact that the reduction of the Fund’s contractual management fee schedule effective February 2020 would have on the Fund’s peer group ranking.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund may benefit from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services
Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain Funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. Invesco Advisers noted that the Fund does not execute brokerage transactions through “soft dollar” arrangements to any significant degree.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers pursuant to procedures approved by the Board. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the costs to the Fund of such investments. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
27 | Invesco High Yield Bond Factor Fund |
Go paperless with eDelivery
Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
With eDelivery, you can elect to have any or all of the following materials delivered straight to your inbox to download, save and print from your own computer:
∎ Fund reports and prospectuses
∎ Quarterly statements
∎ Daily confirmations
∎ Tax forms
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-PORT filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246, or at invesco.com/ proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-05686 and 033-39519 Invesco Distributors, Inc. O-GLHY-SAR-1
| ||||
Semiannual Report to Shareholders
| August 31, 2020 | |||
| ||||
Invesco Income Fund | ||||
A: AGOVX ⬛ C: AGVCX ⬛ R: AGVRX ⬛ Y: AGVYX ⬛ Investor: AGIVX ⬛ R5: AGOIX ⬛ R6: AGVSX |
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.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees |
that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. |
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Income Fund
Performance summary |
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Fund vs. Indexes |
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Cumulative total returns, 2/29/20 to 8/31/20, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. |
| |||
Class A Shares | –10.95 | % | ||
Class C Shares | –11.19 | |||
Class R Shares | –11.16 | |||
Class Y Shares | –10.80 | |||
Investor Class Shares | –10.89 | |||
Class R5 Shares | –10.77 | |||
Class R6 Shares | –10.78 | |||
Bloomberg Barclays U.S. Aggregate Bond Index▼ (Broad Market Index) | 2.98 | |||
Source(s): ▼RIMES Technologies Corp. |
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The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment grade, fixed-rate bond market. |
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The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). |
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A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
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For more information about your Fund
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance. Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends. |
3 Invesco Income Fund
Average Annual Total Returns |
| |||
As of 8/31/20, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (4/28/87) | 4.37 | % | ||
10 Years | 0.16 | |||
5 Years | –1.31 | |||
1 Year | –13.39 | |||
Class C Shares | ||||
Inception (8/4/97) | 2.88 | % | ||
10 Years | –0.13 | |||
5 Years | –1.15 | |||
1 Year | –10.96 | |||
Class R Shares | ||||
Inception (6/3/02) | 2.28 | % | ||
10 Years | 0.35 | |||
5 Years | –0.69 | |||
1 Year | –9.74 | |||
Class Y Shares | ||||
Inception (10/3/08) | 1.93 | % | ||
10 Years | 0.87 | |||
5 Years | –0.17 | |||
1 Year | –9.25 | |||
Investor Class Shares | ||||
Inception (9/30/03) | 2.29 | % | ||
10 Years | 0.64 | |||
5 Years | –0.37 | |||
1 Year | –9.33 | |||
Class R5 Shares | ||||
Inception (4/29/05) | 2.70 | % | ||
10 Years | 0.97 | |||
5 Years | –0.07 | |||
1 Year | –9.07 | |||
Class R6 Shares | ||||
10 Years | 0.71 | % | ||
5 Years | –0.22 | |||
1 Year | –9.18 | |||
Performance includes litigation proceeds. Had these proceeds not been received, total returns would have been lower. |
|
Class R6 shares incepted on April 4, 2017. Performance shown prior to that date is that of Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Class A share performance reflects the maximum 4.25% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC)
for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Investor Class, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
4 Invesco Income Fund
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. 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 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. |
5 Invesco Income Fund
August 31, 2020
(Unaudited)
Principal | ||||||||
Amount | Value | |||||||
Asset-Backed Securities–78.39% |
| |||||||
Adagio V CLO DAC, | $ | 4,000,000 | $ | 4,450,942 | ||||
AMSR Trust, Series 2020-SFR2, Class E1, 4.03%, 07/17/2037(a) | 2,412,000 | 2,525,117 | ||||||
Angel Oak Mortgage Trust, | ||||||||
Series 2019-5, Class B1, 3.96%, 10/25/2049(a)(c) | 2,361,000 | 2,294,035 | ||||||
Series 2020-3, Class M1, 3.81%, 04/25/2065(a)(c) | 5,000,000 | 5,056,867 | ||||||
Series 2020-4, Class A3, 2.81%, 06/25/2065(a)(c) | 4,887,506 | 4,917,528 | ||||||
Angel Oak Mortgage Trust LLC, Series 2020-5, Class A3, 2.04%, 05/25/2065(a)(c) | 3,750,000 | 3,768,027 | ||||||
Arroyo Mortgage Trust, | 4,463,000 | 4,545,152 | ||||||
Avis Budget Rental Car Funding AESOP LLC, Series 2019-3A, Class A, 2.36%, 03/20/2026(a) | 1,000,000 | 1,023,843 | ||||||
Avoca CLO XX DAC, | 2,675,000 | 3,100,982 | ||||||
Banc of America Commercial Mortgage Trust, Series 2015-UBS7, Class XA, IO, 0.94%, 09/15/2048(d) | 18,236,248 | 608,179 | ||||||
Bank, | ||||||||
Series 2018-BN11, Class B, 4.50%, 03/15/2061(c) | 1,250,000 | 1,426,426 | ||||||
Series 2018-BN14, Class E, 3.00%, 09/15/2060(a) | 5,750,000 | 3,976,418 | ||||||
BBCMS Mortgage Trust, Series 2018-C2, Class C, 5.14%, 12/15/2051(c) | 2,500,000 | 2,685,284 | ||||||
Bear Stearns Adjustable Rate Mortgage Trust, | 417,889 | 430,362 | ||||||
Benchmark Mortgage Trust, | ||||||||
Series 2018-B3, Class C, 4.71%, 04/10/2051(c) | 2,375,000 | 2,472,308 | ||||||
Series 2018-B6, Class E, 3.27%, 10/10/2051(a)(c) | 8,000,000 | 5,686,338 | ||||||
Series 2019-B11, Class D, 3.00%, 05/15/2052(a) | 5,250,000 | 4,266,385 | ||||||
Series 2019-B14, Class C, 3.90%, 12/15/2062(c) | 4,650,000 | 4,705,516 | ||||||
Blackbird Capital Aircraft Lease Securitization Ltd., Series 2016-1A, Class B, 5.68%, 12/16/2041(a)(c)(e) | 4,982,187 | 3,266,552 | ||||||
BRAVO Residential Funding Trust, Series 2019-NQM2, Class A3, 3.11%, 11/25/2059(a)(c) | 4,271,617 | 4,344,800 | ||||||
CAL Funding III Ltd., | 1,500,000 | 1,498,620 |
Principal | ||||||||
Amount | Value | |||||||
Cantor Commercial Real Estate Lending, | ||||||||
Series 2019-CF1, Class 65D, 4.66%, 05/15/2052(a)(c) | $ | 4,517,000 | $ | 3,915,446 | ||||
Series 2019-CF2, Class E, 2.50%, 11/15/2052(a) | 3,000,000 | 2,094,940 | ||||||
CBAM Ltd. (Cayman Islands), | ||||||||
Series 2017-3A, Class A, 1.50% (3 mo. USD LIBOR + 1.23%), 10/17/2029(a)(b) | 8,000,000 | 7,975,404 | ||||||
Series 2019-10A, Class A1A, 1.69% (3 mo. USD LIBOR + 1.42%), 04/20/2032(a)(b) | 4,000,000 | 3,989,290 | ||||||
Cerberus Loan Funding XXV L.P., Series 2018-4RA, Class DR, 4.08% (3 mo. USD LIBOR + 3.80%), | 2,100,000 | 1,814,882 | ||||||
Cerberus Loan Funding XXVI L.P., Series 2019-1A, Class D, 5.13% (3 mo. USD LIBOR + 4.85%), | 2,500,000 | 2,147,052 | ||||||
Chase Mortgage Finance Corp., | ||||||||
Series 2016-SH1, Class M3, 3.75%, 04/25/2045(a)(c) | 1,881,925 | 1,875,023 | ||||||
Series 2016-SH2, Class M3, 3.75%, 12/25/2045(a)(c) | 2,407,735 | 2,422,664 | ||||||
Citigroup Commercial Mortgage Trust, | ||||||||
Series 2013-GC11, Class D, 4.56%, 04/10/2023(a)(c) | 4,885,000 | 4,613,323 | ||||||
Series 2014-GC25, Class C, 4.68%, 10/10/2047(c) | 4,000,000 | 3,886,256 | ||||||
Series 2015-GC29, Class D, 3.11%, 04/10/2048(a) | 5,000,000 | 4,237,532 | ||||||
COLT Mortgage Loan Trust, | ||||||||
Series 2020-1, Class A3, 2.90%, 02/25/2050(a)(c) | 2,448,306 | 2,475,707 | ||||||
Series 2020-2, Class A3, 3.70%, 03/25/2065(a)(c) | 2,664,000 | 2,762,187 | ||||||
Series 2020-3, Class A3, 2.38%, 04/27/2065(a)(c) | 3,538,226 | 3,552,481 | ||||||
COMM Mortgage Trust, | 1,760,500 | 1,799,061 | ||||||
Commercial Mortgage Trust, | ||||||||
Series 2014-CR16, Class C, 5.09%, 04/10/2047(c) | 10,000,000 | 9,738,313 | ||||||
Series 2014-CR19, Class C, 4.87%, 08/10/2024(c) | 4,578,800 | 4,644,862 | ||||||
Series 2014-UBS4, Class C, 4.80%, 07/10/2024(c) | 5,000,000 | 4,963,549 | ||||||
Series 2015-CR24, Class B, 4.52%, 08/10/2048(c) | 6,800,000 | 7,311,463 | ||||||
Series 2015-CR26, Class C, 4.63%, 10/10/2048(c) | 4,000,000 | 4,082,369 | ||||||
Credit Suisse Mortgage Capital Ctfs., Series 2020-SPT1, Class A3, 2.80%, | 5,000,000 | 5,023,138 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Income Fund
Principal | ||||||||
Amount | Value | |||||||
CSAIL Commercial Mortgage Trust, | ||||||||
Series 2016-C6, Class E, 4.09%, 01/15/2049(a)(c) | $ | 3,000,000 | $ | 1,068,952 | ||||
Series 2017-CX9, Class D, 4.29%, 09/15/2050(a)(c) | 6,304,000 | 4,567,759 | ||||||
Series 2018-C14, Class E, 5.05%, 11/15/2051(a)(c) | 4,548,000 | 3,215,990 | ||||||
Series 2019-C16, Class C, 4.24%, 06/15/2052(c) | 2,000,000 | 1,954,596 | ||||||
Series 2019-C17, Class C, 3.93%, 09/15/2052 | 5,000,000 | 5,157,826 | ||||||
CVC Cordatus Loan Fund XIV DAC, Series 14A, Class C1, 2.65% (3 mo. EURIBOR + 2.65%), 05/22/2032(a)(b) | 1,000,000 | 1,194,793 | ||||||
Deephaven Residential Mortgage Trust, | 5,800,000 | 5,844,100 | ||||||
Diamond CLO Ltd., | 3,000,000 | 2,697,616 | ||||||
Dryden 53 CLO Ltd., | 7,000,000 | 6,966,572 | ||||||
Flagstar Mortgage Trust, | ||||||||
Series 2018-5, Class B1, 4.54%, 09/25/2048(a)(c) | 1,636,401 | 1,693,941 | ||||||
Series 2018-5, Class B2, 4.54%, 09/25/2048(a)(c) | 1,960,793 | 2,007,777 | ||||||
Series 2018-6RR, Class B2, 5.00%, 10/25/2048(a)(c) | 2,895,758 | 2,892,757 | ||||||
Series 2018-6RR, Class B3, 5.00%, 10/25/2048(a)(c) | 2,895,758 | 3,065,410 | ||||||
Ford Credit Auto Owner Trust, Series 2020-B, Class C, 2.04%, 12/15/2026 | 3,000,000 | 3,062,340 | ||||||
FREMF Mortgage Trust, | ||||||||
Series 2019-KF68, Class B, 2.35% (1 mo. USD LIBOR + 2.20%), 07/25/2026(a)(b) | 2,483,390 | 2,354,451 | ||||||
Series 2019-KF72, Class B, 2.25% (1 mo. USD LIBOR + 2.10%), 11/25/2026(a)(b) | 6,727,545 | 6,320,987 | ||||||
Galton Funding Mortgage Trust, Series 2019-H1, Class B1, 3.89%, 10/25/2059(a)(c) | 5,480,000 | 5,261,689 | ||||||
GCAT Trust, | ||||||||
Series 2019-NQM3, Class B1, 3.95%, 11/25/2059(a)(c) | 4,000,000 | 3,804,679 | ||||||
Series 2020-NQM2, Class M1, 3.59%, 04/25/2065(a)(c) | 3,500,000 | 3,526,216 | ||||||
GM Financial Consumer Automobile Receivables Trust, Series 2020-3, Class C, 1.37%, 01/16/2026 | 1,890,000 | 1,893,659 | ||||||
GS Mortgage Securities Corp. Trust, | ||||||||
Series 2017-SLP, Class E, 4.74%, 10/10/2032(a)(c) | 5,050,000 | 4,711,858 | ||||||
Series 2018-TWR, Class G, 4.09% (1 mo. USD LIBOR + 3.92%), 07/15/2021(a)(b) | 3,000,000 | 2,642,969 | ||||||
GS Mortgage Securities Trust, Series 2017-GS6, Class C, 4.32%, 05/10/2050(c) | 2,774,000 | 3,052,837 |
Principal | ||||||||
Amount | Value | |||||||
GS Mortgage-Backed Securities Trust, | $ | 2,100,000 | $ | 2,110,105 | ||||
Holland Park CLO DAC (Ireland), | ||||||||
Class C, 4.40% (3 mo. EURIBOR + 4.40%), 11/14/2032(a)(b) | 2,000,000 | 2,368,800 | ||||||
Class D, 7.03% (3 mo. EURIBOR + 7.03%), 11/14/2032(a)(b) | 2,000,000 | 2,256,196 | ||||||
Home Partners of America Trust, Series 2017-1, Class E, 2.81% (1 mo. USD LIBOR + 2.65%), 07/17/2034(a)(b) | 5,000,000 | 5,029,036 | ||||||
Invitation Homes Trust, | ||||||||
Series 2018-SFR1, | 6,056,172 | 6,053,580 | ||||||
Series 2018-SFR2, Class C, 1.44% (1 mo. USD LIBOR + 1.28%), 06/17/2037(a)(b) | 1,250,000 | 1,251,879 | ||||||
Series 2018-SFR2, Class E, 2.16% (1 mo. USD LIBOR + 2.00%), 06/17/2037(a)(b) | 5,000,000 | 4,996,635 | ||||||
Series 2018-SFR3, Class C, 1.46% (1 mo. USD LIBOR + 1.30%), 07/17/2037(a)(b) | 3,685,000 | 3,686,306 | ||||||
Series 2018-SFR4, Series E, 2.11% (1 mo. USD LIBOR + 1.95%), 01/17/2038(a)(b) | 4,000,000 | 3,967,028 | ||||||
Series 2018-SFR4, | 4,000,000 | 3,939,650 | ||||||
Jimmy Johns Funding LLC, Series 2017-1A, Class A2II, 4.85%, 07/30/2047(a) | 6,305,000 | 6,456,099 | ||||||
JP Morgan Chase Commercial Mortgage Securities Trust, | ||||||||
Series 2018-PHH, Class E, 3.91% (1 mo. USD LIBOR + 2.41%), 06/15/2021(a)(b) | 2,000,000 | 1,485,010 | ||||||
Series 2018-PHH, Class F, 4.51% (1 mo. USD LIBOR + 3.01%), 06/15/2021(a)(b) | 2,000,000 | 1,492,402 | ||||||
Series 2018-WPT, Class DFL, 2.41% (1 mo. USD LIBOR + 2.25%), 07/05/2033(a)(b) | 3,000,000 | 2,847,038 | ||||||
JPMBB Commercial Mortgage Securities Trust, | ||||||||
Series 2013-C12, Class C, 4.24%, 07/15/2045(c) | 4,760,000 | 4,794,421 | ||||||
Series 2014-C26, Class D, 4.02%, 12/15/2024(a)(c) | 4,000,000 | 3,492,992 | ||||||
Series 2020-COR7, Class A5, 2.18%, 05/13/2053 | 6,665,000 | 7,006,485 | ||||||
Series 2020-COR7, Class C, 3.85%, | 1,779,000 | 1,854,603 | ||||||
MACH 1 Cayman Ltd., | 2,104,651 | 1,634,233 | ||||||
Madison Park Funding XVIII Ltd., Series 2015-18A, Class A1R, 1.46% (3 mo. USD LIBOR + 1.19%), 10/21/2030(a)(b) | 3,000,000 | 2,989,754 | ||||||
Morgan Stanley Bank of America Merrill Lynch Trust, | ||||||||
Series 2015-C20, Class D, 3.07%, 02/15/2048(a) | 3,200,000 | 2,669,342 | ||||||
Series 2015-C24, Class D, 3.26%, 07/15/2025(a) | 5,000,000 | 4,030,192 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Income Fund
Principal | ||||||||
Amount | Value | |||||||
Morgan Stanley Capital I Trust, Series 2018-H4, Class C, 5.24%, 12/15/2051(c) | $ | 5,000,000 | $ | 5,163,875 | ||||
OCP CLO Ltd., | 4,100,000 | 4,089,144 | ||||||
Octagon Investment Partners 48 Ltd., Series 2020-3A, Class A, 1.00% (3 mo. USD LIBOR + 1.50%), 10/20/2031(a)(b) | 6,000,000 | 6,004,500 | ||||||
OHA Loan Funding Ltd., Series 2016-1A, Class AR, 1.53% (3 mo. USD LIBOR + 1.26%), 01/20/2033(a)(b) | 2,400,000 | 2,393,985 | ||||||
Progress Residential Trust, | ||||||||
Series 2017-SFR2, Class D, 3.60%, 12/17/2034(a) | 3,413,000 | 3,443,743 | ||||||
Series 2017-SFR2, Class E, 4.14%, 12/17/2034(a) | 3,000,000 | 3,038,245 | ||||||
Series 2018-SFR1, Class F, 4.78%, 03/17/2035(a) | 525,000 | 537,931 | ||||||
Series 2018-SFR2, Class E, 4.66%, 08/17/2035(a) | 3,000,000 | 3,079,727 | ||||||
Series 2018-SFR3, Class D, 4.43%, 10/17/2035(a) | 7,000,000 | 7,264,132 | ||||||
Series 2019-SFR1, Class E, 4.47%, 08/17/2035(a) | 5,000,000 | 5,157,200 | ||||||
Residential Mortgage Loan Trust, | ||||||||
Series 2019-1, Class M1, 4.59%, 10/25/2058(a)(c) | 5,000,000 | 5,151,957 | ||||||
Series 2019-3, Class B1, 3.81%, 09/25/2059(a)(c) | 3,276,000 | 3,081,735 | ||||||
Series 2020-2, Class M1, 3.57%, 05/25/2060(a)(c) | 5,000,000 | 5,100,263 | ||||||
Sapphire Aviation Finance II Ltd., Series 2020-1A, Class B, 4.34%, 03/15/2040(a) | 3,039,185 | 2,105,221 | ||||||
Seasoned Credit Risk Transfer Trust, Series 2017-4, Class M, 4.75%, 06/25/2057(a)(c) | 3,000,000 | 3,041,221 | ||||||
Sonic Capital LLC, | 5,684,435 | 6,080,380 | ||||||
Starwood Mortgage Residential Trust, | ||||||||
Series 2020-2, Class A2, 3.97%, 04/25/2060(a)(c) | 4,000,000 | 4,147,787 | ||||||
Series 2020-3, Class A3, 2.59%, 04/25/2065(a)(c) | 3,000,000 | 2,997,372 | ||||||
Symphony CLO XXII Ltd., Series 2020-22A, Class A1A, 2.60% (3 mo. USD LIBOR + 1.29%), 04/18/2033(a)(b) | 7,500,000 | 7,459,937 | ||||||
Textainer Marine Containers V Ltd., Series 2017-2A, Class B, 4.75%, 06/20/2042(a) | 1,638,030 | 1,640,098 | ||||||
Textainer Marine Containers VII Ltd. (China), | ||||||||
Series 2018-1A, Class B, 4.93%, 07/20/2043(a) | 960,448 | 963,234 | ||||||
Series 2020-1A, Class B, 4.94%, 08/21/2045(a) | 4,000,000 | 4,128,596 | ||||||
TICP CLO IX Ltd., | 7,000,000 | 6,956,410 |
Principal | ||||||||
Amount | Value | |||||||
Tricon American Homes Trust, | ||||||||
Series 2018-SFR1, Class D, 4.17%, 05/17/2037(a) | $ | 2,000,000 | $ | 2,125,494 | ||||
Series 2020-SFR1, Class D, 2.55%, 07/17/2038(a) | 8,900,000 | 9,078,637 | ||||||
Series 2020-SFR1, Class E, 3.54%, 07/17/2038(a) | 1,600,000 | 1,670,628 | ||||||
Triton Container Finance VI LLC, Series 2018-2A, Class A, 5.05%, | 3,525,000 | 3,533,712 | ||||||
Verus Securitization Trust, | ||||||||
Series 2020-4, Class A3, 2.32%, 05/25/2065(a)(c)(e) | 5,683,725 | 5,710,019 | ||||||
Series 2020-INV1, Class A3, 3.89%, 03/25/2060(a)(c) | 2,800,000 | 2,925,180 | ||||||
Vista Point Securitization Trust, | ||||||||
Series 2020-1, Class M1, 4.15%, 03/25/2065(a)(c) | 2,100,000 | 2,153,522 | ||||||
Series 2020-2, Class A3, 2.50%, 04/25/2065(a)(c) | 2,646,710 | 2,657,536 | ||||||
Series 2020-2, Class M1, 3.40%, 04/25/2065(a)(c) | 1,650,000 | 1,649,931 | ||||||
Voya CLO Ltd. (Cayman Islands), | ||||||||
Series 2014-1A, Class CR2, 3.07% (3 mo. USD LIBOR + 2.80%), 04/18/2031(a)(b) | 1,300,000 | 1,201,100 | ||||||
Series 2020-2A, Class D, 4.43% (3 mo. USD LIBOR + 4.25%), 07/19/2031(a)(b) | 4,000,000 | 4,005,159 | ||||||
Wells Fargo Commercial Mortgage Trust, | ||||||||
Series 2014-LC18, Class D, 3.96%, 12/15/2024(a)(c) | 6,000,000 | 5,024,868 | ||||||
Series 2015-C28, Class B, 4.24%, 05/15/2048(c) | 7,100,000 | 7,445,956 | ||||||
Series 2015-NXS2, Class D, 4.44%, 07/15/2025(c) | 6,000,000 | 5,055,176 | ||||||
Series 2017-C39, Class C, 4.12%, 09/15/2050 | 2,309,000 | 2,334,413 | ||||||
Series 2017-RC1, Class D, 3.25%, 01/15/2060(a) | 4,000,000 | 3,097,040 | ||||||
Series 2019-C49, Class B, 4.55%, 03/15/2052 | 6,000,000 | 6,848,465 | ||||||
Total Asset-Backed Securities |
| 467,289,712 | ||||||
U.S. Government Sponsored Agency Mortgage-Backed Securities–16.60% |
| |||||||
Federal Home Loan Mortgage Corp. (FHLMC)–0.01% |
| |||||||
9.50%, 11/01/2020 to 04/01/2025 | 4,775 | 4,835 | ||||||
9.00%, 04/01/2025 | 24,788 | 27,313 | ||||||
6.50%, 06/01/2029 to 08/01/2032 | 3,750 | 4,216 | ||||||
7.00%, 03/01/2032 to 05/01/2032 | 1,192 | 1,286 | ||||||
37,650 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Income Fund
Principal | ||||||||
Amount | Value | |||||||
Federal National Mortgage Association (FNMA)–0.02% |
| |||||||
5.50%, 03/01/2021 | $ | 5 | $ | 5 | ||||
10.00%, 12/20/2021 | 494 | 499 | ||||||
9.50%, 08/01/2022 to 04/20/2025 | 45 | 46 | ||||||
6.00%, 04/01/2024 | 271 | 302 | ||||||
6.75%, 07/01/2024 | 89,456 | 99,761 | ||||||
6.95%, 07/01/2025 to 10/01/2025 | 25,311 | 25,553 | ||||||
6.50%, 01/01/2026 to 10/01/2036 | 6,366 | 7,187 | ||||||
7.00%, 06/01/2029 to 02/01/2032 | 1,553 | 1,618 | ||||||
8.00%, 10/01/2029 | 31 | 36 | ||||||
135,007 | ||||||||
Government National Mortgage Association (GNMA)–2.85% |
| |||||||
8.00%, 11/15/2021 to 02/15/2036 | 510,524 | 584,665 | ||||||
7.00%, 01/15/2023 to 12/15/2036 | 458,611 | 490,867 | ||||||
9.50%, 03/15/2023 | 373 | 374 | ||||||
6.50%, 07/15/2024 to 09/15/2032 | 70,545 | 73,608 | ||||||
6.95%, 07/20/2025 to 11/20/2026 | 129,296 | 136,820 | ||||||
8.50%, 01/15/2037 | 15,957 | 16,544 | ||||||
TBA, | 15,200,000 | 15,710,031 | ||||||
17,012,909 | ||||||||
Uniform Mortgage-Backed Securities–13.72% |
| |||||||
TBA, | ||||||||
2.00%, 09/01/2050(f) | 63,990,000 | 65,982,189 | ||||||
2.50%, 09/01/2050(f) | 15,000,000 | 15,789,258 | ||||||
81,771,447 | ||||||||
Total U.S. Government Sponsored Agency Mortgage-Backed Securities |
| 98,957,013 | ||||||
Agency Credit Risk Transfer Notes–8.82% |
| |||||||
Fannie Mae Connecticut Avenue Securities | ||||||||
Series 2017-C03, Class 1M2, 3.18% (1 mo. USD LIBOR + 3.00%), 10/25/2029(b) | 6,410,682 | 6,503,421 | ||||||
Series 2017-C05, Class 1M2, 2.38% (1 mo. USD LIBOR + 2.20%), 01/25/2030(b) | 3,921,374 | 3,876,072 | ||||||
Series 2018-C02, Class 2M2, 2.38% (1 mo. USD LIBOR + 2.20%), 08/25/2030(b) | 923,055 | 912,123 | ||||||
Series 2018-C03, Class 1M2, 2.33% (1 mo. USD LIBOR + 2.15%), 10/25/2030(b) | 4,066,972 | 4,015,052 | ||||||
Series 2018-C04, Class 2B1, 4.68% (1 mo. USD LIBOR + 4.50%), | 3,500,000 | 3,268,698 |
Principal | ||||||||
Amount | Value | |||||||
Freddie Mac | ||||||||
Series 2017-HQA2, Class M2, STACR®, 2.83% (1 mo. USD LIBOR + 2.65%), 12/25/2029(b) | $ | 952,656 | $ | 948,582 | ||||
Series 2018-HQA1, Class M2, STACR®, 2.48% (1 mo. USD LIBOR + 2.30%), 09/25/2030(b) | 3,986,949 | 3,944,753 | ||||||
Series 2018-DNA2, Class M2, STACR, 2.33% (1 mo. USD LIBOR + 2.15%), 12/25/2030(a)(b) | 5,000,000 | 4,910,561 | ||||||
Series 2018-HRP2, Class M3, STACR®, 2.58% (1 mo. USD LIBOR + 2.40%), 02/25/2047(a)(b) | 5,000,000 | 4,762,763 | ||||||
Series 2020-DNA4, Class M1, STACR, 1.66% (1 mo. USD LIBOR + 1.50%), 08/25/2050(a)(b) | 5,000,000 | 5,035,519 | ||||||
Freddie Mac Multifamily Connecticut Avenue Securities Trust | ||||||||
Series 2019-01, Class M10, 3.43% (1 mo. USD LIBOR + 3.25%), 10/15/2049(a)(b) | 1,333,000 | 1,251,983 | ||||||
Series 2019-01, Class B10, 5.68% (1 mo. USD LIBOR + 5.50%), 10/15/2049(a)(b) | 1,500,000 | 1,207,946 | ||||||
Golub Capital Partners CLO 34(M) Ltd., (Cayman Islands), Series 2017-34A, Class CR, 3.90% (3 mo. USD LIBOR + 3.65%), 03/14/2031(a)(b) | 5,000,000 | 4,687,565 | ||||||
Madison Park Euro Funding XIII DAC, (Ireland), Series 13A, Class CE, 2.60% (3 mo. EURIBOR + 2.60%), 01/15/2032(a)(b) | 2,400,000 | 2,867,089 | ||||||
Strata CLO I Ltd., (Cayman Islands), Series 2018-1A, Class D, 4.34% (3 mo. USD LIBOR + 4.06%), | 5,000,000 | 4,396,882 | ||||||
Total Agency Credit Risk Transfer Notes |
| 52,589,009 | ||||||
Shares | ||||||||
Preferred Stocks–5.45% | ||||||||
Mortgage REITs–5.45% | ||||||||
AG Mortgage Investment Trust, Inc., 8.00%, Series C, Pfd.(g) | 150,000 | 2,182,500 | ||||||
Annaly Capital Management, Inc., 6.50%, Series G, Pfd.(g) | 250,000 | 5,415,000 | ||||||
Chimera Investment Corp., 8.00%, Series B, Pfd.(g) | 150,000 | 3,249,000 | ||||||
Dynex Capital, Inc., 7.63%, Series B, Pfd. | 23,917 | 586,206 | ||||||
Dynex Capital, Inc., 6.90%, Series C, Pfd.(g) | 160,000 | 3,638,400 | ||||||
MFA Financial, Inc., 6.50%, Series C, Pfd.(g) | 150,000 | 2,881,500 | ||||||
New Residential Investment Corp., 7.13%, Series B, | 100,000 | 2,184,000 | ||||||
New York Mortgage Trust, Inc., 7.88%, Series C, Pfd. | 143,060 | 3,025,719 | ||||||
New York Mortgage Trust, Inc., 8.00%, Series D, Pfd.(g) | 175,000 | 3,692,500 | ||||||
PennyMac Mortgage Investment Trust, 8.00%, Series B, Pfd.(g) | 100,000 | 2,473,000 | ||||||
Two Harbors Investment Corp., 7.25%, Series C, Pfd.(g) | 150,000 | 3,153,000 | ||||||
Total Preferred Stocks (Cost $37,442,142) |
| 32,480,825 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Income Fund
Principal | ||||||||
Amount | Value | |||||||
U.S. Dollar Denominated Bonds & Notes–3.56% |
| |||||||
Automobile Manufacturers–0.26% |
| |||||||
Ford Motor Credit Co. LLC, 4.39%, 01/08/2026 | $ | 1,500,000 | $ | 1,528,095 | ||||
Diversified Banks–0.20% | ||||||||
Lloyds Banking Group PLC (United Kingdom), 7.50%(g)(h) | 1,110,000 | 1,221,742 | ||||||
Diversified Capital Markets–0.46% |
| |||||||
Credit Suisse Group AG (Switzerland), 7.25%(a)(g)(h) | 2,500,000 | 2,754,737 | ||||||
Integrated Oil & Gas–0.16% | ||||||||
Petroleos Mexicanos (Mexico), 6.84%, 01/23/2030(a) | 971,000 | 937,233 | ||||||
Marine–0.35% | ||||||||
Hidrovias International Finance S.a.r.l. (Brazil), 5.95%, 01/24/2025(a) | 2,000,000 | 2,063,330 | ||||||
Oil & Gas Refining & Marketing–0.30% |
| |||||||
Puma International Financing S.A. (Singapore), 5.13%, | 2,000,000 | 1,800,160 | ||||||
Packaged Foods & Meats–0.54% |
| |||||||
NBM US Holdings, Inc. (Brazil), 7.00%, 05/14/2026(a) | 3,000,000 | 3,202,470 | ||||||
Personal Products–0.27% | ||||||||
Edgewell Personal Care Co., 5.50%, 06/01/2028(a) | 1,500,000 | 1,603,343 | ||||||
Security & Alarm Services–0.26% |
| |||||||
Brink’s Co. (The), 4.63%, 10/15/2027(a) | 1,500,000 | 1,561,425 | ||||||
Soft Drinks–0.24% | ||||||||
Coca-Cola FEMSA S.A.B. de C.V. (Mexico), 1.85%, 09/01/2032 | 1,440,000 | 1,442,822 |
Principal | ||||||||
Amount | Value | |||||||
Sovereign Debt–0.25% | ||||||||
Ukraine Government International Bond (Ukraine), 7.30%, 03/15/2033(a) | $ | 1,500,000 | $ | 1,504,740 | ||||
Specialized REITs–0.27% | ||||||||
Iron Mountain, Inc., 5.25%, 03/15/2028(a) | 1,500,000 | 1,581,293 | ||||||
Total U.S. Dollar Denominated Bonds & Notes |
| 21,201,390 | ||||||
U.S. Treasury Securities–3.27% |
| |||||||
U.S. Treasury Bills–0.28% | ||||||||
0.15% - 0.16%, | 1,638,000 | 1,637,964 | ||||||
U.S. Treasury Notes–2.99% | ||||||||
0.63%, 08/15/2030 | 18,000,000 | 17,852,344 | ||||||
Total U.S. Treasury Securities |
| 19,490,308 | ||||||
Shares | ||||||||
Common Stocks & Other Equity Interests–0.65% |
| |||||||
Mortgage REITs–0.65% | ||||||||
New Residential Investment Corp. | 100,000 | 774,000 | ||||||
New York Mortgage Trust, Inc. | 630,000 | 1,663,200 | ||||||
PennyMac Mortgage Investment Trust | 85,000 | 1,456,900 | ||||||
Total Common Stocks & Other Equity Interests (Cost $7,406,495) | 3,894,100 | |||||||
Money Market Funds–2.05% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, | 7,348,712 | 7,348,712 | ||||||
Invesco Treasury Portfolio, Institutional Class, | 4,899,141 | 4,899,141 | ||||||
Total Money Market Funds |
| 12,247,853 | ||||||
TOTAL INVESTMENTS IN |
| 708,150,210 | ||||||
OTHER ASSETS LESS |
| (112,012,879 | ) | |||||
NET ASSETS–100.00% | $ | 596,137,331 |
Investment Abbreviations:
| ||
CLO | – Collateralized Loan Obligation | |
Ctfs. | – Certificates | |
EURIBOR | – Euro Interbank Offered Rate | |
IO | – Interest Only | |
LIBOR | – London Interbank Offered Rate | |
Pfd. | – Preferred | |
REIT | – Real Estate Investment Trust | |
STACR® | – Structured Agency Credit Risk | |
TBA | – To Be Announced | |
USD | – U.S. Dollar |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Income Fund
Notes to Schedule of Investments:
(a) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2020 was $409,040,151, which represented 68.62% of the Fund’s Net Assets. |
(b) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2020. |
(c) | Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on August 31, 2020. |
(d) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on August 31, 2020. |
(e) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
(f) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 10. |
(g) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
(h) | Perpetual bond with no specified maturity date. |
(i) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(j) | Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended August 31, 2020. |
Value February 29, 2020 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain | Value August 31, 2020 | Dividend Income | |||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: |
| ||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | 2,515,116 | $ | 295,652,791 | $ | (290,819,195 | ) | $ | - | $ | - | $ | 7,348,712 | $ | 8,192 | ||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 1,676,744 | 197,101,860 | (193,879,463 | ) | - | - | 4,899,141 | 4,915 | |||||||||||||||||||||||||||
Total | $ | 4,191,860 | $ | 492,754,651 | $ | (484,698,658 | ) | $ | - | $ | - | $ | 12,247,853 | $ | 13,107 |
(k) | The rate shown is the 7-day SEC standardized yield as of August 31, 2020. |
Open Forward Foreign Currency Contracts | ||||||||||||||
Contract to | Unrealized Appreciation | |||||||||||||
Settlement Date | Counterparty | Deliver | Receive | (Depreciation) | ||||||||||
Currency Risk | ||||||||||||||
11/20/2020 | Goldman Sachs International | EUR 13,696,074 | USD 16,182,720 | $(189,212) |
Open Over-The-Counter Credit Default Swap Agreements | ||||||||||||||||||||||||||||||||||||||
Counterparty | Reference Entity | Buy/Sell Protection | (Pay)/ Receive Fixed Rate | Payment Frequency | Maturity Date | Implied Credit Spread(a) | Notional Value | Upfront Payments Paid (Received) | Value | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||||||||
Credit Risk | ||||||||||||||||||||||||||||||||||||||
JP Morgan Chase Bank, N.A. | Markit CMBX North America A Index, Series 13, Version 1 | Sell | 2.00% | Monthly | 12/16/2072 | 3.079% | USD 15,000,000 | (167,822) | (1,274,063) | $(1,106,241) | ||||||||||||||||||||||||||||
Merrill Lynch International | Markit CMBX North America A Index, Series 12, Version 1 | Sell | 2.00 | Monthly | 08/17/2061 | 3.066 | USD 15,000,000 | 51,344 | (1,131,328) | (1,182,672) | ||||||||||||||||||||||||||||
Merrill Lynch International | Markit CMBX North America A Index, Series 12, Version 1 | Sell | 2.00 | Monthly | 08/17/2061 | 3.066 | USD 10,000,000 | 83,394 | (754,219) | (837,612) | ||||||||||||||||||||||||||||
Total Open Over-The-Counter Credit Default Swap Agreements |
| $ (33,084) | $(3,159,610) | $(3,126,525) |
(a) | Implied credit spreads represent the current level, as of August 31, 2020, at which protection could be bought or sold given the terms of the existing credit default swap agreement and serve as an indicator of the current status of the payment/performance risk of the credit default swap agreement. An implied credit spread that has widened or increased since entry into the initial agreement may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets generally. |
Investment Abbreviations:
|
EUR – Euro |
USD – U.S. Dollar |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Income Fund
Portfolio Composition
By security type, based on Total Investments
as of August 31, 2020
Asset-Backed Securities | 65.99 | % | ||
U.S. Government Sponsored Agency Mortgage-Backed Securities | 13.97 | |||
Agency Credit Risk Transfer Notes | 7.43 | |||
Preferred Stocks | 4.59 | |||
U.S. Dollar Denominated Bonds & Notes | 2.99 | |||
U.S. Treasury Securities | 2.75 | |||
Security types each less than 1% portfolio | 0.55 | |||
Money Market Funds | 1.73 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Income Fund
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 695,902,357 | ||
| ||||
Investments in affiliated money market funds, at value (Cost $12,247,853) | 12,247,853 | |||
| ||||
Deposits with brokers: | ||||
Cash collateral – OTC Derivatives | 4,410,000 | |||
| ||||
Cash | 983,262 | |||
| ||||
Foreign currencies, at value (Cost $685,006) | 687,541 | |||
| ||||
Receivable for: | ||||
Investments sold | 31,662,435 | |||
| ||||
Fund shares sold | 139,232 | |||
| ||||
Dividends | 155,172 | |||
| ||||
Interest | 1,875,606 | |||
| ||||
Principal paydowns | 24,359 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 242,751 | |||
| ||||
Other assets | 189,237 | |||
| ||||
Total assets | 748,519,805 | |||
| ||||
Liabilities: | ||||
Other investments: | ||||
Premiums received on swap agreements – OTC | 33,084 | |||
| ||||
Unrealized depreciation on forward foreign currency contracts outstanding | 189,212 | |||
| ||||
Swaps payable – OTC | 853,129 | |||
| ||||
Unrealized depreciation on swap agreements – OTC | 3,126,525 | |||
| ||||
Payable for: | ||||
Investments purchased | 146,739,033 | |||
| ||||
Dividends | 173,605 | |||
| ||||
Fund shares reacquired | 485,724 | |||
| ||||
Accrued fees to affiliates | 367,391 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 3,705 | |||
| ||||
Accrued other operating expenses | 153,598 | |||
| ||||
Trustee deferred compensation and retirement plans | 257,468 | |||
| ||||
Total liabilities | 152,382,474 | |||
| ||||
Net assets applicable to shares outstanding | $ | 596,137,331 | ||
|
Net assets consist of: | ||||
Shares of beneficial interest | $ | 674,283,106 | ||
| ||||
Distributable earnings (loss) | (78,145,775 | ) | ||
| ||||
$ | 596,137,331 | |||
| ||||
Net Assets: | ||||
Class A | $ | 335,814,394 | ||
| ||||
Class C | $ | 7,151,908 | ||
| ||||
Class R | $ | 3,229,807 | ||
| ||||
Class Y | $ | 23,708,386 | ||
| ||||
Investor Class | $ | 20,202,241 | ||
| ||||
Class R5 | $ | 343,534 | ||
| ||||
Class R6 | $ | 205,687,061 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 44,512,955 | |||
| ||||
Class C | 947,502 | |||
| ||||
Class R | 427,653 | |||
| ||||
Class Y | 3,137,054 | |||
| ||||
Investor Class | 2,673,893 | |||
| ||||
Class R5 | 45,530 | |||
| ||||
Class R6 | 27,288,601 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 7.54 | ||
| ||||
Maximum offering price per share | $ | 7.87 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 7.55 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 7.55 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 7.56 | ||
| ||||
Investor Class: | ||||
Net asset value and offering price per share | $ | 7.56 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 7.55 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 7.54 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Income Fund
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Interest | $ | 9,187,085 | ||
| ||||
Dividends | 562,981 | |||
Dividends from affiliated money market funds | 13,107 | |||
| ||||
Total investment income | 9,763,173 | |||
| ||||
Expenses: | ||||
Advisory fees | 955,966 | |||
| ||||
Administrative services fees | 28,893 | |||
| ||||
Custodian fees | 7,870 | |||
| ||||
Distribution fees: | ||||
| ||||
Class A | 407,216 | |||
| ||||
Class C | 37,151 | |||
| ||||
Class R | 8,262 | |||
| ||||
Investor Class | 16,055 | |||
| ||||
Transfer agent fees – A, C, R, Y and Investor | 408,929 | |||
| ||||
Transfer agent fees – R5 | 219 | |||
| ||||
Transfer agent fees – R6 | 30,324 | |||
| ||||
Trustees’ and officers’ fees and benefits | 9,920 | |||
| ||||
Registration and filing fees | 41,248 | |||
| ||||
Reports to shareholders | 47,295 | |||
| ||||
Professional services fees | 25,152 | |||
| ||||
Other | 23,389 | |||
| ||||
Total expenses | 2,047,889 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (13,216 | ) | ||
| ||||
Net expenses | 2,034,673 | |||
| ||||
Net investment income | 7,728,500 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (2,138,952 | ) | ||
| ||||
Foreign currencies | 47,567 | |||
| ||||
Forward foreign currency contracts | (1,179,576 | ) | ||
| ||||
Futures contracts | (6,747,651 | ) | ||
| ||||
Swap agreements | (1,574,169 | ) | ||
| ||||
(11,592,781 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (39,365,114 | ) | ||
| ||||
Foreign currencies | 1,863 | |||
| ||||
Forward foreign currency contracts | 58,729 | |||
| ||||
Futures contracts | 2,166,593 | |||
| ||||
Swap agreements | (1,162,775 | ) | ||
| ||||
(38,300,704 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (49,893,485 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (42,164,985 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Income Fund
Statement of Changes in Net Assets
For the six months ended August 31, 2020 and the year ended February 29, 2020
(Unaudited)
August 31, 2020 | February 29, 2020 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 7,728,500 | $ | 19,113,032 | ||||
| ||||||||
Net realized gain (loss) | (11,592,781 | ) | (971,873 | ) | ||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (38,300,704 | ) | 12,864,237 | |||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (42,164,985 | ) | 31,005,396 | |||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (7,891,636 | ) | (19,046,833 | ) | ||||
| ||||||||
Class C | (151,460 | ) | (370,901 | ) | ||||
| ||||||||
Class R | (76,438 | ) | (250,528 | ) | ||||
| ||||||||
Class Y | (269,281 | ) | (505,774 | ) | ||||
| ||||||||
Investor Class | (477,881 | ) | (1,169,531 | ) | ||||
| ||||||||
Class R5 | (11,381 | ) | (42,190 | ) | ||||
| ||||||||
Class R6 | (1,417,120 | ) | (1,940 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (10,295,197 | ) | (21,387,697 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (14,855,230 | ) | (27,484,448 | ) | ||||
| ||||||||
Class C | (935,037 | ) | (502,958 | ) | ||||
| ||||||||
Class R | (581,788 | ) | (1,250,819 | ) | ||||
| ||||||||
Class Y | 14,361,632 | 657,951 | ||||||
| ||||||||
Investor Class | (1,259,347 | ) | (1,416,835 | ) | ||||
| ||||||||
Class R5 | (99,361 | ) | (460,448 | ) | ||||
| ||||||||
Class R6 | 197,036,533 | (6,461 | ) | |||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | 193,667,402 | (30,464,018 | ) | |||||
| ||||||||
Net increase (decrease) in net assets | 141,207,220 | (20,846,319 | ) | |||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 454,930,111 | 475,776,430 | ||||||
| ||||||||
End of period | $ | 596,137,331 | $ | 454,930,111 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Income Fund
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period | Net investment income(a) | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends from net investment income | Net asset value, end of period | Total | Net assets, end of period (000’s omitted) | Ratio of expenses | Ratio of expenses | Ratio of net investment income to average net assets | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $ | 8.68 | $ | 0.13 | $ | (1.10 | ) | $ | (0.97 | ) | $ | (0.17 | ) | $ | 7.54 | (10.95 | )% | $ | 335,814 | 0.99 | %(d) | 1.00 | %(d) | 3.58 | %(d) | 139 | % | |||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.51 | 0.35 | 0.22 | 0.57 | (0.40 | ) | 8.68 | 6.75 | 405,061 | 1.00 | 1.00 | 4.08 | 50 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.65 | 0.27 | (e) | (0.13 | ) | 0.14 | (0.28 | ) | 8.51 | 1.66 | 424,003 | 1.01 | 1.08 | 3.12 | (e) | 119 | (e) | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.84 | 0.12 | (0.15 | ) | (0.03 | ) | (0.16 | ) | 8.65 | (0.34 | ) | 482,902 | 0.98 | 0.98 | 1.34 | 25 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 9.02 | 0.11 | (0.12 | )(f) | (0.01 | ) | (0.17 | ) | 8.84 | (0.15 | )(f) | 559,388 | 0.97 | 0.97 | 1.25 | 30 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 9.05 | 0.10 | 0.01 | 0.11 | (0.14 | ) | 9.02 | 1.25 | 629,429 | 0.95 | 0.95 | 1.10 | 61 | |||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.68 | 0.10 | (1.08 | ) | (0.98 | ) | (0.15 | ) | 7.55 | (11.19 | ) | 7,152 | 1.74 | (d) | 1.75 | (d) | 2.83 | (d) | 139 | |||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.50 | 0.29 | 0.22 | 0.51 | (0.33 | ) | 8.68 | 6.09 | 9,556 | 1.75 | 1.75 | 3.33 | 50 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.65 | 0.20 | (e) | (0.13 | ) | 0.07 | (0.22 | ) | 8.50 | 0.78 | 9,862 | 1.76 | 1.83 | 2.37 | (e) | 119 | (e) | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.83 | 0.05 | (0.13 | ) | (0.08 | ) | (0.10 | ) | 8.65 | (0.97 | ) | 30,223 | 1.73 | 1.73 | 0.59 | 25 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 9.02 | 0.04 | (0.13 | )(f) | (0.09 | ) | (0.10 | ) | 8.83 | (1.00 | )(f) | 40,481 | 1.72 | 1.72 | 0.50 | 30 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 9.04 | 0.03 | 0.02 | 0.05 | (0.07 | ) | 9.02 | 0.60 | 49,156 | 1.70 | 1.70 | 0.35 | 61 | |||||||||||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.69 | 0.12 | (1.09 | ) | (0.97 | ) | (0.17 | ) | 7.55 | (11.06 | ) | 3,230 | 1.24 | (d) | 1.25 | (d) | 3.33 | (d) | 139 | |||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.52 | 0.33 | 0.21 | 0.54 | (0.37 | ) | 8.69 | 6.48 | 4,443 | 1.25 | 1.25 | 3.83 | 50 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.66 | 0.25 | (e) | (0.13 | ) | 0.12 | (0.26 | ) | 8.52 | 1.41 | 5,557 | 1.26 | 1.33 | 2.87 | (e) | 119 | (e) | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.85 | 0.10 | (0.15 | ) | (0.05 | ) | (0.14 | ) | 8.66 | (0.58 | ) | 5,427 | 1.23 | 1.23 | 1.09 | 25 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 9.03 | 0.09 | (0.12 | )(f) | (0.03 | ) | (0.15 | ) | 8.85 | (0.39 | )(f) | 6,219 | 1.22 | 1.22 | 1.00 | 30 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 9.06 | 0.08 | 0.01 | 0.09 | (0.12 | ) | 9.03 | 1.00 | 6,123 | 1.20 | �� | 1.20 | 0.85 | 61 | ||||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.69 | 0.14 | (1.09 | ) | (0.95 | ) | (0.18 | ) | 7.56 | (10.70 | ) | 23,708 | 0.74 | (d) | 0.75 | (d) | 3.83 | (d) | 139 | |||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.52 | 0.38 | 0.21 | 0.59 | (0.42 | ) | 8.69 | 7.02 | 10,540 | 0.75 | 0.75 | 4.33 | 50 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.67 | 0.29 | (e) | (0.14 | ) | 0.15 | (0.30 | ) | 8.52 | 1.80 | 9,674 | 0.76 | 0.83 | 3.37 | (e) | 119 | (e) | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.86 | 0.14 | (0.15 | ) | (0.01 | ) | (0.18 | ) | 8.67 | (0.08 | ) | 10,671 | 0.73 | 0.73 | 1.59 | 25 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 9.04 | 0.14 | (0.13 | )(f) | 0.01 | (0.19 | ) | 8.86 | 0.11 | (f) | 12,554 | 0.72 | 0.72 | 1.50 | 30 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 9.06 | 0.12 | 0.02 | 0.14 | (0.16 | ) | 9.04 | 1.62 | 17,407 | 0.70 | 0.70 | 1.35 | 61 | |||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.69 | 0.13 | (1.08 | ) | (0.95 | ) | (0.18 | ) | 7.56 | (10.79 | )(g) | 20,202 | 0.90 | (d)(g) | 0.91 | (d)(g) | 3.67 | (d)(g) | 139 | |||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.52 | 0.36 | 0.21 | 0.57 | (0.40 | ) | 8.69 | 6.81 | (g) | 24,787 | 0.93 | (g) | 0.93 | (g) | 4.15 | (g) | 50 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.66 | 0.27 | (e) | (0.13 | ) | 0.14 | (0.28 | ) | 8.52 | 1.71 | (g) | 25,692 | 0.95 | (g) | 1.02 | (g) | 3.18 | (e)(g) | 119 | (e) | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.85 | 0.12 | (0.14 | ) | (0.02 | ) | (0.17 | ) | 8.66 | (0.29 | )(g) | 30,085 | 0.96 | (g) | 0.96 | (g) | 1.36 | (g) | 25 | |||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 9.03 | 0.12 | (0.13 | )(f) | (0.01 | ) | (0.17 | ) | 8.85 | (0.12 | )(f)(g) | 35,471 | 0.92 | (g) | 0.92 | (g) | 1.30 | (g) | 30 | |||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 9.06 | 0.10 | 0.01 | 0.11 | (0.14 | ) | 9.03 | 1.28 | (g) | 41,492 | 0.93 | (g) | 0.93 | (g) | 1.12 | (g) | 61 | |||||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.68 | 0.14 | (1.08 | ) | (0.94 | ) | (0.19 | ) | 7.55 | (10.67 | ) | 344 | 0.62 | (d) | 0.63 | (d) | 3.95 | (d) | 139 | |||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.51 | 0.38 | 0.22 | 0.60 | (0.43 | ) | 8.68 | 7.11 | 508 | 0.64 | 0.64 | 4.44 | 50 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.66 | 0.30 | (e) | (0.14 | ) | 0.16 | (0.31 | ) | 8.51 | 1.87 | 946 | 0.70 | 0.73 | 3.43 | (e) | 119 | (e) | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.85 | 0.15 | (0.14 | ) | 0.01 | (0.20 | ) | 8.66 | 0.04 | 615 | 0.58 | 0.58 | 1.74 | 25 | ||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 9.03 | 0.14 | (0.12 | )(f) | 0.02 | (0.20 | ) | 8.85 | 0.20 | (f) | 1,093 | 0.62 | 0.62 | 1.60 | 30 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 9.04 | 0.13 | 0.03 | 0.16 | (0.17 | ) | 9.03 | 1.84 | 2,068 | 0.59 | 0.59 | 1.46 | 61 | |||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.67 | 0.15 | (1.09 | ) | (0.94 | ) | (0.19 | ) | 7.54 | (10.68 | ) | 205,687 | 0.62 | (d) | 0.63 | (d) | 3.95 | (d) | 139 | |||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.51 | 0.39 | 0.20 | 0.59 | (0.43 | ) | 8.67 | 7.00 | 36 | 0.63 | 0.63 | 4.45 | 50 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.66 | 0.30 | (e) | (0.14 | ) | 0.16 | (0.31 | ) | 8.51 | 1.88 | 42 | 0.69 | 0.70 | 3.44 | (e) | 119 | (e) | |||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18(h) | 8.84 | 0.14 | (0.14 | ) | (0.00 | ) | (0.18 | ) | 8.66 | (0.03 | ) | 6,663 | 0.57 | (i) | 0.57 | (i) | 1.75 | (i) | 25 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $322,760, $7,360, $3,274, $10,736 , $19,306 , $434 and $60,217 for Class A, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares, respectively. |
(e) | Effective July 26, 2018, the Fund modified certain investment policies utilized in achieving its investment objective throughout the period. The Fund’s net investment income, ratio of net investment income and portfolio turnover have increased significantly due to the realignment of the Fund’s portfolio of investments as a result of these changes. |
(f) | Includes litigation proceeds received during the period. Had the litigation proceeds not been received, Net gains (losses) on securities (both realized and unrealized) per share would have been $(0.17), $(0.18), $(0.17), $(0.18), $(0.18) and $(0.17) for Class A, Class C, Class R, Class Y, Investor Class and Class R5 shares, respectively and total returns would have been lower. |
(g) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.16%, 0.19%, 0.19%, 0.23%, 0.21% and 0.22% for the six months ended August 31, 2020 and years ended February 29, 2020, February 28, 2019, February 28, 2018, February 28, 2017 and February 29, 2016, respectively. |
(h) | Commencement date of April 4, 2017. |
(i) | Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 | Invesco Income Fund |
August 31, 2020
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Income Fund (the “Fund”), is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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 current income, and secondarily, capital appreciation.
The Fund currently consists of seven different classes of shares: Class A, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6. Class Y and Investor Class shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met. Under certain circumstances, load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Investor Class, Class R5 and Class R6 shares are sold at net asset value. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares. Effective November 30, 2020, the automatic conversion pursuant to the Conversion Feature will change from ten years to eight years. The first conversion of Class C shares to Class A shares would occur at the end of December 2020 for all Class C shares that were held for more than eight years as of November 30, 2020.
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. |
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.
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.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
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, 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 |
17 Invesco Income Fund
settlement date. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and 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.
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available on a timely basis from the REIT, the recharacterization will be based on available information which may include the previous year’s allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital as a reduction of the cost of the related investment. These recharacterizations are reflected in the accompanying financial statements.
C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions – Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications – Under the Fund’s organizational documents, each Trustee, officer, employee or other agent of the Fund 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. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
J. | Commercial Mortgage-Backed Securities – The Fund may invest in both single and multi-issuer Commercial Mortgage-Backed Securities (“CMBS”). This includes both investment grade and non-investment grade CMBS as well as other non-rated CMBS. A CMBS is a type of mortgage-backed security that is secured by |
18 Invesco Income Fund
one or more mortgage loans on interests in commercial real estate property. CMBS differ from conventional debt securities because principal is paid back over the life of the security rather than at maturity. Investments in CMBS are subject to the various risks which relate to the pool of underlying assets in which the CMBS represents an interest. Securities backed by commercial real estate assets are subject to securities market risks as well as risks similar to those of direct ownership of commercial real estate loans. Risks include the ability of a borrower to meet its obligations on the loan which could lead to default or foreclosure of the property. Such actions may impact the amount of proceeds ultimately derived from the loan, and the timing of receipt of such proceeds.
Management estimates future expected cash flows at the time of purchase based on the anticipated repayment dates on the CMBS. Subsequent changes in expected cash flow projection may result in a prospective change in the timing or character of income recognized on these securities, or the amortized cost of these securities. The Fund amortizes premiums and/or accretes discounts based on the projected cash flows. Realized and unrealized gains and losses on CMBS are included in the Statement of Operations as Net realized gain (loss) from investment securities and Change in net unrealized appreciation (depreciation) of investment securities, respectively.
K. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
L. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
M. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
N. | Swap Agreements – The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. Such transactions are agreements between Counterparties. A swap agreement may be negotiated bilaterally and traded over-the-counter (“OTC”) between two parties (“uncleared/ OTC”) or, in some instances, must be transacted through a future commission merchant (“FCM”) and cleared through a clearinghouse that serves as a central Counterparty (“centrally cleared swap”). These agreements may contain among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/ or provide limits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.
In a centrally cleared swap, the Fund’s ultimate Counterparty is a central clearinghouse. The Fund initially will enter into centrally cleared swaps through an executing broker. When a fund enters into a centrally cleared swap, it must deliver to the central Counterparty (via the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the central Counterparty, but an FCM may require additional initial margin above the amount required by the central Counterparty. Initial margin deposits required upon entering into centrally cleared swaps are satisfied by cash or securities as collateral at the FCM. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the Statement of Assets and Liabilities. During the term of a cleared swap agreement, a “variation margin” amount may be required to be paid by the Fund or may be received by the Fund, based on the daily change in price of the underlying reference instrument subject to the swap agreement and is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities until the centrally cleared swap is terminated at which time a realized gain or loss is recorded.
19 Invesco Income Fund
A CDS is an agreement between Counterparties to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the “par value”, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer “par value” or the full notional value of the referenced obligation, and the Fund would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its Counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund’s maximum risk of loss from Counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the Counterparty and by the designation of collateral by the Counterparty to cover the Fund’s exposure to the Counterparty.
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets.
An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified notional amount.
Changes in the value of centrally cleared and OTC swap agreements are recognized as unrealized gains (losses) in the Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Statement of Operations. The Fund segregates cash or liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Cash held as collateral is recorded as deposits with brokers on the Statement of Assets and Liabilities. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. A short position in a security poses more risk than holding the same security long. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited.
Notional amounts of each individual credit default swap agreement outstanding as of August 31, 2020 for which the Fund is the seller of protection are disclosed in the open swap agreements table. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into by the Fund for the same referenced entity or entities.
O. | Dollar Rolls and Forward Commitment Transactions – The Fund may enter into dollar roll transactions to enhance the Fund’s performance. The Fund executes its dollar roll transactions in the to be announced (“TBA”) market whereby the Fund makes a forward commitment to purchase a security and, instead of accepting delivery, the position is offset by the sale of the security with a simultaneous agreement to repurchase at a future date. |
The Fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions increase the Fund’s portfolio turnover rate. The Fund will segregate liquid assets in an amount equal to its dollar roll commitments.
Dollar roll transactions involve the risk that a Counterparty to the transaction may fail to complete the transaction. If this occurs, the Fund may lose the opportunity to purchase or sell the security at the agreed upon price. Dollar roll transactions also involve the risk that the value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to purchase under the agreement. Dollar roll transactions covered in this manner are not treated as senior securities for purposes of a Fund’s fundamental investment limitation on senior securities and borrowings.
P. | LIBOR Risk – The Fund may invest in instruments that use or may use a floating reference rate based on LIBOR. On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021. There remains uncertainty regarding the future utilization of LIBOR and the nature of any replacement rate. As a result, any impact of a transition away from LIBOR on the Fund or the instruments in which the Fund invests cannot yet be determined. Industry initiatives are underway to identify alternative reference rates; however, there is no assurance that the composition or characteristics of any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. As a result, the transition process might lead to increased volatility and reduced liquidity in markets that currently rely on LIBOR to determine interest rates; a reduction in the value of some LIBOR-based investments; and/or costs incurred in connection with closing out positions and entering into new agreements. These effects could occur prior to the end of 2021 as the utility of LIBOR as a reference rate could deteriorate during the transition period. |
Q. | Other Risks – The Fund may invest in obligations issued by agencies and instrumentalities of the U.S. Government that may vary in the level of support they receive from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the Fund may not be able to recover its investment in such issuer from the U.S. Government. Many securities purchased by the Fund are not guaranteed by the U.S. Government. |
The current low interest rate environment was created in part by the Federal Reserve Board (FRB) and certain foreign central banks keeping the federal funds and equivalent foreign rates near historical lows. Increases in the federal funds and equivalent foreign rates may expose fixed income markets to heightened volatility and reduced liquidity for certain fixed income investments, particularly those with longer maturities. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price may decline. Changes in central bank policies could also result in higher than normal shareholder redemptions, which could potentially increase portfolio turnover and the Fund’s transaction costs.
CLOs are subject to the risks of substantial losses due to actual defaults by underlying borrowers, which will be greater during periods of economic or financial stress. CLOs may also lose value due to collateral defaults and disappearance of subordinate tranches, market anticipation of defaults, and investor aversion to CLO securities as a class. The risks of CLOs will be greater if the Fund invests in CLOs that hold loans of uncreditworthy borrowers or if the Fund holds subordinate tranches of the CLO that absorbs losses from the defaults before senior tranches. In addition, CLOs are subject to interest rate risk and credit risk.
20 Invesco Income Fund
The market values of convertible securities are affected by market interest rates, the risk of actual issuer default on interest or principal payments and the value of the underlying common stock into which the convertible security may be converted. Additionally, a convertible security is subject to the same types of market and issuer risks as apply to the underlying common stock. In addition, certain convertible securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain triggering events, and, as a result, are subject to an increased risk of loss. Convertible securities may be rated below investment grade.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more developed markets. In addition, companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed markets. Securities law in many emerging market countries is relatively new and unsettled. Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder rights may change quickly and unpredictably. In addition, the enforcement of systems of taxation at federal, regional and local levels in emerging market countries may be inconsistent, and subject to sudden change. Other risks of investing in emerging markets securities may include additional transaction costs, delays in settlement procedures, and lack of timely information.
The Fund may invest in lower-quality debt securities, i.e., “junk bonds”. Investments in lower-rated securities or unrated securities of comparable quality tend to be more sensitive to economic conditions than higher rated securities. Junk bonds involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other creditors’ claim.
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject to prepayment or call risk, which is the risk that a borrower’s payments may be received earlier or later than expected due to changes in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby reducing the Fund’s income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
The risk of a municipal obligation generally depends on the financial and credit status of the issuer. Constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may affect the municipal security’s value, interest payments, repayment of principal and the Fund’s ability to sell the security. Failure of a municipal security issuer to comply with applicable tax requirements may make income paid thereon taxable, resulting in a decline in the security’s value. In addition, there could be changes in applicable tax laws or tax treatments that reduce or eliminate the current federal income tax exemption on municipal securities or otherwise adversely affect the current federal or state tax status of municipal securities.
Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. Preferred securities also may be subordinated to bonds or other debt instruments, subjecting them to a greater risk of non-payment, may be less liquid than many other securities, such as common stocks, and generally offer no voting rights with respect to the issuer.
The Fund’s investments are concentrated in a comparatively narrow segment of the economy. Consequently, the Fund may tend to be more volatile than other mutual funds, and the value of the Fund’s investments may tend to rise and fall more rapidly.
Because the Fund concentrates its assets in the real estate industry, an investment in the Fund will be closely linked to the performance of the real estate markets. Property values may fall due to increasing vacancies or declining rents resulting from economic, legal, cultural or technological developments.
R. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
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 | |||
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First $ 200 million | 0.500% | |||
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Next $300 million | 0.400% | |||
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Next $500 million | 0.350% | |||
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Next $19.5 billion | 0.300% | |||
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Over $20.5 billion | 0.240% | |||
|
For the six months ended August 31, 2020, the effective advisory fee rate incurred by the Fund was 0.45%.
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. (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).
Effective July 1, 2020, the Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares to 1.50%, 2.25%, 1.75%, 1.25%, 1.50%, 1.25% and 1.25%, respectively, of average daily net assets (the “expense limits”). Prior to July 1, 2020, the Adviser had contractually agreed to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares to 1.07%, 1.82%, 1.32%, 0.82%, 1.07%, 0.82% and 0.82%, respectively, of the Fund’s average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waivers without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
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 (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended August 31, 2020, the Adviser waived advisory fees of $11,508.
21 Invesco Income Fund
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C, Class R and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the average daily net assets of Class A shares, 1.00% of the average daily net assets of Class C shares, 0.50% of the average daily net assets of Class R shares and 0.25% of the average daily net assets of investor Class shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would 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 August 31, 2020, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended August 31, 2020, IDI advised the Fund that IDI retained $7,380 in front-end sales commissions from the sale of Class A shares and $0 and $299 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
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 August 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 | Total | |||||||||||||
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Investments in Securities | ||||||||||||||||
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Asset-Backed Securities | $ | – | $ | 467,289,712 | $ – | $ | 467,289,712 | |||||||||
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U.S. Government Sponsored Agency Mortgage-Backed Securities | – | 98,957,013 | – | 98,957,013 | ||||||||||||
| ||||||||||||||||
Agency Credit Risk Transfer Notes | – | 52,589,009 | – | 52,589,009 | ||||||||||||
| ||||||||||||||||
Preferred Stocks | 32,480,825 | – | – | 32,480,825 | ||||||||||||
| ||||||||||||||||
U.S. Dollar Denominated Bonds & Notes | – | 21,201,390 | – | 21,201,390 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Securities | – | 19,490,308 | – | 19,490,308 | ||||||||||||
| ||||||||||||||||
Common Stocks & Other Equity Interests | 3,894,100 | – | – | 3,894,100 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 12,247,853 | – | – | 12,247,853 | ||||||||||||
| ||||||||||||||||
Total Investments in Securities | 48,622,778 | 659,527,432 | – | 708,150,210 | ||||||||||||
| ||||||||||||||||
Other Investments – Liabilities* | ||||||||||||||||
| ||||||||||||||||
Forward Foreign Currency Contracts | – | (189,212 | ) | – | (189,212 | ) | ||||||||||
| ||||||||||||||||
Swap Agreements | – | (3,126,525 | ) | – | (3,126,525 | ) | ||||||||||
| ||||||||||||||||
Total Other Investments | – | (3,315,737 | ) | – | (3,315,737 | ) | ||||||||||
| ||||||||||||||||
Total Investments | $ | 48,622,778 | $ | 656,211,695 | $ – | $ | 704,834,473 | |||||||||
|
* | Unrealized appreciation (depreciation). |
NOTE | 4—Derivative Investments |
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
22 Invesco Income Fund
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of August 31, 2020:
Value | ||||||||||||
|
| |||||||||||
Credit | Currency | |||||||||||
Derivative Liabilities | Risk | Risk | Total | |||||||||
| ||||||||||||
Unrealized depreciation on forward foreign currency contracts outstanding | $ | - | $ | (189,212 | ) | $ | (189,212 | ) | ||||
| ||||||||||||
Unrealized depreciation on swap agreements – OTC | (3,126,525 | ) | - | (3,126,525 | ) | |||||||
| ||||||||||||
Total Derivative Liabilities | (3,126,525 | ) | (189,212 | ) | (3,315,737 | ) | ||||||
| ||||||||||||
Derivatives not subject to master netting agreements | - | - | - | |||||||||
| ||||||||||||
Total Derivative Liabilities subject to master netting agreements | $ | (3,126,525 | ) | $ | (189,212 | ) | $ | (3,315,737 | ) | |||
|
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of August 31, 2020.
Financial Derivative Assets | Financial Derivative Liabilities | |||||||||||||||||||||||||||||||||||
Forward | Forward | |||||||||||||||||||||||||||||||||||
Foreign | Foreign | Collateral | ||||||||||||||||||||||||||||||||||
Currency | Swap | Total | Currency | Swap | Total | Net Value of | (Received/Pledged) | Net | ||||||||||||||||||||||||||||
Counterparty | Contracts | Agreements | Assets | Contracts | Agreements | Liabilities | Derivatives | Non-Cash | Cash | Amount | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
Goldman Sachs International | - | - | - | (189,212 | ) | - | (189,212 | ) | (189,212 | ) | - | - | (189,212 | ) | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
JP Morgan Chase Bank, N.A. | - | - | - | - | (1,106,241 | ) | (1,106,241 | ) | (1,106,241 | ) | - | 1,106,241 | - | |||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
Merrill Lynch International | - | - | - | - | (2,020,284 | ) | (2,020,284 | ) | (2,020,284 | ) | - | 1,960,000 | (60,284 | ) | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
Morgan Stanley and Co. International PLC | - | - | - | - | (886,213 | ) | (886,213 | ) | (886,213 | ) | - | 886,213 | - | |||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
Total | - | $- | $- | (189,212 | ) | (4,012,738 | ) | (4,201,950 | ) | (4,201,950 | ) | - | 3,952,454 | (249,496 | ) | |||||||||||||||||||||
|
Effect of Derivative Investments for the six months ended August 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations | ||||||||||||||||
Credit | Currency | Interest | ||||||||||||||
Risk | Risk | Rate Risk | Total | |||||||||||||
| ||||||||||||||||
Realized Gain (Loss): | ||||||||||||||||
Forward foreign currency contracts | $ | - | $ | (1,179,576 | ) | $ | - | $ | (1,179,576 | ) | ||||||
| ||||||||||||||||
Futures contracts | - | - | (6,747,651 | ) | (6,747,651 | ) | ||||||||||
| ||||||||||||||||
Swap agreements | (1,574,169 | ) | - | - | (1,574,169 | ) | ||||||||||
| ||||||||||||||||
Change in Net Unrealized Appreciation (Depreciation): | ||||||||||||||||
Forward foreign currency contracts | - | 58,729 | - | 58,729 | ||||||||||||
| ||||||||||||||||
Futures contracts | - | - | 2,166,593 | 2,166,593 | ||||||||||||
| ||||||||||||||||
Swap agreements | (1,162,775 | ) | - | - | (1,162,775 | ) | ||||||||||
| ||||||||||||||||
Total | $ | (2,736,944 | ) | $ | (1,120,847 | ) | $ | (4,581,058 | ) | $ | (8,438,849 | ) | ||||
|
The table below summarizes the average notional value of derivatives held during the period.
Forward | ||||||||
Foreign Currency | Swap | |||||||
Contracts | Agreements | |||||||
| ||||||||
Average notional value | $15,550,916 | $69,166,667 | ||||||
|
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,708.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under
23 Invesco Income Fund
such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund may borrow for leveraging in an amount up to 5% of the Fund’s total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, 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. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of February 29, 2020, as follows:
Capital Loss Carryforward* | ||||||||||||
| ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
| ||||||||||||
Not subject to expiration | $ | 12,123,526 | $ | 31,892,114 | $ | 44,015,640 | ||||||
|
* | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 9—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 August 31, 2020 was $865,011,474 and $640,660,662, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $25,382,969 and $14,384,906, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $ | 6,905,088 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (28,420,874 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (21,515,786 | ) | |
|
Cost of investments for tax purposes is $726,350,259.
NOTE 10—Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2020(a) | February 29, 2020 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 1,261,947 | $ | 9,102,002 | 2,130,404 | $ | 18,534,383 | ||||||||||
| ||||||||||||||||
Class C | 205,334 | 1,546,734 | 316,687 | 2,753,344 | ||||||||||||
| ||||||||||||||||
Class R | 108,257 | 786,236 | 221,072 | 1,921,311 | ||||||||||||
| ||||||||||||||||
Class Y | 2,298,121 | 16,985,766 | 771,953 | 6,695,585 | ||||||||||||
| ||||||||||||||||
Investor Class | 97,644 | 720,990 | 130,188 | 1,135,316 | ||||||||||||
| ||||||||||||||||
Class R5 | 8,387 | 58,734 | 32,274 | 278,633 | ||||||||||||
| ||||||||||||||||
Class R6 | 27,155,227 | 196,080,556 | - | - | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 967,205 | 6,782,100 | 1,877,185 | 16,272,173 | ||||||||||||
| ||||||||||||||||
Class C | 17,713 | 124,157 | 38,334 | 332,348 | ||||||||||||
| ||||||||||||||||
Class R | 10,776 | 75,327 | 28,178 | 244,556 | ||||||||||||
| ||||||||||||||||
Class Y | 29,013 | 204,827 | 46,088 | 400,368 | ||||||||||||
| ||||||||||||||||
Investor Class | 65,953 | 462,825 | 130,934 | 1,136,640 | ||||||||||||
| ||||||||||||||||
Class R5 | 1,584 | 11,122 | 4,727 | 40,958 | ||||||||||||
| ||||||||||||||||
Class R6 | 190,612 | 1,416,905 | 166 | 1,434 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 56,866 | 401,049 | 119,864 | 1,038,536 | ||||||||||||
| ||||||||||||||||
Class C | (56,838 | ) | (401,049 | ) | (119,827 | ) | (1,038,536 | ) | ||||||||
|
24 Invesco Income Fund
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2020(a) | February 29, 2020 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (4,444,856 | ) | $ | (31,140,380 | ) | (7,301,314 | ) | $ | (63,329,540 | ) | ||||||
| ||||||||||||||||
Class C | (319,664 | ) | (2,204,880 | ) | (293,945 | ) | (2,550,114 | ) | ||||||||
| ||||||||||||||||
Class R | (202,581 | ) | (1,443,351 | ) | (390,467 | ) | (3,416,686 | ) | ||||||||
| ||||||||||||||||
Class Y | (402,390 | ) | (2,828,961 | ) | (740,947 | ) | (6,438,002 | ) | ||||||||
| ||||||||||||||||
Investor Class | (341,794 | ) | (2,443,162 | ) | (424,722 | ) | (3,688,791 | ) | ||||||||
| ||||||||||||||||
Class R5 | (22,918 | ) | (169,217 | ) | (89,666 | ) | (780,039 | ) | ||||||||
| ||||||||||||||||
Class R6 | (61,423 | ) | (460,928 | ) | (909 | ) | (7,895 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | 26,622,175 | $ | 193,667,402 | (3,513,743 | ) | $ | (30,464,018 | ) | ||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 8% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. 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, third party record keeping and account servicing and administrative services. 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. |
In addition, 24% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser.
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.
25 Invesco Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||
(5% annual return before | ||||||||||||
ACTUAL | expenses) | |||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||
(03/01/20) | (08/31/20)1 | Period2 | (08/31/20) | Period2 | Ratio | |||||||
Class A | $1,000.00 | $890.50 | $4.72 | $1,020.21 | $5.04 | 0.99% | ||||||
Class C | 1,000.00 | 888.10 | 8.28 | 1,016.43 | 8.84 | 1.74 | ||||||
Class R | 1,000.00 | 888.40 | 5.90 | 1,018.95 | 6.31 | 1.24 | ||||||
Class Y | 1,000.00 | 892.00 | 3.53 | 1,021.48 | 3.77 | 0.74 | ||||||
Investor Class | 1,000.00 | 891.10 | 4.29 | 1,020.67 | 4.58 | 0.90 | ||||||
Class R5 | 1,000.00 | 892.30 | 2.96 | 1,022.08 | 3.16 | 0.62 | ||||||
Class R6 | 1,000.00 | 892.20 | 2.96 | 1,022.08 | 3.16 | 0.62 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
26 Invesco Income Fund
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Income Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate
sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment
analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over the multiple time periods ending December 31, 2019 to the performance of funds in the Broadridge performance universe and against the Bloomberg Barclays U.S. Aggregate Bond Index. The Board noted that performance of Class A shares of the Fund was in the second quintile for the one year period and the fourth quintile for the three and five year periods. The Board noted that performance of Class A shares of the Fund was above the performance of the Index for the one year period and below the performance of the Index for the three and five year periods. However, the Board noted that the Fund had changed its name, investment strategy and index as of July 26, 2018 and that the performance results prior to the 2018 calendar year were with respect to the Fund’s prior investment strategy. As a result, the Board did not consider performance results prior to 2018 to be particularly relevant. The Board discussed contributors to and detractors from Fund performance for periods after 2018 which reflect the Fund’s utilization of its current strategy. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional
27 Invesco Income Fund
information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain Funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the
performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. Invesco Advisers noted that the Fund does not execute brokerage transactions through “soft dollar” arrangements to any significant degree.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers pursuant to procedures approved by the Board. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the costs to the Fund of such investments. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
28 Invesco Income Fund
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Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
With eDelivery, you can elect to have any or all of the following materials delivered straight to your inbox to download, save and print from your own computer:
∎ | Fund reports and prospectuses |
∎ | Quarterly statements |
∎ | Daily confirmations |
∎ | Tax forms |
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-PORT filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246, or at invesco.com/ proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. | ||
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-05686 and 033-39519 | Invesco Distributors, Inc. | INC-SAR-1 |
| ||||
Semiannual Report to Shareholders
| August 31, 2020
| |||
| ||||
Invesco Intermediate Bond Factor Fund | ||||
Nasdaq: | ||||
A: OFIAX ∎ C: OFICX ∎ R: OFINX ∎ Y: OFIYX ∎ R5: IOTEX ∎ R6: OFIIX |
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.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services |
Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. |
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 | Invesco Intermediate Bond Factor Fund |
Performance summary
| ||||
Fund vs. Indexes | ||||
Cumulative total returns, 2/29/20 to 8/31/20, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. | ||||
Class A Shares | 2.93 | % | ||
Class C Shares | 2.55 | |||
Class R Shares | 2.80 | |||
Class Y Shares | 3.07 | |||
Class R5 Shares | 3.07 | |||
Class R6 Shares | 3.07 | |||
Bloomberg Barclays U.S. Aggregate Bond Index▼ (Broad Market/Style-Specific Index) | 2.98 | |||
Source(s): ▼RIMES Technologies Corp. | ||||
The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment grade, fixed-rate bond market. |
| |||
The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). |
| |||
A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
|
For more information about your Fund
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance. Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
|
3 | Invesco Intermediate Bond Factor Fund |
Average Annual Total Returns |
| |||
As of 8/31/20, including maximum applicable sales charges |
| |||
Class A Shares |
| |||
Inception (8/2/10) | 4.62 | % | ||
10 Years | 4.46 | |||
5 Years | 3.76 | |||
1 Year | 1.51 | |||
Class C Shares |
| |||
Inception (8/2/10) | 4.22 | % | ||
10 Years | 4.09 | |||
5 Years | 3.87 | |||
1 Year | 4.22 | |||
Class R Shares |
| |||
Inception (8/2/10) | 4.75 | % | ||
10 Years | 4.61 | |||
5 Years | 4.37 | |||
1 Year | 5.74 | |||
Class Y Shares |
| |||
Inception (8/2/10) | 5.31 | % | ||
10 Years | 5.16 | |||
5 Years | 4.98 | |||
1 Year | 6.37 | |||
Class R5 Shares |
| |||
10 Years | 4.94 | % | ||
5 Years | 4.73 | |||
1 Year | 6.27 | |||
Class R6 Shares |
| |||
Inception (11/28/12) | 4.29 | % | ||
5 Years | 5.08 | |||
1 Year | 6.30 |
Effective May 24, 2019, Class A, Class C, Class R, Class Y and Class I shares of the Oppenheimer Intermediate Income Fund, (the predecessor fund), were reorganized into Class A, Class C, Class R, Class Y and Class R6 shares, respectively, of the Invesco Oppenheimer Intermediate Income Fund (the Fund). Returns shown above, prior to May 24, 2019, for Class A, Class C, Class R, Class Y and Class R6 shares are those for Class A, Class C, Class R, Class Y and Class I shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
Class R5 shares incepted on May 24, 2019. Performance shown prior to that date is that of the predecessor fund’s Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Class A share performance reflects the maximum 4.25% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
4 | Invesco Intermediate Bond Factor Fund |
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. 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 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. |
5 | Invesco Intermediate Bond Factor Fund |
August 31, 2020
(Unaudited)
Principal Amount | Value | |||||
U.S. Dollar Denominated Bonds & Notes–48.80% | ||||||
Advertising–0.58% | ||||||
Omnicom Group, Inc./Omnicom Capital, Inc., 3.65%, 11/01/2024 | $ | 200,000 | $ 221,636 | |||
WPP Finance 2010 (United Kingdom), 3.75%, 09/19/2024 | 840,000 | 922,352 | ||||
1,143,988 | ||||||
Aerospace & Defense–1.58% | ||||||
Boeing Co. (The), | 832,000 | 893,892 | ||||
3.10%, 05/01/2026 | 725,000 | 731,423 | ||||
Hexcel Corp., 3.95%, 02/15/2027 | 370,000 | 397,705 | ||||
Raytheon Technologies Corp., 3.50%, 03/15/2027(b) | 560,000 | 634,923 | ||||
Rockwell Collins, Inc., 3.20%, 03/15/2024 | 441,000 | 469,172 | ||||
3,127,115 | ||||||
Agricultural & Farm Machinery–0.55% | ||||||
CNH Industrial N.V. (United Kingdom), 4.50%, 08/15/2023 | 400,000 | 430,705 | ||||
Deere & Co., 5.38%, 10/16/2029 | 500,000 | 661,574 | ||||
1,092,279 | ||||||
Agricultural Products–0.30% | ||||||
Bunge Ltd. Finance Corp., 3.25%, 08/15/2026 | 553,000 | 593,458 | ||||
Air Freight & Logistics–0.77% | ||||||
FedEx Corp., | 600,000 | 730,657 | ||||
4.55%, 04/01/2046 | 668,000 | 792,301 | ||||
1,522,958 | ||||||
Airlines–0.39% | ||||||
Delta Air Lines Pass Through Trust, Series 2007-1, Class A, | 43,615 | 43,631 | ||||
Delta Air Lines, Inc., | 56,000 | 55,726 | ||||
3.80%, 04/19/2023 | 17,000 | 16,442 | ||||
2.90%, 10/28/2024 | 69,000 | 63,420 | ||||
3.75%, 10/28/2029 | 38,000 | 33,909 | ||||
Southwest Airlines Co., | 34,000 | 34,310 | ||||
Spirit Airlines Pass Through Trust, Series 2015-1A, | 104,710 | 90,722 | ||||
United Airlines Pass Through Trust, Series 2019-1, Class AA, 4.15%, 08/25/2031 | 431,122 | 429,386 | ||||
767,546 | ||||||
Apparel Retail–0.79% | ||||||
TJX Cos., Inc. (The), 3.88%, 04/15/2030 | 1,312,000 | 1,559,175 |
Principal Amount | Value | |||||
Asset Management & Custody Banks–0.31% | ||||||
Affiliated Managers Group, Inc., 4.25%, 02/15/2024 | $ | 106,000 | $ 116,995 | |||
Ameriprise Financial, Inc., 4.00%, 10/15/2023 | 241,000 | 267,794 | ||||
Ares Capital Corp., 3.50%, 02/10/2023 | 124,000 | 127,274 | ||||
BlackRock, Inc., 2.40%, 04/30/2030 | 72,000 | 78,689 | ||||
FS KKR Capital Corp., 4.13%, 02/01/2025 | 19,000 | 18,876 | ||||
609,628 | ||||||
Automobile Manufacturers–1.66% | ||||||
American Honda Finance Corp., 3.50%, 02/15/2028 | 1,375,000 | 1,588,717 | ||||
Ford Motor Co., | 100,000 | 100,394 | ||||
7.45%, 07/16/2031 | 100,000 | 116,718 | ||||
4.75%, 01/15/2043 | 100,000 | 92,813 | ||||
Ford Motor Credit Co. LLC, 3.09%, 01/09/2023 | 385,000 | 383,456 | ||||
General Motors Co., | 100,000 | 119,881 | ||||
5.15%, 04/01/2038 | 49,000 | 52,059 | ||||
6.25%, 10/02/2043 | 403,000 | 468,985 | ||||
6.75%, 04/01/2046 | 259,000 | 314,543 | ||||
5.95%, 04/01/2049 | 44,000 | 51,778 | ||||
3,289,344 | ||||||
Biotechnology–0.07% | ||||||
AbbVie, Inc., 2.95%, 11/21/2026(b) | 117,000 | 128,788 | ||||
Amgen, Inc., 2.20%, 02/21/2027 | 17,000 | 18,017 | ||||
146,805 | ||||||
Brewers–0.38% | ||||||
Anheuser-Busch InBev Worldwide, Inc. (Belgium), 8.20%, 01/15/2039 | 262,000 | 421,107 | ||||
Molson Coors Beverage Co., 5.00%, 05/01/2042 | 165,000 | 186,405 | ||||
4.20%, 07/15/2046 | 140,000 | 144,469 | ||||
751,981 | ||||||
Broadcasting–0.51% | ||||||
Discovery Communications LLC, | 200,000 | 222,662 | ||||
4.13%, 05/15/2029 | 289,000 | 330,510 | ||||
ViacomCBS, Inc., 4.75%, 05/15/2025 | 400,000 | 462,232 | ||||
1,015,404 | ||||||
Building Products–0.04% | ||||||
Owens Corning, 7.00%, 12/01/2036 | 62,000 | 82,398 | ||||
Cable & Satellite–0.90% | ||||||
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 5.13%, 07/01/2049 | 50,000 | 58,400 | ||||
Comcast Corp., 3.60%, 03/01/2024 | 403,000 | 447,027 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Intermediate Bond Factor Fund |
Principal Amount | Value | |||||
Cable & Satellite–(continued) | ||||||
Grupo Televisa S.A.B. (Mexico), 4.63%, 01/30/2026 | $ | 450,000 | $ 504,504 | |||
Time Warner Cable LLC, | 106,000 | 150,881 | ||||
5.50%, 09/01/2041 | 86,000 | 105,575 | ||||
4.50%, 09/15/2042 | 420,000 | 469,337 | ||||
Time Warner Entertainment Co. L.P., 8.38%, 07/15/2033 | 35,000 | 54,457 | ||||
1,790,181 | ||||||
Commodity Chemicals–0.01% | ||||||
Westlake Chemical Corp., 5.00%, 08/15/2046 | 27,000 | 30,875 | ||||
Communications Equipment–0.13% | ||||||
Juniper Networks, Inc., 5.95%, 03/15/2041 | 14,000 | 17,708 | ||||
Motorola Solutions, Inc., | 200,000 | 222,175 | ||||
5.50%, 09/01/2044 | 14,000 | 16,284 | ||||
256,167 | ||||||
Construction & Engineering–0.07% | ||||||
Fluor Corp., | 32,000 | 25,071 | ||||
4.25%, 09/15/2028 | 38,000 | 30,430 | ||||
Valmont Industries, Inc., 5.25%, 10/01/2054 | 73,000 | 77,907 | ||||
133,408 | ||||||
Construction Machinery & Heavy Trucks–0.87% | ||||||
Caterpillar Financial Services Corp., 1.93%, 10/01/2021 | 694,000 | 706,454 | ||||
Cummins, Inc., 3.65%, 10/01/2023 | 479,000 | 523,132 | ||||
PACCAR Financial Corp., 2.80%, 03/01/2021 | 501,000 | 507,508 | ||||
1,737,094 | ||||||
Construction Materials–0.01% | ||||||
Eagle Materials, Inc., 4.50%, 08/01/2026 | 20,000 | 20,759 | ||||
Consumer Finance–0.74% | ||||||
Ally Financial, Inc., 4.63%, 05/19/2022 | 480,000 | 505,446 | ||||
8.00%, 11/01/2031 | 218,000 | 296,741 | ||||
Discover Financial Services, 3.95%, 11/06/2024 | 305,000 | 336,123 | ||||
Synchrony Financial, 4.25%, 08/15/2024 | 300,000 | 322,264 | ||||
1,460,574 | ||||||
Department Stores–0.04% | ||||||
Nordstrom, Inc., 5.00%, 01/15/2044 | 102,000 | 71,908 | ||||
Distillers & Vintners–0.50% | ||||||
Diageo Capital PLC (United Kingdom), | 574,000 | 608,266 | ||||
3.88%, 05/18/2028 | 330,000 | 386,788 | ||||
995,054 |
Principal Amount | Value | |||||
Diversified Banks–7.25% | ||||||
Banco Santander S.A. (Spain), | $ | 600,000 | $ 685,396 | |||
4.25%, 04/11/2027 | 400,000 | 452,175 | ||||
Bancolombia S.A. (Colombia), | 213,000 | 217,236 | ||||
Bank of America Corp., 4.27%, 07/23/2029(c) | 188,000 | 222,259 | ||||
7.75%, 05/14/2038 | 271,000 | 451,360 | ||||
Series DD, 6.30%(c)(d) | 257,000 | 297,331 | ||||
Bank of Montreal (Canada), 3.80%, 12/15/2032(c) | 300,000 | 332,740 | ||||
Bank of Nova Scotia (The) (Canada), 2.70%, 03/07/2022 | 278,000 | 288,847 | ||||
Barclays Bank PLC (United Kingdom), 3.75%, 05/15/2024 | 240,000 | 265,896 | ||||
Barclays PLC (United Kingdom), 5.20%, 05/12/2026 | 284,000 | 324,104 | ||||
7.88%(b)(c)(d) | 75,000 | 78,750 | ||||
8.00%(c)(d) | 94,000 | 102,879 | ||||
BPCE S.A. (France), 4.50%, 03/15/2025(b) | 195,000 | 217,865 | ||||
Capital One Bank USA N.A., 3.38%, 02/15/2023 | 250,000 | 265,021 | ||||
Citigroup, Inc., 3.67%, | 100,000 | 112,971 | ||||
Cooperatieve Rabobank U.A. (Netherlands), 3.95%, 11/09/2022 | 900,000 | 961,732 | ||||
Deutsche Bank AG (Germany), 3.95%, 02/27/2023 | 343,000 | 362,653 | ||||
HSBC Bank USA N.A., 5.88%, 11/01/2034 | 700,000 | 961,046 | ||||
HSBC Holdings PLC (United Kingdom), | 100,000 | 108,002 | ||||
4.29%, 09/12/2026(c) | 325,000 | 366,341 | ||||
4.58%, 06/19/2029(c) | 165,000 | 192,914 | ||||
JPMorgan Chase & Co., | 258,000 | 281,021 | ||||
3.88%, 09/10/2024 | 502,000 | 559,516 | ||||
7.75%, 07/15/2025 | 250,000 | 324,515 | ||||
3.54%, 05/01/2028(c) | 263,000 | 297,041 | ||||
Lloyds Bank PLC (United Kingdom), 3.30%, 05/07/2021 | 1,275,000 | 1,300,131 | ||||
Lloyds Banking Group PLC (United Kingdom), | 755,000 | 866,450 | ||||
3.87%, 07/09/2025(c) | 201,000 | 221,207 | ||||
Mitsubishi UFJ Financial Group, Inc. (Japan), 3.74%, 03/07/2029 | 191,000 | 220,365 | ||||
National Australia Bank Ltd. (Australia), 3.93%, | 230,000 | 256,622 | ||||
Natwest Group PLC (United Kingdom), 6.10%, 06/10/2023 | 250,000 | 278,128 | ||||
6.00%, 12/19/2023 | 300,000 | 338,438 | ||||
Santander UK PLC (United Kingdom), 2.88%, 06/18/2024 | 558,000 | 604,104 | ||||
Sumitomo Mitsui Financial Group, Inc. (Japan), 2.35%, 01/15/2025 | 200,000 | 212,517 | ||||
Svenska Handelsbanken AB (Sweden), 3.90%, 11/20/2023 | 474,000 | 527,277 | ||||
U.S. Bancorp, Series W, 3.10%, 04/27/2026 | 160,000 | 179,518 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Intermediate Bond Factor Fund |
Principal Amount | Value | |||||
Diversified Banks–(continued) | ||||||
Wells Fargo & Co., 4.75%, 12/07/2046 | $ | 510,000 | $ 644,154 | |||
14,378,522 | ||||||
Diversified Capital Markets–0.17% | ||||||
Credit Suisse Group AG (Switzerland), 3.87%, 01/12/2029(b)(c) | 189,000 | 212,449 | ||||
UBS Group AG (Switzerland), 7.00%(b)(c)(d) | 125,000 | 135,556 | ||||
348,005 | ||||||
Diversified Chemicals–0.03% | ||||||
Dow Chemical Co. (The), 9.40%, 05/15/2039 | 32,000 | 54,544 | ||||
Diversified REITs–0.02% | ||||||
CyrusOne L.P./CyrusOne Finance Corp., 3.45%, 11/15/2029 | 33,000 | 36,093 | ||||
Diversified Support Services–0.06% | ||||||
Cintas Corp. No. 2, 2.90%, 04/01/2022 | 114,000 | 118,267 | ||||
Drug Retail–0.13% | ||||||
Walgreens Boots Alliance, Inc., 4.80%, 11/18/2044 | 245,000 | 269,318 | ||||
Education Services–0.02% | ||||||
California Institute of Technology, 4.70%, 11/01/2111 | 27,000 | 38,758 | ||||
Electric Utilities–2.70% | ||||||
AEP Texas, Inc., 3.95%, 06/01/2028(b) | 806,000 | 936,306 | ||||
Edison International, 5.75%, 06/15/2027 | 150,000 | 170,709 | ||||
EDP Finance B.V. (Portugal), 3.63%, 07/15/2024(b) | 349,000 | 380,484 | ||||
ITC Holdings Corp., 5.30%, 07/01/2043 | 323,000 | 423,706 | ||||
National Grid USA, 5.80%, 04/01/2035 | 146,000 | 188,588 | ||||
NextEra Energy Capital Holdings, Inc., 5.65%, 05/01/2079(c) | 235,000 | 268,689 | ||||
Oglethorpe Power Corp., 5.95%, 11/01/2039 | 374,000 | 489,248 | ||||
PPL WEM Ltd./Western Power Distribution PLC (United Kingdom), 5.38%, 05/01/2021(b) | 500,000 | 510,066 | ||||
Southern California Edison Co., 6.00%, 01/15/2034 | 168,000 | 227,261 | ||||
Southern Power Co., 5.15%, 09/15/2041 | 435,000 | 502,785 | ||||
Union Electric Co., 8.45%, 03/15/2039 | 400,000 | 676,765 | ||||
Virginia Electric & Power Co., 8.88%, 11/15/2038 | 316,000 | 573,080 | ||||
5,347,687 | ||||||
Electronic Components–0.09% | ||||||
Amphenol Corp., 3.20%, 04/01/2024 | 111,000 | 120,091 | ||||
Corning, Inc., 5.35%, 11/15/2048 | 50,000 | 67,320 | ||||
187,411 |
Principal Amount | Value | |||||
Fertilizers & Agricultural Chemicals–0.02% | ||||||
Mosaic Co. (The), | $ | 19,000 | $ 21,852 | |||
5.63%, 11/15/2043 | 24,000 | 27,636 | ||||
49,488 | ||||||
Gold–0.13% | ||||||
Newmont Corp., 2.80%, 10/01/2029 | 231,000 | 251,481 | ||||
Health Care Equipment–0.41% | ||||||
Baxter International, Inc., 3.95%, 04/01/2030(b) | 318,000 | 382,516 | ||||
Medtronic, Inc., 4.38%, 03/15/2035 | 330,000 | 437,359 | ||||
819,875 | ||||||
Health Care Facilities–0.69% | ||||||
HCA, Inc., | 197,000 | 229,796 | ||||
5.25%, 06/15/2049 | 300,000 | 375,616 | ||||
SSM Health Care Corp., 3.69%, 06/01/2023 | 715,000 | 767,396 | ||||
1,372,808 | ||||||
Health Care REITs–0.34% | ||||||
Sabra Health Care L.P., 5.13%, 08/15/2026 | 28,000 | 30,529 | ||||
Welltower, Inc., 3.63%, 03/15/2024 | 590,000 | 638,186 | ||||
668,715 | ||||||
Health Care Services–0.95% | ||||||
CHRISTUS Health, Series C, 4.34%, 07/01/2028 | 430,000 | 486,817 | ||||
CommonSpirit Health, 2.95%, 11/01/2022 | 378,000 | 394,043 | ||||
CVS Health Corp., | 179,000 | 195,182 | ||||
5.05%, 03/25/2048 | 302,000 | 392,662 | ||||
Laboratory Corp. of America Holdings, 3.20%, 02/01/2022 | 222,000 | 230,478 | ||||
Toledo Hospital (The), 6.02%, 11/15/2048 | 154,000 | 176,803 | ||||
1,875,985 | ||||||
Hotel & Resort REITs–0.06% | ||||||
Service Properties Trust, | 28,000 | 28,175 | ||||
4.35%, 10/01/2024 | 61,000 | 57,474 | ||||
4.95%, 10/01/2029 | 50,000 | 44,812 | ||||
130,461 | ||||||
Hotels, Resorts & Cruise Lines–0.02% | ||||||
Marriott International, Inc., Series EE, 5.75%, 05/01/2025 | 39,000 | 43,828 | ||||
Household Appliances–0.46% | ||||||
Whirlpool Corp., 4.70%, 06/01/2022 | 850,000 | 908,174 | ||||
Household Products–0.31% | ||||||
Kimberly-Clark Corp., 2.40%, 03/01/2022 | 589,000 | 606,972 | ||||
Hypermarkets & Super Centers–0.10% | ||||||
Walmart, Inc., 3.70%, 06/26/2028 | 170,000 | 201,631 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Intermediate Bond Factor Fund |
Principal Amount | Value | |||||
Industrial Conglomerates–0.92% | ||||||
Carlisle Cos., Inc., 3.75%, 11/15/2022 | $ | 131,000 | $ 137,723 | |||
GE Capital International Funding Co. Unlimited Co., 3.37%, 11/15/2025 | 252,000 | 267,380 | ||||
General Electric Co., | 460,000 | 576,628 | ||||
5.88%, 01/14/2038 | 725,000 | 838,186 | ||||
1,819,917 | ||||||
Industrial Machinery–0.68% | ||||||
nVent Finance S.a.r.l. (United Kingdom), 4.55%, 04/15/2028 | 400,000 | 429,959 | ||||
Stanley Black & Decker, Inc., 4.25%, 11/15/2028 | 570,000 | 688,459 | ||||
4.00%, 03/15/2060(c) | 213,000 | 223,694 | ||||
1,342,112 | ||||||
Industrial REITs–0.06% | ||||||
Prologis L.P., 2.25%, 04/15/2030 | 113,000 | 120,468 | ||||
Insurance Brokers–0.32% | ||||||
Aon Corp., 8.21%, 01/01/2027 | 100,000 | 129,098 | ||||
Marsh & McLennan Cos., Inc., 3.88%, 03/15/2024 | 456,000 | 505,713 | ||||
634,811 | ||||||
Integrated Oil & Gas–0.69% | ||||||
BP Capital Markets PLC (United Kingdom), 3.81%, 02/10/2024 | 321,000 | 354,250 | ||||
Chevron Corp., 2.90%, 03/03/2024 | 324,000 | 349,297 | ||||
Occidental Petroleum Corp., 2.90%, 08/15/2024 | 519,000 | 478,451 | ||||
Shell International Finance B.V. (Netherlands), 3.25%, 05/11/2025 | 90,000 | 100,604 | ||||
Total Capital International S.A. (France), 2.70%, 01/25/2023 | 82,000 | 86,534 | ||||
1,369,136 | ||||||
Integrated Telecommunication Services–0.77% | ||||||
TCI Communications, Inc., 7.13%, 02/15/2028 | 1,100,000 | 1,530,681 | ||||
Interactive Media & Services–0.89% | ||||||
Alphabet, Inc., 3.38%, 02/25/2024 | 274,000 | 302,218 | ||||
Baidu, Inc. (China), | 865,000 | 910,542 | ||||
4.38%, 03/29/2028 | 300,000 | 346,438 | ||||
Weibo Corp. (China), 3.50%, 07/05/2024 | 200,000 | 212,499 | ||||
1,771,697 | ||||||
Internet & Direct Marketing Retail–0.84% | ||||||
Alibaba Group Holding Ltd. (China), | 330,000 | 373,620 | ||||
4.50%, 11/28/2034 | 570,000 | 721,133 | ||||
Booking Holdings, Inc., 3.55%, 03/15/2028 | 399,000 | 444,831 | ||||
Expedia Group, Inc., 4.63%, 08/01/2027(b) | 122,000 | 127,398 | ||||
1,666,982 |
Principal Amount | Value | |||||
Investment Banking & Brokerage–2.09% | ||||||
Goldman Sachs Group, Inc. (The), | $ | 1,077,000 | $ 1,193,808 | |||
3.50%, 11/16/2026 | 301,000 | 335,927 | ||||
5.15%, 05/22/2045 | 200,000 | 265,846 | ||||
Jefferies Group LLC, 6.25%, 01/15/2036 | 12,000 | 14,516 | ||||
Jefferies Group LLC/Jefferies Group Capital Finance, Inc., 4.85%, 01/15/2027 | 134,000 | 152,289 | ||||
Morgan Stanley, | 726,000 | 784,712 | ||||
3.88%, 01/27/2026 | 415,000 | 476,748 | ||||
Series F, 3.88%, 04/29/2024 | 538,000 | 598,612 | ||||
TD Ameritrade Holding Corp., 2.95%, 04/01/2022 | 308,000 | 319,622 | ||||
4,142,080 | ||||||
IT Consulting & Other Services–0.33% | ||||||
International Business Machines Corp., 7.13%, 12/01/2096 | 383,000 | 659,259 | ||||
Leisure Products–0.26% | ||||||
Hasbro, Inc., | 300,000 | 359,887 | ||||
5.10%, 05/15/2044 | 147,000 | 151,026 | ||||
510,913 | ||||||
Life & Health Insurance–1.44% | ||||||
Brighthouse Financial, Inc., | 257,000 | 270,371 | ||||
4.70%, 06/22/2047 | 236,000 | 227,137 | ||||
MetLife, Inc., | 692,000 | 770,292 | ||||
Series D, 5.88%(c)(d) | 100,000 | 110,960 | ||||
Prudential Financial, Inc., | 342,000 | 367,731 | ||||
5.20%, 03/15/2044(c) | 225,000 | 238,453 | ||||
5.38%, 05/15/2045(c) | 135,000 | 148,507 | ||||
3.70%, 03/13/2051 | 224,000 | 249,787 | ||||
Reliance Standard Life Global Funding II, 2.75%, 01/21/2027(b) | 441,000 | 454,463 | ||||
Unum Group, 5.75%, 08/15/2042 | 13,000 | 14,839 | ||||
2,852,540 | ||||||
Motorcycle Manufacturers–0.26% | ||||||
Harley-Davidson, Inc., | 187,000 | 200,837 | ||||
4.63%, 07/28/2045 | 279,000 | 307,266 | ||||
508,103 | ||||||
Multi-line Insurance–0.06% | ||||||
American International Group, Inc., | 20,000 | 22,105 | ||||
8.18%, 05/15/2058(c) | 11,000 | 15,752 | ||||
Hartford Financial Services Group, Inc. (The), 2.41% (3 mo. USD LIBOR + 2.13%), 02/12/2047(b)(e) | 108,000 | 91,166 | ||||
129,023 | ||||||
Multi-Sector Holdings–0.04% | ||||||
Berkshire Hathaway, Inc., 2.20%, 03/15/2021 | 71,000 | 71,645 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Intermediate Bond Factor Fund |
Principal Amount | Value | |||||
Multi-Utilities–0.63% | ||||||
Black Hills Corp., | $ | 216,000 | $ 237,557 | |||
3.95%, 01/15/2026 | 277,000 | 304,891 | ||||
PSEG Power LLC, 8.63%, 04/15/2031 | 358,000 | 528,318 | ||||
Sempra Energy, 4.05%, 12/01/2023 | 159,000 | 174,752 | ||||
1,245,518 | ||||||
Office REITs–0.32% | ||||||
Alexandria Real Estate Equities, Inc., 4.00%, 01/15/2024 | 558,000 | 617,408 | ||||
Office Properties Income Trust, 4.00%, 07/15/2022 | 16,000 | 16,064 | ||||
633,472 | ||||||
Oil & Gas Equipment & Services–0.47% | ||||||
Baker Hughes Holdings LLC, 5.13%, 09/15/2040 | 152,000 | 184,944 | ||||
Baker Hughes, a GE Co. LLC/Baker Hughes Co-Obligor, Inc., | 162,000 | 169,677 | ||||
4.08%, 12/15/2047 | 181,000 | 190,982 | ||||
Halliburton Co., | 113,000 | 153,948 | ||||
5.00%, 11/15/2045 | 220,000 | 241,239 | ||||
940,790 | ||||||
Oil & Gas Exploration & Production–1.08% | ||||||
Apache Corp., 5.10%, 09/01/2040 | 322,000 | 313,810 | ||||
Continental Resources, Inc., | 194,000 | 194,049 | ||||
4.38%, 01/15/2028 | 265,000 | 254,874 | ||||
Devon Energy Corp., 5.60%, 07/15/2041 | 138,000 | 144,438 | ||||
Hess Corp., 5.60%, 02/15/2041 | 140,000 | 159,886 | ||||
Marathon Oil Corp., | 470,000 | 488,231 | ||||
6.60%, 10/01/2037 | 250,000 | 268,793 | ||||
Newfield Exploration Co., 5.63%, 07/01/2024 | 275,000 | 279,783 | ||||
Ovintiv, Inc., 6.50%, 08/15/2034 | 48,000 | 46,708 | ||||
2,150,572 | ||||||
Oil & Gas Refining & Marketing–0.17% | ||||||
Marathon Petroleum Corp., 4.50%, 04/01/2048 | 105,000 | 112,212 | ||||
Valero Energy Corp., 6.63%, 06/15/2037 | 166,000 | 224,343 | ||||
336,555 | ||||||
Oil & Gas Storage & Transportation–1.18% | ||||||
Boardwalk Pipelines L.P., 4.45%, 07/15/2027 | 56,000 | 61,164 | ||||
Cheniere Corpus Christi Holdings LLC, 7.00%, 06/30/2024 | 370,000 | 431,422 | ||||
Columbia Pipeline Group, Inc., 5.80%, 06/01/2045 | 143,000 | 182,711 | ||||
Enable Midstream Partners L.P., | 250,000 | 248,482 | ||||
4.95%, 05/15/2028 | 51,000 | 50,239 | ||||
Energy Transfer Operating L.P., 5.30%, 04/15/2047 | 389,000 | 374,952 | ||||
Kinder Morgan Energy Partners L.P., 6.95%, 01/15/2038 | 131,000 | 174,080 |
Principal Amount | Value | |||||
Oil & Gas Storage & Transportation–(continued) | ||||||
MPLX L.P., 1.41% (3 mo. USD LIBOR + 1.10%), 09/09/2022(e) | $ | 225,000 | $ 225,023 | |||
Sunoco Logistics Partners Operations L.P., 5.40%, 10/01/2047 | 167,000 | 163,799 | ||||
Transcanada Trust (Canada), 5.50%, 09/15/2079(c) | 122,000 | 130,143 | ||||
Western Midstream Operating L.P., | 56,000 | 57,400 | ||||
6.25%, 02/01/2050 | 65,000 | 65,209 | ||||
Williams Cos., Inc. (The), 6.30%, 04/15/2040 | 136,000 | 171,179 | ||||
2,335,803 | ||||||
Other Diversified Financial Services–0.52% | ||||||
Blackstone Holdings Finance Co. LLC, 3.15%, 10/02/2027(b) | 125,000 | 138,409 | ||||
Brookfield Finance, Inc. (Canada), | 240,000 | 265,113 | ||||
4.70%, 09/20/2047 | 101,000 | 119,165 | ||||
Equitable Holdings, Inc., 5.00%, 04/20/2048 | 44,000 | 52,019 | ||||
ORIX Corp. (Japan), | 322,000 | 353,692 | ||||
3.70%, 07/18/2027 | 72,000 | 81,214 | ||||
Voya Financial, Inc., 5.65%, 05/15/2053(c) | 20,000 | 20,935 | ||||
1,030,547 | ||||||
Packaged Foods & Meats–0.27% | ||||||
Experian Finance PLC (United Kingdom), 2.75%, 03/08/2030(b) | 497,000 | 540,933 | ||||
Paper Packaging–0.17% | ||||||
International Paper Co., 4.80%, 06/15/2044 | 280,000 | 343,671 | ||||
Paper Products–0.13% | ||||||
Fibria Overseas Finance Ltd. (Brazil), 5.50%, 01/17/2027 | 27,000 | 30,033 | ||||
Suzano Austria GmbH (Brazil), 6.00%, 01/15/2029 | 200,000 | 227,150 | ||||
257,183 | ||||||
Pharmaceuticals–1.32% | ||||||
Bristol-Myers Squibb Co., 3.40%, 07/26/2029 | 327,000 | 381,901 | ||||
GlaxoSmithKline Capital, Inc. (United Kingdom), 5.38%, 04/15/2034 | 305,000 | 430,527 | ||||
Johnson & Johnson, 3.55%, 05/15/2021 | 328,000 | 335,546 | ||||
Perrigo Finance Unlimited Co., | 800,000 | 867,110 | ||||
4.90%, 12/15/2044 | 200,000 | 216,617 | ||||
Wyeth LLC, 6.50%, 02/01/2034 | 247,000 | 386,323 | ||||
2,618,024 | ||||||
Property & Casualty Insurance–0.36% | ||||||
Allied World Assurance Co. Holdings Ltd., | ||||||
4.35%, 10/29/2025 | 76,000 | 79,604 | ||||
Assured Guaranty US Holdings, Inc., 5.00%, 07/01/2024 | 266,000 | 300,293 | ||||
CNA Financial Corp., 3.95%, 05/15/2024 | 297,000 | 328,208 | ||||
708,105 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Intermediate Bond Factor Fund |
Principal Amount | Value | |||||
Railroads–0.20% | ||||||
CSX Corp., 3.70%, 11/01/2023 | $ | 366,000 | $ 401,644 | |||
Regional Banks–0.20% | ||||||
KeyBank N.A., 3.40%, 05/20/2026 | 230,000 | 258,514 | ||||
Truist Bank, | 10,000 | 11,651 | ||||
3.30%, 05/15/2026 | 115,000 | 129,879 | ||||
400,044 | ||||||
Reinsurance–0.04% | ||||||
RenaissanceRe Finance, Inc. (Bermuda), 3.70%, 04/01/2025 | 34,000 | 37,113 | ||||
Sompo International Holdings Ltd. (Bermuda), 4.70%, 10/15/2022 | 34,000 | 36,054 | ||||
73,167 | ||||||
Residential REITs–0.18% | ||||||
AvalonBay Communities, Inc., 4.20%, 12/15/2023 | 325,000 | 359,494 | ||||
Restaurants–0.26% | ||||||
Starbucks Corp., 3.85%, 10/01/2023 | 467,000 | 511,334 | ||||
Retail REITs–0.37% | ||||||
Federal Realty Investment Trust, 4.50%, 12/01/2044 | 61,000 | 70,305 | ||||
Kite Realty Group L.P., 4.00%, 10/01/2026 | 326,000 | 310,054 | ||||
Simon Property Group L.P., 6.75%, 02/01/2040 | 244,000 | 346,260 | ||||
726,619 | ||||||
Semiconductors–0.89% | ||||||
Broadcom Corp./Broadcom Cayman Finance Ltd., 3.88%, 01/15/2027 | 173,000 | 191,865 | ||||
Broadcom, Inc., 4.11%, 09/15/2028 | 265,000 | 298,249 | ||||
Microchip Technology, Inc., 4.33%, 06/01/2023 | 200,000 | 215,670 | ||||
QUALCOMM, Inc., 2.90%, 05/20/2024 | 681,000 | 735,951 | ||||
Xilinx, Inc., 3.00%, 03/15/2021 | 317,000 | 321,394 | ||||
1,763,129 | ||||||
Soft Drinks–0.28% | ||||||
Coca-Cola FEMSA S.A.B. de C.V. (Mexico), 2.75%, 01/22/2030 | 526,000 | 566,593 | ||||
Specialized Finance–0.45% | ||||||
National Rural Utilities Cooperative Finance Corp., | 312,000 | 316,386 | ||||
3.40%, 11/15/2023 | 305,000 | 331,468 | ||||
8.00%, 03/01/2032 | 148,000 | 235,861 | ||||
5.25%, 04/20/2046(c) | 12,000 | 13,093 | ||||
896,808 | ||||||
Specialized REITs–0.01% | ||||||
EPR Properties, 3.75%, 08/15/2029 | 28,000 | 24,754 | ||||
Specialty Chemicals–0.23% | ||||||
Celanese US Holdings LLC, 3.50%, 05/08/2024 | 150,000 | 160,346 | ||||
Huntsman International LLC, 5.13%, 11/15/2022 | 17,000 | 18,292 |
Principal Amount | Value | |||||
Specialty Chemicals–(continued) | ||||||
PPG Industries, Inc., 2.40%, 08/15/2024 | $ | 261,000 | $ 278,083 | |||
456,721 | ||||||
Steel–0.15% | ||||||
ArcelorMittal S.A. (Luxembourg), | 240,000 | 256,717 | ||||
7.25%, 10/15/2039 | 27,000 | 34,735 | ||||
291,452 | ||||||
Systems Software–0.66% | ||||||
Microsoft Corp., | 565,000 | 610,115 | ||||
2.70%, 02/12/2025 | 647,000 | 706,612 | ||||
1,316,727 | ||||||
Technology Hardware, Storage & Peripherals–0.88% | ||||||
Apple, Inc., | 728,000 | 788,095 | ||||
4.45%, 05/06/2044 | 476,000 | 639,884 | ||||
Dell International LLC/EMC Corp., | 52,000 | 69,161 | ||||
8.35%, 07/15/2046(b) | 140,000 | 189,087 | ||||
Seagate HDD Cayman, 4.88%, 06/01/2027 | 50,000 | 55,956 | ||||
1,742,183 | ||||||
Tobacco–1.17% | ||||||
Altria Group, Inc., | 557,000 | 610,773 | ||||
3.88%, 09/16/2046 | 225,000 | 233,874 | ||||
BAT Capital Corp. (United Kingdom), | 200,000 | 215,801 | ||||
3.56%, 08/15/2027 | 407,000 | 446,052 | ||||
4.54%, 08/15/2047 | 87,000 | 94,865 | ||||
4.76%, 09/06/2049 | 35,000 | 39,177 | ||||
Reynolds American, Inc. (United Kingdom), 5.85%, 08/15/2045 | 545,000 | 675,179 | ||||
2,315,721 | ||||||
Trading Companies & Distributors–0.27% | ||||||
Air Lease Corp., 3.00%, 02/01/2030 | 560,000 | 532,342 | ||||
Trucking–0.36% | ||||||
Avolon Holdings Funding Ltd. (Ireland), 3.25%, 02/15/2027(b) | 265,000 | 228,310 | ||||
Ryder System, Inc., 3.65%, 03/18/2024 | 438,000 | 478,153 | ||||
706,463 | ||||||
Water Utilities–0.16% | ||||||
American Water Capital Corp., | 174,000 | 190,976 | ||||
6.59%, 10/15/2037 | 84,000 | 128,619 | ||||
319,595 | ||||||
Wireless Telecommunication Services–0.61% | ||||||
America Movil S.A.B. de C.V. (Mexico), | 603,000 | 628,980 | ||||
6.38%, 03/01/2035 | 400,000 | 580,000 | ||||
1,208,980 | ||||||
Total U.S. Dollar Denominated Bonds & Notes (Cost $93,687,228) |
| 96,790,432 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco Intermediate Bond Factor Fund |
Principal Amount | Value | |||||
U.S. Treasury Securities–33.17% | ||||||
U.S. Treasury Bills–0.70% | ||||||
0.15% - 0.40%, 09/03/2020(f)(g) | $ | 1,385,000 | $ 1,384,983 | |||
U.S. Treasury Bonds–0.63% | ||||||
2.38%, 11/15/2049 | 1,037,600 | 1,260,846 | ||||
U.S. Treasury Notes–31.84% | ||||||
1.38%, 01/31/2022 | 4,402,000 | 4,478,691 | ||||
1.13%, 02/28/2022 | 17,700,000 | 17,960,660 | ||||
0.13%, 07/31/2022 | 2,535,000 | 2,534,307 | ||||
1.38%, 02/15/2023 | 563,000 | 580,143 | ||||
1.38%, 01/31/2025 | 8,521,000 | 8,947,050 | ||||
1.13%, 02/28/2025 | 3,577,000 | 3,719,102 | ||||
0.25%, 07/31/2025 | 1,050,000 | 1,049,221 | ||||
1.50%, 08/15/2026 | 4,500,000 | 4,794,258 | ||||
1.50%, 01/31/2027 | 14,225,500 | 15,186,277 | ||||
0.50%, 06/30/2027 | 2,100,000 | 2,103,281 | ||||
1.50%, 02/15/2030 | 700,900 | 754,289 | ||||
0.63%, 05/15/2030 | 1,050,000 | 1,043,027 | ||||
63,150,306 | ||||||
Total U.S. Treasury Securities |
| 65,796,135 | ||||
U.S. Government Sponsored Agency Mortgage-Backed Securities–27.23% | ||||||
Collateralized Mortgage Obligations–0.46% | ||||||
Fannie Mae ACES, 0.38%, 12/25/2022(h) | 19,339,190 | 79,896 | ||||
Fannie Mae REMICs, IO, | 398,311 | 48,664 | ||||
5.50%, 07/25/2046 | 107,484 | 20,098 | ||||
4.00%, 08/25/2047 | 169,844 | 10,463 | ||||
5.00% (5.90% - 1 mo. USD LIBOR), 09/25/2047(e) | 1,297,572 | 174,446 | ||||
Freddie Mac Multifamily Structured Pass Through Ctfs., Series KC03, Class X1, 0.63%, 11/25/2024(h) | 4,163,572 | 74,787 | ||||
Series K734, Class X1, 0.79%, 02/25/2026(h) | 3,066,126 | 93,910 | ||||
Series K735, Class X1, 1.10%, 05/25/2026(h) | 3,236,596 | 157,462 | ||||
Series K093, Class X1, 1.09%, 05/25/2029(h) | 2,554,656 | 183,497 | ||||
Freddie Mac REMICs, IO, 5.94% (6.10% - 1 mo. USD LIBOR), 01/15/2044(e) | 331,698 | 47,485 | ||||
Freddie Mac STRIPS, IO, 3.00%, 12/15/2027 | 139,595 | 9,001 | ||||
899,709 | ||||||
Federal Home Loan Mortgage Corp. (FHLMC)–4.73% | ||||||
4.50%, 09/01/2049 to 01/01/2050 | 982,933 | 1,061,661 | ||||
3.00%, 01/01/2050 to 05/01/2050 | 3,944,564 | 4,284,175 | ||||
2.50%, 07/01/2050 to 08/01/2050 | 3,786,101 | 4,039,875 | ||||
9,385,711 |
Principal Amount | Value | |||||
Federal National Mortgage Association (FNMA)–4.32% | ||||||
TBA, 2.50%, 09/01/2035(i) | $ | 4,532,000 | $ 4,755,236 | |||
4.50%, 06/01/2049 | 427,070 | 460,756 | ||||
3.00%, 10/01/2049 to 03/01/2050 | 2,451,309 | 2,601,008 | ||||
2.50%, 03/01/2050 | 708,716 | 754,218 | ||||
8,571,218 | ||||||
Government National Mortgage Association (GNMA)–4.42% | ||||||
IO, 6.04% (6.20% - 1 mo. USD LIBOR), 10/16/2047(e) | 667,627 | 120,950 | ||||
TBA, 3.00%, 09/01/2050(i) | 8,200,000 | 8,634,984 | ||||
8,755,934 | ||||||
Uniform Mortgage-Backed Securities–13.30% | ||||||
TBA, | 9,750,000 | 10,079,434 | ||||
2.50%, 09/01/2050(i) | 15,489,000 | 16,303,987 | ||||
26,383,421 | ||||||
Total U.S. Government Sponsored Agency Mortgage-Backed Securities |
| 53,995,993 | ||||
Non-U.S. Dollar Denominated Bonds & Notes–7.18%(j) | ||||||
Sovereign Debt–7.18% | ||||||
Australia Government Bond (Australia), Series 142, | AUD | 1,212,000 | 1,078,121 | |||
Australia Government Bond (Australia), Series 155, | AUD | 1,284,000 | 1,080,046 | |||
Bundesrepublik Deutschland Bundesanleihe (Germany), 1.00%, 08/15/2025(b) | EUR | 657,000 | 849,385 | |||
Bundesrepublik Deutschland Bundesanleihe (Germany), 0.01%, 02/15/2030(b) | EUR | 690,000 | 857,800 | |||
Canadian Government Bond (Canada), 0.50%, 09/01/2025 | CAD | 1,381,000 | 1,065,975 | |||
Canadian Government Bond (Canada), 1.25%, 06/01/2030 | CAD | 1,325,000 | 1,076,893 | |||
New Zealand Government Bond (New Zealand), Series 425, 2.75%, 04/15/2025(b) | NZD | 1,424,000 | 1,074,215 | |||
New Zealand Government Bond (New Zealand), 1.50%, 05/15/2031 | NZD | 1,492,000 | 1,095,434 | |||
Norway Government Bond (Norway), Series 477, 1.75%, 03/13/2025(b) | NOK | 7,705,000 | 934,269 | |||
Norway Government Bond (Norway), Series 482, 1.38%, 08/19/2030(b) | NOK | 8,965,000 | 1,084,555 | |||
Sweden Government Bond (Sweden), Series 1058, 2.50%, 05/12/2025 | SEK | 7,200,000 | 941,266 | |||
Sweden Government Bond (Sweden), Series 1061, 0.75%, 11/12/2029(b) | SEK | 7,550,000 | 930,714 | |||
Swiss Confederation Government Bond (Switzerland), 1.25%, 06/11/2024(b) | CHF | 908,000 | 1,081,524 | |||
Swiss Confederation Government Bond (Switzerland), 0.50%, 05/27/2030(b) | CHF | 898,000 | 1,085,013 | |||
Total Non-U.S. Dollar Denominated Bonds & Notes |
| 14,235,210 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco Intermediate Bond Factor Fund |
Principal Amount | Value | |||||
Agency Credit Risk Transfer Notes–1.34% | ||||||
Connecticut Avenue Securities Trust, Series 2018-R07, Class 1M2, 2.58% (1 mo. USD LIBOR + 2.40%), 04/25/2031(b)(e) | $ | 236,861 | $ 237,631 | |||
Fannie Mae Connecticut Avenue Securities Series 2013-C01, Class M2, 5.43% (1 mo. USD LIBOR + 5.25%), 10/25/2023(e) | 395,108 | 375,574 | ||||
Series 2014-C02, Class M2, 4.58% (1 mo. USD LIBOR + 4.40%), 01/25/2024(e) | 586,608 | 538,165 | ||||
Series 2014-C02, Class 1M2, 2.78% (1 mo. USD LIBOR + 2.60%), 05/25/2024(e) | 300,560 | 262,699 | ||||
Series 2014-C03, Class 2M2, 3.08% (1 mo. USD LIBOR + 2.90%), 07/25/2024(e) | 78,119 | 77,715 | ||||
Series 2014-C03, Class 1M2, 3.18% (1 mo. USD LIBOR + 3.00%), 07/25/2024(e) | 644,288 | 569,931 | ||||
Freddie Mac Series 2013-DN2, Class M2, STACR® , 4.43% (1 mo. USD LIBOR + 4.25%), 11/25/2023(e) | 308,676 | 274,968 | ||||
Series 2018-HQA1, Class M2, STACR® , 2.48% (1 mo. USD LIBOR + 2.30%), 09/25/2030(e) | 139,543 | 138,066 | ||||
Series 2019-HRP1, Class M2, STACR® , 1.58% (1 mo. USD LIBOR + 1.40%), 02/25/2049(b)(e) | 189,519 | 181,412 | ||||
Total Agency Credit Risk Transfer Notes (Cost $2,993,891) | 2,656,161 | |||||
Asset-Backed Securities–0.74% | ||||||
Banc of America Mortgage Trust, Series 2007-1, Class 1A24, 6.00%, 03/25/2037 | 23,326 | 23,197 |
Principal Amount | Value | |||||
| ||||||
Bank, Series 2019-BNK16, Class XA, 1.12%, 02/15/2052(h) | $ | 2,380,580 | $ 153,275 | |||
| ||||||
Citigroup Commercial Mortgage Trust, Series 2017-C4, Class XA, 1.25%, 10/12/2050(h) | 6,382,764 | 357,546 | ||||
| ||||||
DT Auto Owner Trust, Series 2017-1A, Class E, 5.79%, 02/15/2024(b) | 750,000 | 762,234 | ||||
| ||||||
Navistar Financial Dealer Note Master Owner Trust II, Series 2019-1, Class C, 1.13% (1 mo. USD LIBOR + 0.95%), 05/25/2024(b)(e) | 70,000 | 69,727 | ||||
| ||||||
Series 2019-1, Class D, 1.63% (1 mo. USD LIBOR + 1.45%), 05/25/2024(b)(e) | 65,000 | 64,655 | ||||
| ||||||
WaMu Mortgage Pass-Through Ctfs. Trust, Series 2005-AR14, Class 1A4, 3.78%, 12/25/2035(h) | 33,218 | 32,629 | ||||
| ||||||
Total Asset-Backed Securities (Cost $1,494,323) | 1,463,263 | |||||
| ||||||
Shares | ||||||
Money Market Funds–0.39% | ||||||
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(k)(l) | 272,402 | 272,402 | ||||
| ||||||
Invesco Liquid Assets Portfolio, Institutional Class, 0.12%(k)(l) | 194,212 | 194,329 | ||||
| ||||||
Invesco Treasury Portfolio, Institutional Class, 0.02%(k)(l) | 311,316 | 311,316 | ||||
| ||||||
Total Money Market Funds (Cost $778,047) |
| 778,047 | ||||
| ||||||
TOTAL INVESTMENTS IN SECURITIES-118.85% (Cost $229,949,180) |
| 235,715,241 | ||||
| ||||||
OTHER ASSETS LESS LIABILITIES—(18.85)% | (37,384,463) | |||||
| ||||||
NET ASSETS–100.00% | $198,330,778 | |||||
|
Investment Abbreviations: | ||
ACES | – Automatically Convertible Extendable Security | |
AUD | – Australian Dollar | |
CAD | – Canadian Dollar | |
CHF | – Swiss Franc | |
Ctfs. | – Certificates | |
EUR | – Euro | |
IO | – Interest Only | |
LIBOR | – London Interbank Offered Rate | |
NOK | – Norwegian Krone | |
NZD | – New Zealand Dollar | |
REIT | – Real Estate Investment Trust | |
REMICs | – Real Estate Mortgage Investment Conduits | |
SEK | – Swedish Krona | |
STACR® | – Structured Agency Credit Risk | |
STRIPS | – Separately Traded Registered Interest and Principal Security | |
TBA | – To Be Announced | |
USD | – U.S. Dollar |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 | Invesco Intermediate Bond Factor Fund |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2020 was $17,084,553, which represented 8.61% of the Fund’s Net Assets. |
(c) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
(d) | Perpetual bond with no specified maturity date. |
(e) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2020. |
(f) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1K. |
(g) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(h) | Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on August 31, 2020. |
(i) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1L. |
(j) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
(k) | Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended August 31, 2020. |
Change in | ||||||||||||||||||||||||||||
Unrealized | Realized | |||||||||||||||||||||||||||
Value | Purchases | Proceeds | Appreciation | Gain | Value | |||||||||||||||||||||||
February 29, 2020 | at Cost | from Sales | (Depreciation) | (Loss) | August 31, 2020 | Dividend Income | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: | ||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ - | $ | 3,633,631 | $ | (3,361,229 | ) | $ | - | $ - | $272,402 | $ 31 | |||||||||||||||||
| ||||||||||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 36,463,571 | 2,595,451 | (2,401,109 | ) | (36,463,571 | ) | (13 | ) | 194,329 | 56 | ||||||||||||||||||
| ||||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | - | 4,152,721 | (3,841,405 | ) | - | - | 311,316 | 34 | ||||||||||||||||||||
| ||||||||||||||||||||||||||||
Total | $36,463,571 | $ | 10,381,803 | $ | (9,603,743 | ) | $ | (36,463,571 | ) | $(13 | ) | $778,047 | $121 | |||||||||||||||
|
(l) | The rate shown is the 7-day SEC standardized yield as of August 31, 2020. |
Open Futures Contracts | ||||||||||||||||||||
Long Futures Contracts | Number of Contracts | Expiration Month | Notional Value | Value | Unrealized Appreciation (Depreciation) | |||||||||||||||
Interest Rate Risk | ||||||||||||||||||||
U.S. Treasury Long Bonds | 17 | December-2020 | $ | 2,987,219 | $ | (10,131 | ) | $(10,131 | ) | |||||||||||
U.S. Treasury Ultra Bonds | 57 | December-2020 | 12,591,656 | (40,685 | ) | (40,685 | ) | |||||||||||||
Subtotal–Long Futures Contracts | (50,816 | ) | (50,816 | ) | ||||||||||||||||
Short Futures Contracts | ||||||||||||||||||||
Interest Rate Risk | ||||||||||||||||||||
U.S. Treasury 2 Year Notes | 10 | December-2020 | (2,209,453 | ) | (567 | ) | (567 | ) | ||||||||||||
U.S. Treasury 5 Year Notes | 124 | December-2020 | (15,627,875 | ) | (21,563 | ) | (21,563 | ) | ||||||||||||
U.S. Treasury 10 Year Notes | 92 | December-2020 | (12,811,000 | ) | (10,976 | ) | (10,976 | ) | ||||||||||||
U.S. Treasury 10 Year Ultra Notes | 7 | December-2020 | (1,116,063 | ) | (124 | ) | (124 | ) | ||||||||||||
Subtotal–Short Futures Contracts | (33,230 | ) | (33,230 | ) | ||||||||||||||||
Total Futures Contracts | $ | (84,046 | ) | $(84,046 | ) |
Open Forward Foreign Currency Contracts
| ||||||||||
Settlement | Contract to | Unrealized Appreciation | ||||||||
Date | Counterparty | Deliver | Receive | (Depreciation) | ||||||
| ||||||||||
Currency Risk | ||||||||||
11/20/2020 | Morgan Stanley & Co. | AUD 2,932,238 | USD 2,129,991 | $ (33,151 | ) | |||||
11/20/2020 | Morgan Stanley & Co. | CAD 2,807,094 | USD 2,141,195 | (11,319 | ) | |||||
11/20/2020 | Morgan Stanley & Co. | CHF 2,126,000 | USD 2,345,365 | (11,923 | ) | |||||
11/20/2020 | Morgan Stanley & Co. | EUR 1,415,443 | USD 1,676,761 | (15,222 | ) | |||||
11/20/2020 | Morgan Stanley & Co. | NOK 17,600,000 | USD 1,977,891 | (37,582 | ) | |||||
11/20/2020 | Morgan Stanley & Co. | NZD 3,170,965 | USD 2,105,996 | (29,680 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 | Invesco Intermediate Bond Factor Fund |
Open Forward Foreign Currency Contracts–(continued) | ||||||||||
| ||||||||||
Settlement | Contract to | Unrealized Appreciation | ||||||||
Date | Counterparty | Deliver | Receive | (Depreciation) | ||||||
| ||||||||||
11/20/2020 | Morgan Stanley & Co. | SEK 16,328,822 | USD 1,873,530 | $ (15,832 | ) | |||||
Total Forward Foreign Currency Contracts | $(154,709 | ) |
Abbreviations:
AUD | – | Australian Dollar | ||
CAD | – | Canadian Dollar | ||
CHF | – | Swiss Franc | ||
EUR | – | Euro | ||
NOK | – | Norwegian Krone | ||
NZD | – | New Zealand Dollar | ||
SEK | – | Swedish Krona | ||
USD | – | U.S. Dollar |
Portfolio Composition
By sector, based on Net Assets
as of August 31, 2020
U.S. Treasury Securities | 33.17% | |||
Collateralized Mortgage Obligations | 27.23 | |||
Financials | 14.40 | |||
Sovereign Debt | 7.18 | |||
Industrials | 6.63 | |||
Consumer Discretionary | 4.59 | |||
Communication Services | 4.27 | |||
Energy | 3.57 | |||
Utilities | 3.49 | |||
Health Care | 3.45 | |||
Consumer Staples | 3.18 | |||
Information Technology | 2.99 | |||
Other Sectors, Each Less than 2% of Net Assets | 4.31 | |||
Money Market Funds Plus Other Assets Less Liabilities | (18.46 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 | Invesco Intermediate Bond Factor Fund |
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 234,937,194 | ||
| ||||
Investments in affiliated money market funds, at value (Cost $778,047) | 778,047 | |||
| ||||
Other investments: | ||||
Variation margin receivable – futures contracts | 140,953 | |||
| ||||
Cash | 834,695 | |||
| ||||
Foreign currencies, at value (Cost $212,106) | 211,851 | |||
| ||||
Receivable for: | ||||
Investments sold | 5,286,585 | |||
| ||||
Fund shares sold | 330,844 | |||
| ||||
Dividends | 48,085 | |||
| ||||
Interest | 1,262,600 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 23,849 | |||
| ||||
Other assets | 83,390 | |||
| ||||
Total assets | 243,938,093 | |||
Liabilities: | ||||
Other investments: | ||||
Unrealized depreciation on forward foreign currency contracts outstanding | 154,709 | |||
| ||||
Payable for: | ||||
Investments purchased | 45,118,549 | |||
| ||||
Dividends | 20,063 | |||
| ||||
Fund shares reacquired | 48,552 | |||
| ||||
Accrued fees to affiliates | 186,968 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 3,527 | |||
| ||||
Accrued other operating expenses | 51,098 | |||
| ||||
Trustee deferred compensation and retirement plans | 23,849 | |||
| ||||
Total liabilities | 45,607,315 | |||
| ||||
Net assets applicable to shares outstanding | $ | 198,330,778 | ||
|
Net assets consist of: | ||||
Shares of beneficial interest | $ | 186,599,333 | ||
| ||||
Distributable earnings | 11,731,445 | |||
| ||||
$ | 198,330,778 | |||
| ||||
Net Assets: | ||||
Class A | $ | 130,194,001 | ||
| ||||
Class C | $ | 22,852,382 | ||
| ||||
Class R | $ | 19,631,911 | ||
| ||||
Class Y | $ | 18,331,766 | ||
| ||||
Class R5 | $ | 10,761 | ||
| ||||
Class R6 | $ | 7,309,957 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 11,338,242 | |||
| ||||
Class C | 1,990,982 | |||
| ||||
Class R | 1,708,793 | |||
| ||||
Class Y | 1,597,223 | |||
| ||||
Class R5 | 937 | |||
| ||||
Class R6 | 636,709 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 11.48 | ||
| ||||
Maximum offering price per share (Net asset value of $11.48 ÷ 95.75%) | $ | 11.99 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 11.48 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 11.49 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 11.48 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 11.48 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 11.48 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 | Invesco Intermediate Bond Factor Fund |
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Interest | $ | 2,051,624 | ||
| ||||
Dividends | 48,123 | |||
| ||||
Dividends from affiliated money market funds | 121 | |||
| ||||
Total investment income | 2,099,868 | |||
| ||||
Expenses: | ||||
Advisory fees | 243,535 | |||
| ||||
Administrative services fees | 13,561 | |||
| ||||
Custodian fees | 17,059 | |||
| ||||
Distribution fees: | ||||
| ||||
Class A | 153,331 | |||
| ||||
Class C | 114,071 | |||
| ||||
Class R | 50,038 | |||
| ||||
Transfer agent fees | 222,920 | |||
| ||||
Transfer agent fees – R5 | 2 | |||
| ||||
Transfer agent fees – R6 | 1,154 | |||
| ||||
Trustees’ and officers’ fees and benefits | 8,608 | |||
| ||||
Registration and filing fees | 71,475 | |||
| ||||
Reports to shareholders | 22,685 | |||
| ||||
Professional services fees | 23,585 | |||
| ||||
Other | (11,985 | ) | ||
| ||||
Total expenses | 930,039 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (346,946 | ) | ||
| ||||
Net expenses | 583,093 | |||
| ||||
Net investment income | 1,516,775 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | 8,198,267 | |||
| ||||
Foreign currencies | 20,213 | |||
| ||||
Forward foreign currency contracts | (1,021,249 | ) | ||
| ||||
Futures contracts | 549,354 | |||
| ||||
7,746,585 | ||||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (3,169,899 | ) | ||
| ||||
Foreign currencies | 4,182 | |||
| ||||
Forward foreign currency contracts | (154,709 | ) | ||
| ||||
Futures contracts | (506,859 | ) | ||
| ||||
(3,827,285 | ) | |||
| ||||
Net realized and unrealized gain | 3,919,300 | |||
| ||||
Net increase in net assets resulting from operations | $ | 5,436,075 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 | Invesco Intermediate Bond Factor Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2020, period ended February 29, 2020, and year ended July 31, 2019
(Unaudited)
Six Months Ended August 31, 2020 | Seven Months Ended February 29, 2020 | Year Ended July 31, 2019 | ||||||||||
| ||||||||||||
Operations: | ||||||||||||
Net investment income | $ | 1,516,775 | $ | 2,987,319 | $ | 5,666,561 | ||||||
| ||||||||||||
Net realized gain (loss) | 7,746,585 | 3,461,649 | (1,743,970 | ) | ||||||||
| ||||||||||||
Change in net unrealized appreciation (depreciation) | (3,827,285 | ) | 3,280,615 | 9,508,868 | ||||||||
| ||||||||||||
Net increase in net assets resulting from operations | 5,436,075 | 9,729,583 | 13,431,459 | |||||||||
| ||||||||||||
Distributions to shareholders from distributable earnings: | ||||||||||||
Class A | (1,204,352 | ) | (2,103,408 | ) | (3,454,780 | ) | ||||||
| ||||||||||||
Class C | (131,799 | ) | (268,610 | ) | (618,547 | ) | ||||||
| ||||||||||||
Class R | (165,664 | ) | (296,036 | ) | (537,255 | ) | ||||||
| ||||||||||||
Class Y | (202,630 | ) | (408,127 | ) | (780,401 | ) | ||||||
| ||||||||||||
Class R5 | (115 | ) | (189 | ) | (57 | ) | ||||||
| ||||||||||||
Class R6 | (73,184 | ) | (114,051 | ) | (240,155 | ) | ||||||
| ||||||||||||
Total distributions from distributable earnings | (1,777,744 | ) | (3,190,421 | ) | (5,631,195 | ) | ||||||
| ||||||||||||
Share transactions–net: | ||||||||||||
Class A | 5,403,174 | (1,109,919 | ) | (4,592,048 | ) | |||||||
| ||||||||||||
Class C | (676,853 | ) | (1,180,162 | ) | (8,897,146 | ) | ||||||
| ||||||||||||
Class R | (1,078,485 | ) | (866,522 | ) | 251,717 | |||||||
| ||||||||||||
Class Y | (1,023,732 | ) | (2,535,892 | ) | (7,267,938 | ) | ||||||
| ||||||||||||
Class R5 | – | – | 10,000 | |||||||||
| ||||||||||||
Class R6 | 1,359,727 | (67,919 | ) | (2,393,472 | ) | |||||||
| ||||||||||||
Net increase (decrease) in net assets resulting from share transactions | 3,983,831 | (5,760,414 | ) | (22,888,887 | ) | |||||||
| ||||||||||||
Net increase (decrease) in net assets | 7,642,162 | 778,748 | (15,088,623 | ) | ||||||||
| ||||||||||||
Net assets: | ||||||||||||
Beginning of period | 190,688,616 | 189,909,868 | 204,998,491 | |||||||||
| ||||||||||||
End of period | $ | 198,330,778 | $ | 190,688,616 | $ | 189,909,868 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 | Invesco Intermediate Bond Factor Fund |
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period | Net investment income(a) | Net gains on securities | Total from investment operations | Dividends from net investment income | Net asset of period | Total return(b) | Net assets, end of period (000’s omitted) | Ratio of fee waivers | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed(c) | Ratio of net investment income to average net assets | Portfolio turnover (d) | |||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $11.27 | $0.09 | $0.23 | $0.32 | $(0.11 | ) | $11.48 | 2.84 | %(e) | $130,194 | 0.52 | %(e)(f) | 0.88 | %(e)(f) | 1.64 | %(e)(f) | 162 | % | ||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.88 | 0.18 | 0.40 | 0.58 | (0.19 | ) | 11.27 | 5.39 | 122,371 | 1.05 | (g) | 1.05 | (g) | 2.80 | (g) | 64 | ||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 10.43 | 0.32 | 0.45 | 0.77 | (0.32 | ) | 10.88 | 7.52 | 119,300 | 0.97 | 0.97 | 3.07 | 108 | |||||||||||||||||||||||||||||||||||
Year ended 07/31/18 | 10.92 | 0.31 | (0.49 | ) | (0.18 | ) | (0.31 | ) | 10.43 | (1.67 | ) | 119,119 | 0.97 | 0.97 | 2.89 | 57 | ||||||||||||||||||||||||||||||||
Year ended 07/31/17 | 11.03 | 0.29 | (0.10 | ) | 0.19 | (0.30 | ) | 10.92 | 1.82 | 129,985 | 1.00 | 1.00 | 2.68 | 80 | ||||||||||||||||||||||||||||||||||
Year ended 07/31/16 | 10.66 | 0.30 | 0.37 | 0.67 | (0.30 | ) | 11.03 | 6.45 | 139,018 | 1.02 | 1.02 | 2.83 | 73 | |||||||||||||||||||||||||||||||||||
Year ended 07/31/15 | 10.90 | 0.33 | (0.24 | ) | 0.09 | (0.33 | ) | 10.66 | 0.84 | 103,315 | 1.01 | 1.01 | 3.07 | 100 | ||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 11.26 | 0.05 | 0.24 | 0.29 | (0.07 | ) | 11.48 | 2.55 | 22,852 | 1.27 | (f) | 1.64 | (f) | 0.89 | (f) | 162 | ||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.87 | 0.12 | 0.40 | 0.52 | (0.13 | ) | 11.26 | 4.80 | 23,114 | 1.81 | (g) | 1.81 | (g) | 1.90 | (g) | 64 | ||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 10.43 | 0.23 | 0.44 | 0.67 | (0.23 | ) | 10.87 | 6.52 | 23,487 | 1.72 | 1.72 | 2.17 | 108 | |||||||||||||||||||||||||||||||||||
Year ended 07/31/18 | 10.91 | 0.23 | (0.48 | ) | (0.25 | ) | (0.23 | ) | 10.43 | (2.32 | ) | 31,250 | 1.72 | 1.72 | 2.14 | 57 | ||||||||||||||||||||||||||||||||
Year ended 07/31/17 | 11.03 | 0.21 | (0.11 | ) | 0.10 | (0.22 | ) | 10.91 | 0.97 | 33,420 | 1.75 | 1.75 | 1.92 | 80 | ||||||||||||||||||||||||||||||||||
Year ended 07/31/16 | 10.65 | 0.22 | 0.38 | 0.60 | (0.22 | ) | 11.03 | 5.76 | 38,261 | 1.77 | 1.77 | 2.07 | 73 | |||||||||||||||||||||||||||||||||||
Year ended 07/31/15 | 10.89 | 0.25 | (0.24 | ) | 0.01 | (0.25 | ) | 10.65 | 0.08 | 27,706 | 1.78 | 1.78 | 2.32 | 100 | ||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 11.27 | 0.08 | 0.23 | 0.31 | (0.09 | ) | 11.49 | 2.80 | 19,632 | 0.77 | (f) | 1.14 | (f) | 1.39 | (f) | 162 | ||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.88 | 0.15 | 0.40 | 0.55 | (0.16 | ) | 11.27 | 5.09 | 20,366 | 1.31 | (g) | 1.31 | (g) | 2.40 | (g) | 64 | ||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 10.44 | 0.28 | 0.44 | 0.72 | (0.28 | ) | 10.88 | 7.06 | 20,511 | 1.22 | 1.22 | 2.67 | 108 | |||||||||||||||||||||||||||||||||||
Year ended 07/31/18 | 10.93 | 0.28 | (0.49 | ) | (0.21 | ) | (0.28 | ) | 10.44 | (1.91 | ) | 19,416 | 1.21 | 1.21 | 2.65 | 57 | ||||||||||||||||||||||||||||||||
Year ended 07/31/17 | 11.04 | 0.26 | (0.09 | ) | 0.17 | (0.28 | ) | 10.93 | 1.58 | 15,318 | 1.25 | 1.25 | 2.45 | 80 | ||||||||||||||||||||||||||||||||||
Year ended 07/31/16 | 10.66 | 0.27 | 0.39 | 0.66 | (0.28 | ) | 11.04 | 6.29 | 11,736 | 1.27 | 1.27 | 2.55 | 73 | |||||||||||||||||||||||||||||||||||
Year ended 07/31/15 | 10.90 | 0.31 | (0.24 | ) | 0.07 | (0.31 | ) | 10.66 | 0.59 | 6,189 | 1.27 | 1.27 | 2.82 | 100 | ||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 11.26 | 0.11 | 0.23 | 0.34 | (0.12 | ) | 11.48 | 3.07 | 18,332 | 0.27 | (f) | 0.64 | (f) | 1.89 | (f) | 162 | ||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.88 | 0.20 | 0.40 | 0.60 | (0.22 | ) | 11.26 | 5.55 | 19,032 | 0.81 | (g) | 0.81 | (g) | 3.09 | (g) | 64 | ||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 10.43 | 0.35 | 0.45 | 0.80 | (0.35 | ) | 10.88 | 7.81 | 20,940 | 0.73 | 0.73 | 3.37 | 108 | |||||||||||||||||||||||||||||||||||
Year ended 07/31/18 | 10.91 | 0.33 | (0.47 | ) | (0.14 | ) | (0.34 | ) | 10.43 | (1.35 | ) | 27,430 | 0.72 | 0.72 | 3.14 | 57 | ||||||||||||||||||||||||||||||||
Year ended 07/31/17 | 11.03 | 0.32 | (0.11 | ) | 0.21 | (0.33 | ) | 10.91 | 1.98 | 17,748 | 0.75 | 0.75 | 2.95 | 80 | ||||||||||||||||||||||||||||||||||
Year ended 07/31/16 | 10.65 | 0.32 | 0.39 | 0.71 | (0.33 | ) | 11.03 | 6.82 | 11,013 | 0.77 | 0.77 | 3.04 | 73 | |||||||||||||||||||||||||||||||||||
Year ended 07/31/15 | 10.89 | 0.36 | (0.24 | ) | 0.12 | (0.36 | ) | 10.65 | 1.09 | 5,413 | 0.77 | 0.77 | 3.35 | 100 | ||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 11.27 | 0.11 | 0.22 | 0.33 | (0.12 | ) | 11.48 | 2.98 | 11 | 0.27 | (f) | 0.43 | (f) | 1.89 | (f) | 162 | ||||||||||||||||||||||||||||||||
Period ended 02/29/20 | 10.87 | 0.20 | 0.40 | 0.60 | (0.20 | ) | 11.27 | 5.59 | 11 | 0.60 | (g) | 0.60 | (g) | 3.09 | (g) | 64 | ||||||||||||||||||||||||||||||||
Period ended 07/31/19 | 10.67 | 0.07 | 0.19 | 0.26 | (0.06 | ) | 10.87 | 2.44 | 10 | 0.62 | (g) | 0.62 | (g) | 3.39 | (g) | 108 | ||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 11.27 | 0.11 | 0.22 | 0.33 | (0.12 | ) | 11.48 | 2.98 | 7,310 | 0.27 | (f) | 0.43 | (f) | 1.89 | (f) | 162 | ||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.88 | 0.20 | 0.40 | 0.60 | (0.21 | ) | 11.27 | 5.60 | 5,795 | 0.58 | (g) | 0.58 | (g) | 3.14 | (g) | 64 | ||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 10.44 | 0.36 | 0.43 | 0.79 | (0.35 | ) | 10.88 | 7.80 | 5,662 | 0.56 | 0.56 | 3.41 | 108 | |||||||||||||||||||||||||||||||||||
Year ended 07/31/18 | 10.92 | 0.35 | (0.48 | ) | (0.13 | ) | (0.35 | ) | 10.44 | (1.18 | ) | 7,783 | 0.56 | 0.56 | 3.30 | 57 | ||||||||||||||||||||||||||||||||
Year ended 07/31/17 | 11.03 | 0.35 | (0.11 | ) | 0.24 | (0.35 | ) | 10.92 | 2.27 | 2,189 | 0.56 | 0.56 | 3.23 | 80 | ||||||||||||||||||||||||||||||||||
Year ended 07/31/16 | 10.65 | 0.35 | 0.38 | 0.73 | (0.35 | ) | 11.03 | 7.03 | 80 | 0.57 | 0.57 | 3.28 | 73 | |||||||||||||||||||||||||||||||||||
Year ended 07/31/15 | 10.89 | 0.38 | (0.24 | ) | 0.14 | (0.38 | ) | 10.65 | 1.29 | 110 | 0.56 | 0.56 | 3.52 | 100 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.02%, 0.02%, 0.02%, 0.02%, 0.01% and 0.01% for the seven months ended February 29, 2020 and the years ended July 31, 2019, 2018, 2017, 2016 and 2015, respectively. |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the seven months ended February 29, 2020, the portfolio turnover calculation excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities of $11,531,839 and 13,476,801, respectively. For the year ended July 31, 2019, the portfolio turnover calculation excludes purchase and sale transactions of TBA mortgage-related securities of $129,169,490 and $127,412,648, respectively. |
(e) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.24% for the six months ended August 31, 2020. |
(f) | Ratios are annualized and based on average daily net assets (000’s omitted) of $125,381, $22,628, $19,852, $18,636, $11 and $6,732 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(g) | Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 | Invesco Intermediate Bond Factor Fund |
August 31, 2020
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Intermediate Bond Factor Fund (the “Fund”), is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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. 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. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares. Effective November 30, 2020, the automatic conversion pursuant to the Conversion Feature will change from ten years to eight years. The first conversion of Class C shares to Class A shares would occur at the end of December 2020 for all Class C shares that were held for more than eight years as of November 30, 2020.
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. |
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.
Variable rate senior loan interests are fair valued using quotes provided by an independent pricing service. Quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
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.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
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, 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.
20 | Invesco Intermediate Bond Factor Fund |
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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and 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 realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions – Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications – Under the Fund’s organizational documents, each Trustee, officer, employee or other agent of the Fund 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. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
I. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
J. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
21 | Invesco Intermediate Bond Factor Fund |
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
K. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
L. | Dollar Rolls and Forward Commitment Transactions – The Fund may enter into dollar roll transactions to enhance the Fund’s performance. The Fund executes its dollar roll transactions in the to be announced (“TBA”) market whereby the Fund makes a forward commitment to purchase a security and, instead of accepting delivery, the position is offset by the sale of the security with a simultaneous agreement to repurchase at a future date. |
The Fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions increase the Fund’s portfolio turnover rate. The Fund will segregate liquid assets in an amount equal to its dollar roll commitments.
Dollar roll transactions involve the risk that a Counterparty to the transaction may fail to complete the transaction. If this occurs, the Fund may lose the opportunity to purchase or sell the security at the agreed upon price. Dollar roll transactions also involve the risk that the value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to purchase under the agreement. Dollar roll transactions covered in this manner are not treated as senior securities for purposes of a Fund’s fundamental investment limitation on borrowings.
M. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
N. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
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 | |||
Up to $2 billion | 0.250 | % | ||
Over $2 billion | 0.230 | % |
* | The advisory fee paid by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with the Adviser. |
For the six months ended August 31, 2020, the effective advisory fee rate incurred by the Fund was 0.25%.
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. (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).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 0.52%, 1.27%, 0.77%, 0.27%, 0.27% and 0.27%, 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 the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waivers without approval of the Board of Trustees.
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 August 31, 2020, the Adviser waived advisory fees of $121,825 and reimbursed class level expenses of $149,868, $27,047, $23,729, $22,276, $2 and $1,154 of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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
22 | Invesco Intermediate Bond Factor Fund |
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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Class A Plan, reimburses IDI for its allocated share of expenses incurred for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Class A shares. The Fund pursuant to the Class C and Class R Plan, pays IDI compensation at the annual rate of 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 Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended August 31, 2020, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended August 31, 2020, IDI advised the Fund that IDI retained $10,749 in front-end sales commissions from the sale of Class A shares and $70 and $180 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
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 August 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 | Total | |||||||||||||||||
Investments in Securities | ||||||||||||||||||||
U.S. Dollar Denominated Bonds & Notes | $ | – | $ | 96,790,432 | $ | – | $ | 96,790,432 | ||||||||||||
U.S. Treasury Securities | – | 65,796,135 | – | 65,796,135 | ||||||||||||||||
U.S. Government Sponsored Agency Mortgage-Backed Securities | – | 53,995,993 | – | 53,995,993 | ||||||||||||||||
Non-U.S. Dollar Denominated Bonds & Notes | – | 14,235,210 | – | 14,235,210 | ||||||||||||||||
Agency Credit Risk Transfer Notes | – | 2,656,161 | – | 2,656,161 | ||||||||||||||||
Asset-Backed Securities | – | 1,463,263 | – | 1,463,263 | ||||||||||||||||
Money Market Funds | 778,047 | – | – | 778,047 | ||||||||||||||||
Total Investments in Securities | 778,047 | 234,937,194 | – | 235,715,241 | ||||||||||||||||
Other Investments - Assets* | ||||||||||||||||||||
Investments Matured | – | 0 | – | 0 | ||||||||||||||||
Other Investments - Liabilities* | ||||||||||||||||||||
Futures Contracts | (84,046 | ) | – | – | (84,046 | ) | ||||||||||||||
Forward Foreign Currency Contracts | – | (154,709 | ) | – | (154,709 | ) | ||||||||||||||
Total Other Investments | (84,046 | ) | (154,709 | ) | – | (238,755 | ) | |||||||||||||
Total Investments | $ | 694,001 | $ | 234,782,485 | $ | – | $ | 235,476,486 |
* | Forward foreign currency contracts and futures contracts are valued at unrealized appreciation (depreciation). Investments matured is shown at value. |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
23 | Invesco Intermediate Bond Factor Fund |
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of August 31, 2020:
Value | ||||||||||||
Currency | Interest | |||||||||||
Derivative Liabilities | Risk | Rate Risk | Total | |||||||||
Unrealized depreciation on futures contracts – Exchange-Traded(a) | $ | - | $ | (84,046 | ) | $ | (84,046 | ) | ||||
Unrealized depreciation on forward foreign currency contracts outstanding | (154,709 | ) | - | (154,709 | ) | |||||||
Total Derivative Liabilities | (154,709 | ) | (84,046 | ) | (238,755 | ) | ||||||
Derivatives not subject to master netting agreements | - | 84,046 | 84,046 | |||||||||
Total Derivative Liabilities subject to master netting agreements | $ | (154,709 | ) | $ | - | $ | (154,709 | ) |
(a) | The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of August 31, 2020.
Financial Derivative Assets | Financial Derivative Liabilities | Collateral (Received)/Pledged | ||||||||||
Counterparty | Forward Foreign Currency Contracts | Forward Foreign Currency Contracts | Net Value of Derivatives | Non-Cash | Cash | Net Amount | ||||||
Morgan Stanley & Co. | $– | $(154,709) | $(154,709) | $– | $– | $(154,709) |
Effect of Derivative Investments for the six months ended August 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on | ||||||||||||
Statement of Operations | ||||||||||||
Currency | Interest | |||||||||||
Risk | Rate Risk | Total | ||||||||||
Realized Gain (Loss): | ||||||||||||
Forward foreign currency contracts | $ | (1,021,249 | ) | $ | - | $ | (1,021,249 | ) | ||||
Futures contracts | - | 549,354 | 549,354 | |||||||||
Change in Net Unrealized Appreciation (Depreciation): | ||||||||||||
Forward foreign currency contracts | (154,709 | ) | - | (154,709 | ) | |||||||
Futures contracts | - | (506,859 | ) | (506,859 | ) | |||||||
Total | $ | (1,175,958 | ) | $ | 42,495 | $ | (1,133,463 | ) |
The table below summarizes the average notional value of derivatives held during the period.
Forward Foreign Currency Contracts | Futures Contracts | |||||||
Average notional value | $13,147,911 | $ | 53,089,357 |
NOTE 5–Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,045.
NOTE 6–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, 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
24 | Invesco Intermediate Bond Factor Fund |
by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 8–Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of February 29, 2020, as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
Not subject to expiration | $ | 1,302,983 | $ | 7,529 | $ | 1,310,512 |
* | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 9–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 August 31, 2020 was $121,871,643 and $121,104,632, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $44,080,472 and $23,211,632, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
Aggregate unrealized appreciation of investments | $ | 6,468,521 | ||
Aggregate unrealized (depreciation) of investments | (1,424,168 | ) | ||
Net unrealized appreciation of investments | $ | 5,044,353 |
Cost of investments for tax purposes is $230,432,133.
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||||||||||
Six months ended | Seven months ended | Year ended | ||||||||||||||||||||||
August 31, 2020(a) | February 29, 2020 | July 31, 2019 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
Sold: | ||||||||||||||||||||||||
Class A | 1,959,140 | $ | 21,966,001 | 1,037,571 | $ | 11,455,611 | 2,475,679 | $ | 25,977,722 | |||||||||||||||
Class C | 300,040 | 3,382,730 | 277,867 | 3,072,852 | 445,362 | 4,635,606 | ||||||||||||||||||
Class R | 283,128 | 3,187,580 | 257,804 | 2,845,463 | 486,574 | 5,075,703 | ||||||||||||||||||
Class Y | 721,428 | 8,079,315 | 683,759 | 7,590,469 | 2,309,644 | 23,802,066 | ||||||||||||||||||
Class R5(b) | - | - | - | - | 937 | 10,000 | ||||||||||||||||||
Class R6 | 293,913 | 3,279,086 | 126,736 | 1,393,303 | 238,957 | 2,496,305 | ||||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||||||||||
Class A | 98,070 | 1,105,825 | 188,737 | 2,087,920 | 327,284 | 3,426,438 | ||||||||||||||||||
Class C | 10,781 | 121,359 | 23,926 | 264,633 | 58,108 | 606,705 | ||||||||||||||||||
Class R | 14,850 | 167,376 | 26,491 | 289,089 | 50,674 | 530,456 | ||||||||||||||||||
Class Y | 15,854 | 178,515 | 36,654 | 405,459 | 74,462 | 777,216 | ||||||||||||||||||
Class R6 | 6,637 | 74,903 | 9,987 | 110,563 | 22,775 | 238,146 | ||||||||||||||||||
Automatic conversion of Class C | ||||||||||||||||||||||||
Class A | 66,376 | 753,046 | 29,570 | 327,243 | - | - | ||||||||||||||||||
Class C | (66,390 | ) | (753,046 | ) | (29,586 | ) | (327,243 | ) | - | - |
25 | Invesco Intermediate Bond Factor Fund |
Summary of Share Activity | ||||||||||||||||||||||||
Six months ended | Seven months ended | Year ended | ||||||||||||||||||||||
August 31, 2020(a) | February 29, 2020 | July 31, 2019 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
Reacquired: | ||||||||||||||||||||||||
Class A | (1,646,379 | ) | $ | (18,421,698 | ) | (1,357,418 | ) | $ | (14,980,693 | ) | (3,256,200 | ) | $ | (33,996,208 | ) | |||||||||
Class C | (306,084 | ) | (3,427,896 | ) | (380,085 | ) | (4,190,404 | ) | (1,339,404 | ) | (14,139,457 | ) | ||||||||||||
Class R | (395,866 | ) | (4,433,441 | ) | (362,485 | ) | (4,001,074 | ) | (512,103 | ) | (5,354,442 | ) | ||||||||||||
Class Y | (830,185 | ) | (9,281,562 | ) | (954,407 | ) | (10,531,820 | ) | (3,090,351 | ) | (31,847,220 | ) | ||||||||||||
Class R6 | (178,195 | ) | (1,994,262 | ) | (142,659 | ) | (1,571,785 | ) | (487,266 | ) | (5,127,923 | ) | ||||||||||||
Net increase (decrease) in share activity | 347,118 | $ | 3,983,831 | (293,544 | ) | $ | (3,224,522 | ) | (1,488,353 | ) | $ | (15,620,949 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 14% 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. |
(b) | Commencement date after the close of business on May 24, 2019. |
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.
26 | Invesco Intermediate Bond Factor Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
ACTUAL | HYPOTHETICAL (5% annual return before | |||||||||||
Beginning Account Value (03/01/20) | Ending Account Value (08/31/20)1 | Expenses Paid During Period2 | Ending Account Value (08/31/20) | Expenses Paid During Period2 | Annualized Expense Ratio | |||||||
Class A | $1,000.00 | $1,029.30 | $2.66 | $1,022.58 | $2.65 | 0.52% | ||||||
Class C | 1,000.00 | 1,025.50 | 6.48 | 1,018.80 | 6.46 | 1.27 | ||||||
Class R | 1,000.00 | 1,028.00 | 3.94 | 1,021.32 | 3.92 | 0.77 | ||||||
Class Y | 1,000.00 | 1,030.70 | 1.38 | 1,023.84 | 1.38 | 0.27 | ||||||
Class R5 | 1,000.00 | 1,030.70 | 1.38 | 1,023.84 | 1.38 | 0.27 | ||||||
Class R6 | 1,000.00 | 1,030.70 | 1.38 | 1,023.84 | 1.38 | 0.27 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
27 | Invesco Intermediate Bond Factor Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Intermediate Bond Factor Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory contracts with Invesco Capital Management LLC, Invesco Asset Management (India) Private Limited and OppenheimerFunds, Inc. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also
discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world.
As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2019 to the performance of funds in the Broadridge performance universe and against the Bloomberg Barclays U.S. Aggregate Bond Index. The Board noted that performance of Class A shares of the Fund was in the fourth quintile of its performance universe for the one, three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was above the performance of the Index for the one and five year periods and reasonably comparable to the performance of the Index for the three year period. The Board considered that the Fund was created in connection with the Transaction and that the Fund’s performance prior to the closing of the Transaction after the close of business on May 24, 2019 is that of its predecessor fund. The Board noted that the Fund’s allocation to structured securities detracted from performance. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board further considered that the Fund had changed its name, investment strategy and portfolio management team on February 28, 2020 in connection with its repositioning as a factor-based fund, and that performance results prior to such date reflected that of the Fund’s former strategy. As a result, the Board did not consider past performance of the Fund to be particularly relevant. The Board considered information provided regarding the more recent performance of the Fund utilizing the new strategy as well as other metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the Fund’s contractual management fee schedule
28 | Invesco Intermediate Bond Factor Fund |
was reduced at certain breakpoint levels effective February 2020 in connection with its repositioning as a factor-based fund and that the Broadridge materials did not reflect this reduced contractual management fee schedule. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. Economies of Scale and Breakpoints
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund may benefit from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain Funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information
from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. Invesco Advisers noted that the Fund does not execute brokerage transactions through “soft dollar” arrangements to any significant degree.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers pursuant to procedures approved by the Board. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the costs to the Fund of such investments. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
29 | Invesco Intermediate Bond Factor Fund |
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Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-PORT filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246, or at invesco.com/ proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-05686 and 033-39519 | Invesco Distributors, Inc. | O-INTI-SAR-1 |
| ||||
Semiannual Report to Shareholders
| August 31, 2020 | |||
| ||||
Invesco Real Estate Fund | ||||
Nasdaq: | ||||
A: IARAX ∎ C: IARCX ∎ R: IARRX ∎ Y: IARYX ∎ Investor: REINX ∎ R5: IARIX ∎ R6: IARFX |
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.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services | ||
Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee. |
On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. | ||
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us. |
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 | Invesco Real Estate Fund |
Performance summary
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Fund vs. Indexes |
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Cumulative total returns, 2/29/20 to 8/31/20, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. |
| |||
Class A Shares | -6.73 | % | ||
Class C Shares | -7.11 | |||
Class R Shares | -6.86 | |||
Class Y Shares | -6.59 | |||
Investor Class Shares | -6.64 | |||
Class R5 Shares | -6.59 | |||
Class R6 Shares | -6.59 | |||
S&P 500 Index▼ (Broad Market Index) | 19.63 | |||
FTSE NAREIT All Equity REITs Index▼ (Style-Specific Index) | -4.27 | |||
Lipper Real Estate Funds Index∎ (Peer Group Index) | -3.59 | |||
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. |
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The S&P 500® Index is an unmanaged index considered representative of the US stock market. The FTSE NAREIT All Equity REITs Index is an unmanaged index considered representative of US REITs. The Lipper Real Estate Funds Index is an unmanaged index considered representative of real estate funds tracked by Lipper. The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.
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For more information about your Fund |
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance. |
Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends. |
3 | Invesco Real Estate Fund |
Average Annual Total Returns |
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As of 8/31/20, including maximum applicable sales charges |
| |||
Class A Shares |
| |||
Inception (12/31/96) | 8.42 | % | ||
10 Years | 7.78 | |||
5 Years | 4.64 | |||
1 Year | -15.72 | |||
Class C Shares |
| |||
Inception (5/1/95) | 9.55 | % | ||
10 Years | 7.57 | |||
5 Years | 5.02 | |||
1 Year | -12.26 | |||
Class R Shares |
| |||
Inception (4/30/04) | 8.23 | % | ||
10 Years | 8.11 | |||
5 Years | 5.55 | |||
1 Year | -11.08 | |||
Class Y Shares |
| |||
Inception (10/3/08) | 7.67 | % | ||
10 Years | 8.66 | |||
5 Years | 6.09 | |||
1 Year | -10.60 | |||
Investor Class Shares |
| |||
Inception (9/30/03) | 8.69 | % | ||
10 Years | 8.40 | |||
5 Years | 5.86 | |||
1 Year | -10.75 | |||
Class R5 Shares |
| |||
Inception (4/30/04) | 8.95 | % | ||
10 Years | 8.80 | |||
5 Years | 6.21 | |||
1 Year | -10.50 | |||
Class R6 Shares |
| |||
10 Years | 8.78 | % | ||
5 Years | 6.29 | |||
1 Year | -10.47 |
Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class A shares at net asset value and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Investor Class, Class R5 and
Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
4 | Invesco Real Estate Fund |
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 pro viding 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. 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 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. |
5 | Invesco Real Estate Fund |
August 31, 2020
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests-99.21% |
| |||||||
Apartments-7.57% | ||||||||
Apartment Investment & Management Co., Class A | 815,441 | $ | 29,380,339 | |||||
AvalonBay Communities, Inc. | 68,174 | 10,775,582 | ||||||
Equity Residential | 762,594 | 43,048,431 | ||||||
UDR, Inc. | 1,692,545 | 58,917,492 | ||||||
142,121,844 | ||||||||
Data Centers-11.86% | ||||||||
CoreSite Realty Corp. | 176,747 | 21,642,670 | ||||||
CyrusOne, Inc. | 554,511 | 46,318,304 | ||||||
Digital Realty Trust, Inc. | 298,867 | 46,518,649 | ||||||
Equinix, Inc. | 116,813 | 92,256,571 | ||||||
QTS Realty Trust, Inc., Class A | 237,460 | 16,104,537 | ||||||
222,840,731 | ||||||||
Diversified-3.40% | ||||||||
American Assets Trust, Inc. | 466,721 | 11,924,722 | ||||||
BGP Holdings PLC(b)(c)(d) | 3,547,941 | 0 | ||||||
VEREIT, Inc. | 7,717,813 | 51,863,703 | ||||||
63,788,425 | ||||||||
Free Standing-3.84% | ||||||||
Essential Properties Realty Trust, Inc. | 1,001,566 | 16,996,575 | ||||||
National Retail Properties, Inc. | 993,448 | 35,207,797 | ||||||
NETSTREIT Corp. | 241,529 | 4,429,642 | ||||||
Realty Income Corp. | 250,234 | 15,522,015 | ||||||
72,156,029 | ||||||||
Health Care-9.53% | ||||||||
CareTrust REIT, Inc. | 535,106 | 10,365,003 | ||||||
Healthcare Realty Trust, Inc. | 706,790 | 20,390,892 | ||||||
Healthcare Trust of America, Inc., Class A | 1,382,270 | 36,478,105 | ||||||
Healthpeak Properties, Inc. | 2,935,799 | 81,145,484 | ||||||
Omega Healthcare Investors, Inc. | 649,260 | 20,107,582 | ||||||
Ventas, Inc. | 257,694 | 10,619,570 | ||||||
179,106,636 | ||||||||
Industrial-12.15% | ||||||||
Americold Realty Trust | 394,141 | 15,115,307 | ||||||
Duke Realty Corp. | 2,290,585 | 88,302,052 | ||||||
Exeter Industrial Value Fund L.P., (Acquired 11/06/2007-04/18/2011; Cost $3,529,048)(b)(c)(d)(e) | 4,185,000 | 248,346 | ||||||
Prologis, Inc. | 630,447 | 64,217,331 | ||||||
Rexford Industrial Realty, Inc. | 693,022 | 33,251,196 |
Shares | Value | |||||||
Industrial-(continued) | ||||||||
STAG Industrial, Inc. | 837,650 | $ | 27,056,095 | |||||
228,190,327 | ||||||||
Infrastructure REITs-19.67% |
| |||||||
American Tower Corp. | 1,016,612 | 253,288,880 | ||||||
Crown Castle International Corp. | 653,033 | 106,607,637 | ||||||
SBA Communications Corp., Class A | 31,191 | 9,546,629 | ||||||
369,443,146 | ||||||||
Lodging Resorts-3.02% | ||||||||
Apple Hospitality REIT, Inc. | 1,941,098 | 19,740,967 | ||||||
Host Hotels & Resorts, Inc. | 2,163,206 | 24,292,803 | ||||||
Sunstone Hotel Investors, Inc. | 1,535,942 | 12,794,397 | ||||||
56,828,167 | ||||||||
Manufactured Homes-2.42% |
| |||||||
Equity LifeStyle Properties, Inc. | 294,331 | 19,511,202 | ||||||
Sun Communities, Inc. | 173,905 | 25,925,757 | ||||||
45,436,959 | ||||||||
Office-6.91% | ||||||||
Alexandria Real Estate Equities, Inc. | 373,429 | 62,877,975 | ||||||
Boston Properties, Inc. | 398,868 | 34,649,663 | ||||||
Brandywine Realty Trust | 1,004,883 | 11,184,348 | ||||||
Kilroy Realty Corp. | 361,663 | 21,164,519 | ||||||
129,876,505 | ||||||||
Regional Malls-0.72% | ||||||||
Simon Property Group, Inc. | 198,382 | 13,460,219 | ||||||
Self Storage-2.98% | ||||||||
CubeSmart | 466,127 | 14,738,936 | ||||||
Extra Space Storage, Inc. | 387,285 | 41,265,217 | ||||||
56,004,153 | ||||||||
Shopping Centers-3.79% |
| |||||||
Brixmor Property Group, Inc. | 854,871 | 10,087,478 | ||||||
Kimco Realty Corp. | 1,849,011 | 22,169,642 | ||||||
Regency Centers Corp. | 697,554 | 27,699,869 | ||||||
Retail Opportunity Investments Corp. | 1,007,358 | 11,211,895 | ||||||
71,168,884 | ||||||||
Single Family Homes-3.46% |
| |||||||
Invitation Homes, Inc. | 2,272,227 | 65,053,859 | ||||||
Specialty-5.02% | ||||||||
Gaming and Leisure Properties, Inc. | 950,274 | 34,542,460 | ||||||
Lamar Advertising Co., Class A | 195,808 | 13,555,788 | ||||||
VICI Properties, Inc. | 2,066,442 | 46,164,314 | ||||||
94,262,562 | ||||||||
Timber REITs-2.87% | ||||||||
Weyerhaeuser Co. | 1,779,256 | 53,929,249 | ||||||
Total Common Stocks & Other Equity Interests |
| 1,863,667,695 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Real Estate Fund |
Shares | Value | |||||||
Money Market Funds-0.60% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(f)(g) | 1,543,720 | $ | 1,543,720 | |||||
Invesco Liquid Assets Portfolio, Institutional Class, 0.12%(f)(g) | 7,892,586 | 7,897,322 | ||||||
Invesco Treasury Portfolio, Institutional Class, 0.02%(f)(g) | 1,764,251 | 1,764,251 | ||||||
Total Money Market Funds |
| 11,205,293 | ||||||
TOTAL INVESTMENTS IN SECURITIES-99.81% (Cost $1,506,237,544) |
| 1,874,872,988 | ||||||
OTHER ASSETS LESS LIABILITIES-0.19% | 3,646,429 | |||||||
NET ASSETS-100.00% | $ | 1,878,519,417 |
Investment Abbreviations:
REIT - Real Estate Investment Trust
Notes to Schedule of Investments:
(a) | Property type classifications used in this report are generally according to FSTE National Association of Real Estate Investment Trusts (“NAREIT”) Equity REITs Index, which is exclusively owned by NAREIT. |
(b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2020 was $248,346, which represented less than 1% of the Fund’s Net Assets. |
(c) | Non-income producing security. |
(d) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(e) | The Fund has a remaining commitment to purchase additional interests, which are subject to the terms of the limited partnership agreements for the following securities: |
Security | Remaining Commitment | Percent Ownership | ||||||
Exeter Industrial Value Fund L.P. | $ | 315,000 | 1.26 | % |
(f) | Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended August 31, 2020. |
Value February 29, 2020 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain | Value August 31, 2020 | Dividend Income | |||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: |
| ||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | 6,694,798 | $ | 118,845,718 | $ | (123,996,796 | ) | $ | — | $ | — | $ | 1,543,720 | $ | 11,246 | ||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 4,402,318 | 63,359,413 | (59,868,548 | ) | 3,701 | 438 | 7,897,322 | 17,089 | |||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 7,651,197 | 83,245,693 | (89,132,639 | ) | — | — | 1,764,251 | 6,419 | |||||||||||||||||||||||||||
Total | $ | 18,748,313 | $ | 265,450,824 | $ | (272,997,983 | ) | $ | 3,701 | $ | 438 | $ | 11,205,293 | $ | 34,754 |
(g) | The rate shown is the 7-day SEC standardized yield as of August 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Real Estate Fund |
Portfolio Composition
By property type, based on total net assets
as of August 31, 2020
Infrastructure REITs | 19.67 | % | ||
Industrial | 12.15 | |||
Data Centers | 11.86 | |||
Health Care | 9.53 | |||
Apartments | 7.57 | |||
Office | 6.91 | |||
Specialty | 5.02 | |||
Free Standing | 3.84 | |||
Shopping Centers | 3.79 | |||
Single Family Homes | 3.46 | |||
Diversified | 3.40 | |||
Lodging Resorts | 3.02 | |||
Self Storage | 2.98 | |||
Timber REITs | 2.87 | |||
Manufactured Homes | 2.42 | |||
Regional Malls | 0.72 | |||
Money Market Funds Plus Other Assets Less Liabilities | 0.79 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Real Estate Fund |
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, at value | $1,863,667,695 | |||
| ||||
Investments in affiliated money market funds, at value | 11,205,293 | |||
| ||||
Foreign currencies, at value and cost | 222 | |||
| ||||
Receivable for: | ||||
Investments sold | 30,387,171 | |||
| ||||
Fund shares sold | 1,286,108 | |||
| ||||
Dividends | 1,048,748 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 395,634 | |||
| ||||
Other assets | 89,214 | |||
| ||||
Total assets | 1,908,080,085 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 25,522,734 | |||
| ||||
Dividends | 30 | |||
| ||||
Fund shares reacquired | 2,665,159 | |||
| ||||
Amount due custodian | 20,414 | |||
| ||||
Accrued fees to affiliates | 652,220 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 23,828 | |||
| ||||
Accrued other operating expenses | 252,471 | |||
| ||||
Trustee deferred compensation and retirement plans | 423,812 | |||
| ||||
Total liabilities | 29,560,668 | |||
| ||||
Net assets applicable to shares outstanding | $1,878,519,417 | |||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $1,637,786,484 | |||
| ||||
Distributable earnings | 240,732,933 | |||
| ||||
$1,878,519,417 | ||||
|
Net Assets: | ||||
Class A | $ 856,358,479 | |||
| ||||
Class C | $ 53,198,476 | |||
| ||||
Class R | $ 111,927,562 | |||
| ||||
Class Y | $ 269,760,687 | |||
| ||||
Investor Class | $ 28,617,924 | |||
| ||||
Class R5 | $ 240,884,171 | |||
| ||||
Class R6 | $ 317,772,118 | |||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 47,558,652 | |||
| ||||
Class C | 2,976,607 | |||
| ||||
Class R | 6,206,663 | |||
| ||||
Class Y | 14,990,113 | |||
| ||||
Investor Class | 1,593,746 | |||
| ||||
Class R5 | 13,389,270 | |||
| ||||
Class R6 | 17,669,225 | |||
| ||||
Class A: | ||||
Net asset value per share | $ 18.01 | |||
| ||||
Maximum offering price per share | $ 19.06 | |||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ 17.87 | |||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ 18.03 | |||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ 18.00 | |||
| ||||
Investor Class: | ||||
Net asset value and offering price per share | $ 17.96 | |||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ 17.99 | |||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ 17.98 | |||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Real Estate Fund |
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Dividends | $ | 16,441,179 | ||
| ||||
Dividends from affiliated money market funds | 34,754 | |||
| ||||
Total investment income | 16,475,933 | |||
| ||||
Expenses: | ||||
Advisory fees | 6,316,174 | |||
| ||||
Administrative services fees | 109,714 | |||
| ||||
Custodian fees | 10,136 | |||
| ||||
Distribution fees: | ||||
Class A | 933,303 | |||
| ||||
Class C | 238,891 | |||
| ||||
Class R | 239,794 | |||
| ||||
Investor Class | 18,769 | |||
| ||||
Transfer agent fees – A, C, R, Y and Investor | 1,124,197 | |||
| ||||
Transfer agent fees – R5 | 116,600 | |||
| ||||
Transfer agent fees – R6 | 34,369 | |||
| ||||
Trustees’ and officers’ fees and benefits | 12,281 | |||
| ||||
Registration and filing fees | 53,279 | |||
| ||||
Reports to shareholders | 71,144 | |||
| ||||
Professional services fees | 27,406 | |||
| ||||
Other | 3,484 | |||
| ||||
Total expenses | 9,309,541 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (11,830 | ) | ||
| ||||
Net expenses | 9,297,711 | |||
| ||||
Net investment income | 7,178,222 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from investment securities | (116,536,843 | ) | ||
| ||||
Change in net unrealized appreciation of: | ||||
Investment securities | 59,617,461 | |||
| ||||
Foreign currencies | 22 | |||
| ||||
59,617,483 | ||||
| ||||
Net realized and unrealized gain (loss) | (56,919,360 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (49,741,138 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Real Estate Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2020 and the year ended February 29, 2020
(Unaudited)
August 31, 2020 | February 29, 2020 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 7,178,222 | $ | 22,287,396 | ||||
| ||||||||
Net realized gain (loss) | (116,536,843 | ) | 154,774,685 | |||||
| ||||||||
Change in net unrealized appreciation (depreciation) | 59,617,483 | (58,588,758 | ) | |||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (49,741,138 | ) | 118,473,323 | |||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (36,541,101 | ) | (56,826,231 | ) | ||||
| ||||||||
Class C | (1,528,301 | ) | (2,461,328 | ) | ||||
| ||||||||
Class R | (3,474,549 | ) | (5,707,071 | ) | ||||
| ||||||||
Class Y | (12,415,544 | ) | (18,979,045 | ) | ||||
| ||||||||
Investor Class | (1,916,985 | ) | (3,406,311 | ) | ||||
| ||||||||
Class R5 | (15,514,776 | ) | (25,153,977 | ) | ||||
| ||||||||
Class R6 | (13,614,943 | ) | (17,676,934 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (85,006,199 | ) | (130,210,897 | ) | ||||
| ||||||||
Share transactions-net: | ||||||||
Class A | 287,430,549 | (30,974,296 | ) | |||||
| ||||||||
Class C | 26,622,667 | (11,223,202 | ) | |||||
| ||||||||
Class R | 54,645,112 | (8,276,671 | ) | |||||
| ||||||||
Class Y | 85,148,438 | 18,547,348 | ||||||
| ||||||||
Investor Class | (3,292,293 | ) | 5,637,507 | |||||
| ||||||||
Class R5 | 6,606,652 | 12,121,611 | ||||||
| ||||||||
Class R6 | 127,128,017 | 46,331,139 | ||||||
| ||||||||
Net increase in net assets resulting from share transactions | 584,289,142 | 32,163,436 | ||||||
| ||||||||
Net increase in net assets | 449,541,805 | 20,425,862 | ||||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 1,428,977,612 | 1,408,551,750 | ||||||
| ||||||||
End of period | $ | 1,878,519,417 | $ | 1,428,977,612 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco Real Estate Fund |
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset beginning | Net investment | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends from net investment income | Distributions from net realized gains | Total distributions | Net asset value, end of period | Total return (b) | Net assets, end of period (000’s omitted) | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | Ratio of net to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $ | 20.72 | $ | 0.06 | $ | (1.58 | ) | $ | (1.52 | ) | $ | (0.14 | ) | $ | (1.05 | ) | $ | (1.19 | ) | $ | 18.01 | (6.73 | )% | $ | 856,358 | 1.20 | %(d) | 1.20 | %(d) | 0.70 | %(d) | 89 | % | |||||||||||||||||||||||
Year ended 02/29/20 | 20.94 | 0.30 | 1.44 | 1.74 | (0.35 | ) | (1.61 | ) | (1.96 | ) | 20.72 | 8.11 | 627,197 | 1.23 | 1.23 | 1.33 | 59 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 19.32 | 0.32 | 2.70 | 3.02 | (0.28 | ) | (1.12 | ) | (1.40 | ) | 20.94 | 15.98 | 661,325 | 1.27 | 1.27 | 1.54 | 47 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 21.64 | 0.30 | (1.35 | ) | (1.05 | ) | (0.25 | ) | (1.02 | ) | (1.27 | ) | 19.32 | (5.38 | ) | 659,464 | 1.27 | 1.27 | 1.38 | 44 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 21.76 | 0.31 | 2.97 | 3.28 | (0.41 | ) | (2.99 | ) | (3.40 | ) | 21.64 | 15.74 | 922,255 | 1.24 | 1.24 | 1.31 | 52 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 27.02 | 0.39 | (1.75 | ) | (1.36 | ) | (0.29 | ) | (3.61 | ) | (3.90 | ) | 21.76 | (5.26 | ) | 1,043,135 | 1.25 | 1.25 | 1.57 | 80 | ||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 20.56 | (0.00 | ) | (1.57 | ) | (1.57 | ) | (0.07 | ) | (1.05 | ) | (1.12 | ) | 17.87 | (7.11 | ) | 53,198 | 1.95 | (d) | 1.95 | (d) | (0.05 | )(d) | 89 | ||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 20.80 | 0.13 | 1.42 | 1.55 | (0.18 | ) | (1.61 | ) | (1.79 | ) | 20.56 | 7.25 | 27,928 | 1.98 | 1.98 | 0.58 | 59 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 19.20 | 0.16 | 2.68 | 2.84 | (0.12 | ) | (1.12 | ) | (1.24 | ) | 20.80 | 15.10 | 38,515 | 2.02 | 2.02 | 0.79 | 47 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 21.50 | 0.14 | (1.34 | ) | (1.20 | ) | (0.08 | ) | (1.02 | ) | (1.10 | ) | 19.20 | (6.04 | ) | 76,811 | 2.02 | 2.02 | 0.63 | 44 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 21.64 | 0.13 | 2.95 | 3.08 | (0.23 | ) | (2.99 | ) | (3.22 | ) | 21.50 | 14.84 | 117,090 | 1.99 | 1.99 | 0.56 | 52 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 26.89 | 0.21 | (1.76 | ) | (1.55 | ) | (0.09 | ) | (3.61 | ) | (3.70 | ) | 21.64 | (5.98 | ) | 126,592 | 2.00 | 2.00 | 0.82 | 80 | ||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 20.74 | 0.04 | (1.58 | ) | (1.54 | ) | (0.12 | ) | (1.05 | ) | (1.17 | ) | 18.03 | (6.86 | ) | 111,928 | 1.45 | (d) | 1.45 | (d) | 0.45 | (d) | 89 | |||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 20.97 | 0.24 | 1.43 | 1.67 | (0.29 | ) | (1.61 | ) | (1.90 | ) | 20.74 | 7.78 | 60,630 | 1.48 | 1.48 | 1.08 | 59 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 19.35 | 0.27 | 2.70 | 2.97 | (0.23 | ) | (1.12 | ) | (1.35 | ) | 20.97 | 15.67 | 68,733 | 1.52 | 1.52 | 1.29 | 47 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 21.66 | 0.24 | (1.34 | ) | (1.10 | ) | (0.19 | ) | (1.02 | ) | (1.21 | ) | 19.35 | (5.56 | ) | 74,367 | 1.52 | 1.52 | 1.13 | 44 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 21.78 | 0.25 | 2.97 | 3.22 | (0.35 | ) | (2.99 | ) | (3.34 | ) | 21.66 | 15.43 | 102,102 | 1.49 | 1.49 | 1.06 | 52 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 27.04 | 0.33 | (1.76 | ) | (1.43 | ) | (0.22 | ) | (3.61 | ) | (3.83 | ) | 21.78 | (5.50 | ) | 103,196 | 1.50 | 1.50 | 1.32 | 80 | ||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 20.71 | 0.08 | (1.57 | ) | (1.49 | ) | (0.17 | ) | (1.05 | ) | (1.22 | ) | 18.00 | (6.59 | ) | 269,761 | 0.95 | (d) | 0.95 | (d) | 0.95 | (d) | 89 | |||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 20.94 | 0.36 | 1.42 | 1.78 | (0.40 | ) | (1.61 | ) | (2.01 | ) | 20.71 | 8.33 | 204,951 | 0.98 | 0.98 | 1.58 | 59 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 19.32 | 0.37 | 2.70 | 3.07 | (0.33 | ) | (1.12 | ) | (1.45 | ) | 20.94 | 16.28 | 188,940 | 1.02 | 1.02 | 1.79 | 47 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 21.63 | 0.35 | (1.34 | ) | (0.99 | ) | (0.30 | ) | (1.02 | ) | (1.32 | ) | 19.32 | (5.09 | ) | 191,203 | 1.02 | 1.02 | 1.63 | 44 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 21.76 | 0.37 | 2.96 | 3.33 | (0.47 | ) | (2.99 | ) | (3.46 | ) | 21.63 | 15.98 | 201,330 | 0.99 | 0.99 | 1.56 | 52 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 27.02 | 0.46 | (1.75 | ) | (1.29 | ) | (0.36 | ) | (3.61 | ) | (3.97 | ) | 21.76 | (5.02 | ) | 171,879 | 1.00 | 1.00 | 1.82 | 80 | ||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 20.65 | 0.07 | (1.56 | ) | (1.49 | ) | (0.15 | ) | (1.05 | ) | (1.20 | ) | 17.96 | (6.64 | )(d)(e) | 28,618 | 1.08 | (d)(e) | 1.08 | (d)(e) | 0.82 | (d)(e) | 89 | |||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 20.89 | 0.30 | 1.42 | 1.72 | (0.35 | ) | (1.61 | ) | (1.96 | ) | 20.65 | 8.06 | (e) | 37,537 | 1.22 | (e) | 1.22 | (e) | 1.34 | (e) | 59 | |||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 19.27 | 0.32 | 2.70 | 3.02 | (0.28 | ) | (1.12 | ) | (1.40 | ) | 20.89 | 16.05 | (e) | 32,447 | 1.23 | (e) | 1.23 | (e) | 1.58 | (e) | 47 | |||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 21.58 | 0.30 | (1.34 | ) | (1.04 | ) | (0.25 | ) | (1.02 | ) | (1.27 | ) | 19.27 | (5.33 | )(e) | 32,868 | 1.23 | (e) | 1.23 | (e) | 1.42 | (e) | 44 | |||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 21.71 | 0.31 | 2.96 | 3.27 | (0.41 | ) | (2.99 | ) | (3.40 | ) | 21.58 | 15.73 | (e) | 41,961 | 1.23 | (e) | 1.23 | (e) | 1.32 | (e) | 52 | |||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 26.97 | 0.39 | (1.75 | ) | (1.36 | ) | (0.29 | ) | (3.61 | ) | (3.90 | ) | 21.71 | (5.27 | ) | 43,435 | 1.25 | 1.25 | 1.57 | 80 | ||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 20.71 | 0.09 | (1.58 | ) | (1.49 | ) | (0.18 | ) | (1.05 | ) | (1.23 | ) | 17.99 | (6.59 | ) | 240,884 | 0.86 | (d) | 0.86 | (d) | 1.04 | (d) | 89 | |||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 20.94 | 0.38 | 1.43 | 1.81 | (0.43 | ) | (1.61 | ) | (2.04 | ) | 20.71 | 8.47 | 268,267 | 0.87 | 0.87 | 1.69 | 59 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 19.32 | 0.40 | 2.69 | 3.09 | (0.35 | ) | (1.12 | ) | (1.47 | ) | 20.94 | 16.41 | 258,447 | 0.88 | 0.88 | 1.93 | 47 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 21.63 | 0.38 | (1.34 | ) | (0.96 | ) | (0.33 | ) | (1.02 | ) | (1.35 | ) | 19.32 | (4.96 | ) | 258,599 | 0.89 | 0.89 | 1.76 | 44 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 21.76 | 0.39 | 2.96 | 3.35 | (0.49 | ) | (2.99 | ) | (3.48 | ) | 21.63 | 16.12 | 345,558 | 0.89 | 0.89 | 1.66 | 52 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 27.02 | 0.49 | (1.75 | ) | (1.26 | ) | (0.39 | ) | (3.61 | ) | (4.00 | ) | 21.76 | (4.89 | ) | 380,119 | 0.87 | 0.87 | 1.95 | 80 | ||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 20.71 | 0.10 | (1.59 | ) | (1.49 | ) | (0.19 | ) | (1.05 | ) | (1.24 | ) | 17.98 | (6.59 | ) | 317,772 | 0.78 | (d) | 0.78 | (d) | 1.12 | (d) | 89 | |||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 20.93 | 0.40 | 1.44 | 1.84 | (0.45 | ) | (1.61 | ) | (2.06 | ) | 20.71 | 8.60 | 202,467 | 0.79 | 0.79 | 1.77 | 59 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 19.31 | 0.41 | 2.70 | 3.11 | (0.37 | ) | (1.12 | ) | (1.49 | ) | 20.93 | 16.52 | 160,145 | 0.80 | 0.80 | 2.01 | 47 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 21.63 | 0.40 | (1.35 | ) | (0.95 | ) | (0.35 | ) | (1.02 | ) | (1.37 | ) | 19.31 | (4.93 | ) | 100,866 | 0.80 | 0.80 | 1.85 | 44 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 21.75 | 0.41 | 2.97 | 3.38 | (0.51 | ) | (2.99 | ) | (3.50 | ) | 21.63 | 16.28 | 111,069 | 0.80 | 0.80 | 1.75 | 52 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 27.02 | 0.51 | (1.76 | ) | (1.25 | ) | (0.41 | ) | (3.61 | ) | (4.02 | ) | 21.75 | (4.85 | ) | 99,691 | 0.78 | 0.78 | 2.04 | 80 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the six months ended August 31, 2020, the portfolio turnover calculation excludes the value of securities purchased of $630,639,314 and sold of $40,029,958 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Oppenheimer Real Estate Fund into the Fund. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $750,934, $47,463, $95,295, $239,579 , $28,885 , $231,710 and $322,018 for Class A, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares, respectively. |
(e) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.13%, 0.24%, 0.21%, 0.21% and 0.24% for the six months ended August 31, 2020 and the years ended February 29, 2020, February 28, 2019, February 28, 2018 and February 28, 2017, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco Real Estate Fund |
August 31, 2020
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Real Estate Fund (the “Fund”), is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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 total return through growth of capital and current income.
The Fund currently consists of seven different classes of shares: Class A, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6. Class Y and Investor Class shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met. Under certain circumstances, load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Investor Class, Class R5 and Class R6 shares are sold at net asset value. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares. Effective November 30, 2020, the automatic conversion pursuant to the Conversion Feature will change from ten years to eight years. The first conversion of Class C shares to Class A shares would occur at the end of December 2020 for all Class C shares that were held for more than eight years as of November 30, 2020.
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, 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 |
13 | Invesco Real Estate Fund |
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 investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and 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.
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available on a timely basis from the REIT, the recharacterization will be based on available information which may include the previous year’s allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital as a reduction of the cost of the related investment. These recharacterizations are reflected in the accompanying financial statements.
C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions – Distributions from net investment income, if any, are declared and paid quarterly and are recorded on the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. |
Therefore, no provision for federal income taxes is recorded in the financial statements.
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications – Under the Fund’s organizational documents, each Trustee, officer, employee or other agent of the Fund 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. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
I. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
J. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement
14 | Invesco Real Estate Fund |
based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
K. | Other Risks – The Fund’s investments are concentrated in a comparatively narrow segment of the economy. Consequently, the Fund may tend to be more volatile than other mutual funds, and the value of the Fund’s investments may tend to rise and fall more rapidly. |
Because the Fund concentrates its assets in the real estate industry, an investment in the Fund will be closely linked to the performance of the real estate markets. Property values may fall due to increasing vacancies or declining rents resulting from economic, legal, cultural or technological developments.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more developed markets. In addition, companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed markets. Securities law in many emerging market countries is relatively new and unsettled. Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder rights may change quickly and unpredictably. In addition, the enforcement of systems of taxation at federal, regional and local levels in emerging market countries may be inconsistent, and subject to sudden change. Other risks of investing in emerging markets securities may include additional transaction costs, delays in settlement procedures, and lack of timely information.
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 $250 million | 0.750 | % | ||
Next $250 million | 0.740 | % | ||
Next $500 million | 0.730 | % | ||
Next $1.5 billion | 0.720 | % | ||
Next $2.5 billion | 0.710 | % | ||
Next $2.5 billion | 0.700 | % | ||
Next $2.5 billion | 0.690 | % | ||
Over $10 billion | 0.680 | % |
For the six months ended August 31, 2020, the effective advisory fee rate incurred by the Fund was 0.73%.
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. (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).
Effective April 17, 2020, the Adviser has contractually agreed, through at least May 31, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares to 1.34%, 2.09%, 1.59%, 1.09%, 1.34%, 0.97% and 0.92%, respectively, of the Fund’s average daily net assets (the “expense limits”). Prior to April 17, 2020, the Adviser has contractually agreed, through at least May 31, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Investor Class, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.25%, 1.75%, 2.00%, 1.75% and 1.75%, respectively, of the Fund’s average daily net asset. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on 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 waivers without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limit.
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 August 31, 2020, the Adviser waived advisory fees of $8,940.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C, Class R and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, reimburses IDI for its allocated share of expenses incurred for the period,
15 | Invesco Real Estate Fund |
up to a maximum annual rate of 0.25% of the average daily net assets of Class A shares and up to a maximum annual rate of 0.25% of the average daily net assets of Investor Class shares. The Fund pursuant to the Class C Plan and Class R Plan, pays IDI compensation at the annual rate of 1.00% of the average daily net assets of Class C shares and at the annual rate of 0.50% of the average daily net assets of Class R shares, respectively. 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 Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended August 31, 2020, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended August 31, 2020, IDI advised the Fund that IDI retained $31,456 in front-end sales commissions from the sale of Class A shares and $750 and $1,027 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
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 August 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 | Total | |||||||||||||||||
Investments in Securities | ||||||||||||||||||||
Common Stocks & Other Equity Interests | $ | 1,863,419,349 | $ | – | $ | 248,346 | $ | 1,863,667,695 | ||||||||||||
Money Market Funds | 11,205,293 | – | – | 11,205,293 | ||||||||||||||||
Total Investments | $ | 1,874,624,642 | $ | – | $ | 248,346 | $ | 1,874,872,988 |
NOTE 4–Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,890.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, 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. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of February 29, 2020.
16 | Invesco Real Estate Fund |
NOTE 8–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 August 31, 2020 was $1,233,232,172 and $1,344,141,050, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
Aggregate unrealized appreciation of investments | $ | 410,682,998 | ||
Aggregate unrealized (depreciation) of investments | (48,812,619 | ) | ||
Net unrealized appreciation of investments | $ | 361,870,379 |
Cost of investments for tax purposes is $1,513,002,609.
NOTE 9–Share Information
Summary of Share Activity | ||||||||||||||||
Six months ended August 31, 2020(a) | Year ended February 29, 2020 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 3,812,265 | $ | 66,243,248 | 4,184,405 | $ | 94,583,732 | ||||||||||
Class C | 138,647 | 2,384,409 | 321,511 | 7,167,575 | ||||||||||||
Class R | 406,670 | 7,054,520 | 586,165 | 13,268,701 | ||||||||||||
Class Y | 2,172,754 | 37,623,702 | 3,147,958 | 70,191,718 | ||||||||||||
Investor Class | 79,057 | 1,366,481 | 422,712 | 9,346,776 | ||||||||||||
Class R5 | 1,914,735 | 33,343,393 | 3,397,673 | 76,641,504 | ||||||||||||
Class R6 | 2,890,247 | 49,985,533 | 4,564,112 | 103,313,563 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 2,115,560 | 34,879,782 | 2,537,733 | 54,142,757 | ||||||||||||
Class C | 86,359 | 1,417,330 | 106,556 | 2,251,419 | ||||||||||||
Class R | 209,819 | 3,473,856 | 267,268 | 5,707,041 | ||||||||||||
Class Y | 524,928 | 8,657,205 | 603,160 | 12,860,778 | ||||||||||||
Investor Class | 112,905 | 1,849,607 | 153,236 | 3,258,842 | ||||||||||||
Class R5 | 943,092 | 15,488,817 | 1,174,200 | 25,070,905 | ||||||||||||
Class R6 | 812,681 | 13,425,535 | 813,623 | 17,365,275 | ||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 279,841 | 4,795,746 | 390,499 | 8,967,960 | ||||||||||||
Class C | (281,737 | ) | (4,795,746 | ) | (392,920 | ) | (8,967,960 | ) | ||||||||
Issued in connection with acquisitions:(b) | ||||||||||||||||
Class A | 17,572,308 | 293,751,283 | - | - | ||||||||||||
Class C | 2,249,756 | 37,367,211 | - | - | ||||||||||||
Class R | 3,800,712 | 63,660,703 | - | - | ||||||||||||
Class Y | 5,359,726 | 89,531,346 | - | - | ||||||||||||
Class R5 | 480 | 8,007 | - | - | ||||||||||||
Class R6 | 13,725,949 | 229,101,643 | - | - |
17 | Invesco Real Estate Fund |
Summary of Share Activity | ||||||||||||||||
Six months ended August 31, 2020(a) | Year ended February 29, 2020 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Reacquired: | ||||||||||||||||
Class A | (6,494,413 | ) | $ | (112,239,510 | ) | (8,417,407 | ) | $ | (188,668,745 | ) | ||||||
Class C | (574,682 | ) | (9,750,537 | ) | (528,815 | ) | (11,674,236 | ) | ||||||||
Class R | (1,133,174 | ) | (19,543,967 | ) | (1,208,801 | ) | (27,252,413 | ) | ||||||||
Class Y | (2,961,582 | ) | (50,663,815 | ) | (2,880,174 | ) | (64,505,148 | ) | ||||||||
Investor Class | (415,592 | ) | (6,508,381 | ) | (311,921 | ) | (6,968,111 | ) | ||||||||
Class R5 | (2,422,487 | ) | (42,233,565 | ) | (3,962,056 | ) | (89,590,798 | ) | ||||||||
Class R6 | (9,537,678 | ) | (165,384,694 | ) | (3,249,980 | ) | (74,347,699 | ) | ||||||||
Net increase (decrease) in share activity | 35,387,146 | $ | 584,289,142 | 1,718,737 | $ | 32,163,436 |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 16% 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. |
(b) | After the close of business on April 17, 2020, the Fund acquired all the net assets of Invesco Oppenheimer Real Estate Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Board of Trustees of the Fund on February 14, 2020. The reorganization was executed in order to reduce overlap and increase efficiencies in the Adviser’s product line. The acquisition was accomplished by a tax-free exchange of 42,708,930 shares of the Fund for 34,206,907 shares outstanding of the Target Fund as of the close of business on April 17, 2020. Shares of the Target Fund were exchanged for the like class of shares of the Fund, based on the relative net asset value of the Target Fund to the net asset value of the Fund on the close of business, April 17, 2020. The Target Fund’s net assets as of the close of business on April 17, 2020 of $713,420,193, including $37,161,369 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $1,201,814,189 and $1,915,234,382 immediately after the acquisition. |
The pro forma results of operations for the six months ended August 31, 2020 assuming the reorganization had been completed on March 1, 2020, the beginning of the annual reporting period are as follows:
Net investment income | $ | 10,576,504 | ||
Net realized/unrealized gains | (192,324,872 | ) | ||
Change in net assets resulting from operations | $ | (181,748,368 | ) |
As the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Target Fund that has been included in the Fund’s Statement of Operations since April 18, 2020.
NOTE 10–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.
18 | Invesco Real Estate Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||
(5% annual return before | ||||||||||||
ACTUAL | expenses) | |||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||
(03/01/20) | (08/31/20)1 | Period2 | (08/31/20) | Period2 | Ratio | |||||||
Class A | $1,000.00 | $932.70 | $5.85 | $1,019.16 | $6.11 | 1.20% | ||||||
Class C | 1,000.00 | 928.90 | 9.48 | 1,015.38 | 9.91 | 1.95 | ||||||
Class R | 1,000.00 | 931.40 | 7.06 | 1,017.90 | 7.38 | 1.45 | ||||||
Class Y | 1,000.00 | 934.10 | 4.63 | 1,020.42 | 4.84 | 0.95 | ||||||
Investor Class | 1,000.00 | 933.60 | 5.26 | 1,019.76 | 5.50 | 1.08 | ||||||
Class R5 | 1,000.00 | 934.10 | 4.19 | 1,020.87 | 4.38 | 0.86 | ||||||
Class R6 | 1,000.00 | 934.10 | 3.80 | 1,021.27 | 3.97 | 0.78 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
19 | Invesco Real Estate Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Real Estate Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate
sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020. Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of Oppenheimer Funds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment
analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement as well as the sub-advisory contracts for the Fund, as Invesco Asset Management Limited currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2019 to the performance of funds in the Broadridge performance universe and against the FTSE NAREIT All Equity REITs Index. The Board noted that performance of Class A shares of the Fund was in the third quintile of its performance universe for the one year period and the second quintile for the three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was reasonably comparable to the performance of the Index for the one year period and below the performance of the Index for the three and five year periods. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components. The Board noted that the Fund’s total expense ratio was in the fourth quintile of its expense group and discussed with management reasons for such relative total expenses.
20 | Invesco Real Estate Fund |
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board also considered the fees charged by Invesco Advisers and the Affiliated Sub-Advisers to other similarly managed client accounts. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations.
The Board also compared the Fund’s effective advisory fee rate (the advisory fee rate after advisory fee waivers and before other expense limitations/ waivers) to the effective advisory fee rates of other similarly managed third-party mutual funds and affiliated funds advised or sub-advised by Invesco Advisers and its affiliates, based on asset balances as of December 31, 2019.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts. The Board noted that Invesco Advisers retains overall responsibility for, and provides services to, sub-advised Invesco Funds, including oversight of the Affiliated Sub-Advisers as well as the additional services described herein other than day-to-day portfolio management.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain Funds
on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from Invesco representing that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers pursuant to procedures approved by the Board. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the costs to the Fund of such investments. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
The Board also considered that an affiliated broker may receive commissions for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers may use the affiliated broker to, among other things, control order routing and minimize information leakage, and the Board was advised that such trades are executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
21 | Invesco Real Estate Fund |
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Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
With eDelivery, you can elect to have any or all of the following materials delivered straight to your inbox to download, save and print from your own computer:
∎ Fund reports and prospectuses
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Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-PORT filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246, or at invesco.com/ proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-05686 and 033-39519 Invesco Distributors, Inc. REA-SAR-1
| ||||
Semiannual Report to Shareholders
| August 31, 2020 | |||
| ||||
Invesco Short Duration Inflation Protected Fund | ||||
Nasdaq: A: LMTAX ⬛ A2: SHTIX ⬛ Y: LMTYX ⬛ R5: ALMIX ⬛ R6: SDPSX |
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 heldwith your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges |
for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. |
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Short Duration Inflation Protected Fund
Performance summary |
| |||
Fund vs. Indexes |
| |||
Cumulative total returns, 2/29/20 to 8/31/20, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. |
| |||
Class A Shares | 3.14% | |||
Class A2 Shares | 3.10 | |||
Class Y Shares | 3.18 | |||
Class R5 Shares | 3.18 | |||
Class R6 Shares | 3.19 | |||
ICE BofAML 1-5 Year US Inflation-Linked Treasury Index▼ (Broad Market/Style- Specific Index) | 3.31 | |||
Lipper Inflation Protected Bond Funds Index∎ (Peer Group Index) | 5.60 | |||
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. | ||||
The ICE BofAML 1-5 Year US Inflation-Linked Treasury Index is composed of US Treasury inflation-protected securities with maturities between one and five years. |
| |||
The Lipper Inflation Protected Bond Funds Index is an unmanaged index considered representative of inflation protected bond funds tracked by Lipper. |
| |||
The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). |
| |||
A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
|
For more information about your Fund
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance. Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends. |
3 Invesco Short Duration Inflation Protected Fund
Average Annual Total Returns |
| |||
As of 8/31/20, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (10/31/02) | 1.51 | % | ||
10 Years | 0.85 | |||
5 Years | 1.66 | |||
1 Year | 2.09 | |||
Class A2 Shares | ||||
Inception (12/15/87) | 3.75 | % | ||
10 Years | 1.06 | |||
5 Years | 2.08 | |||
1 Year | 3.86 | |||
Class Y Shares | ||||
Inception (10/3/08) | 1.33 | % | ||
10 Years | 1.25 | |||
5 Years | 2.43 | |||
1 Year | 5.02 | |||
Class R5 Shares | ||||
Inception (7/13/87) | 4.00 | % | ||
10 Years | 1.26 | |||
5 Years | 2.45 | |||
1 Year | 4.94 | |||
Class R6 Shares | ||||
10 Years | 1.24 | % | ||
5 Years | 2.45 | |||
1 Year | 4.96 |
Class R6 shares incepted on December 31, 2015. Performance shown prior to that date is that of Class A2 shares at net asset value and includes the 12b-1 fees applicable to Class A2 shares.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Class A share performance reflects the maximum 2.50% sales charge. Class A2 share performance reflects the maximum 1.00% sales charge. Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
4 Invesco Short Duration Inflation Protected Fund
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. 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 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. |
5 Invesco Short Duration Inflation Protected Fund
August 31, 2020
(Unaudited)
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||
| ||||||||||||||||
U.S. Treasury Securities–99.91% | ||||||||||||||||
U.S. Treasury Inflation — Indexed Notes–99.91%(a) | ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13% | 01/15/2022 | $ | 36,306 | $ | 37,048,052 | ||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.12% | 04/15/2022 | 36,372 | 37,202,756 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13% | 07/15/2022 | 35,494 | 36,625,310 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13% | 01/15/2023 | 35,340 | 36,639,163 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.62% | 04/15/2023 | 37,656 | 39,657,043 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.37% | 07/15/2023 | 35,055 | 37,040,518 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.62% | 01/15/2024 | 34,966 | 37,439,219 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.50% | 04/15/2024 | 25,381 | 27,165,432 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13% | 07/15/2024 | 34,381 | 36,660,506 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13% | 10/15/2024 | 27,257 | 29,179,475 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 2.37% | 01/15/2025 | 29,574 | 34,692,470 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.25% | 01/15/2025 | 34,458 | 37,089,045 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13% | 04/15/2025 | 27,403 | 29,452,851 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.37% | 07/15/2025 | 34,346 | 37,618,509 | ||||||||||||
| ||||||||||||||||
Total U.S. Treasury Securities (Cost $471,231,911) | 493,510,349 | |||||||||||||||
| ||||||||||||||||
Shares | ||||||||||||||||
Money Market Funds–0.16% | ||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(b)(c) | 273,204 | 273,204 | ||||||||||||||
| ||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 0.12%(b)(c) | 195,029 | 195,146 | ||||||||||||||
| ||||||||||||||||
Invesco Treasury Portfolio, Institutional Class, 0.02%(b)(c) | 312,233 | 312,233 | ||||||||||||||
| ||||||||||||||||
Total Money Market Funds (Cost $780,583) | 780,583 | |||||||||||||||
| ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES–100.07% (Cost $472,012,494) | 494,290,932 | |||||||||||||||
| ||||||||||||||||
OTHER ASSETS LESS LIABILITIES–(0.07)% | (358,445 | ) | ||||||||||||||
| ||||||||||||||||
NET ASSETS–100.00% | $ | 493,932,487 | ||||||||||||||
|
Notes to Schedule of Investments:
(a) | Principal amount of security and interest payments are adjusted for inflation. See Note 1H. |
(b) | Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended August 31, 2020. |
Change in | |||||||||||||||||||||||||||||||||||
Value | Purchases | Proceeds | Unrealized | Realized | Value | ||||||||||||||||||||||||||||||
February 29, 2020 | at Cost | from Sales | Appreciation | Gain | August 31, 2020 | Dividend Income | |||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: | |||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | - | $ | 15,514,976 | $ | (15,241,772 | ) | $ | - | $ | - | $ | 273,204 | $ | 73 | ||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | - | 11,276,072 | (11,081,052 | ) | - | 126 | 195,146 | 300 | |||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | - | 17,731,401 | (17,419,168 | ) | - | - | 312,233 | 59 | |||||||||||||||||||||||||||
Total | $ | - | $ | 44,522,449 | $ | (43,741,992 | ) | $ | - | $ | 126 | $ | 780,583 | $ | 432 |
(c) | The rate shown is the 7-day SEC standardized yield as of August 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Short Duration Inflation Protected Fund
Portfolio Composition
By U.S. Treasury Securities
as of August 31, 2020
Coupon | % of Total | |||||||||
Maturity Date | Rate | Net Assets | ||||||||
1/15/2022 | 0.13 | % | 7.50 | % | ||||||
4/15/2022 | 0.12 | 7.53 | ||||||||
7/15/2022 | 0.13 | 7.41 | ||||||||
1/15/2023 | 0.13 | 7.42 | ||||||||
4/15/2023 | 0.62 | 8.03 | ||||||||
7/15/2023 | 0.37 | 7.50 | ||||||||
1/15/2024 | 0.62 | 7.58 | ||||||||
4/15/2024 | 0.50 | 5.50 | ||||||||
7/15/2024 | 0.13 | 7.42 | ||||||||
10/15/2024 | 0.13 | 5.91 | ||||||||
1/15/2025 | 2.37 | 7.02 | ||||||||
1/15/2025 | 0.25 | 7.51 | ||||||||
4/15/2025 | 0.13 | 5.96 | ||||||||
7/15/2025 | 0.37 | 7.62 | ||||||||
Other Assets Less Liabilities | 0.09 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Short Duration Inflation Protected Fund
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 493,510,349 | ||
| ||||
Investments in affiliated money market funds, at value | 780,583 | |||
| ||||
Receivable for: |
| |||
Fund shares sold | 92,854 | |||
| ||||
Dividends | 22 | |||
| ||||
Interest | 369,171 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 113,383 | |||
| ||||
Other assets | 45,376 | |||
| ||||
Total assets | 494,911,738 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 645,809 | |||
| ||||
Accrued fees to affiliates | 41,386 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 3,785 | |||
| ||||
Accrued other operating expenses | 166,587 | |||
| ||||
Trustee deferred compensation and retirement plans | 121,684 | |||
| ||||
Total liabilities | 979,251 | |||
| ||||
Net assets applicable to shares outstanding | $ | 493,932,487 | ||
| ||||
Net assets consist of: |
| |||
Shares of beneficial interest | $ | 496,830,865 | ||
| ||||
Distributable earnings (loss) | (2,898,378 | ) | ||
| ||||
$ | 493,932,487 | |||
|
Net Assets: | ||||
Class A | $ | 52,070,413 | ||
| ||||
Class A2 | $ | 16,146,754 | ||
| ||||
Class Y | $ | 38,445,163 | ||
| ||||
Class R5 | $ | 4,340,456 | ||
| ||||
Class R6 | $ | 382,929,701 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 4,872,596 | |||
| ||||
Class A2 | 1,509,322 | |||
| ||||
Class Y | 3,592,566 | |||
| ||||
Class R5 | 405,781 | |||
| ||||
Class R6 | 35,791,995 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 10.69 | ||
| ||||
Maximum offering price per share | $ | 10.96 | ||
| ||||
Class A2: | ||||
Net asset value per share | $ | 10.70 | ||
| ||||
Maximum offering price per share | $ | 10.81 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 10.70 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 10.70 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 10.70 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Short Duration Inflation Protected Fund
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Treasury Inflation-Protected Securities inflation adjustments | $ | 1,379,659 | ||
| ||||
Interest | 746,332 | |||
| ||||
Dividends from affiliated money market funds | 432 | |||
| ||||
Total investment income | 2,126,423 | |||
| ||||
Expenses: | ||||
Advisory fees | 511,064 | |||
| ||||
Administrative services fees | 37,894 | |||
| ||||
Custodian fees | 7,186 | |||
| ||||
Distribution fees: | ||||
| ||||
Class A | 59,636 | |||
| ||||
Class A2 | 12,269 | |||
| ||||
Transfer agent fees - A, A2, and Y | 61,024 | |||
| ||||
Transfer agent fees - R5 | 915 | |||
| ||||
Transfer agent fees - R6 | 2,302 | |||
| ||||
Trustees’ and officers’ fees and benefits | 10,187 | |||
| ||||
Registration and filing fees | 35,877 | |||
| ||||
Licensing fees | 40,697 | |||
| ||||
Reports to shareholders | 13,046 | |||
| ||||
Professional services fees | 20,368 | |||
| ||||
Other | 4,325 | |||
| ||||
Total expenses | 816,790 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (47,838 | ) | ||
| ||||
Net expenses | 768,952 | |||
| ||||
Net investment income | 1,357,471 | |||
| ||||
Realized and unrealized gain from: | ||||
Net realized gain from investment securities | 1,118,984 | |||
| ||||
Change in net unrealized appreciation of investment securities | 12,497,105 | |||
| ||||
Net realized and unrealized gain | 13,616,089 | |||
| ||||
Net increase in net assets resulting from operations | $ | 14,973,560 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Short Duration Inflation Protected Fund
Statement of Changes in Net Assets
For the six months ended August 31, 2020 and the year ended February 29, 2020
(Unaudited)
August 31, | February 29, | |||||||
2020 | 2020 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 1,357,471 | $ | 13,714,708 | ||||
| ||||||||
Net realized gain (loss) | 1,118,984 | (4,699,221 | ) | |||||
| ||||||||
Change in net unrealized appreciation | 12,497,105 | 18,466,453 | ||||||
| ||||||||
Net increase in net assets resulting from operations | 14,973,560 | 27,481,940 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (287,894 | ) | (716,900 | ) | ||||
| ||||||||
Class A2 | (109,765 | ) | (284,986 | ) | ||||
| ||||||||
Class Y | (117,752 | ) | (217,029 | ) | ||||
| ||||||||
Class R5 | (19,477 | ) | (50,696 | ) | ||||
| ||||||||
Class R6 | (3,419,335 | ) | (9,505,471 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (3,954,223 | ) | (10,775,082 | ) | ||||
| ||||||||
Return of capital: | ||||||||
Class A | – | (127,457 | ) | |||||
| ||||||||
Class A2 | – | (50,667 | ) | |||||
| ||||||||
Class Y | – | (38,586 | ) | |||||
| ||||||||
Class R5 | – | (9,013 | ) | |||||
| ||||||||
Class R6 | – | (1,689,975 | ) | |||||
| ||||||||
Total return of capital | – | (1,915,698 | ) | |||||
| ||||||||
Total distributions | (3,954,223 | ) | (12,690,780 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | 5,546,566 | (2,181,523 | ) | |||||
| ||||||||
Class A2 | (877,738 | ) | (1,059,533 | ) | ||||
| ||||||||
Class Y | 20,097,335 | 7,695,748 | ||||||
| ||||||||
Class R5 | 1,897,874 | (709,349 | ) | |||||
| ||||||||
Class R6 | (93,081,279 | ) | (170,261,367 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (66,417,242 | ) | (166,516,024 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (55,397,905 | ) | (151,724,864 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 549,330,392 | 701,055,256 | ||||||
| ||||||||
End of period | $ | 493,932,487 | $ | 549,330,392 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Short Duration Inflation Protected Fund
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period | Net investment income (loss)(a) | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends from net investment income | Return of capital | Total distributions | Net asset value, end of period | Total return (b) | Net assets, end of period (000’s omitted) | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | Ratio of net investment income (loss) to average net assets | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $ | 10.43 | $ | 0.01 | $ | 0.31 | $ | 0.32 | $ | (0.06 | ) | $ | – | $ | (0.06 | ) | $ | 10.69 | 3.14 | % | $ | 52,070 | 0.55 | %(d) | 0.67 | %(d) | 0.28 | %(d) | 26 | % | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 10.16 | 0.22 | 0.24 | 0.46 | (0.16 | ) | (0.03 | ) | (0.19 | ) | 10.43 | 4.61 | 45,383 | 0.55 | 0.66 | 2.17 | 45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 10.29 | 0.20 | (0.08 | ) | 0.12 | (0.25 | ) | – | (0.25 | ) | 10.16 | 1.23 | 46,384 | 0.55 | 0.67 | 1.97 | 37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 10.58 | 0.20 | (0.29 | ) | (0.09 | ) | (0.20 | ) | – | (0.20 | ) | 10.29 | (0.86 | ) | 45,609 | 0.55 | 0.65 | 2.02 | 48 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 10.50 | 0.13 | 0.08 | 0.21 | (0.12 | ) | (0.01 | ) | (0.13 | ) | 10.58 | 2.04 | 39,978 | 0.55 | 0.70 | 1.18 | 41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 10.42 | (0.05 | ) | 0.14 | 0.09 | (0.01 | ) | – | (0.01 | ) | 10.50 | 0.83 | 34,373 | 0.52 | 0.90 | (0.52 | ) | 199 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 10.45 | 0.02 | 0.30 | 0.32 | (0.07 | ) | – | (0.07 | ) | 10.70 | 3.10 | 16,147 | 0.45 | (d) | 0.57 | (d) | 0.38 | (d) | 26 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 10.17 | 0.23 | 0.25 | 0.48 | (0.17 | ) | (0.03 | ) | (0.20 | ) | 10.45 | 4.81 | 16,641 | 0.45 | 0.56 | 2.27 | 45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 10.30 | 0.21 | (0.08 | ) | 0.13 | (0.26 | ) | – | (0.26 | ) | 10.17 | 1.33 | 17,255 | 0.45 | 0.57 | 2.07 | 37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 10.59 | 0.22 | (0.30 | ) | (0.08 | ) | (0.21 | ) | – | (0.21 | ) | 10.30 | (0.76 | ) | 19,826 | 0.45 | 0.55 | 2.12 | 48 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 10.51 | 0.13 | 0.09 | 0.22 | (0.13 | ) | (0.01 | ) | (0.14 | ) | 10.59 | 2.14 | 22,234 | 0.45 | 0.60 | 1.28 | 41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 10.42 | (0.05 | ) | 0.15 | 0.10 | (0.01 | ) | – | (0.01 | ) | 10.51 | 0.92 | 24,851 | 0.50 | 0.80 | (0.50 | ) | 199 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 10.45 | 0.03 | 0.30 | 0.33 | (0.08 | ) | – | (0.08 | ) | 10.70 | 3.18 | 38,445 | 0.30 | (d) | 0.42 | (d) | 0.54 | (d) | 26 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 10.18 | 0.25 | 0.24 | 0.49 | (0.19 | ) | (0.03 | ) | (0.22 | ) | 10.45 | 4.86 | 17,906 | 0.30 | 0.41 | 2.42 | 45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 10.31 | 0.23 | (0.08 | ) | 0.15 | (0.28 | ) | – | (0.28 | ) | 10.18 | 1.48 | 9,843 | 0.30 | 0.42 | 2.22 | 37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 10.59 | 0.24 | (0.29 | ) | (0.05 | ) | (0.23 | ) | – | (0.23 | ) | 10.31 | (0.51 | ) | 12,778 | 0.30 | 0.40 | 2.27 | 48 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 10.51 | 0.15 | 0.09 | 0.24 | (0.14 | ) | (0.02 | ) | (0.16 | ) | 10.59 | 2.30 | 9,656 | 0.30 | 0.45 | 1.43 | 41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 10.42 | (0.05 | ) | 0.15 | 0.10 | (0.01 | ) | – | (0.01 | ) | 10.51 | 0.92 | 10,471 | 0.48 | 0.65 | (0.48 | ) | 199 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 10.44 | 0.03 | 0.31 | 0.34 | (0.08 | ) | – | (0.08 | ) | 10.70 | 3.28 | 4,340 | 0.30 | (d) | 0.33 | (d) | 0.54 | (d) | 26 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 10.18 | 0.25 | 0.23 | 0.48 | (0.19 | ) | (0.03 | ) | (0.22 | ) | 10.44 | 4.81 | 2,340 | 0.29 | 0.29 | 2.43 | 45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 10.31 | 0.23 | (0.08 | ) | 0.15 | (0.28 | ) | – | (0.28 | ) | 10.18 | 1.50 | 2,976 | 0.28 | 0.28 | 2.24 | 37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 10.59 | 0.24 | (0.29 | ) | (0.05 | ) | (0.23 | ) | – | (0.23 | ) | 10.31 | (0.50 | ) | 723 | 0.29 | 0.29 | 2.28 | 48 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 10.52 | 0.15 | 0.08 | 0.23 | (0.14 | ) | (0.02 | ) | (0.16 | ) | 10.59 | 2.21 | 783 | 0.30 | 0.32 | 1.43 | 41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 10.43 | (0.05 | ) | 0.15 | 0.10 | (0.01 | ) | – | (0.01 | ) | 10.52 | 0.95 | 608 | 0.48 | 0.59 | (0.48 | ) | 199 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 10.45 | 0.03 | 0.30 | 0.33 | (0.08 | ) | – | (0.08 | ) | 10.70 | 3.19 | 382,930 | 0.27 | (d) | 0.27 | (d) | 0.57 | (d) | 26 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 10.18 | 0.25 | 0.24 | 0.49 | (0.19 | ) | (0.03 | ) | (0.22 | ) | 10.45 | 4.92 | 467,061 | 0.26 | 0.26 | 2.46 | 45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 10.31 | 0.23 | (0.08 | ) | 0.15 | (0.28 | ) | – | (0.28 | ) | 10.18 | 1.52 | 624,598 | 0.27 | 0.27 | 2.25 | 37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 10.59 | 0.24 | (0.29 | ) | (0.05 | ) | (0.23 | ) | – | (0.23 | ) | 10.31 | (0.48 | ) | 709,402 | 0.26 | 0.26 | 2.31 | 48 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 10.51 | 0.15 | 0.09 | 0.24 | (0.14 | ) | (0.02 | ) | (0.16 | ) | 10.59 | 2.32 | 718,865 | 0.29 | 0.29 | 1.44 | 41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Period ended 02/29/16(e) | 10.40 | (0.01 | ) | 0.12 | 0.11 | – | – | – | 10.51 | 1.06 | 36,414 | 0.30 | (f) | 0.46 | (f) | (0.30 | )(f) | 199 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $47,335, $16,231, $17,510 , $3,043 and $423,763 for Class A, Class A2, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | Commencement date of December 31, 2015. |
(f) | Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Short Duration Inflation Protected Fund
August 31, 2020
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Short Duration Inflation Protected Fund (the “Fund”), is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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 provide protection from the negative effects of unanticipated inflation.
The Fund currently consists of five different classes of shares: Class A, Class A2, Class Y, Class R5 and Class R6. Class A and Class A2 shares are sold with a front-end sales charge unless certain waiver criteria are met. Under certain circumstances, load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class Y, Class R5 and Class R6 shares are sold at net asset value.
As of the close of business on October 30, 2002, Class A2 shares are closed to new investors.
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. |
Securities are fair valued using an evaluated quote provided by an independent pricing service approved by the Board of Trustees. 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, yield, quality, coupon rate, maturity, type of issue, 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 securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and principal payments.
Securities for which market quotations either 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. Some of the factors which may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on transferability or disposition; trading in similar securities by the same issuer or comparable companies; relevant political, economic or issuer specific news; and other relevant factors under the circumstances.
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, 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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements.Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and 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 realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Distributions – Distributions from net investment income, if any, are declared and paid quarterly and are recorded on the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
D. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
E. | 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. |
F. | 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 |
12 Invesco Short Duration Inflation Protected Fund
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. |
G. | 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. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
H. | Treasury Inflation-Protected Securities – The Fund may invest in Treasury Inflation-Protected Securities (“TIPS”). TIPS are fixed income securities whose principal value is periodically adjusted to the rate of inflation. The principal value of TIPS will be adjusted upward or downward, and any increase or decrease in the principal amount of TIPS will be shown as Treasury Inflation-Protected Securities inflation adjustments in the Statement of Operations, even though investors do not receive their principal until maturity. |
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 $ 500 million | 0.200% | |||
| ||||
Over $500 million | 0.175% | |||
|
For the six months ended August 31, 2020, the effective advisory fee rate incurred by the Fund was 0.20%.
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. (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).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class A2, Class Y, Class R5 and Class R6 shares to 0.55%, 0.45%, 0.30%, 0.30% and 0.30%, respectively, of 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 the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 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.
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 August 31, 2020, the Adviser waived advisory fees of $228 and reimbursed class level expenses of $27,449, $9,416, $10,156, $390 and $0 of Class A, Class A2, Class Y, Class R5 and Class R6 shares, respectively.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class A2, 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 and Class A2 shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the average daily net assets of Class A shares and 0.15% of the Fund’s average daily net assets of Class A2 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 Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) also 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 August 31, 2020, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A and Class A2 shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended August 31, 2020, IDI advised the Fund that IDI retained $0 and $134 in front-end sales commissions from the sale of Class A and Class A2 shares, respectively, and $1,878 and $0 from Class A and Class A2 shares, respectively, for CDSC was imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the 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. |
13 Invesco Short Duration Inflation Protected Fund
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 August 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 | Total | |||||||||||||
| ||||||||||||||||
Investments in Securities | ||||||||||||||||
| ||||||||||||||||
U.S. Treasury Securities | $ | - | $ | 493,510,349 | $- | $ | 493,510,349 | |||||||||
| ||||||||||||||||
Money Market Funds | 780,583 | - | - | 780,583 | ||||||||||||
| ||||||||||||||||
Total Investments | $ | 780,583 | $ | 493,510,349 | $- | $ | 494,290,932 | |||||||||
|
NOTE 4–Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $199.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund may borrow for leveraging in an amount up to 5% of the Fund’s total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, 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. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of February 29, 2020, as follows:
Capital Loss Carryforward* | ||||||||||||
| ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
| ||||||||||||
Not subject to expiration | $ | 1,826,279 | $ | 19,831,376 | $ | 21,657,655 | ||||||
|
* | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 8–Investment Transactions
The aggregate amount of long-term U.S. government obligations (other than short-term securities and money market funds, if any) purchased and sold by the Fund during the six months ended August 31, 2020 was $132,691,099 and $203,122,049, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $ | 20,896,993 | ||
| ||||
Aggregate unrealized (depreciation) of investments | – | |||
| ||||
Net unrealized appreciation of investments | $ | 20,896,993 | ||
|
Cost of investments for tax purposes is $473,393,939.
14 Invesco Short Duration Inflation Protected Fund
NOTE 9–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2020(a) | February 29, 2020 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 1,698,412 | $ | 17,687,333 | 1,706,717 | $ | 17,580,951 | ||||||||||
| ||||||||||||||||
Class A2 | 15,012 | 157,237 | 15,427 | 158,707 | ||||||||||||
| ||||||||||||||||
Class Y | 2,538,371 | 26,907,834 | 1,750,771 | 18,092,154 | ||||||||||||
| ||||||||||||||||
Class R5 | 231,738 | 2,420,336 | 49,765 | 510,746 | ||||||||||||
| ||||||||||||||||
Class R6 | 2,560,063 | 26,746,955 | 2,149,948 | 22,180,815 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 23,621 | 239,394 | 72,327 | 742,797 | ||||||||||||
| ||||||||||||||||
Class A2 | 9,410 | 95,383 | 28,207 | 289,967 | ||||||||||||
| ||||||||||||||||
Class Y | 9,798 | 99,418 | 21,461 | 220,733 | ||||||||||||
| ||||||||||||||||
Class R5 | 976 | 10,076 | 1,106 | 11,382 | ||||||||||||
| ||||||||||||||||
Class R6 | 337,267 | 3,418,707 | 1,089,631 | 11,193,032 | ||||||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (1,198,750 | ) | (12,380,161 | ) | (1,993,431 | ) | (20,505,271 | ) | ||||||||
| ||||||||||||||||
Class A2 | (108,237 | ) | (1,130,358 | ) | (146,446 | ) | (1,508,207 | ) | ||||||||
| ||||||||||||||||
Class Y | (669,257 | ) | (6,909,917 | ) | (1,025,733 | ) | (10,617,139 | ) | ||||||||
| ||||||||||||||||
Class R5 | (51,046 | ) | (532,538 | ) | (119,124 | ) | (1,231,477 | ) | ||||||||
| ||||||||||||||||
Class R6 | (11,816,591 | ) | (123,246,941 | ) | (19,895,701 | ) | (203,635,214 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (6,419,213 | ) | $ | (66,417,242 | ) | (16,295,075 | ) | $ | (166,516,024 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 76% 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 10–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.
15 Invesco Short Duration Inflation Protected Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||
(5% annual return before | ||||||||||||
ACTUAL | expenses) | |||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||
(03/01/20) | (08/31/20)1 | Period2 | (08/31/20) | Period2 | Ratio | |||||||
Class A | $1,000.00 | $1,031.40 | $2.82 | $1,022.43 | $2.80 | 0.55% | ||||||
Class A2 | 1,000.00 | 1,031.00 | 2.30 | 1,022.94 | 2.29 | 0.45 | ||||||
Class Y | 1,000.00 | 1,031.80 | 1.54 | 1,023.69 | 1.53 | 0.30 | ||||||
Class R5 | 1,000.00 | 1,032.80 | 1.54 | 1,023.69 | 1.53 | 0.30 | ||||||
Class R6 | 1,000.00 | 1,031.90 | 1.38 | 1,023.84 | 1.38 | 0.27 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
16 Invesco Short Duration Inflation Protected Fund
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Short Duration Inflation Protected Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate
sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment
analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board noted that the Fund had changed its name and investment strategy and tracks a new broad based securities market benchmark index as of December 31, 2015. The Broadridge materials prior to the 2016 calendar year were with respect to the Fund’s prior investment strategy. The Board compared the Fund’s investment performance during the past three years ended December 31, 2019 to the performance of funds in the Broadridge performance universe and against the Ice BofAML 1-5 Year US Inflation-Linked Treasury Index. The Board noted that performance of Class A2 shares of the Fund was in the fifth quintile of its performance universe for the one and three year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A2 shares of the Fund was below the performance of the Index for the one and three year periods. The Board acknowledged limitations regarding the Broadridge data, in particular that differences may exist between a Fund’s investment objective, principal investment strategies and/or investment restrictions and those of its performance peer funds and specifically that the Fund’s peer group includes funds that are actively managed or may track a different index than the Fund. The Board noted that because the Fund is passively managed, it may lag its actively managed peers. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A2 shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is
17 Invesco Short Duration Inflation Protected Fund
included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain Funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees
received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. Invesco Advisers noted that the Fund does not execute brokerage transactions through “soft dollar” arrangements to any significant degree.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers pursuant to procedures approved by the Board. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the costs to the Fund of such investments. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
18 Invesco Short Duration Inflation Protected Fund
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∎ | Fund reports and prospectuses |
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Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-PORT filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246, or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-05686 and 003-39519 | Invesco Distributors, Inc. | SDIP-SAR-1 |
| ||||
Semiannual Report to Shareholders
|
August 31, 2020 | |||
| ||||
Invesco Short Term Bond Fund | ||||
Nasdaq: | ||||
A: STBAX ∎ C: STBCX ∎ R: STBRX ∎ Y: STBYX ∎ R5: ISTBX ∎ R6: ISTFX |
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.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco |
provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
| Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. |
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 | Invesco Short Term Bond Fund |
Performance summary
|
| |||
Fund vs. Indexes |
| |||
Cumulative total returns, 2/29/20 to 8/31/20, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. |
| |||
Class A Shares | 1.10 | % | ||
Class C Shares | 0.89 | |||
Class R Shares | 0.92 | |||
Class Y Shares | 1.17 | |||
Class R5 Shares | 1.11 | |||
Class R6 Shares | 1.23 | |||
Bloomberg Barclays U.S. Aggregate Bond Index▼ (Broad Market Index) | 2.98 | |||
Bloomberg Barclays 1-3 Year Government/Credit Index▼ (Style-Specific Index) | 1.71 | |||
Lipper Short Investment Grade Debt Funds Index∎ (Peer Group Index) | 1.87 | |||
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. |
| |||
The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment grade, fixed-rate bond market. The Bloomberg Barclays 1-3 Year Government/Credit Index is an unmanaged index considered representative of short-term US corporate and US government bonds with maturities of one to three years. The Lipper Short Investment Grade Debt Funds Index is an unmanaged index considered representative of short investment-grade debt funds tracked by Lipper. The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
|
For more information about your Fund
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance. Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends. |
3 | Invesco Short Term Bond Fund |
Average Annual Total Returns |
| |||
As of 8/31/20, including maximum applicable sales charges |
| |||
Class A Shares |
| |||
Inception (4/30/04) | 1.98 | % | ||
10 Years | 1.83 | |||
5 Years | 1.96 | |||
1 Year | 0.38 | |||
Class C Shares |
| |||
Inception (8/30/02) | 2.07 | % | ||
10 Years | 1.74 | |||
5 Years | 2.12 | |||
1 Year | 2.55 | |||
Class R Shares |
| |||
Inception (4/30/04) | 1.84 | % | ||
10 Years | 1.75 | |||
5 Years | 2.12 | |||
1 Year | 2.58 | |||
Class Y Shares |
| |||
Inception (10/3/08) | 2.48 | % | ||
10 Years | 2.24 | |||
5 Years | 2.64 | |||
1 Year | 3.10 | |||
Class R5 Shares |
| |||
Inception (4/30/04) | 2.38 | % | ||
10 Years | 2.29 | |||
5 Years | 2.69 | |||
1 Year | 3.05 | |||
Class R6 Shares |
| |||
10 Years | 2.23 | % | ||
5 Years | 2.75 | |||
1 Year | 3.21 |
Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class C shares and includes the 12b-1 fees applicable to Class C shares.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Class A share performance reflects the maximum 2.50% sales charge. Class C shares have no upfront or contingent deferred sales charges; therefore, performance shown is at net asset value. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
4 | Invesco Short Term Bond Fund |
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. 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 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. |
5 | Invesco Short Term Bond Fund |
August 31, 2020
(Unaudited)
Principal Amount | Value | |||||
U.S. Dollar Denominated Bonds & Notes–63.31% | ||||||
Advertising–0.49% | ||||||
Interpublic Group of Cos., Inc. (The), 4.20%, 04/15/2024 | $ | 4,439,000 | $ 4,931,697 | |||
Omnicom Group, Inc./Omnicom Capital, Inc., 3.63%, 05/01/2022 | 4,995,000 | 5,248,919 | ||||
WPP Finance 2010 (United Kingdom), 3.75%, 09/19/2024 | 3,791,000 | 4,162,662 | ||||
14,343,278 | ||||||
Aerospace & Defense–1.31% | ||||||
BAE Systems Holdings, Inc. (United Kingdom), 2.85%, 12/15/2020(b) | 4,621,000 | 4,643,405 | ||||
Boeing Co. (The), | ||||||
2.04%, 11/17/2020(b) | 9,990,000 | 9,964,740 | ||||
2.19%, 11/17/2020(b) | 10,010,000 | 9,984,690 | ||||
L3Harris Technologies, Inc., 3.85%, 06/15/2023 | 3,686,000 | 4,006,962 | ||||
Raytheon Technologies Corp., 2.80%, 03/15/2022(b) | 5,414,000 | 5,601,383 | ||||
Textron, Inc., 4.30%, 03/01/2024 | 4,114,000 | 4,438,053 | ||||
38,639,233 | ||||||
Agricultural & Farm Machinery–0.61% | ||||||
CNH Industrial Capital LLC, 4.88%, 04/01/2021 | 3,467,000 | 3,543,469 | ||||
John Deere Capital Corp., | ||||||
2.95%, 04/01/2022 | 5,000,000 | 5,208,824 | ||||
1.20%, 04/06/2023 | 3,581,000 | 3,662,176 | ||||
0.70%, 07/05/2023 | 5,600,000 | 5,656,605 | ||||
18,071,074 | ||||||
Agricultural Products–0.48% | ||||||
Archer-Daniels-Midland Co., 2.75%, 03/27/2025 | 706,000 | 769,825 | ||||
Bunge Ltd. Finance Corp., | ||||||
4.35%, 03/15/2024 | 3,883,000 | 4,269,738 | ||||
1.63%, 08/17/2025 | 2,607,000 | 2,623,322 | ||||
Cargill, Inc., 1.38%, | 6,437,000 | 6,591,868 | ||||
14,254,753 | ||||||
Airlines–0.49% | ||||||
American Airlines Pass Through Trust, | ||||||
Series 2016-3, Class B, 3.75%, 10/15/2025 | 2,269,347 | 1,584,068 | ||||
Series 2017-2, Class B, 3.70%, 10/15/2025 | 1,812,573 | 1,242,273 | ||||
Series 2019-1, Class B, 3.85%, 02/15/2028 | 4,028,536 | 2,617,654 | ||||
British Airways Pass Through Trust (United Kingdom), Series 2019-1, Class A, 3.35%, 06/15/2029(b) | 1,070,542 | 896,384 | ||||
Delta Air Lines Pass Through Trust, Series 2019-1, Class A, 3.40%, 04/25/2024 | 1,852,000 | 1,722,080 |
Principal Amount | Value | |||||
Airlines–(continued) | ||||||
Norwegian Air Shuttle ASA Pass Through Trust (Norway), Series 2016-1, Class B, 7.50%, 11/10/2023(b) | $ | 5,793,614 | $ 4,258,306 | |||
United Airlines Pass Through Trust, Series 2016-2, Class B, 3.65%, 10/07/2025 | 2,736,433 | 2,043,011 | ||||
14,363,776 | ||||||
Apparel Retail–0.50% | ||||||
L Brands, Inc., 5.63%, 02/15/2022 | 2,147,000 | 2,210,819 | ||||
Ross Stores, Inc., | ||||||
3.38%, 09/15/2024 | 2,568,000 | 2,770,139 | ||||
4.60%, 04/15/2025 | 8,456,000 | 9,750,964 | ||||
14,731,922 | ||||||
Apparel, Accessories & Luxury Goods–0.19% | ||||||
Hanesbrands, Inc., 4.63%, 05/15/2024(b) | 3,232,000 | 3,402,019 | ||||
Ralph Lauren Corp., 1.70%, 06/15/2022 | 2,124,000 | 2,166,570 | ||||
5,568,589 | ||||||
Asset Management & Custody Banks–0.27% | ||||||
Ameriprise Financial, Inc., | ||||||
3.00%, 03/22/2022 | 3,000,000 | 3,118,416 | ||||
3.00%, 04/02/2025 | 1,497,000 | 1,641,627 | ||||
Apollo Management Holdings L.P., 4.95%, 01/14/2050(b)(c) | 3,035,000 | 3,068,901 | ||||
7,828,944 | ||||||
Automobile Manufacturers–6.02% | ||||||
American Honda Finance Corp., 0.66% (3 mo. USD LIBOR + 0.35%), 06/11/2021(d) | 6,094,000 | 6,094,000 | ||||
BMW Finance N.V. (Germany), 2.40%, 08/14/2024(b) | 5,547,000 | 5,855,337 | ||||
Ford Motor Credit Co. LLC, | ||||||
5.09%, 01/07/2021 | 4,392,000 | 4,408,470 | ||||
1.15%, (3 mo. USD LIBOR + 0.88%), 10/12/2021(d) | 6,243,000 | 6,024,318 | ||||
3.81%, 10/12/2021 | 6,654,000 | 6,694,922 | ||||
5.60%, 01/07/2022 | 4,592,000 | 4,729,622 | ||||
3.09%, 01/09/2023 | 3,285,000 | 3,271,827 | ||||
General Motors Financial Co., Inc., | ||||||
1.12%, (3 mo. USD LIBOR + 0.85%), 04/09/2021(d) | 2,420,000 | 2,419,652 | ||||
3.20%, 07/06/2021 | 2,613,000 | 2,657,059 | ||||
4.20%, 11/06/2021 | 9,339,000 | 9,659,516 | ||||
Harley-Davidson Financial Services, Inc., | ||||||
3.35%, 02/15/2023(b) | 6,471,000 | 6,743,858 | ||||
3.35%, 06/08/2025(b) | 4,786,000 | 5,084,476 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Automobile Manufacturers–(continued) | ||||||
Hyundai Capital America, | ||||||
3.95%, 02/01/2022(b) | $ | 16,000,000 | $ 16,651,276 | |||
3.10%, 04/05/2022(b) | 6,011,000 | 6,199,426 | ||||
2.85%, 11/01/2022(b) | 6,667,000 | 6,907,250 | ||||
2.38%, 02/10/2023(b) | 6,000,000 | 6,164,678 | ||||
5.75%, 04/06/2023(b) | 7,402,000 | 8,251,466 | ||||
4.30%, 02/01/2024(b) | 6,601,000 | 7,185,554 | ||||
2.65%, 02/10/2025(b) | 7,935,000 | 8,258,590 | ||||
5.88%, 04/07/2025(b) | 6,208,000 | 7,294,073 | ||||
Toyota Motor Corp. (Japan), 2.36%, 07/02/2024 | 3,697,000 | 3,950,745 | ||||
Toyota Motor Credit Corp., | ||||||
0.49%, (SOFR + 0.40%), 10/23/2020(d) | 10,000,000 | 10,003,317 | ||||
3.00%, 04/01/2025 | 23,932,000 | 26,346,205 | ||||
Volkswagen Group of America Finance LLC (Germany), | ||||||
1.20%, (3 mo. USD LIBOR + 0.94%), 11/12/2021(b)(d) | 2,867,000 | 2,869,029 | ||||
4.00%, 11/12/2021(b) | 3,783,000 | 3,937,223 | ||||
177,661,889 | ||||||
Automotive Retail–0.44% | ||||||
Advance Auto Parts, Inc., 4.50%, 12/01/2023 | 3,602,000 | 3,933,303 | ||||
AutoNation, Inc., 3.35%, 01/15/2021 | 4,000,000 | 4,017,757 | ||||
AutoZone, Inc., 3.63%, 04/15/2025 | 4,557,000 | 5,115,930 | ||||
13,066,990 | ||||||
Biotechnology–2.08% | ||||||
AbbVie, Inc., | ||||||
3.38%, 11/14/2021 | 6,061,000 | 6,275,882 | ||||
2.15%, 11/19/2021(b) | 21,785,000 | 22,229,804 | ||||
2.30%, 11/21/2022(b) | 6,030,000 | 6,268,962 | ||||
3.85%, 06/15/2024(b) | 7,600,000 | 8,391,329 | ||||
2.60%, 11/21/2024(b) | 13,231,000 | 14,188,190 | ||||
Shire Acquisitions Investments Ireland DAC, 2.88%, 09/23/2023 | 3,791,000 | 4,038,957 | ||||
61,393,124 | ||||||
Brewers–0.38% | ||||||
Anheuser-Busch InBev Worldwide, Inc. (Belgium), | ||||||
3.50%, 01/12/2024 | 2,957,000 | 3,223,629 | ||||
4.15%, 01/23/2025 | 7,054,000 | 8,030,463 | ||||
11,254,092 | ||||||
Broadcasting–0.06% | ||||||
Fox Corp., | ||||||
4.03%, 01/25/2024 | 1,180,000 | 1,304,928 | ||||
3.05%, 04/07/2025 | 360,000 | 394,696 | ||||
1,699,624 | ||||||
Building Products–0.45% | ||||||
Carrier Global Corp., | ||||||
1.92%, 02/15/2023(b) | 6,403,000 | 6,594,530 | ||||
2.24%, 02/15/2025(b) | 3,169,000 | 3,323,247 | ||||
Masco Corp., 3.50%, 04/01/2021 | 3,190,000 | 3,231,595 | ||||
13,149,372 |
Principal Amount | Value | |||||
Cable & Satellite–0.57% | ||||||
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 4.50%, 02/01/2024 | $ | 3,696,000 | $ 4,122,480 | |||
Comcast Corp., 3.30%, 04/01/2027 | 5,320,000 | 6,043,384 | ||||
Time Warner Cable LLC, 4.00%, 09/01/2021 | 3,328,000 | 3,405,815 | ||||
Virgin Media Secured Finance PLC (United Kingdom), 5.50%, 08/15/2026(b) | 3,142,000 | 3,318,737 | ||||
16,890,416 | ||||||
Casinos & Gaming–0.21% | ||||||
International Game Technology PLC, 6.25%, 02/15/2022(b) | 2,018,000 | 2,077,925 | ||||
Las Vegas Sands Corp., 3.20%, 08/08/2024 | 3,975,000 | 4,039,131 | ||||
6,117,056 | ||||||
Commodity Chemicals–0.12% | ||||||
LyondellBasell Industries N.V., 6.00%, 11/15/2021 | 3,323,000 | 3,495,522 | ||||
Communications Equipment–0.14% | ||||||
British Telecommunications PLC (United Kingdom), 4.50%, 12/04/2023 | 3,771,000 | 4,195,682 | ||||
Construction Machinery & Heavy Trucks–1.06% | ||||||
Caterpillar Financial Services Corp., | ||||||
0.60%, (3 mo. USD LIBOR + 0.28%), 09/07/2021(d) | 3,250,000 | 3,257,435 | ||||
0.65%, 07/07/2023 | 14,999,000 | 15,109,136 | ||||
Cummins, Inc., 0.75%, 09/01/2025 | 2,967,000 | 2,974,791 | ||||
PACCAR Financial Corp., | ||||||
2.65%, 04/06/2023 | 1,099,000 | 1,162,566 | ||||
0.80%, 06/08/2023 | 4,749,000 | 4,811,498 | ||||
Wabtec Corp., 4.40%, 03/15/2024 | 3,698,000 | 4,022,705 | ||||
31,338,131 | ||||||
Consumer Finance–0.51% | ||||||
Capital One Financial Corp., 3.20%, 01/30/2023 | 3,882,000 | 4,106,484 | ||||
Credit Acceptance Corp., 5.13%, 12/31/2024(b) | 1,130,000 | 1,166,612 | ||||
Discover Bank, 2.45%, 09/12/2024 | 2,450,000 | 2,597,787 | ||||
Nissan Motor Acceptance Corp., 3.88%, 09/21/2023(b) | 3,698,000 | 3,860,343 | ||||
Synchrony Financial, 4.25%, 08/15/2024 | 3,179,000 | 3,414,929 | ||||
15,146,155 | ||||||
Data Processing & Outsourced Services–0.49% | ||||||
Fiserv, Inc., 3.80%, 10/01/2023 | 3,699,000 | 4,050,199 | ||||
Global Payments, Inc., 4.00%, 06/01/2023 | 4,619,000 | 5,023,926 | ||||
PayPal Holdings, Inc., 2.20%, 09/26/2022 | 5,231,000 | 5,426,322 | ||||
14,500,447 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Distillers & Vintners–0.32% |
| |||||
Constellation Brands, Inc., 3.75%, 05/01/2021 | $ | 4,768,000 | $ 4,872,445 | |||
Pernod Ricard S.A. (France), 4.25%, 07/15/2022(b) | 4,343,000 | 4,638,775 | ||||
9,511,220 | ||||||
Diversified Banks–4.29% | ||||||
Banco del Estado de Chile (Chile), 2.70%, 01/09/2025(b) | 6,415,000 | 6,755,861 | ||||
Banco do Brasil S.A. (Brazil), 8.50%(b)(c)(e) | 6,893,000 | 6,957,070 | ||||
Bank of America Corp., | ||||||
3.00%, 12/20/2023(c) | 2,569,000 | 2,708,641 | ||||
3.86%, 07/23/2024(c) | 4,528,000 | 4,927,526 | ||||
Bank of Ireland Group PLC (Ireland), 4.50%, | 2,997,000 | 3,260,306 | ||||
Bank of Montreal (Canada), Series E, 3.30%, 02/05/2024 | 3,105,000 | 3,389,354 | ||||
Barclays Bank PLC (United Kingdom), | ||||||
5.14%, 10/14/2020 | 1,195,000 | 1,200,492 | ||||
10.18%, 06/12/2021(b) | 6,000,000 | 6,410,576 | ||||
Barclays PLC (United Kingdom), 1.71% (3 mo. USD LIBOR + 1.43%), | 5,954,000 | 5,979,433 | ||||
BBVA USA, 2.50%, 08/27/2024 | 3,183,000 | 3,281,972 | ||||
Citigroup, Inc., Series V, | 3,790,000 | 3,778,156 | ||||
Credit Agricole S.A. (France), 3.38%, 01/10/2022(b) | 3,327,000 | 3,450,975 | ||||
Danske Bank A/S (Denmark), | ||||||
3.00%, 09/20/2022(b)(c) | 3,281,000 | 3,351,455 | ||||
1.38%, (3 mo. USD LIBOR + 1.06%), 09/12/2023(b)(d) | 5,898,000 | 5,826,197 | ||||
3.24%, 12/20/2025(b)(c) | 1,779,000 | 1,911,098 | ||||
Federation des Caisses Desjardins du Quebec (Canada), 2.05%, | 4,334,000 | 4,527,541 | ||||
Global Bank Corp. (Panama), 4.50%, 10/20/2021(b) | 6,500,000 | 6,682,162 | ||||
HSBC Holdings PLC (United Kingdom), 3.95%, | 2,956,000 | 3,194,949 | ||||
Industrial & Commercial Bank of China Ltd. (China), 2.96%, 11/08/2022 | 905,000 | 941,019 | ||||
JPMorgan Chase & Co., | ||||||
2.78%, 04/25/2023(c) | 3,885,000 | 4,031,942 | ||||
Series HH, 4.60%(c)(e) | 5,455,000 | 5,482,275 | ||||
Series I, 3.74% (3 mo. USD LIBOR + 3.47%)(d)(e) | 1,956,000 | 1,897,345 | ||||
Series V, 3.62% (3 mo. USD LIBOR + 3.32%)(d)(e) | 1,390,000 | 1,321,491 | ||||
Lloyds Banking Group PLC (United Kingdom), 2.91%, 11/07/2023(c) | 3,515,000 | 3,676,008 | ||||
Mizuho Financial Group, Inc. (Japan), 1.24%, 07/10/2024(c) | 4,000,000 | 4,050,372 | ||||
Nordea Bank Abp (Finland), 1.00%, 06/09/2023(b) | 3,704,000 | 3,754,212 | ||||
PNC Bank N.A., 0.74% (3 mo. USD LIBOR + 0.43%), 12/09/2022(d) | 8,000,000 | 8,028,073 | ||||
Skandinaviska Enskilda Banken AB (Sweden), 0.96% (3 mo. USD LIBOR + 0.65%), 12/12/2022(b)(d) | 5,559,000 | 5,605,587 |
Principal Amount | Value | |||||
Diversified Banks–(continued) |
| |||||
Standard Chartered PLC (United Kingdom), 1.42% (3 mo. USD LIBOR + 1.15%), | $ | 1,379,000 | $ 1,384,937 | |||
Wells Fargo & Co., 2.63%, 07/22/2022 | 8,412,000 | 8,753,947 | ||||
126,520,972 | ||||||
Diversified Capital Markets–1.18% | ||||||
Credit Suisse AG (Switzerland), | ||||||
2.80%, 04/08/2022 | 2,795,000 | 2,904,433 | ||||
1.00%, 05/05/2023 | 6,818,000 | 6,921,558 | ||||
2.95%, 04/09/2025 | 2,512,000 | 2,761,275 | ||||
Credit Suisse Group AG (Switzerland), | ||||||
3.57%, 01/09/2023(b) | 6,700,000 | 6,959,848 | ||||
2.59%, 09/11/2025(b)(c) | 3,699,000 | 3,874,304 | ||||
Macquarie Group Ltd. (Australia), 3.19%, | 4,342,000 | 4,550,675 | ||||
UBS AG (Switzerland), 1.75%, 04/21/2022(b) | 6,583,000 | 6,718,703 | ||||
34,690,796 | ||||||
Diversified Metals & Mining–0.10% | ||||||
Anglo American Capital PLC (South Africa), 3.75%, 04/10/2022(b) | 2,774,000 | 2,875,839 | ||||
Drug Retail–0.14% | ||||||
Walgreen Co., 3.10%, 09/15/2022 | 2,312,000 | 2,429,429 | ||||
Walgreens Boots Alliance, Inc., 3.30%, 11/18/2021 | 1,524,000 | 1,568,927 | ||||
3,998,356 | ||||||
Electric Utilities–3.09% | ||||||
Alabama Power Co., Series 17A, 2.45%, 03/30/2022 | 3,515,000 | 3,624,149 | ||||
Alliant Energy Finance LLC, 3.75%, 06/15/2023(b) | 3,696,000 | 3,979,665 | ||||
EDP Finance B.V. (Portugal), 3.63%, 07/15/2024(b) | 3,835,000 | 4,180,964 | ||||
Emera US Finance L.P. (Canada), 2.70%, 06/15/2021 | 4,344,000 | 4,413,231 | ||||
Enel Finance International N.V. (Italy), 2.75%, 04/06/2023(b) | 5,549,000 | 5,798,515 | ||||
Eversource Energy, | ||||||
Series N, 3.80%, 12/01/2023 | 3,880,000 | 4,267,161 | ||||
Series Q, 0.80%, 08/15/2025 | 2,148,000 | 2,151,723 | ||||
Exelon Corp., 3.50%, 06/01/2022 | 7,373,000 | 7,721,807 | ||||
Exelon Generation Co. LLC, 3.25%, 06/01/2025 | 4,676,000 | 5,159,145 | ||||
FirstEnergy Corp., Series B, 4.25%, 03/15/2023 | 3,606,000 | 3,827,214 | ||||
Georgia Power Co., 2.85%, 05/15/2022 | 3,781,000 | 3,936,096 | ||||
NextEra Energy Capital Holdings, Inc., | ||||||
3.15%, 04/01/2024 | 4,624,000 | 5,020,217 | ||||
2.75%, 05/01/2025 | 1,904,000 | 2,074,205 | ||||
NextEra Energy Operating Partners L.P., 4.25%, 09/15/2024(b) | 4,123,000 | 4,396,149 | ||||
NRG Energy, Inc., 3.75%, 06/15/2024(b) | 3,926,000 | 4,216,350 | ||||
Pacific Gas and Electric Co., 1.75%, 06/16/2022 | 13,800,000 | 13,850,595 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Electric Utilities–(continued) |
| |||||
PNM Resources, Inc., 3.25%, 03/09/2021 | $ | 3,698,000 | $ 3,747,202 | |||
Southern Power Co., Series E, 2.50%, 12/15/2021 | 3,700,000 | 3,794,552 | ||||
Southwestern Electric Power Co., 3.55%, 02/15/2022 | 2,000,000 | 2,072,538 | ||||
Vistra Operations Co. LLC, 3.55%, 07/15/2024(b) | 2,772,000 | 2,943,947 | ||||
91,175,425 | ||||||
Fertilizers & Agricultural Chemicals–0.50% | ||||||
CF Industries, Inc., | ||||||
3.40%, 12/01/2021(b) | 2,193,000 | 2,251,750 | ||||
3.45%, 06/01/2023 | 3,244,000 | 3,382,924 | ||||
Nutrien Ltd. (Canada), | ||||||
1.90%, 05/13/2023 | 5,124,000 | 5,309,664 | ||||
3.50%, 06/01/2023 | 3,511,000 | 3,752,895 | ||||
14,697,233 | ||||||
Financial Exchanges & Data–0.71% | ||||||
Intercontinental Exchange, Inc., | ||||||
0.70%, 06/15/2023 | 4,532,000 | 4,564,315 | ||||
0.90%, (3 mo. USD LIBOR + 0.65%), 06/15/2023(d) | 10,000,000 | 10,014,020 | ||||
Moody’s Corp., 2.63%, 01/15/2023 | 6,101,000 | 6,399,044 | ||||
20,977,379 | ||||||
Food Retail–0.40% | ||||||
Albertsons Cos., Inc./Safeway, Inc./New Albertsons L.P./Albertson’s LLC, 3.50%, 02/15/2023(b) | 2,922,000 | 2,990,667 | ||||
Alimentation Couche-Tard, Inc. (Canada), 2.70%, | 3,328,000 | 3,437,546 | ||||
Kroger Co. (The), | ||||||
2.95%, 11/01/2021 | 2,824,000 | 2,903,521 | ||||
2.80%, 08/01/2022 | 2,357,000 | 2,457,826 | ||||
11,789,560 | ||||||
Footwear–0.03% | ||||||
NIKE, Inc., 2.40%, 03/27/2025 | 689,000 | 742,703 | ||||
Gas Utilities–0.13% | ||||||
East Ohio Gas Co. (The), 1.30%, 06/15/2025(b) | 3,609,000 | 3,696,513 | ||||
General Merchandise Stores–0.14% | ||||||
Dollar Tree, Inc., 3.70%, 05/15/2023 | 3,695,000 | 3,983,665 | ||||
Gold–0.02% | ||||||
Newmont Corp., 3.70%, 03/15/2023 | 565,000 | 595,564 | ||||
Health Care Distributors–0.56% | ||||||
Cardinal Health, Inc., 2.62%, 06/15/2022 | 4,999,000 | 5,170,095 | ||||
McKesson Corp., 3.65%, 11/30/2020 | 11,340,000 | 11,431,032 | ||||
16,601,127 |
Principal Amount | Value | |||||
Health Care Equipment–0.38% |
| |||||
Becton, Dickinson and Co., 3.36%, 06/06/2024 | $ | 4,620,000 | $ 5,029,752 | |||
Zimmer Biomet Holdings, Inc., 1.07% (3 mo. USD LIBOR + 0.75%), 03/19/2021(d) | 6,250,000 | 6,251,599 | ||||
11,281,351 | ||||||
Health Care Facilities–0.14% | ||||||
HCA, Inc., 5.38%, 02/01/2025 | 3,756,000 | 4,235,397 | ||||
Health Care REITs–0.31% | ||||||
Healthpeak Properties, Inc., 4.25%, 11/15/2023 | 84,000 | 92,024 | ||||
Ventas Realty L.P., 2.65%, 01/15/2025 | 3,928,000 | 4,104,380 | ||||
Welltower, Inc., 3.63%, 03/15/2024 | 4,623,000 | 5,000,569 | ||||
9,196,973 | ||||||
Health Care Services–1.39% | ||||||
Cigna Corp., | ||||||
3.20%, 09/17/2020 | 24,000,000 | 24,029,422 | ||||
3.40%, 09/17/2021 | 7,772,000 | 8,016,316 | ||||
3.75%, 07/15/2023 | 4,755,000 | 5,178,935 | ||||
CVS Health Corp., 2.63%, 08/15/2024 | 3,619,000 | 3,884,015 | ||||
41,108,688 | ||||||
Homebuilding–0.36% | ||||||
D.R. Horton, Inc., 4.75%, 02/15/2023 | 4,820,000 | 5,206,113 | ||||
Lennar Corp., | ||||||
2.95%, 11/29/2020(f) | 2,772,000 | 2,778,930 | ||||
4.13%, 01/15/2022 | 2,125,000 | 2,177,328 | ||||
Toll Brothers Finance Corp., 4.88%, 11/15/2025 | 502,000 | 561,755 | ||||
10,724,126 | ||||||
Hotels, Resorts & Cruise Lines–0.30% | ||||||
Marriott International, Inc., | 8,718,000 | 8,714,153 | ||||
Housewares & Specialties–0.08% | ||||||
Newell Brands, Inc., 4.35%, 04/01/2023 | 2,132,000 | 2,258,588 | ||||
Industrial Conglomerates–0.18% | ||||||
Roper Technologies, Inc., | ||||||
0.45%, 08/15/2022 | 3,499,000 | 3,501,517 | ||||
1.00%, 09/15/2025 | 1,832,000 | 1,844,991 | ||||
5,346,508 | ||||||
Industrial Machinery–0.31% | ||||||
Fortive Corp., 2.35%, 06/15/2021 | 4,714,000 | 4,776,805 | ||||
nVent Finance S.a.r.l. (United Kingdom), 3.95%, 04/15/2023 | 4,000,000 | 4,222,839 | ||||
8,999,644 | ||||||
Insurance Brokers–0.10% | ||||||
Marsh & McLennan Cos., Inc., 3.88%, 03/15/2024 | 2,665,000 | 2,955,536 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Integrated Oil & Gas–2.04% |
| |||||
Chevron USA, Inc., 0.43%, 08/11/2023 | $ | 9,000,000 | $ 9,028,189 | |||
Exxon Mobil Corp., | ||||||
1.57%, 04/15/2023 | 16,064,000 | 16,574,281 | ||||
2.99%, 03/19/2025 | 5,582,000 | 6,135,423 | ||||
Occidental Petroleum Corp., 2.90%, 08/15/2024 | 5,547,000 | 5,113,613 | ||||
Saudi Arabian Oil Co. (Saudi Arabia), | ||||||
2.75%, 04/16/2022(b) | 14,633,000 | 15,027,762 | ||||
2.88%, 04/16/2024(b) | 7,791,000 | 8,196,913 | ||||
60,076,181 | ||||||
Integrated Telecommunication Services–0.31% | ||||||
AT&T, Inc., 1.50% (3 mo. USD LIBOR + 1.18%), | 2,732,000 | 2,791,977 | ||||
Telefonica Emisiones S.A.U. (Spain), 4.57%, 04/27/2023 | 5,642,000 | 6,208,018 | ||||
8,999,995 | ||||||
Interactive Media & Services–0.58% | ||||||
Tencent Holdings Ltd. (China), | ||||||
2.99%, 01/19/2023(b) | 4,039,000 | 4,219,483 | ||||
3.28%, 04/11/2024(b) | 10,000,000 | 10,703,463 | ||||
1.81%, 01/26/2026(b) | 2,242,000 | 2,297,335 | ||||
17,220,281 | ||||||
Internet & Direct Marketing Retail–0.43% | ||||||
Amazon.com, Inc., 0.80%, 06/03/2025 | 7,967,000 | 8,081,311 | ||||
Expedia Group, Inc., 3.60%, 12/15/2023(b) | 4,537,000 | 4,621,195 | ||||
12,702,506 | ||||||
Internet Services & Infrastructure–0.25% | ||||||
Leidos, Inc., | ||||||
2.95%, 05/15/2023(b) | 3,077,000 | 3,249,712 | ||||
3.63%, 05/15/2025(b) | 1,227,000 | 1,372,406 | ||||
VeriSign, Inc., | ||||||
5.25%, 04/01/2025 | 1,858,000 | 2,085,800 | ||||
4.75%, 07/15/2027 | 583,000 | 626,570 | ||||
7,334,488 | ||||||
Investment Banking & Brokerage–1.56% | ||||||
Cantor Fitzgerald L.P., 6.50%, 06/17/2022(b) | 4,519,000 | 4,863,424 | ||||
Goldman Sachs Group, Inc. (The), 2.91%, 06/05/2023(c) | 4,620,000 | 4,809,586 | ||||
Morgan Stanley, | ||||||
2.75%, 05/19/2022 | 5,175,000 | 5,375,549 | ||||
0.92%, (SOFR + 0.83%), 06/10/2022(d) | 30,000,000 | 30,099,953 | ||||
National Securities Clearing Corp., 1.50%, 04/23/2025(b) | 845,000 | 876,676 | ||||
46,025,188 | ||||||
IT Consulting & Other Services–0.36% | ||||||
DXC Technology Co., 4.25%, 04/15/2024 | 4,624,000 | 5,030,684 | ||||
Leidos Holdings, Inc., 4.45%, 12/01/2020 | 5,728,000 | 5,728,000 | ||||
10,758,684 |
Principal Amount | Value | |||||
Leisure Products–0.14% | ||||||
Hasbro, Inc., 2.60%, 11/19/2022 | $ | 3,860,000 | $ 3,988,222 | |||
Life & Health Insurance–2.09% | ||||||
AIG Global Funding, 2.70%, 12/15/2021(b) | 7,047,000 | 7,265,137 | ||||
Athene Global Funding, 2.95%, 11/12/2026(b) | 5,573,000 | 5,878,405 | ||||
New York Life Global Funding, 0.55% (3 mo. USD LIBOR + 0.28%), 01/10/2023(b)(d) | 35,000,000 | 34,971,707 | ||||
Protective Life Global Funding, 2.16%, 09/25/2020(b) | 5,000,000 | 5,006,249 | ||||
Reliance Standard Life Global Funding II, 2.50%, | 8,350,000 | 8,690,105 | ||||
61,811,603 | ||||||
Managed Health Care–0.39% | ||||||
Humana, Inc., 2.90%, 12/15/2022 | 3,835,000 | 4,030,626 | ||||
UnitedHealth Group, Inc., 2.38%, 08/15/2024 | 7,000,000 | 7,497,168 | ||||
11,527,794 | ||||||
Marine Ports & Services–0.06% | ||||||
Adani Abbot Point Terminal Pty. Ltd. (Australia), 4.45%, 12/15/2022(b) | 1,916,000 | 1,806,740 | ||||
Metal & Glass Containers–0.03% | ||||||
Ball Corp., 4.88%, 03/15/2026 | 846,000 | 948,933 | ||||
Movies & Entertainment–0.23% | ||||||
Netflix, Inc., 5.50%, 02/15/2022 | 3,852,000 | 4,063,860 | ||||
Tencent Music Entertainment Group (China), 1.38%, 09/03/2025 | 2,695,000 | 2,702,601 | ||||
6,766,461 | ||||||
Multi-line Insurance–0.06% | ||||||
American International Group, Inc., 2.50%, 06/30/2025 | 1,586,000 | 1,697,834 | ||||
Multi-Utilities–1.51% | ||||||
Ameren Corp., 2.50%, 09/15/2024 | 2,585,000 | 2,762,300 | ||||
CenterPoint Energy, Inc., 2.50%, 09/01/2024 | 9,432,000 | 10,042,866 | ||||
Dominion Energy, Inc., | ||||||
2.72%, 08/15/2021(g) | 8,214,000 | 8,386,542 | ||||
3.07%, 08/15/2024(g) | 4,622,000 | 5,017,921 | ||||
DTE Energy Co., | ||||||
Series C, 2.53%, 10/01/2024 | 4,809,000 | 5,128,160 | ||||
Series F, 1.05%, 06/01/2025 | 4,413,000 | 4,440,052 | ||||
PSEG Power LLC, 3.85%, 06/01/2023 | 3,695,000 | 3,989,716 | ||||
WEC Energy Group, Inc., 3.10%, 03/08/2022 | 4,620,000 | 4,806,640 | ||||
44,574,197 | ||||||
Office REITs–0.17% | ||||||
SL Green Operating Partnership L.P., 1.26% (3 mo. USD LIBOR + 0.98%), 08/16/2021(d) | 5,000,000 | 4,959,504 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Oil & Gas Equipment & Services–0.14% | ||||||
Schlumberger Holdings Corp., 3.75%, 05/01/2024(b) | $ | 3,885,000 | $ 4,233,879 | |||
Oil & Gas Exploration & Production–0.42% | ||||||
Canadian Natural Resources Ltd. (Canada), 2.95%, 01/15/2023 | 3,836,000 | 3,996,769 | ||||
Cimarex Energy Co., 4.38%, 06/01/2024 | 3,694,000 | 3,978,039 | ||||
Continental Resources, Inc., 5.00%, 09/15/2022 | 2,372,000 | 2,372,593 | ||||
EQT Corp., 3.00%, 10/01/2022 | 2,157,000 | 2,135,430 | ||||
12,482,831 | ||||||
Oil & Gas Refining & Marketing–0.43% | ||||||
Chevron Phillips Chemical Co. LLC/Chevron Phillips Chemical Co. L.P., 3.30%, 05/01/2023(b) | 3,700,000 | 3,928,832 | ||||
Phillips 66, | ||||||
0.83%, (3 mo. USD LIBOR + 0.60%), 02/26/2021(d) | 7,864,000 | 7,859,554 | ||||
3.70%, 04/06/2023 | 776,000 | 835,806 | ||||
12,624,192 | ||||||
Oil & Gas Storage & Transportation–3.72% | ||||||
Enbridge, Inc. (Canada), 2.90%, 07/15/2022 | 4,622,000 | 4,810,729 | ||||
Energy Transfer Operating L.P., | ||||||
4.25%, 03/15/2023 | 2,921,000 | 3,081,068 | ||||
5.88%, 01/15/2024 | 3,787,000 | 4,209,561 | ||||
2.90%, 05/15/2025 | 4,079,000 | 4,195,579 | ||||
Enterprise Products Operating LLC, | ||||||
3.50%, 02/01/2022 | 5,000,000 | 5,208,151 | ||||
Series D, 4.88%, | 5,002,000 | 4,424,294 | ||||
EQM Midstream Partners L.P., 4.75%, 07/15/2023 | 3,695,000 | 3,771,708 | ||||
Kinder Morgan, Inc., 3.15%, 01/15/2023 | 3,142,000 | 3,304,194 | ||||
MPLX L.P., | ||||||
1.21%, (3 mo. USD LIBOR + 0.90%), 09/09/2021(d) | 7,864,000 | 7,863,776 | ||||
1.41%, (3 mo. USD LIBOR + 1.10%), 09/09/2022(d) | 7,522,000 | 7,522,786 | ||||
3.50%, 12/01/2022 | 5,543,000 | 5,803,907 | ||||
1.75%, 03/01/2026 | 10,912,000 | 10,922,938 | ||||
ONEOK Partners L.P., 4.90%, 03/15/2025 | 4,160,000 | 4,541,116 | ||||
ONEOK, Inc., | ||||||
4.25%, 02/01/2022 | 9,000,000 | 9,339,429 | ||||
5.85%, 01/15/2026 | 3,715,000 | 4,286,499 | ||||
Plains All American Pipeline L.P./PAA Finance Corp., | ||||||
5.00%, 02/01/2021 | 7,955,000 | 8,013,575 | ||||
3.85%, 10/15/2023 | 3,884,000 | 4,115,413 | ||||
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., 4.25%, 11/15/2023 | 4,063,000 | 4,099,100 | ||||
TC PipeLines L.P., 4.65%, 06/15/2021 | 2,600,000 | 2,656,188 | ||||
Western Midstream Operating L.P., 2.12% (3 mo. USD LIBOR + 1.85%), | 3,208,000 | 3,048,840 |
Principal Amount | Value | |||||
Oil & Gas Storage & Transportation–(continued) | ||||||
Williams Cos., Inc. (The), 3.35%, 08/15/2022 | $ | 4,437,000 | $ 4,630,260 | |||
109,849,111 | ||||||
Other Diversified Financial Services–0.49% | ||||||
Daimler Finance North America LLC, 2.70%, 06/14/2024(b) | 5,270,000 | 5,592,774 | ||||
Equitable Holdings, Inc., 3.90%, 04/20/2023 | 4,624,000 | 4,983,958 | ||||
USAA Capital Corp., 1.50%, 05/01/2023(b) | 3,698,000 | 3,806,964 | ||||
14,383,696 | ||||||
Packaged Foods & Meats–0.28% | ||||||
Conagra Brands, Inc., 4.30%, 05/01/2024 | 3,792,000 | 4,244,937 | ||||
Lamb Weston Holdings, Inc., 4.63%, 11/01/2024(b) | 3,700,000 | 3,870,736 | ||||
8,115,673 | ||||||
Paper Packaging–0.22% | ||||||
Graphic Packaging International LLC, 4.75%, 04/15/2021 | 1,811,000 | 1,838,165 | ||||
Packaging Corp. of America, 3.65%, 09/15/2024 | 3,240,000 | 3,559,190 | ||||
Sealed Air Corp., 5.50%, 09/15/2025(b) | 938,000 | 1,053,979 | ||||
6,451,334 | ||||||
Paper Products–0.28% | ||||||
Domtar Corp., 4.40%, 04/01/2022 | 3,514,000 | 3,619,986 | ||||
Georgia-Pacific LLC, 1.75%, 09/30/2025(b) | 4,459,000 | 4,664,214 | ||||
8,284,200 | ||||||
Pharmaceuticals–2.27% | ||||||
AstraZeneca PLC (United Kingdom), 0.70%, 04/08/2026 | 12,444,000 | 12,349,819 | ||||
Bayer US Finance II LLC (Germany), 3.88%, | 5,174,000 | 5,678,414 | ||||
Bristol-Myers Squibb Co., | ||||||
2.88%, 02/19/2021 | 3,500,000 | 3,543,228 | ||||
3.25%, 02/20/2023 | 5,000,000 | 5,345,971 | ||||
Elanco Animal Health, Inc., 5.27%, 08/28/2023 | 3,697,000 | 4,103,984 | ||||
GlaxoSmithKline Capital PLC (United Kingdom), 2.88%, 06/01/2022 | 4,214,000 | 4,395,434 | ||||
Merck & Co., Inc., 0.75%, 02/24/2026 | 6,943,000 | 6,981,361 | ||||
Mylan, Inc., 3.13%, 01/15/2023(b) | 3,836,000 | 4,052,651 | ||||
Royalty Pharma PLC, | ||||||
0.75%, 09/02/2023(b) | 4,365,000 | 4,365,836 | ||||
1.20%, 09/02/2025(b) | 2,697,000 | 2,692,572 | ||||
Takeda Pharmaceutical Co. Ltd. (Japan), 4.40%, 11/26/2023 | 3,787,000 | 4,236,311 | ||||
Upjohn, Inc., | ||||||
1.13%, 06/22/2022(b) | 5,715,000 | 5,768,969 | ||||
1.65%, 06/22/2025(b) | 3,401,000 | 3,497,183 | ||||
67,011,733 | ||||||
Regional Banks–2.61% | ||||||
Citizens Bank N.A., 2.65%, 05/26/2022 | 3,881,000 | 4,015,528 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Regional Banks–(continued) | ||||||
Citizens Financial Group, Inc., Series A, 4.26% (3 mo. USD LIBOR + 3.96%)(d)(e) | $ | 3,900,000 | $ 3,671,675 | |||
Fifth Third Bancorp, 1.63%, 05/05/2023 | 4,194,000 | 4,305,681 | ||||
First Horizon National Corp., 3.50%, 12/15/2020 | 3,175,000 | 3,192,862 | ||||
First Niagara Financial Group, Inc., 7.25%, 12/15/2021 | 750,000 | 809,433 | ||||
Huntington Bancshares, Inc., 2.63%, 08/06/2024 | 3,236,000 | 3,466,068 | ||||
KeyBank N.A., 2.50%, 11/22/2021 | 4,023,000 | 4,129,980 | ||||
M&T Bank Corp., 3.55%, 07/26/2023 | 1,530,000 | 1,665,003 | ||||
PNC Financial Services Group, Inc. (The), 3.50%, 01/23/2024 | 3,545,000 | 3,886,223 | ||||
Santander Holdings USA, Inc., 3.50%, 06/07/2024 | 3,153,000 | 3,393,537 | ||||
Synovus Financial Corp., | ||||||
3.13%, 11/01/2022 | 2,040,000 | 2,108,534 | ||||
5.75%, 12/15/2025(c) | 7,885,000 | 7,874,316 | ||||
Truist Bank, | ||||||
1.25%, 03/09/2023 | 9,640,000 | 9,832,871 | ||||
3.20%, 04/01/2024 | 3,144,000 | 3,434,564 | ||||
3.69%, 08/02/2024(c) | 3,420,000 | 3,726,834 | ||||
Zions Bancorporation N.A., | ||||||
3.50%, 08/27/2021 | 9,550,000 | 9,766,588 | ||||
3.35%, 03/04/2022 | 7,611,000 | 7,858,512 | ||||
77,138,209 | ||||||
Restaurants–0.27% | ||||||
Aramark Services, Inc., 5.00%, 04/01/2025(b) | 3,034,000 | 3,073,487 | ||||
McDonald’s Corp., 3.30%, 07/01/2025 | 831,000 | 929,907 | ||||
Starbucks Corp., 1.30%, 05/07/2022 | 4,000,000 | 4,064,522 | ||||
8,067,916 | ||||||
Retail REITs–0.22% | ||||||
Digital Realty Trust L.P., 2.75%, 02/01/2023 | 4,530,000 | 4,750,316 | ||||
Simon Property Group L.P., 3.50%, 09/01/2025 | 1,689,000 | 1,858,172 | ||||
6,608,488 | ||||||
Semiconductors–1.37% | ||||||
Analog Devices, Inc., 2.50%, 12/05/2021 | 4,825,000 | 4,942,357 | ||||
Broadcom, Inc., | ||||||
2.25%, 11/15/2023 | 4,495,000 | 4,679,790 | ||||
3.46%, 09/15/2026 | 11,771,000 | 12,952,200 | ||||
Marvell Technology Group Ltd., 4.20%, 06/22/2023 | 3,695,000 | 3,989,979 | ||||
Microchip Technology, Inc., 4.33%, 06/01/2023 | 3,694,000 | 3,983,425 | ||||
NXP B.V./NXP Funding LLC (Netherlands), | ||||||
4.13%, 06/01/2021(b) | 5,000,000 | 5,129,276 | ||||
4.63%, 06/01/2023(b) | 4,387,000 | 4,820,590 | ||||
40,497,617 |
Principal Amount | Value | |||||
Soft Drinks–0.38% | ||||||
Keurig Dr Pepper, Inc., | ||||||
3.55%, 05/25/2021 | $ | 4,604,000 | $ 4,713,056 | |||
4.06%, 05/25/2023 | 6,046,000 | 6,610,834 | ||||
11,323,890 | ||||||
Specialized Consumer Services–0.13% | ||||||
Service Corp. International, 5.38%, 05/15/2024 | 3,831,000 | 3,911,087 | ||||
Specialized Finance–0.07% |
| |||||
Park Aerospace Holdings Ltd. (Ireland), 5.25%, 08/15/2022(b) | 2,000,000 | 1,986,453 | ||||
Specialized REITs–0.87% |
| |||||
American Tower Corp., 3.00%, 06/15/2023 | 4,767,000 | 5,083,659 | ||||
Equinix, Inc., 2.63%, 11/18/2024 | 11,850,000 | 12,704,740 | ||||
GLP Capital L.P./GLP Financing II, Inc., 3.35%, 09/01/2024 | 3,698,000 | 3,753,082 | ||||
Weyerhaeuser Co., 3.25%, 03/15/2023 | 3,883,000 | 4,100,691 | ||||
25,642,172 | ||||||
Specialty Chemicals–0.63% | ||||||
Avient Corp., 5.25%, 03/15/2023 | 3,767,000 | 4,095,388 | ||||
Celanese US Holdings LLC, 3.50%, 05/08/2024 | 3,700,000 | 3,955,208 | ||||
DuPont de Nemours, Inc., 4.21%, 11/15/2023 | 3,049,000 | 3,370,557 | ||||
International Flavors & Fragrances, Inc., 3.40%, 09/25/2020 | 3,000,000 | 3,004,994 | ||||
PPG Industries, Inc., 2.40%, 08/15/2024 | 3,976,000 | 4,236,238 | ||||
18,662,385 | ||||||
Steel–0.69% | ||||||
ArcelorMittal S.A. (Luxembourg), 3.60%, 07/16/2024 | 3,881,000 | 4,085,999 | ||||
POSCO (South Korea), | ||||||
2.38%, 01/17/2023(b) | 9,145,000 | 9,378,742 | ||||
2.50%, 01/17/2025(b) | 4,990,000 | 5,202,138 | ||||
Steel Dynamics, Inc., 2.40%, 06/15/2025 | 1,738,000 | 1,831,645 | ||||
20,498,524 | ||||||
Systems Software–0.35% | ||||||
Oracle Corp., 2.50%, 04/01/2025 | 3,455,000 | 3,728,410 | ||||
VMware, Inc., 2.95%, 08/21/2022 | 6,285,000 | 6,560,085 | ||||
10,288,495 | ||||||
Technology Distributors–0.05% | ||||||
CDW LLC/CDW Finance Corp., 5.00%, 09/01/2025 | 1,386,000 | 1,439,714 | ||||
Technology Hardware, Storage & Peripherals–0.47% | ||||||
Dell International LLC/EMC Corp., 4.00%, 07/15/2024(b) | 8,518,000 | 9,202,705 | ||||
Hewlett Packard Enterprise Co., 4.40%, 10/15/2022 | 4,254,000 | 4,562,139 | ||||
13,764,844 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Tires & Rubber–0.13% | ||||||
Goodyear Tire & Rubber Co. (The), 5.13%, 11/15/2023 | $ | 3,928,000 | $ 3,945,224 | |||
Tobacco–1.10% | ||||||
Altria Group, Inc., | ||||||
3.49%, 02/14/2022 | 7,017,000 | 7,320,959 | ||||
4.00%, 01/31/2024 | 3,651,000 | 4,041,329 | ||||
2.35%, 05/06/2025 | 1,549,000 | 1,649,390 | ||||
BAT Capital Corp. (United Kingdom), | ||||||
3.22%, 08/15/2024 | 4,899,000 | 5,286,043 | ||||
2.79%, 09/06/2024 | 4,148,000 | 4,414,556 | ||||
Imperial Brands Finance PLC (United Kingdom), 3.13%, 07/26/2024(b) | 3,882,000 | 4,105,601 | ||||
Philip Morris International, Inc., | ||||||
1.13%, 05/01/2023 | 3,624,000 | 3,690,524 | ||||
1.50%, 05/01/2025 | 1,934,000 | 2,002,197 | ||||
32,510,599 | ||||||
Trading Companies & Distributors–0.26% | ||||||
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland), 3.50%, 05/26/2022 DAC | 3,665,000 | 3,685,845 | ||||
Air Lease Corp., 2.30%, 02/01/2025 | 4,000,000 | 3,942,705 | ||||
7,628,550 | ||||||
Trucking–2.08% | ||||||
Aviation Capital Group LLC, 0.94% (3 mo. USD LIBOR + 0.67%), 07/30/2021(b)(d) | 1,860,000 | 1,800,934 | ||||
Avolon Holdings Funding Ltd. (Ireland), 3.63%, | 2,760,000 | 2,672,314 | ||||
Penske Truck Leasing Co. L.P./PTL Finance Corp., | ||||||
3.65%, 07/29/2021(b) | 21,478,000 | 22,045,634 | ||||
3.45%, 07/01/2024(b) | 5,542,000 | 6,009,932 | ||||
4.00%, 07/15/2025(b) | 4,719,000 | 5,303,868 | ||||
Ryder System, Inc., | ||||||
2.50%, 09/01/2024 | 7,974,000 | 8,442,396 | ||||
4.63%, 06/01/2025 | 5,716,000 | 6,598,827 | ||||
3.35%, 09/01/2025 | 7,704,000 | 8,490,547 | ||||
61,364,452 | ||||||
Wireless Telecommunication Services–1.14% | ||||||
Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC/Sprint Spectrum Co. III LLC, | ||||||
Class A-1, 3.36%, | 5,532,187 | 5,605,572 | ||||
4.74%, 03/20/2025(b) | 12,282,000 | 13,365,948 | ||||
T-Mobile USA, Inc., 6.38%, 03/01/2025 | 3,512,000 | 3,586,630 | ||||
VEON Holdings B.V. (Netherlands), 4.00%, 04/09/2025(b) | 4,343,000 | 4,523,517 | ||||
Vodafone Group PLC (United Kingdom), 3.75%, 01/16/2024 | 5,888,000 | 6,457,925 | ||||
33,539,592 | ||||||
Total U.S. Dollar Denominated |
| 1,867,840,856 |
Principal Amount | Value | |||||
Asset-Backed Securities–22.91% | ||||||
ALM VII Ltd., Series 2012-7A, Class A1A2, 1.45% (3 mo. USD LIBOR + 1.17%), 07/15/2029(b)(d) | $ | 2,230,600 | $ 2,229,267 | |||
Alternative Loan Trust, Series 2004-8CB, Class A, 0.45% (1 mo. USD LIBOR + 0.27%), 06/25/2034(d) | 60,511 | 60,588 | ||||
American Credit Acceptance Receivables Trust, | ||||||
Series 2017-4, Class D, 3.57%, 01/10/2024(b) | 2,737,726 | 2,768,313 | ||||
Series 2018-2, Class C, 3.70%, 07/10/2024(b) | 1,687,561 | 1,698,948 | ||||
Series 2018-3, Class D, 4.14%, 10/15/2024(b) | 340,000 | 349,833 | ||||
Series 2018-4, Class C, 3.97%, 01/13/2025(b) | 2,460,000 | 2,492,809 | ||||
Series 2019-1, Class C, 3.50%, 04/14/2025(b) | 1,625,000 | 1,652,943 | ||||
Series 2019-2, Class D, 3.41%, 06/12/2025(b) | 1,935,000 | 1,989,918 | ||||
Series 2019-3, Class C, 2.76%, 09/12/2025(b) | 2,145,000 | 2,183,394 | ||||
AmeriCredit Automobile Receivables Trust, | ||||||
Series 2017-2, Class D, 3.42%, 04/18/2023 | 3,075,000 | 3,156,005 | ||||
Series 2017-4, Class D, 3.08%, 12/18/2023 | 1,480,000 | 1,529,543 | ||||
Series 2018-3, Class C, 3.74%, 10/18/2024 | 3,465,000 | 3,684,616 | ||||
Series 2019-2, Class C, 2.74%, 04/18/2025 | 1,335,000 | 1,381,546 | ||||
Series 2019-2, Class D, 2.99%, 06/18/2025 | 3,700,000 | 3,857,252 | ||||
Series 2019-3, Class D, 2.58%, 09/18/2025 | 1,830,000 | 1,851,961 | ||||
Angel Oak Mortgage Trust, | ||||||
Series 2019-3, Class A1, 2.93%, 05/25/2059(b)(h) | 6,606,653 | 6,691,765 | ||||
Series 2020-1, Class A1, 2.47%, 12/25/2059(b)(h) | 4,022,355 | 4,082,610 | ||||
Series 2020-3, Class A1, 1.69%, 04/25/2065(b)(h) | 11,124,118 | 11,221,947 | ||||
Angel Oak Mortgage Trust I LLC, | ||||||
Series 2017-1, Class A1, 2.81%, 01/25/2047(b)(h) | 216,744 | 217,228 | ||||
Series 2018-1, Class A1, 3.26%, 04/27/2048(b)(h) | 2,126,258 | 2,136,488 | ||||
Series 2018-3, Class A1, 3.65%, 09/25/2048(b)(h) | 4,072,337 | 4,161,789 | ||||
Series 2019-2, Class A1, 3.63%, 03/25/2049(b)(h) | 5,511,114 | 5,641,401 | ||||
Angel Oak Mortgage Trust LLC, | ||||||
Series 2017-3, Class A1, 2.71%, 11/25/2047(b)(h) | 359,324 | 360,289 | ||||
Series 2020-5, Class A1, 1.37%, 05/25/2065(b)(h) | 7,265,000 | 7,301,319 | ||||
Banc of America Mortgage Trust, Series 2004-D, Class 2A2, 3.80%, 05/25/2034(h) | 28,810 | 28,513 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Bear Stearns Adjustable Rate Mortgage Trust, | ||||||
Series 2003-6, Class 1A3, 2.78%, 08/25/2033(h) | $ | 43,455 | $ 42,566 | |||
Series 2005-9, Class A1, 2.41% (1 yr. U.S. Treasury Yield Curve Rate + 2.30%), 10/25/2035(d) | 202,356 | 202,823 | ||||
Series 2006-1, Class A1, 3.84% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), 02/25/2036(d) | 488,008 | 491,380 | ||||
Benchmark Mortgage Trust, Series 2018-B1, Class XA, 0.66%, 01/15/2051(h) | 26,265,152 | 797,959 | ||||
Capital Auto Receivables Asset Trust, Series 2017-1, Class D, 3.15%, | 435,000 | 444,321 | ||||
Capital Lease Funding Securitization L.P., Series 1997-CTL1, Class IO, 1.51%, 06/22/2024(b)(i) | 138,938 | 1,862 | ||||
CarMax Auto Owner Trust, | ||||||
Series 2017-1, Class D, 3.43%, 07/17/2023 | 2,345,000 | 2,371,949 | ||||
Series 2017-4, Class D, 3.30%, 05/15/2024 | 1,120,000 | 1,147,189 | ||||
Series 2018-1, Class D, 3.37%, 07/15/2024 | 810,000 | 828,507 | ||||
Series 2018-3, Class A3, 3.13%, 06/15/2023 | 10,018,453 | 10,237,905 | ||||
Series 2018-4, Class C, 3.85%, 07/15/2024 | 1,170,000 | 1,235,478 | ||||
CCG Receivables Trust, | ||||||
Series 2018-1, Class B, 3.09%, 06/16/2025(b) | 1,030,000 | 1,045,421 | ||||
Series 2018-1, Class C, 3.42%, 06/16/2025(b) | 290,000 | 294,402 | ||||
Series 2018-2, Class C, 3.87%, 12/15/2025(b) | 755,000 | 780,879 | ||||
Series 2019-1, Class B, 3.22%, 09/14/2026(b) | 2,540,000 | 2,626,819 | ||||
Series 2019-1, Class C, 3.57%, 09/14/2026(b) | 555,000 | 569,271 | ||||
Series 2019-2, Class B, 2.55%, 03/15/2027(b) | 1,445,000 | 1,468,476 | ||||
Series 2019-2, Class C, 2.89%, 03/15/2027(b) | 695,000 | 703,923 | ||||
CD Mortgage Trust, Series 2017- CD6, Class XA, 1.10%, 11/13/2050(h) | 8,825,382 | 403,210 | ||||
CGDBB Commercial Mortgage Trust, | ||||||
Series 2017-BIOC, Class A, 0.95% (1 mo. USD LIBOR + 0.79%), 07/15/2032(b)(d) | 5,595,453 | 5,587,719 | ||||
Series 2017-BIOC, Class C, 1.21% (1 mo. USD LIBOR + 1.05%), 07/15/2032(b)(d) | 3,608,496 | 3,577,034 | ||||
Series 2017-BIOC, Class D, 1.76% (1 mo. USD LIBOR + 1.60%), 07/15/2032(b)(d) | 2,204,380 | 2,203,291 | ||||
Chase Home Lending Mortgage Trust, Series 2019-ATR1, Class A15, 4.00%, 04/25/2049(b)(h) | 500,087 | 513,922 | ||||
Series 2019-ATR2, Class A3, 3.50%, 07/25/2049(b)(h) | 7,061,161 | 7,282,648 | ||||
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, 3.85%, 01/25/2036(h) | 435,595 | 415,386 |
Principal Amount | Value | |||||
CHL Mortgage Pass-Through Trust, | ||||||
Series 2005-17, Class 1A8, 5.50%, 09/25/2035 | $ | 445,148 | $ 443,001 | |||
Series 2005-JA, Class A7, 5.50%, 11/25/2035 | 437,140 | 436,254 | ||||
Citigroup Commercial Mortgage Trust, | ||||||
Series 2013-GC17, Class XA, 1.18%, 11/10/2046(h) | 11,441,388 | 316,096 | ||||
Series 2014-GC21, Class AAB, 3.48%, 05/10/2047 | 812,736 | 849,891 | ||||
Series 2017-C4, Class XA, 1.25%, 10/12/2050(h) | 23,925,545 | 1,340,247 | ||||
Citigroup Mortgage Loan Trust, Inc., | ||||||
Series 2004-UST1, Class A4, 2.54%, 08/25/2034(h) | 107,413 | 103,596 | ||||
Series 2006-AR1, Class 1A1, 3.88% (1 yr. U.S. Treasury Yield Curve Rate + 2.40%), 10/25/2035(d) | 948,596 | 946,784 | ||||
Series 2019-IMC1, Class A1, 2.72%, 07/25/2049(b)(h) | 6,597,240 | 6,706,885 | ||||
CNH Equipment Trust, | 750,000 | 762,271 | ||||
COLT Mortgage Loan Trust, | ||||||
Class 2020-1, Class A2, 2.69%, 02/25/2050(b)(h) | 2,221,430 | 2,252,963 | ||||
Series 2020-1, Class A1, 2.49%, 02/25/2050(b)(h) | 8,658,844 | 8,760,634 | ||||
Series 2020-2, Class A1, 1.85%, 03/25/2065(b)(h) | 5,691,771 | 5,727,581 | ||||
Commercial Mortgage Trust, | ||||||
Series 2012-CR5, Class XA, 1.66%, 12/10/2045(h) | 11,828,241 | 340,553 | ||||
Series 2014-CR20, Class ASB, 3.31%, 11/10/2047 | 601,951 | 629,520 | ||||
CPS Auto Receivables Trust, | 269,068 | 269,409 | ||||
Credit Suisse Mortgage Capital Ctfs., Series 2020-SPT1, Class A1, 1.70%, | 8,592,768 | 8,614,004 | ||||
Credit Suisse Mortgage Trust, Series 2020-AFC1, Class A1, 2.24%, 02/25/2050(b)(h) | 13,149,697 | 13,372,139 | ||||
CSWF, Series 2018-TOP, Class B, 1.46% (1 mo. USD LIBOR + 1.30%), 08/15/2035(b)(d) | 3,665,600 | 3,526,208 | ||||
DB Master Finance LLC, Series 2019-1A, Class A2I, 3.79%, 05/20/2049(b) | 8,910,000 | 9,341,397 | ||||
Deephaven Residential Mortgage Trust, | ||||||
Series 2017-2A, Class A2, 2.61%, 06/25/2047(b)(h) | 176,160 | 176,584 | ||||
Series 2017-2A, Class A3, 2.71%, 06/25/2047(b)(h) | 191,793 | 192,294 | ||||
Series 2017-3A, Class A1, 2.58%, 10/25/2047(b)(h) | 1,013,902 | 1,027,055 | ||||
Series 2017-3A, Class A2, 2.71%, 10/25/2047(b)(h) | 296,426 | 300,198 | ||||
Series 2017-3A, Class A3, 2.81%, 10/25/2047(b)(h) | 994,718 | 1,006,412 | ||||
Series 2018-2A, Class A1, 3.48%, 04/25/2058(b)(h) | 4,546,794 | 4,634,793 | ||||
Series 2019-4A, Class A1, 2.79%, 10/25/2059(b)(h) | 2,688,152 | 2,733,718 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Dell Equipment Finance Trust, | ||||||
Series 2018-1, Class B, 3.34%, 06/22/2023(b) | $ | 1,040,000 | $ 1,055,712 | |||
Series 2019-1, Class C, 3.14%, 03/22/2024(b) | 4,465,000 | 4,549,980 | ||||
Series 2019-2, Class D, 2.48%, 04/22/2025(b) | 1,530,000 | 1,537,086 | ||||
Drive Auto Receivables Trust, | ||||||
Series 2016-CA, Class D, 4.18%, 03/15/2024(b) | 1,028,399 | 1,046,525 | ||||
Series 2017-1, Class D, 3.84%, 03/15/2023 | 2,695,881 | 2,731,814 | ||||
Series 2018-2, Class D, 4.14%, 08/15/2024 | 2,765,000 | 2,875,766 | ||||
Series 2018-3, Class D, 4.30%, 09/16/2024 | 2,560,000 | 2,676,119 | ||||
Series 2018-5, Class C, 3.99%, 01/15/2025 | 2,770,000 | 2,850,877 | ||||
Series 2019-1, Class C, 3.78%, 04/15/2025 | 4,740,000 | 4,876,948 | ||||
Series 2019-3, Class C, 2.90%, 08/15/2025 | 2,525,000 | 2,607,768 | ||||
Series 2019-3, Class D, 3.18%, 10/15/2026 | 2,885,000 | 2,953,711 | ||||
DT Auto Owner Trust, | ||||||
Series 2016-4A, Class E, 6.49%, 09/15/2023(b) | 2,650,000 | 2,655,356 | ||||
Series 2017-1A, Class D, 3.55%, 11/15/2022(b) | 852,705 | 855,857 | ||||
Series 2017-1A, Class E, 5.79%, 02/15/2024(b) | 3,680,000 | 3,740,030 | ||||
Series 2017-2A, Class D, 3.89%, 01/15/2023(b) | 590,819 | 594,117 | ||||
Series 2017-3A, Class E, 5.60%, 08/15/2024(b) | 2,400,000 | 2,474,125 | ||||
Series 2017-4A, Class D, 3.47%, 07/17/2023(b) | 1,478,868 | 1,487,531 | ||||
Series 2017-4A, Class E, 5.15%, 11/15/2024(b) | 2,785,000 | 2,850,000 | ||||
Series 2018-2A, Class D, 4.15%, 03/15/2024(b) | 1,185,000 | 1,212,203 | ||||
Series 2018-3A, Class B, 3.56%, 09/15/2022(b) | 2,443,834 | 2,456,932 | ||||
Series 2018-3A, Class C, 3.79%, 07/15/2024(b) | 1,360,000 | 1,389,300 | ||||
Series 2019-3A, Class C, 2.74%, 04/15/2025(b) | 2,890,000 | 2,935,376 | ||||
Element Rail Leasing I LLC, Series 2014-1A, Class A1, 2.30%, 04/19/2044(b) | 259,040 | 259,910 | ||||
Ellington Financial Mortgage Trust, Series 2020-1, Class A1, 2.01%, 05/25/2065(b)(h) | 2,550,095 | 2,591,020 | ||||
Exeter Automobile Receivables Trust, | ||||||
Series 2019-1A, Class D, 4.13%, 12/16/2024(b) | 4,215,000 | 4,374,386 | ||||
Series 2019-2A, Class C, 3.30%, 03/15/2024(b) | 4,309,000 | 4,439,022 | ||||
Series 2019-4A, Class D, 2.58%, 09/15/2025(b) | 3,225,000 | 3,258,644 | ||||
Flagship Credit Auto Trust, | ||||||
Series 2015-3, Class C, 4.65%, 03/15/2022(b) | 1,354,065 | 1,355,823 | ||||
Series 2016-1, Class C, 6.22%, 06/15/2022(b) | 2,250,679 | 2,278,113 |
Principal Amount | Value | |||||
FREMF Mortgage Trust, | ||||||
Series 2011-K10, Class B, 4.78%, 11/25/2049(b)(h) | $ | 4,025,000 | $ 4,021,287 | |||
Series 2012-K23, Class C, 3.78%, 10/25/2045(b)(h) | 5,250,000 | 5,452,610 | ||||
Series 2013-K25, Class C, 3.74%, 11/25/2045(b)(h) | 2,362,000 | 2,444,286 | ||||
Series 2013-K26, Class C, 3.72%, 12/25/2045(b)(h) | 1,642,030 | 1,700,718 | ||||
Series 2013-K27, Class C, 3.62%, 01/25/2046(b)(h) | 530,000 | 549,137 | ||||
Series 2013-K28, Class C, 3.61%, 06/25/2046(b)(h) | 530,000 | 551,073 | ||||
Series 2013-K29, Class C, 3.60%, 05/25/2046(b)(h) | 1,915,000 | 1,994,066 | ||||
Series 2013-K30, Class C, 3.67%, 06/25/2045(b)(h) | 917,000 | 954,739 | ||||
Series 2014-K714, Class C, 4.24%, 01/25/2047(b)(h) | 5,815,000 | 5,825,070 | ||||
Series 2014-K715, Class C, 4.27%, 02/25/2046(b)(h) | 2,895,000 | 2,904,453 | ||||
Series 2015-K721, Class B, 3.68%, 11/25/2047(b)(h) | 1,150,000 | 1,198,439 | ||||
Series 2017-K724, Class B, 3.60%, 11/25/2023(b)(h) | 1,395,000 | 1,472,059 | ||||
Galton Funding Mortgage Trust, | ||||||
Series 2018-2, Series A41, 4.50%, 10/25/2058(b)(h) | 2,463,688 | 2,528,848 | ||||
Series 2019-H1, Class A1, 2.66%, 10/25/2059(b)(h) | 3,003,078 | 3,073,818 | ||||
GCAT Trust, | ||||||
Series 2019-NQM2, Class A1, 2.86%, 09/25/2059(b)(g)(h) | 4,608,249 | 4,689,032 | ||||
Series 2019-NQM3, Class A1, 2.69%, 11/25/2059(b)(h) | 8,107,138 | 8,270,742 | ||||
Series 2020-NQM2, Class A1, 1.56%, 04/25/2065(b)(g)(h) | 3,343,412 | 3,351,927 | ||||
GLS Auto Receivables Trust, Series 2018-1A, Class A, 2.82%, 07/15/2022(b) | 411,726 | 412,854 | ||||
GM Financial Automobile Leasing Trust, | ||||||
Series 2018-2, Class C, 3.50%, 04/20/2022 | 1,730,000 | 1,740,873 | ||||
Series 2019-1, Class D, 3.95%, 05/22/2023 | 4,000,000 | 4,089,140 | ||||
GMF Floorplan Owner Revolving Trust, | ||||||
Series 2018-3, Class B, 3.49%, 09/15/2022(b) | 3,220,000 | 3,222,902 | ||||
Series 2018-3, Class C, 3.68%, 09/15/2022(b) | 2,725,000 | 2,727,127 | ||||
Series 2018-4, Class B, 3.68%, 09/15/2023(b) | 2,725,000 | 2,760,815 | ||||
Series 2018-4, Class C, 3.88%, 09/15/2023(b) | 3,405,000 | 3,444,987 | ||||
Goldentree Loan Management US CLO 2 Ltd., Series 2017-2A, Class A, 1.42% (3 mo. USD LIBOR + 1.15%), 11/28/2030(b)(d) | 6,022,000 | 5,983,003 | ||||
Golub Capital Partners CLO 35(B) Ltd., Class 2017-35A, Class AR, 1.46% (3 mo. USD LIBOR + 1.19%), | 9,000,000 | 8,960,973 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
GS Mortgage Securities Trust, | ||||||
Series 2012-GC6, Class A3, 3.48%, 01/10/2045 | $ | 1,260,241 | $ 1,289,038 | |||
Series 2012-GC6, Class AS, 4.95%, 01/10/2045(b) | 2,500,000 | 2,594,834 | ||||
Series 2013-GCJ12, Class AAB, 2.68%, 06/10/2046 | 200,339 | 203,636 | ||||
Series 2014-GC18, Class AAB, 3.65%, 01/10/2047 | 662,017 | 688,238 | ||||
GSR Mortgage Loan Trust, Series 2005-AR, Class 6A1, 3.31%, 07/25/2035(h) | 108,453 | 108,822 | ||||
Hertz Vehicle Financing II L.P., | ||||||
Series 2018-1A, Class A, 3.29%, 02/25/2024(b) | 1,753,784 | 1,757,059 | ||||
Series 2019-1A, Class A, 3.71%, 03/25/2023(b) | 5,747,714 | 5,757,744 | ||||
Series 2019-2A, Class A, 3.42%, 05/25/2025(b) | 3,290,566 | 3,293,720 | ||||
Hilton Grand Vacations Trust, Series 2019 AA, Class A, 2.34%, 07/25/2033(b) | 3,634,773 | 3,719,622 | ||||
Home Partners of America Trust, | ||||||
Series 2018-1, Class A, 1.06% (1 mo. USD LIBOR + 0.90%), 07/17/2037(b)(d) | 1,736,816 | 1,727,983 | ||||
Series 2018-1, Class B, 1.26% (1 mo. USD LIBOR + 1.10%), 07/17/2037(b)(d) | 2,970,000 | 2,948,232 | ||||
Series 2018-1, Class C, 1.41% (1 mo. USD LIBOR + 1.25%), 07/17/2037(b)(d) | 1,350,000 | 1,344,093 | ||||
HomeBanc Mortgage Trust, Series 2005-3, Class A2, 0.49% (1 mo. USD LIBOR + 0.31%), 07/25/2035(d) | 60,673 | 60,871 | ||||
Homeward Opportunities Fund I Trust, Series 2019-1, Class A1, 3.45%, 01/25/2059(b)(h) | 6,711,509 | 6,827,175 | ||||
ICG US CLO Ltd., Series 2016-1A, Class A1R, 1.41% (3 mo. USD LIBOR + 1.14%), 07/29/2028(b)(d) | 3,000,000 | 2,987,938 | ||||
Invitation Homes Trust, | ||||||
Series 2017-SFR2, Class A, 1.01% (1 mo. USD LIBOR + 0.85%), 12/17/2036(b)(d) | 2,495,887 | 2,483,868 | ||||
Series 2017-SFR2, Class B, 1.31% (1 mo. USD LIBOR + 1.15%), 12/17/2036(b)(d) | 1,441,000 | 1,442,456 | ||||
Series 2017-SFR2, Class C, 1.61% (1 mo. USD LIBOR + 1.45%), 12/17/2036(b)(d) | 2,758,000 | 2,774,392 | ||||
Series 2017-SFR2, Class D, 1.96% (1 mo. USD LIBOR + 1.80%), 12/17/2036(b)(d) | 2,101,916 | 2,112,877 | ||||
Jimmy Johns Funding LLC, Series 2017-1A, Class A2I, 3.61%, 07/30/2047(b) | 9,929,046 | 10,104,772 | ||||
JP Morgan Chase Commercial Mortgage Securities Trust, | ||||||
Series 2013-C16, Class AS, 4.52%, 12/15/2046 | 2,335,000 | 2,536,455 | ||||
Series 2016-JP3, Class A2, 2.43%, 08/15/2049 | 1,432,989 | 1,450,712 |
Principal Amount | Value | |||||
JP Morgan Mortgage Trust, | ||||||
Series 2007-A1, Class 5A1, 3.75%, 07/25/2035(h) | $ | 330,707 | $ 324,185 | |||
Series 2018-8, Class A17, 4.00%, 01/25/2049(b)(h) | 544,970 | 548,406 | ||||
JPMBB Commercial Mortgage Securities Trust, | ||||||
Series 2015-C27, Class XA, 1.31%, 02/15/2048(h) | 28,887,032 | 1,250,523 | ||||
Series 2015-C29, Class A2, 2.92%, 05/15/2048 | 113,738 | 113,672 | ||||
KNDL Mortgage Trust, | ||||||
Series 2019-KNSQ, Class A, 0.96% (1 mo. USD LIBOR + 0.80%), 05/15/2036(b)(d) | 7,750,000 | 7,742,728 | ||||
Series 2019-KNSQ, Class C, 1.21% (1 mo. USD LIBOR + 1.05%), 05/15/2036(b)(d) | 4,250,000 | 4,188,246 | ||||
Lehman Structured Securities Corp., Series 2002-GE1, Class A, 0.00%, | 29,488 | 19,017 | ||||
Master Credit Card Trust II, Series 2020-1A, Class A, 1.99%, 09/21/2024(b) | 15,000,000 | 15,573,687 | ||||
Mercedes-Benz Auto Lease Trust, Series 2019-A, Class A3, 3.10%, 11/15/2021 | 3,637,958 | 3,668,353 | ||||
Merrill Lynch Mortgage Investors Trust, Series 2005-3, Class 3A, 4.01%, 11/25/2035(h) | 660,814 | 646,489 | ||||
MMAF Equipment Finance LLC, | ||||||
Series 2020-A, Class A2, 0.74%, 04/09/2024(b) | 5,250,000 | 5,269,034 | ||||
Series 2020-A, Class A3, 0.97%, 04/09/2027(b) | 5,800,000 | 5,867,188 | ||||
Morgan Stanley Bank of America Merrill Lynch Trust, | ||||||
Series 2013-C9, Class AS, 3.46%, 05/15/2046 | 2,235,000 | 2,329,529 | ||||
Series 2015-C23, Class A2, 2.98%, 07/15/2050 | 140,911 | 140,806 | ||||
Morgan Stanley Capital I Trust, | ||||||
Series 2011-C2, Class A4, 4.66%, 06/15/2044(b) | 1,594,948 | 1,634,318 | ||||
Series 2017-CLS, Class A, 0.86% (1 mo. USD LIBOR + 0.70%), 11/15/2034(b)(d) | 8,028,000 | 8,012,170 | ||||
Series 2017-CLS, Class B, 1.01% (1 mo. USD LIBOR + 0.85%), 11/15/2034(b)(d) | 3,944,000 | 3,919,109 | ||||
Series 2017-CLS, Class C, 1.16% (1 mo. USD LIBOR + 1.00%), 11/15/2034(b)(d) | 2,676,000 | 2,650,695 | ||||
Series 2017-HR2, Class XA, 0.93%, 12/15/2050(h) | 8,687,827 | 402,485 | ||||
MVW LLC, Series 2019-2A, Class A, 2.22%, | 3,984,850 | 4,074,375 | ||||
MVW Owner Trust, Series 2019-1A, Class A, 2.89%, 11/20/2036(b) | 3,516,662 | 3,616,555 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Navistar Financial Dealer Note Master Owner Trust II, | ||||||
Series 2018-1, Class B, 0.98% (1 mo. USD LIBOR + 0.80%), 09/25/2023(b)(d) | $ | 670,000 | $ 669,950 | |||
Series 2019-1, Class C, 1.13% (1 mo. USD LIBOR + 0.95%), 05/25/2024(b)(d) | 305,000 | 303,812 | ||||
Series 2019-1, Class D, 1.63% (1 mo. USD LIBOR + 1.45%), 05/25/2024(b)(d) | 290,000 | 288,459 | ||||
Neuberger Berman Loan Advisers CLO 24 Ltd., Series 2017-24A, Class AR, 1.29% (3 mo. USD LIBOR + 1.02%), 04/19/2030(b)(d) | 7,455,000 | 7,413,784 | ||||
New Residential Mortgage Loan Trust, | ||||||
Series 2019-NQM4, Class A1, 2.49%, 09/25/2059(b)(h) | 3,367,314 | 3,442,452 | ||||
Series 2020-NQM1, Series A1, 2.46%, 01/26/2060(b)(h) | 4,659,398 | 4,769,375 | ||||
OBX Trust, Series 2019-EXP1, Class 1A3, 4.00%, | 2,012,646 | 2,090,377 | ||||
OHA Loan Funding Ltd., Series 2016-1A, Class AR, 1.53% (3 mo. USD LIBOR + 1.26%), 01/20/2033(b)(d) | 7,550,413 | 7,531,491 | ||||
PPM CLO 3 Ltd., Series 2019-3A, Class A, 1.67% (3 mo. USD LIBOR + 1.40%), 07/17/2030(b)(d) | 3,874,000 | 3,867,929 | ||||
Prestige Auto Receivables Trust, Series 2019-1A, Class C, 2.70%, 10/15/2024(b) | 1,560,000 | 1,592,345 | ||||
Progress Residential Trust, Series 2020-SFR1, Class A, 1.73%, 04/17/2037(b) | 5,005,000 | 5,074,979 | ||||
RALI Trust, Series 2006-QS13, Class 1A8, 6.00%, 09/25/2036 | 5,486 | 5,073 | ||||
RBSSP Resecuritization Trust, Series 2010-1, Class 2A1, 3.22% (Acquired 02/25/2015; Cost $4,746), 07/26/2045(b)(h) | 22,739 | 22,938 | ||||
Residential Mortgage Loan Trust, | ||||||
Series 2019-3, Class A1, 2.63%, 09/25/2059(b)(h) | 1,805,440 | 1,839,567 | ||||
Series 2020-1, Class A1, 2.38%, 02/25/2024(b)(h) | 3,730,736 | 3,788,835 | ||||
Santander Drive Auto Receivables Trust, | ||||||
Series 2017-1, Class E, 5.05%, 07/15/2024(b) | 4,585,000 | 4,668,038 | ||||
Series 2017-2, Class D, 3.49%, 07/17/2023 | 1,640,000 | 1,665,591 | ||||
Series 2017-3, Class D, 3.20%, 11/15/2023 | 3,210,000 | 3,259,045 | ||||
Series 2018-1, Class D, 3.32%, 03/15/2024 | 1,195,000 | 1,224,011 | ||||
Series 2018-2, Class D, 3.88%, 02/15/2024 | 2,015,000 | 2,062,639 | ||||
Series 2018-5, Class C, 3.81%, 12/16/2024 | 2,895,000 | 2,943,297 | ||||
Series 2019-2, Class D, 3.22%, 07/15/2025 | 2,675,000 | 2,761,068 | ||||
Series 2019-3, Class D, 2.68%, 10/15/2025 | 2,230,000 | 2,283,347 |
Principal Amount | Value | |||||
Santander Retail Auto Lease Trust, | ||||||
Series 2019-A, Class C, 3.30%, 05/22/2023(b) | $ | 4,295,000 | $ 4,371,018 | |||
Series 2019-B, Class C, 2.77%, 08/21/2023(b) | 1,555,000 | 1,595,660 | ||||
Series 2019-C, Class C, 2.39%, 11/20/2023(b) | 2,845,000 | 2,870,809 | ||||
Sequoia Mortgage Trust, | ||||||
Series 2013-3, Class A1, 2.00%, 03/25/2043(h) | 1,408,984 | 1,429,893 | ||||
Series 2013-4, Class A3, 1.55%, 04/25/2043(h) | 915,393 | 913,525 | ||||
Series 2013-6, Class A2, 3.00%, 05/25/2043(h) | 1,994,836 | 2,099,706 | ||||
Series 2013-7, Class A2, 3.00%, 06/25/2043(h) | 1,251,262 | 1,292,485 | ||||
Sierra Timeshare Receivables Funding LLC, | ||||||
Series 2016-1A, Class A, 3.08%, 03/21/2033(b) | 2,233,665 | 2,244,081 | ||||
Series 2019-3A, Class A, 2.34%, 08/20/2036(b) | 4,952,386 | 5,077,346 | ||||
Starwood Mortgage Residential Trust, Series 2020-1, Class A1, 2.28%, 02/25/2050(b)(h) | 2,595,484 | 2,640,792 | ||||
Starwood Waypoint Homes Trust, Series 2017-1, Class D, 2.11% (1 mo. USD LIBOR + 1.95%), 01/17/2035(b)(d) | 7,700,000 | 7,714,188 | ||||
Structured Asset Securities Corp., Series 2002-AL1, Class AIO, 3.45%, 02/25/2032(h) | 1,049,451 | 62,842 | ||||
Taconic Park CLO Ltd., Series 2016-1A, Class A1R, 1.27% (3 mo. USD LIBOR + 1.00%), 01/20/2029(b)(d) | 12,119,000 | 12,015,619 | ||||
TICP CLO XV Ltd., Series 2020-15A, Class A, 2.92% (3 mo. USD LIBOR + 1.28%), 04/20/2033(b)(d) | 7,162,000 | 7,122,857 | ||||
Towd Point Mortgage Trust, | ||||||
Series 2016-3, Class A1, 2.25%, 04/25/2056(b)(h) | 872,213 | 886,676 | ||||
Series 2017-2, Class A1, 2.75%, 04/25/2057(b)(h) | 3,590,054 | 3,694,810 | ||||
Triton Container Finance VI LLC, Series 2018-2A, Class A, 4.19%, 06/22/2043(b) | 3,161,533 | 3,193,270 | ||||
UBS Commercial Mortgage Trust, Series 2017-C5, Class XA, 1.15%, 11/15/2050(h) | 15,022,598 | 763,907 | ||||
United Auto Credit Securitization Trust, Series 2019-1, Class C, 3.16%, 08/12/2024(b) | 2,060,000 | 2,076,835 | ||||
Vendee Mortgage Trust, | 1,022,126 | 12,838 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Verus Securitization Trust, | ||||||
Series 2018-3, Class A1, 4.11%, 10/25/2058(b)(h) | $ | 5,309,967 | $ 5,446,593 | |||
Series 2019-1, Class A1, 3.84%, 02/25/2059(b)(h) | 4,172,696 | 4,255,983 | ||||
Series 2019-2, Class A1, 3.21%, 05/25/2059(b)(h) | 11,089,490 | 11,322,569 | ||||
Series 2020-1, Class A1, 2.42%, 01/25/2060(b)(g)(h) | 10,961,184 | 11,197,340 | ||||
Series 2020-INV1, Class A1, 1.98%, 03/25/2060(b)(h) | 1,943,380 | 1,963,698 | ||||
WaMu Mortgage Pass-Through Ctfs. Trust, | ||||||
Series 2003-AR10, Class A7, 4.15%, 10/25/2033(h) | 166,152 | 164,427 | ||||
Series 2005-AR14, Class 1A4, 3.78%, 12/25/2035(h) | 62,919 | 61,803 | ||||
Series 2005-AR16, Class 1A1, 3.73%, 12/25/2035(h) | 289,884 | 283,074 | ||||
Wells Fargo Commercial Mortgage Trust, | ||||||
Series 2015-NXS1, Class A2, 2.63%, 05/15/2048 | 202,525 | 202,435 | ||||
Series 2017-C42, Class XA, 1.03%, 12/15/2050(h) | 12,082,950 | 649,306 | ||||
Wells Fargo Re-REMIC Trust, Series 2011-RR1, Class 1A, 4.81%, 09/17/2047(b)(h) | 3,379,754 | 3,401,309 | ||||
Wendy’s Funding LLC, Series 2019-1A, Class A2I, 3.78%, 06/15/2049(b) | 6,860,000 | 7,311,938 | ||||
Westlake Automobile Receivables Trust, | ||||||
Series 2017-2A, Class E, 4.63%, 07/15/2024(b) | 3,255,000 | 3,290,617 | ||||
Series 2018-2A, Class C, 3.50%, 01/16/2024(b) | 3,549,118 | 3,574,176 | ||||
Series 2019-2A, Class C, 2.84%, 07/15/2024(b) | 2,805,000 | 2,871,670 | ||||
Series 2019-3A, Class C, 2.49%, 10/15/2024(b) | 3,590,000 | 3,660,284 | ||||
WFRBS Commercial Mortgage Trust, | ||||||
IO, Series 2012-C10, Class XA, 1.68%, 12/15/2045(b)(i) | 3,388,947 | 98,273 | ||||
IO, Series 2012-C6, Class XA, 2.24%, 04/15/2045(b)(i) | 2,005,501 | 33,907 | ||||
Series 2011-C3, Class XA, 1.48%, 03/15/2044(b)(h) | 6,561,107 | 32,109 | ||||
Series 2013-C16, Class B, 5.19%, 09/15/2046(h) | 4,500,000 | 4,281,207 | ||||
World Financial Network Credit Card Master Trust, | ||||||
Series 2019-A, Class A, 3.14%, 12/15/2025 | 1,000,000 | 1,034,440 | ||||
Series 2019-B, Class A, 2.49%, 04/15/2026 | 3,665,000 | 3,775,415 | ||||
Series 2019-C, Class A, 2.21%, 07/15/2026 | 3,130,000 | 3,207,389 | ||||
Total Asset-Backed Securities |
| 676,083,769 | ||||
U.S. Treasury Securities–6.25% | ||||||
U.S. Treasury Bills–0.13%(j)(k) | ||||||
0.10% - 0.40%, 09/03/2020 | 3,782,000 | 3,781,967 |
Principal Amount | Value | |||||
U.S. Treasury Notes–6.12% | ||||||
0.13%, 08/31/2022 | $ | 28,148,100 | $ 28,143,702 | |||
0.13%, 08/15/2023 | 73,145,900 | 73,091,612 | ||||
0.25%, 08/31/2025 | 79,493,100 | 79,415,470 | ||||
180,650,784 | ||||||
Total U.S. Treasury Securities |
| 184,432,751 | ||||
U.S. Government Sponsored Agency Mortgage-Backed Securities–1.32% | ||||||
Collateralized Mortgage Obligations–0.79% | ||||||
Fannie Mae Interest STRIPS, IO, | ||||||
7.50%, 05/25/2023 to 11/25/2029 | 876,597 | 156,043 | ||||
6.50%, 02/25/2032 to 07/25/2032 | 428,869 | 82,123 | ||||
6.00%, 12/25/2032 to 09/25/2035 | 1,068,182 | 199,789 | ||||
5.50%, 11/25/2033 to 06/25/2035 | 813,313 | 148,680 | ||||
PO, | 34,290 | 32,306 | ||||
Fannie Mae REMICs, | ||||||
3.00%, 01/25/2021 to 11/25/2027 | 1,867,190 | 110,094 | ||||
7.50%, 09/25/2022 | 181,387 | 189,324 | ||||
6.50%, 06/25/2023 to 11/25/2029 | 159,065 | 176,281 | ||||
1.18%, 04/25/2032 | 58,995 | 60,144 | ||||
0.65% (1 mo. USD LIBOR + 0.50%), 10/18/2032(d) | 28,093 | 28,173 | ||||
0.58%, 11/25/2033 to 03/25/2042 | 163,770 | 164,197 | ||||
13.75% (1 mo. USD LIBOR + 14.10%), 12/25/2033(d) | 2,254 | 2,310 | ||||
5.50%, 04/25/2035 to 07/25/2046 | 4,917,780 | 4,287,695 | ||||
23.92% (24.57% - (3.67 x 1 mo. USD LIBOR)), 03/25/2036(d) | 102,445 | 171,767 | ||||
23.56%, 06/25/2036 | 388,302 | 660,485 | ||||
23.56% (24.20% - (3.67 x 1 mo. USD LIBOR)), 06/25/2036(d) | 54,138 | 89,093 | ||||
5.00%, 04/25/2040 to 09/25/2047 | 11,393,226 | 1,808,602 | ||||
4.00%, 03/25/2041 to 08/25/2047 | 4,009,092 | 351,122 | ||||
0.63% (1 mo. USD LIBOR + 0.45%), 02/25/2047(d) | 74,856 | 75,308 | ||||
IO, | 999,159 | 206,200 | ||||
7.75%, 11/18/2031 to 12/18/2031 | 230,838 | 49,947 | ||||
7.72% (7.90% - 1 mo. USD LIBOR), 11/25/2031(d) | 45,784 | 9,807 | ||||
7.77%, 01/25/2032 to 07/25/2032 | 282,807 | 52,860 | ||||
7.85% (8.00% - 1 mo. USD LIBOR), 03/18/2032(d) | 89,953 | 20,891 | ||||
7.92%, 03/25/2032 to 04/25/2032 | 127,858 | 29,511 | ||||
6.82% (7.00% - 1 mo. USD LIBOR), 04/25/2032(d) | 85,110 | 17,558 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Collateralized Mortgage Obligations–(continued) | ||||||
7.62% (7.80% - 1 mo. USD LIBOR), 04/25/2032(d) | $ | 44,951 | $ 9,950 | |||
7.82%, 07/25/2032 to 09/25/2032 | 283,418 | 64,416 | ||||
7.95%, 12/18/2032 | 201,102 | 43,075 | ||||
8.07%, 02/25/2033 to 05/25/2033 | 244,248 | 58,523 | ||||
7.00%, 04/25/2033 | 1,220,410 | 282,680 | ||||
5.87%, 03/25/2035 to 07/25/2038 | 530,353 | 100,834 | ||||
6.57%, 03/25/2035 to 05/25/2035 | 411,475 | 67,099 | ||||
6.42% (1 mo. USD LIBOR + 6.60%), 05/25/2035(d) | 233,629 | 39,518 | ||||
3.50%, 08/25/2035 | 5,136,749 | 627,588 | ||||
6.36% (1 mo. USD LIBOR + 6.54%), 06/25/2037(d) | 180,713 | 38,657 | ||||
6.37% (6.55% - 1 mo. USD LIBOR), 10/25/2041(d) | 581,578 | 121,497 | ||||
5.97% (6.15% - 1 mo. USD LIBOR), 12/25/2042(d) | 1,256,872 | 251,274 | ||||
4.50%, 02/25/2043 | 343,962 | 59,347 | ||||
Freddie Mac Multifamily Structured Pass Through Ctfs., | ||||||
Series KC02, Class X1, 0.50%, 03/25/2024(h) | 59,658,170 | 717,992 | ||||
Series KC03, Class X1, 0.63%, 11/25/2024(h) | 37,532,126 | 674,156 | ||||
Series K734, Class X1, 0.79%, 02/25/2026(h) | 27,704,997 | 848,557 | ||||
Series K735, Class X1, 1.10%, 05/25/2026(h) | 28,599,923 | 1,391,398 | ||||
Series K093, Class X1, 1.09%, 05/25/2029(h) | 22,383,173 | 1,607,745 | ||||
Freddie Mac REMICs, | ||||||
2.13% (COF 11 + 1.45%), 12/15/2023(d) | 572,493 | 581,713 | ||||
6.50%, 04/15/2028 to 06/15/2032 | 1,098,731 | 1,278,306 | ||||
6.00%, 01/15/2029 to 04/15/2029 | 538,488 | 607,698 | ||||
7.50%, 09/15/2029 | 79,332 | 93,364 | ||||
8.00%, 03/15/2030 | 41,623 | 50,242 | ||||
1.11%, 08/15/2031 to 01/15/2032 | 86,256 | 87,868 | ||||
1.16%, 12/15/2031 to 03/15/2032 | 183,357 | 186,255 | ||||
0.66% (1 mo. USD LIBOR + 0.50%), 01/15/2033(d) | 4,103 | 4,139 | ||||
5.00%, 08/15/2035 | 1,846,851 | 2,144,540 | ||||
4.00%, 06/15/2038 to 03/15/2045 | 2,254,193 | 446,401 | ||||
IO, | 416,892 | 37,845 | ||||
3.00%, 06/15/2027 to 12/15/2027 | 6,082,613 | 365,811 | ||||
2.50%, 05/15/2028 | 1,205,006 | 66,133 | ||||
8.54%, 07/17/2028 | 75,019 | 7,670 | ||||
7.89% (1 mo. USD LIBOR + 8.05%), 02/15/2029(d) | 228,835 | 43,547 | ||||
7.59% (1 mo. USD LIBOR + 7.75%), 06/15/2029(d) | 221,787 | 37,403 |
Principal Amount | Value | |||||
Collateralized Mortgage Obligations–(continued) | ||||||
7.94%, 06/15/2029 to 09/15/2029 | $ | 140,217 | $ 28,009 | |||
6.54% (6.70% - 1 mo. USD LIBOR), 01/15/2035(d) | 583,093 | 113,831 | ||||
6.59% (6.75% - 1 mo. USD LIBOR), 02/15/2035(d) | 135,054 | 26,644 | ||||
6.56% (6.72% - 1 mo. USD LIBOR), 05/15/2035(d) | 460,602 | 77,780 | ||||
5.99% (6.15% - 1 mo. USD LIBOR), 07/15/2035(d) | 658,101 | 96,015 | ||||
6.84% (7.00% - 1 mo. USD LIBOR), 12/15/2037(d) | 77,541 | 18,603 | ||||
5.91% (6.07% - 1 mo. USD LIBOR), 05/15/2038(d) | 1,067,999 | 221,286 | ||||
6.09% (1 mo. USD LIBOR + 6.25%), 12/15/2039(d) | 207,807 | 41,036 | ||||
5.94% (6.10% - 1 mo. USD LIBOR), 01/15/2044(d) | 1,806,092 | 258,554 | ||||
Freddie Mac STRIPS, IO, | ||||||
3.00%, 12/15/2027 | 2,696,000 | 180,431 | ||||
3.27%, 12/15/2027(i) | 722,181 | 39,527 | ||||
6.50%, 02/01/2028 | 24,906 | 3,720 | ||||
7.00%, 09/01/2029 | 182,348 | 33,445 | ||||
7.50%, 12/15/2029 | 74,677 | 14,632 | ||||
6.00%, 12/15/2032 | 69,075 | 11,494 | ||||
23,388,558 | ||||||
Federal Home Loan Mortgage Corp. (FHLMC)–0.12% | ||||||
6.50%, 04/01/2021 to 04/01/2034 | 109,491 | 123,118 | ||||
6.00%, 01/01/2022 to 07/01/2024 | 250,739 | 275,732 | ||||
9.00%, 08/01/2022 to 05/01/2025 | 3,604 | 3,918 | ||||
8.50%, 05/01/2024 to 08/17/2026 | 65,162 | 66,047 | ||||
7.00%, 10/25/2024 to 03/01/2035 | 974,092 | 1,118,588 | ||||
7.50%, 01/01/2032 to 02/01/2032 | 546,174 | 638,506 | ||||
5.00%, 07/01/2033 to 06/01/2034 | 294,918 | 337,929 | ||||
5.50%, 09/01/2039 | 841,248 | 966,950 | ||||
ARM, | ||||||
2.28% (6 mo. USD LIBOR + 1.62%), 07/01/2036(d) | 27,221 | 28,372 | ||||
4.09% (1 yr. USD LIBOR + 2.07%), 02/01/2037(d) | 8,783 | 9,397 | ||||
4.08% (1 yr. USD LIBOR + 2.01%), 01/01/2038(d) | 7,420 | 7,841 | ||||
3,576,398 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||
Federal National Mortgage Association (FNMA)–0.32% | ||||||
5.00%, 09/01/2020 to 06/01/2022 | $ | 3,398 | $ 3,584 | |||
4.50%, 12/01/2020 | 71 | 75 | ||||
7.50%, 01/01/2021 to 08/01/2033 | 1,383,320 | 1,617,447 | ||||
8.00%, 12/01/2022 to 07/01/2032 | 122,042 | 125,667 | ||||
6.50%, 11/01/2023 to 10/01/2035 | 1,770,585 | 1,988,959 | ||||
7.00%, 11/01/2025 to 08/01/2036 | 2,263,703 | 2,590,042 | ||||
9.00%, 01/01/2030 | 37,414 | 38,314 | ||||
8.50%, 05/01/2030 to 07/01/2032 | 133,986 | 153,750 | ||||
6.00%, 06/01/2030 to 03/01/2037 | 2,092,586 | 2,468,761 | ||||
5.50%, 02/01/2035 to 05/01/2036 | 291,343 | 343,538 | ||||
ARM, | ||||||
3.90% (1 yr. U.S. Treasury Yield Curve Rate + 2.22%), 11/01/2032(d) | 19,043 | 19,132 | ||||
3.31% (1 yr. U.S. Treasury Yield Curve Rate + 2.21%), 05/01/2035(d) | 46,539 | 49,080 | ||||
3.60% (1 yr. USD LIBOR + 1.72%), 03/01/2038(d) | 10,935 | 11,533 | ||||
9,409,882 | ||||||
Government National Mortgage Association (GNMA)–0.09% | ||||||
7.75%, 02/15/2021 | 1,460 | 1,463 | ||||
8.00%, 02/15/2022 to 08/15/2028 | 11,747 | 11,815 | ||||
7.50%, 09/15/2022 to 11/15/2026 | 35,974 | 38,588 | ||||
6.50%, 07/15/2023 to 02/15/2034 | 607,977 | 676,831 | ||||
7.00%, 10/15/2026 to 01/20/2030 | 102,660 | 110,959 | ||||
8.50%, 07/20/2027 | 41,478 | 47,094 | ||||
IO, | ||||||
6.39% (6.55% - 1 mo. USD LIBOR), | 1,073,839 | 227,274 | ||||
6.49% (6.65% - 1 mo. USD LIBOR), | 1,684,627 | 305,353 | ||||
4.50%, 09/16/2047 | 3,509,068 | 526,235 | ||||
6.04% (6.20% - 1 mo. USD LIBOR), | 4,057,326 | 735,039 | ||||
2,680,651 | ||||||
Total U.S. Government Sponsored Agency Mortgage-Backed Securities |
| 39,055,489 | ||||
Agency Credit Risk Transfer Notes–0.77% | ||||||
Connecticut Avenue Securities Trust | ||||||
Series 2018-R07, Class 1M2, 2.58% (1 mo. USD LIBOR + 2.40%), 04/25/2031(b)(d) | 2,087,011 | 2,093,793 | ||||
Series 2019-R02, Class 1M2, 2.48% (1 mo. USD LIBOR + 2.30%), 08/25/2031(b)(d) | 984,064 | 988,047 |
Principal Amount | Value | |||||
Fannie Mae Connecticut Avenue Securities | ||||||
Series 2016-C02, Class 1M2, 6.18% (1 mo. USD LIBOR + 6.00%), 09/25/2028(d) | $ | 2,481,617 | $ 2,641,907 | |||
Series 2019-R03, Class 1M2, 2.33% (1 mo. USD LIBOR + 2.15%), 09/25/2031(b)(d) | 989,726 | 995,280 | ||||
Freddie Mac | ||||||
Series 2013-DN2, Class M2, STACR®, 4.43% (1 mo. USD LIBOR + 4.25%), | 2,373,075 | 2,113,927 | ||||
Series 2014-DN1, Class M2, STACR®, 2.38% (1 mo. USD LIBOR + 2.20%), | 152,193 | 152,553 | ||||
Series 2014-DN1, Class M3, STACR®, 4.68% (1 mo. USD LIBOR + 4.50%), | 1,260,000 | 1,093,938 | ||||
Series 2014-DN3, Class M3, STACR®, 4.18% (1 mo. USD LIBOR + 4.00%), | 1,645,088 | 1,687,648 | ||||
Series 2014-HQ2, Class M3, STACR®, 3.93% (1 mo. USD LIBOR + 3.75%), | 3,100,000 | 3,180,191 | ||||
Series 2014-DN4, Class M3, 4.73% (1 mo. USD LIBOR + 4.55%), 10/25/2024(d) | 273,409 | 281,155 | ||||
Series 2016-DNA2, Class M3, STACR®, 4.83% (1 mo. USD LIBOR + 4.65%), | 879,972 | 919,581 | ||||
Series 2018-HQA1, Class M2, STACR®, 2.48% (1 mo. USD LIBOR + 2.30%), | 1,227,980 | 1,214,984 | ||||
Series 2018-DNA2, Class M1, STACR®, 0.98% (1 mo. USD LIBOR + 0.80%), | 556,563 | 555,947 | ||||
Series 2018-HRP1, Class M2, STACR®, 1.83% (1 mo. USD LIBOR + 1.65%), 04/25/2043(b)(d) | 1,832,452 | 1,747,738 | ||||
Series 2018-HRP2, Class M2, STACR®, 1.43% (1 mo. USD LIBOR + 1.25%), | 1,897,859 | 1,842,349 | ||||
Series 2018-DNA3, Class M1, STACR®, 0.93% (1 mo. USD LIBOR + 0.75%), | 2,126 | 2,123 | ||||
Series 2018-HQA2, Class M1, STACR®, 0.93% (1 mo. USD LIBOR + 0.75%), | 364,551 | 363,989 | ||||
Series 2019-HRP1, Class M2, STACR®, 1.58% (1 mo. USD LIBOR + 1.40%), | 827,900 | 792,484 | ||||
Total Agency Credit Risk Transfer Notes |
| 22,667,634 | ||||
Shares | ||||||
Preferred Stocks–0.07% | ||||||
Regional Banks–0.07% | ||||||
PNC Financial Services Group, Inc. (The), 6.13%, Series P, Pfd. (Cost $1,875,000)(c) | 75,000 | 1,990,500 | ||||
Money Market Funds–5.25% |
| |||||
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(m)(n) | 53,818,254 | 53,818,254 | ||||
Invesco Liquid Assets Portfolio, Institutional Class, 0.12%(m)(n) | 39,607,382 | 39,631,147 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20 | Invesco Short Term Bond Fund |
Shares | Value | |||||
Money Market Funds–(continued) | ||||||
Invesco Treasury Portfolio, Institutional Class, 0.02%(m)(n) | 61,506,576 | $ 61,506,576 | ||||
Total Money Market Funds |
| 154,955,977 | ||||
TOTAL INVESTMENTS IN SECURITIES |
| 2,947,026,976 | ||||
Investments Purchased with Cash Collateral from Securities on Loan | ||||||
Money Market Funds–0.09% | ||||||
Invesco Private Government Fund, 0.03%(m)(n)(o) | 1,926,615 | 1,926,615 |
Shares | Value | |||||||
Money Market Funds–(continued) | ||||||||
Invesco Private Prime Fund, | 642,077 | $ | 642,205 | |||||
Total Investments Purchased with Cash Collateral from Securities on Loan |
| 2,568,820 | ||||||
TOTAL INVESTMENTS |
| 2,949,595,796 | ||||||
OTHER ASSETS LESS LIABILITIES–0.03% |
| 900,345 | ||||||
NET ASSETS–100.00% |
| $ | 2,950,496,141 |
Investment Abbreviations:
ARM | – Adjustable Rate Mortgage | |
CLO | – Collateralized Loan Obligation | |
COF | – Cost of Funds | |
Ctfs. | – Certificates | |
DAC | – Designated Activity Co. | |
IO | – Interest Only | |
LIBOR | – London Interbank Offered Rate | |
Pfd. | – Preferred | |
PO | – Principal only | |
REIT | – Real Estate Investment Trust | |
REMICs | – Real Estate Mortgage Investment Conduits | |
SOFR | – Secured Overnight Financing Rate | |
STACR® | – Structured Agency Credit Risk | |
STRIPS | – Separately Traded Registered Interest and Principal Security | |
USD | – U.S. Dollar |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2020 was $1,183,530,157, which represented 40.11% of the Fund’s Net Assets. |
(c) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
(d) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2020. |
(e) | Perpetual bond with no specified maturity date. |
(f) | All or a portion of this security was out on loan at August 31, 2020. |
(g) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
(h) | Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on August 31, 2020. |
(i) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on August 31, 2020. |
(j) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1J. |
(k) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(l) | Zero coupon bond issued at a discount. The interest rate shown represents the yield to maturity at issue. |
(m) | Affiliated issuer. The issuer and/or the Fund is a wholly-owned subsidiary of Invesco Ltd., or is affiliated by having an investment adviser that is under common control of Invesco Ltd. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the six months ended August 31, 2020. |
Value February 29, 2020 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain (Loss) | Value August 31, 2020 | Dividend Income | |||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: | |||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | 13,406,487 | $ | 207,564,071 | $ | (167,152,304 | ) | $ | - | $ | - | $ | 53,818,254 | $ | 31,472 | ||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 10,882,266 | 148,329,947 | (119,583,330 | ) | 5,150 | (2,886 | ) | 39,631,147 | 59,877 | ||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 15,321,700 | 237,216,080 | (191,031,204 | ) | - | - | 61,506,576 | 29,452 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21 | Invesco Short Term Bond Fund |
Value February 29, 2020 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain (Loss) | Value August 31, 2020 | Dividend Income | |||||||||||||||||||||||||||||
Investments Purchased with Cash Collateral from Securities on Loan: | |||||||||||||||||||||||||||||||||||
Invesco Private Government Fund | $ | - | $ | 1,926,615 | $ | - | $ | - | $ | - | $ | 1,926,615 | $ | 42* | |||||||||||||||||||||
Invesco Private Prime Fund | - | 642,205 | - | - | - | 642,205 | 33* | ||||||||||||||||||||||||||||
Total | $ | 39,610,453 | $ | 595,678,918 | $ | (477,766,838 | ) | $ | 5,150 | $ | (2,886 | ) | $ | 157,524,797 | $ | 120,876 | |||||||||||||||||||
* Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
|
(n) | The rate shown is the 7-day SEC standardized yield as of August 31, 2020. |
(o) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
Open Futures Contracts
Unrealized | ||||||||||||||||||
Number of | Expiration | Notional | Appreciation | |||||||||||||||
Long Futures Contracts | Contracts | Month | Value | Value | (Depreciation) | |||||||||||||
Interest Rate Risk | ||||||||||||||||||
U.S. Treasury 2 Year Notes | 5,343 | December-2020 | $ | 1,180,510,802 | $ | 558,331 | $ | 558,331 | ||||||||||
U.S. Treasury 10 Year Notes | 140 | December-2020 | 19,495,000 | 45,641 | 45,641 | |||||||||||||
Subtotal-Long Futures Contracts | 603,972 | 603,972 | ||||||||||||||||
Short Futures Contracts | ||||||||||||||||||
Interest Rate Risk | ||||||||||||||||||
U.S. Treasury Long Bonds | 56 | December-2020 | (9,840,250 | ) | 34,441 | 34,441 | ||||||||||||
U.S. Treasury 5 Year Notes | 4,718 | December-2020 | (594,615,437 | ) | (820,437 | ) | (820,437 | ) | ||||||||||
Subtotal-Short Futures Contracts | (785,996 | ) | (785,996 | ) | ||||||||||||||
Total Futures Contracts | $ | (182,024 | ) | $ | (182,024 | ) |
Portfolio Composition
By security type, based on Net Assets
as of August 31, 2020
U.S. Dollar Denominated Bonds & Notes | 63.31 | % | ||
Asset-Backed Securities | 22.91 | |||
U.S. Treasury Securities | 6.25 | |||
U.S. Government Sponsored Agency Mortgage-Backed Securities | 1.32 | |||
Security Types Each Less Than 1% of Portfolio | 0.84 | |||
Money Market Funds Plus Other Assets Less Liabilities | 5.37 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
22 | Invesco Short Term Bond Fund |
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 2,792,070,999 | ||
| ||||
Investments in affiliated money market funds, at value (Cost $ 157,518,207)* | 157,524,797 | |||
| ||||
Receivable for: | ||||
Investments sold | 119,790,035 | |||
| ||||
Fund shares sold | 6,719,273 | |||
| ||||
Dividends | 6,498 | |||
| ||||
Interest | 15,433,824 | |||
| ||||
Principal paydowns | 176 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 238,218 | |||
| ||||
Other assets | 140,115 | |||
| ||||
Total assets | 3,091,923,935 | |||
| ||||
Liabilities: | ||||
Other investments: | ||||
Variation margin payable - futures contracts | 225,261 | |||
| ||||
Payable for: | ||||
Investments purchased | 129,784,757 | |||
| ||||
Dividends | 852,606 | |||
| ||||
Fund shares reacquired | 6,607,620 | |||
| ||||
Amount due custodian | 167,600 | |||
| ||||
Collateral upon return of securities loaned | 2,568,820 | |||
| ||||
Accrued fees to affiliates | 690,949 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 60,913 | |||
| ||||
Accrued other operating expenses | 218,759 | |||
| ||||
Trustee deferred compensation and retirement plans | 250,509 | |||
| ||||
Total liabilities | 141,427,794 | |||
| ||||
Net assets applicable to shares outstanding | $ | 2,950,496,141 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 2,911,520,447 | ||
| ||||
Distributable earnings | 38,975,694 | |||
| ||||
$ | 2,950,496,141 | |||
|
Net Assets: | ||||
Class A | $ | 1,433,008,649 | ||
| ||||
Class C | $ | 250,200,953 | ||
| ||||
Class R | $ | 46,468,278 | ||
| ||||
Class Y | $ | 581,717,419 | ||
| ||||
Class R5 | $ | 571,409 | ||
| ||||
Class R6 | $ | 638,529,433 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 165,739,967 | |||
| ||||
Class C | 28,930,537 | |||
| ||||
Class R | 5,360,724 | |||
| ||||
Class Y | 67,246,453 | |||
| ||||
Class R5 | 66,196 | |||
| ||||
Class R6 | 73,762,307 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 8.65 | ||
| ||||
Maximum offering price per share | $ | 8.87 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 8.65 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 8.67 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 8.65 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 8.63 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 8.66 | ||
| ||||
* At August 31, 2020, securities with an aggregate value of $2,515,296 were on loan to brokers. |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
23 | Invesco Short Term Bond Fund |
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Interest | $ | 30,804,777 | ||
| ||||
Dividends from affiliated money market funds (includes securities lending income of $238) | 121,039 | |||
| ||||
Dividends | 56,675 | |||
| ||||
Total investment income | 30,982,491 | |||
| ||||
Expenses: | ||||
Advisory fees | 3,775,257 | |||
| ||||
Administrative services fees | 167,781 | |||
| ||||
Custodian fees | 11,017 | |||
| ||||
Distribution fees: | ||||
Class A | 792,077 | |||
| ||||
Class C | 700,977 | |||
| ||||
Class R | 73,890 | |||
| ||||
Transfer agent fees – A, C, R and Y | 957,173 | |||
| ||||
Transfer agent fees – R5 | 107 | |||
| ||||
Transfer agent fees – R6 | 17,020 | |||
| ||||
Trustees’ and officers’ fees and benefits | 2,947 | |||
| ||||
Registration and filing fees | 67,720 | |||
| ||||
Reports to shareholders | 51,927 | |||
| ||||
Professional services fees | 28,259 | |||
| ||||
Other | 4,382 | |||
| ||||
Total expenses | 6,650,534 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (211,605 | ) | ||
| ||||
Net expenses | 6,438,929 | |||
| ||||
Net investment income | 24,543,562 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (9,612,332 | ) | ||
| ||||
Futures contracts | (1,137,027 | ) | ||
| ||||
(10,749,359 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 50,930,763 | |||
| ||||
Futures contracts | (1,563,662 | ) | ||
| ||||
49,367,101 | ||||
| ||||
Net realized and unrealized gain | 38,617,742 | |||
| ||||
Net increase in net assets resulting from operations | $ | 63,161,304 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
24 | Invesco Short Term Bond Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2020 and the year ended February 29, 2020
(Unaudited)
August 31, 2020 | February 29, 2020 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 24,543,562 | $ | 41,900,947 | ||||
| ||||||||
Net realized gain (loss) | (10,749,359 | ) | 4,950,162 | |||||
| ||||||||
Change in net unrealized appreciation | 49,367,101 | 30,650,775 | ||||||
| ||||||||
Net increase in net assets resulting from operations | 63,161,304 | 77,501,884 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (12,585,740 | ) | (16,160,643 | ) | ||||
| ||||||||
Class C | (2,089,038 | ) | (3,285,936 | ) | ||||
| ||||||||
Class R | (282,815 | ) | (135,343 | ) | ||||
| ||||||||
Class Y | (4,898,713 | ) | (3,995,040 | ) | ||||
| ||||||||
Class R5 | (7,067 | ) | (26,897 | ) | ||||
| ||||||||
Class R6 | (8,701,958 | ) | (18,708,844 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (28,565,331 | ) | (42,312,703 | ) | ||||
| ||||||||
Return of capital: | ||||||||
Class A | – | (535,685 | ) | |||||
| ||||||||
Class C | – | (125,484 | ) | |||||
| ||||||||
Class R | – | (5,167 | ) | |||||
| ||||||||
Class Y | – | (125,179 | ) | |||||
| ||||||||
Class R5 | – | (808 | ) | |||||
| ||||||||
Class R6 | – | (561,735 | ) | |||||
| ||||||||
Total return of capital | – | (1,354,058 | ) | |||||
| ||||||||
Total distributions | (28,565,331 | ) | (43,666,761 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | 758,495,674 | 50,529,808 | ||||||
| ||||||||
Class C | 88,814,943 | 15,578,415 | ||||||
| ||||||||
Class R | 39,174,014 | 1,051,000 | ||||||
| ||||||||
Class Y | 424,046,614 | 8,664,195 | ||||||
| ||||||||
Class R5 | 74,247 | (1,300,316 | ) | |||||
| ||||||||
Class R6 | (6,732,677 | ) | 66,689,262 | |||||
| ||||||||
Net increase in net assets resulting from share transactions | 1,303,872,815 | 141,212,364 | ||||||
| ||||||||
Net increase in net assets | 1,338,468,788 | 175,047,487 | ||||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 1,612,027,353 | 1,436,979,866 | ||||||
| ||||||||
End of period | $ | 2,950,496,141 | $ | 1,612,027,353 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
25 | Invesco Short Term Bond Fund |
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average | to average net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(losses) | net assets | assets without | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | on securities | Dividends | with fee waivers | fee waivers | investment | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | (both | Total from | from net | Net asset | Net assets, | and/or | and/or | income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | Return of | Total | value, end | Total | end of period | expenses | expenses | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
of period | income(a) | unrealized) | operations | income | capital | distributions | of period | return (b) | (000’s omitted) | absorbed | absorbed | net assets | turnover (c) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $ | 8.66 | $ | 0.09 | $ | 0.00 | $ | 0.09 | $ | (0.10 | ) | $ | – | $ | (0.10 | ) | $ | 8.65 | 1.10 | % | $ | 1,433,009 | 0.60 | %(d) | 0.60 | %(d) | 1.99 | %(d) | 123 | % | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.47 | 0.23 | 0.20 | 0.43 | (0.23 | ) | (0.01 | ) | (0.24 | ) | 8.66 | 5.08 | 655,357 | 0.65 | 0.65 | 2.62 | 155 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.51 | 0.21 | (0.03 | ) | 0.18 | (0.22 | ) | – | (0.22 | ) | 8.47 | 2.19 | 591,443 | 0.64 | 0.65 | 2.52 | 176 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.61 | 0.17 | (0.10 | ) | 0.07 | (0.17 | ) | – | (0.17 | ) | 8.51 | 0.79 | 395,766 | 0.65 | 0.66 | 1.98 | 198 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 8.47 | 0.14 | 0.15 | 0.29 | (0.15 | ) | – | (0.15 | ) | 8.61 | 3.39 | 435,592 | 0.65 | 0.66 | 1.59 | 294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 8.65 | 0.15 | (0.16 | ) | (0.01 | ) | (0.17 | ) | – | (0.17 | ) | 8.47 | (0.12 | ) | 379,091 | 0.68 | 0.68 | 1.72 | 200 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.66 | 0.07 | 0.01 | 0.08 | (0.09 | ) | – | (0.09 | ) | 8.65 | 0.89 | 250,201 | 0.95 | (d) | 0.95 | (d) | 1.64 | (d) | 123 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.47 | 0.19 | 0.21 | 0.40 | (0.20 | ) | (0.01 | ) | (0.21 | ) | 8.66 | 4.71 | 158,968 | 1.00 | 1.15 | 2.27 | 155 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.51 | 0.18 | (0.03 | ) | 0.15 | (0.19 | ) | – | (0.19 | ) | 8.47 | 1.83 | 140,247 | 0.99 | 1.15 | 2.17 | 176 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.61 | 0.14 | (0.10 | ) | 0.04 | (0.14 | ) | – | (0.14 | ) | 8.51 | 0.44 | 391,791 | 1.00 | 1.16 | 1.63 | 198 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 8.47 | 0.11 | 0.15 | 0.26 | (0.12 | ) | – | (0.12 | ) | 8.61 | 3.03 | 451,018 | 1.00 | 1.16 | 1.24 | 294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 8.65 | 0.12 | (0.16 | ) | (0.04 | ) | (0.14 | ) | – | (0.14 | ) | 8.47 | (0.47 | ) | 443,163 | 1.03 | 1.18 | 1.37 | 200 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.68 | 0.07 | 0.01 | 0.08 | (0.09 | ) | – | (0.09 | ) | 8.67 | 0.92 | 46,468 | 0.95 | (d) | 0.95 | (d) | 1.64 | (d) | 123 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.49 | 0.20 | 0.20 | 0.40 | (0.20 | ) | (0.01 | ) | (0.21 | ) | 8.68 | 4.70 | 6,210 | 1.00 | 1.00 | 2.27 | 155 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.53 | 0.18 | (0.03 | ) | 0.15 | (0.19 | ) | – | (0.19 | ) | 8.49 | 1.84 | 5,035 | 0.99 | 1.00 | 2.17 | 176 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.62 | 0.14 | (0.09 | ) | 0.05 | (0.14 | ) | – | (0.14 | ) | 8.53 | 0.55 | 4,693 | 1.00 | 1.01 | 1.63 | 198 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 8.49 | 0.11 | 0.14 | 0.25 | (0.12 | ) | – | (0.12 | ) | 8.62 | 2.90 | 6,466 | 1.00 | 1.01 | 1.24 | 294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 8.66 | 0.12 | (0.15 | ) | (0.03 | ) | (0.14 | ) | – | (0.14 | ) | 8.49 | (0.35 | ) | 4,068 | 1.03 | 1.03 | 1.37 | 200 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.66 | 0.09 | 0.01 | 0.10 | (0.11 | ) | – | (0.11 | ) | 8.65 | 1.17 | 581,717 | 0.45 | (d) | 0.45 | (d) | 2.14 | (d) | 123 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.48 | 0.24 | 0.19 | 0.43 | (0.24 | ) | (0.01 | ) | (0.25 | ) | 8.66 | 5.11 | 146,159 | 0.50 | 0.50 | 2.77 | 155 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.52 | 0.23 | (0.03 | ) | 0.20 | (0.24 | ) | – | (0.24 | ) | 8.48 | 2.35 | 134,272 | 0.49 | 0.50 | 2.67 | 176 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.61 | 0.18 | (0.09 | ) | 0.09 | (0.18 | ) | – | (0.18 | ) | 8.52 | 1.06 | 128,874 | 0.50 | 0.51 | 2.13 | 198 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 8.48 | 0.15 | 0.14 | 0.29 | (0.16 | ) | – | (0.16 | ) | 8.61 | 3.42 | 129,794 | 0.50 | 0.51 | 1.74 | 294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 8.65 | 0.16 | (0.15 | ) | 0.01 | (0.18 | ) | – | (0.18 | ) | 8.48 | 0.15 | 56,237 | 0.53 | 0.53 | 1.87 | 200 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.65 | 0.09 | 0.00 | 0.09 | (0.11 | ) | – | (0.11 | ) | 8.63 | 1.11 | 571 | 0.38 | (d) | 0.38 | (d) | 2.21 | (d) | 123 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.47 | 0.25 | 0.18 | 0.43 | (0.24 | ) | (0.01 | ) | (0.25 | ) | 8.65 | 5.20 | 496 | 0.40 | 0.40 | 2.87 | 155 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.51 | 0.23 | (0.03 | ) | 0.20 | (0.24 | ) | – | (0.24 | ) | 8.47 | 2.45 | 1,765 | 0.39 | 0.40 | 2.77 | 176 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.60 | 0.19 | (0.09 | ) | 0.10 | (0.19 | ) | – | (0.19 | ) | 8.51 | 1.17 | 1,699 | 0.38 | 0.39 | 2.25 | 198 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 8.47 | 0.16 | 0.14 | 0.30 | (0.17 | ) | – | (0.17 | ) | 8.60 | 3.54 | 1,220 | 0.39 | 0.40 | 1.85 | 294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 8.64 | 0.17 | (0.15 | ) | 0.02 | (0.19 | ) | – | (0.19 | ) | 8.47 | 0.26 | 1,165 | 0.43 | 0.43 | 1.97 | 200 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 8.67 | 0.10 | 0.00 | 0.10 | (0.11 | ) | – | (0.11 | ) | 8.66 | 1.23 | 638,529 | 0.35 | (d) | 0.35 | (d) | 2.24 | (d) | 123 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.49 | 0.25 | 0.19 | 0.44 | (0.25 | ) | (0.01 | ) | (0.26 | ) | 8.67 | 5.23 | 644,838 | 0.37 | 0.37 | 2.90 | 155 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.53 | 0.24 | (0.03 | ) | 0.21 | (0.25 | ) | – | (0.25 | ) | 8.49 | 2.46 | 564,219 | 0.38 | 0.39 | 2.78 | 176 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.62 | 0.19 | (0.09 | ) | 0.10 | (0.19 | ) | – | (0.19 | ) | 8.53 | 1.17 | 575,750 | 0.38 | 0.39 | 2.25 | 198 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/17 | 8.48 | 0.16 | 0.15 | 0.31 | (0.17 | ) | – | (0.17 | ) | 8.62 | 3.66 | 499,674 | 0.39 | 0.40 | 1.85 | 294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/29/16 | 8.66 | 0.17 | (0.16 | ) | 0.01 | (0.19 | ) | – | (0.19 | ) | 8.48 | 0.14 | 63,201 | 0.42 | 0.42 | 1.98 | 200 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the six months ended August 31, 2020, the portfolio turnover calculation excludes the value of securities purchased of $1,288,591,313 in connection with the acquisition of Invesco Oppenheimer Limited-Term Bond Fund into the Fund. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $1,074,496, $213,950, $29,324, $399,476, $532 and $653,542 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
26 | Invesco Short Term Bond Fund |
August 31, 2020
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Short Term Bond Fund (the “Fund”), is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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 total return, comprised of current income and capital appreciation.
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. 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. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares. Effective November 30, 2020, the automatic conversion pursuant to the Conversion Feature will change from ten years to eight years. The first conversion of Class C shares to Class A shares would occur at the end of December 2020 for all Class C shares that were held for more than eight years as of November 30, 2020.
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. |
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.
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.
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, 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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash |
27 | Invesco Short Term Bond Fund |
dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and 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 realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions – Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
J. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference |
28 | Invesco Short Term Bond Fund |
between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
K. | LIBOR Risk – The Fund may invest in instruments that use or may use a floating reference rate based on LIBOR. On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021. There remains uncertainty regarding the future utilization of LIBOR and the nature of any replacement rate. As a result, any impact of a transition away from LIBOR on the Fund or the instruments in which the Fund invests cannot yet be determined. Industry initiatives are underway to identify alternative reference rates; however, there is no assurance that the composition or characteristics of any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. As a result, the transition process might lead to increased volatility and reduced liquidity in markets that currently rely on LIBOR to determine interest rates; a reduction in the value of some LIBOR-based investments; and/or costs incurred in connection with closing out positions and entering into new agreements. These effects could occur prior to the end of 2021 as the utility of LIBOR as a reference rate could deteriorate during the transition period. |
L. | Other Risks – Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
M. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
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 $500 million | 0.350% | |
Next $500 million | 0.325% | |
Next $1.5 billion | 0.300% | |
Next $2.5 billion | 0.290% | |
Over $5 billion | 0.280% |
For the six months ended August 31, 2020, the effective advisory fee rate incurred by the Fund was 0.32%.
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. (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).
Effective May 15, 2020, the Adviser has contractually agreed, through at least May 31, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 0.75%, 1.59% (after 12b-1 fee waivers), 1.09%, 0.45%, 0.44% and 0.39%, respectively, of average daily net assets (the “expense limits”). Prior to May 15, 2020, the Adviser had contractually agreed, through at least June 30, 2020, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.40%, 1.75% (after 12b-1 fee waivers), 1.75%, 1.25%,1.25% and 1.25%, respectively, of 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 the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary items or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on 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. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
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 (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended August 31, 2020, the Adviser waived advisory fees of $47,735.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.15% of the Fund’s average daily net assets of Class A shares, 0.65% 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 Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. IDI has contractually agreed, through at least June 30, 2021, to waive 12b-1 fees for Class C shares to the extent necessary to limit
29 | Invesco Short Term Bond Fund |
12b-1 fees to 0.50% of average daily net assets. 12b-1 fees before fee waivers under this agreement are shown as Distribution fees in the Statement of Operations. For the six months ended August 31, 2020, 12b-1 fees incurred for Class C shares were $539,213 after fee waivers of $161,764.
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 August 31, 2020, IDI advised the Fund that IDI retained $45,406 in front-end sales commissions from the sale of Class A shares and $73,126 and $4,000 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
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 August 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 | Total | |||||||||||||
| ||||||||||||||||
Investments in Securities | ||||||||||||||||
| ||||||||||||||||
U.S. Dollar Denominated Bonds & Notes | $ | – | $ | 1,867,840,856 | $ | – | $ | 1,867,840,856 | ||||||||
| ||||||||||||||||
Asset-Backed Securities | – | 676,083,769 | – | 676,083,769 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Securities | – | 184,432,751 | – | 184,432,751 | ||||||||||||
| ||||||||||||||||
U.S. Government Sponsored Agency Mortgage-Backed Securities | – | 39,055,489 | – | 39,055,489 | ||||||||||||
| ||||||||||||||||
Agency Credit Risk Transfer Notes | – | 22,667,634 | – | 22,667,634 | ||||||||||||
| ||||||||||||||||
Preferred Stocks | 1,990,500 | – | – | 1,990,500 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 154,955,977 | 2,568,820 | – | 157,524,797 | ||||||||||||
| ||||||||||||||||
Total Investments in Securities | 156,946,477 | 2,792,649,319 | — | 2,949,595,796 | ||||||||||||
| ||||||||||||||||
Other Investments – Assets* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | 638,413 | – | – | 638,413 | ||||||||||||
| ||||||||||||||||
Other Investments – Liabilities* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | (820,437 | ) | – | – | (820,437 | ) | ||||||||||
| ||||||||||||||||
Total Other Investments | (182,024 | ) | – | – | (182,024 | ) | ||||||||||
| ||||||||||||||||
Total Investments | $ | 156,764,453 | $ | 2,792,649,319 | $– | $ | 2,949,413,772 | |||||||||
|
* | Unrealized appreciation (depreciation). |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of August 31, 2020:
Value | ||||
Derivative Assets | Interest Rate Risk | |||
| ||||
Unrealized appreciation on futures contracts – Exchange-Traded(a) | $ | 638,413 | ||
| ||||
Derivatives not subject to master netting agreements | (638,413 | ) | ||
| ||||
Total Derivative Assets subject to master netting agreements | $ | - | ||
|
30 | Invesco Short Term Bond Fund |
Value | ||||
Derivative Liabilities | Interest Rate Risk | |||
| ||||
Unrealized depreciation on futures contracts – Exchange-Traded(a) | $ | (820,437 | ) | |
| ||||
Derivatives not subject to master netting agreements | 820,437 | |||
| ||||
Total Derivative Liabilities subject to master netting agreements | $ | - | ||
|
(a) | The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the six months ended August 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations | ||||
Interest Rate Risk | ||||
| ||||
Realized Gain (Loss): | ||||
Futures contracts | $(1,137,027) | |||
| ||||
Change in Net Unrealized Appreciation (Depreciation): | ||||
Futures contracts | (1,563,662) | |||
| ||||
Total | $(2,700,689) | |||
|
The table below summarizes the average notional value of derivatives held during the period.
Futures Contracts | ||||
| ||||
Average notional value | $ | 1,474,319,008 | ||
|
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,106.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund may borrow for leveraging in an amount up to 5% of the Fund’s total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, 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. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of February 29, 2020, as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
Not subject to expiration | $ | 1,996,807 | $ | 15,140,867 | $ | 17,137,674 |
* | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
31 | Invesco Short Term Bond Fund |
NOTE 9—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 August 31, 2020 was $431,593,273 and $538,312,359, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $1,403,388,616 and $1,369,873,666, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $ | 88,980,143 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (17,966,294 | ) | ||
| ||||
Net unrealized appreciation of investments | $ | 71,013,849 | ||
|
Cost of investments for tax purposes is $2,878,399,923.
NOTE 10—Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2020(a) | Year ended February 29, 2020 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 28,350,464 | $ | 240,959,373 | 32,376,390 | $ | 278,032,431 | ||||||||||
| ||||||||||||||||
Class C | 6,535,160 | 55,599,746 | 9,715,952 | 83,413,841 | ||||||||||||
| ||||||||||||||||
Class R | 657,214 | 5,625,135 | 387,350 | 3,330,963 | ||||||||||||
| ||||||||||||||||
Class Y | 20,714,088 | 176,261,746 | 13,106,059 | 112,222,859 | ||||||||||||
| ||||||||||||||||
Class R5 | 9,489 | 79,251 | 34,651 | 295,779 | ||||||||||||
| ||||||||||||||||
Class R6 | 5,839,753 | 49,744,980 | 17,128,603 | 146,435,536 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 1,244,967 | 10,619,272 | 1,637,769 | 14,070,280 | ||||||||||||
| ||||||||||||||||
Class C | 202,068 | 1,719,728 | 323,868 | 2,780,819 | ||||||||||||
| ||||||||||||||||
Class R | 32,446 | 278,855 | 16,109 | 138,633 | ||||||||||||
| ||||||||||||||||
Class Y | 349,934 | 2,994,752 | 297,910 | 2,559,622 | ||||||||||||
| ||||||||||||||||
Class R5 | 809 | 6,863 | 2,837 | 24,269 | ||||||||||||
| ||||||||||||||||
Class R6 | 1,006,117 | 8,554,072 | 2,213,330 | 19,039,098 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 1,962,827 | 16,884,929 | 1,433,718 | 12,281,863 | ||||||||||||
| ||||||||||||||||
Class C | (1,962,787 | ) | (16,884,929 | ) | (1,434,559 | ) | (12,281,863 | ) | ||||||||
| ||||||||||||||||
Issued in connection with acquisitions:(b) | ||||||||||||||||
Class A | 81,158,649 | 682,135,260 | - | - | ||||||||||||
| ||||||||||||||||
Class C | 11,583,605 | 97,310,533 | - | - | ||||||||||||
| ||||||||||||||||
Class R | 4,433,094 | 37,326,256 | - | - | ||||||||||||
| ||||||||||||||||
Class Y | 45,739,122 | 384,550,934 | - | - | ||||||||||||
| ||||||||||||||||
Class R5 | 1,183 | 9,928 | - | - | ||||||||||||
| ||||||||||||||||
Class R6 | 15,510,515 | 130,528,698 | - | - | ||||||||||||
|
32 | Invesco Short Term Bond Fund |
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2020(a) | Year ended February 29, 2020 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (22,633,096 | ) | $ | (192,103,160 | ) | (29,583,975 | ) | $ | (253,854,766 | ) | ||||||
| ||||||||||||||||
Class C | (5,788,598 | ) | (48,930,135 | ) | (6,802,635 | ) | (58,334,382 | ) | ||||||||
| ||||||||||||||||
Class R | (477,600 | ) | (4,056,232 | ) | (280,988 | ) | (2,418,596 | ) | ||||||||
| ||||||||||||||||
Class Y | (16,424,720 | ) | (139,760,818 | ) | (12,376,838 | ) | (106,118,286 | ) | ||||||||
| ||||||||||||||||
Class R5 | (2,589 | ) | (21,795 | ) | (188,630 | ) | (1,620,364 | ) | ||||||||
| ||||||||||||||||
Class R6 | (22,939,774 | ) | (195,560,427 | ) | (11,488,662 | ) | (98,785,372 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | 155,102,340 | $ | 1,303,872,815 | 16,518,259 | $ | 141,212,364 | ||||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 35% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. 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, third party record keeping and account servicing and administrative services. 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. |
(b) | After the close of business on May 15, 2020, the Fund acquired all the net assets of Invesco Oppenheimer Limited-Term Bond Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Board of Trustees of the Fund on February 14, 2020. The reorganization was executed in order to reduce overlap and increase efficiencies in the Adviser’s product line. The acquisition was accomplished by a tax-free exchange of 158,426,168 shares of the Fund for 298,121,720 shares outstanding of the Target Fund as of the close of business on May 15, 2020. Shares of the Target Fund were exchanged for the like class of shares of the Fund, based on the relative net asset value of the Target Fund to the net asset value of the Fund on the close of business, May 15, 2020. The Target Fund’s net assets as of the close of business on May 15, 2020 of $1,331,861,609, including $(3,211,961) of unrealized appreciation (depreciation), were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $1,589,317,925 and $2,921,179,534 immediately after the acquisition. |
The pro forma results of operations for the six months ended August 31, 2020 assuming the reorganization had been completed on March 1, 2020, the beginning of the semi-annual reporting period are as follows:
Net investment income | $ | 33,210,859 | ||
| ||||
Net realized/unrealized gain (loss) | (10,291,984 | ) | ||
| ||||
Change in net assets resulting from operations | $ | 22,918,875 | ||
|
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.
33 | Invesco Short Term Bond Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||
(5% annual return before | ||||||||||||
ACTUAL | expenses) | |||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||
(03/01/20) | (08/31/20)1 | Period2 | (08/31/20) | Period2 | Ratio | |||||||
Class A | $1,000.00 | $1,011.00 | $3.04 | $1,022.18 | $3.06 | 0.60% | ||||||
Class C | 1,000.00 | 1,008.90 | 4.81 | 1,020.42 | 4.84 | 0.95 | ||||||
Class R | 1,000.00 | 1,009.20 | 4.81 | 1,020.42 | 4.84 | 0.95 | ||||||
Class Y | 1,000.00 | 1,011.70 | 2.28 | 1,022.94 | 2.29 | 0.45 | ||||||
Class R5 | 1,000.00 | 1,011.10 | 1.93 | 1,023.29 | 1.94 | 0.38 | ||||||
Class R6 | 1,000.00 | 1,012.30 | 1.78 | 1,023.44 | 1.79 | 0.35 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
34 | Invesco Short Term Bond Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Short Term Bond Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate
sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment
analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2019 to the performance of funds in the Broadridge performance universe and against the Bloomberg Barclays U.S. Government & Credit 1-3 Year Index. The Board noted that performance of Class A shares of the Fund was in the second quintile of its performance universe for the one, three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was above the performance of the Index for the one, three and five year periods. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified
35 | Invesco Short Term Bond Fund |
percentage of average daily net assets for each class of the Fund.
The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain Funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. Invesco Advisers noted that the Fund does not execute brokerage transactions through “soft dollar” arrangements to any significant degree.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 (collectively referred to as “affiliated money market funds”) advised by Invesco Advisers pursuant to procedures approved by the Board. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the costs to the Fund of such investments. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
36 | Invesco Short Term Bond Fund |
The following table sets forth on a per share basis the distribution that was paid in July 2020. Included in the table is a written statement of the sources of the distribution on a GAAP basis.
Gain from | ||||||||||
Net Income | Sale of Securities | Return of Principal | Total Distribution | |||||||
| ||||||||||
07/31/2020 | Class A | $0.0150 | $0.000 | $0.0018 | $0.0168 | |||||
| ||||||||||
07/31/2020 | Class C | $0.0113 | $0.000 | $0.0018 | $0.0131 | |||||
| ||||||||||
07/31/2020 | Class R | $0.0124 | $0.000 | $0.0018 | $0.0142 | |||||
| ||||||||||
07/31/2020 | Class Y | $0.0159 | $0.000 | $0.0018 | $0.0177 | |||||
| ||||||||||
07/31/2020 | Class R5 | $0.0185 | $0.000 | $0.0018 | $0.0203 | |||||
| ||||||||||
07/31/2020 | Class R6 | $0.0167 | $0.000 | $0.0018 | $0.0185 | |||||
|
Please note that the information in the preceding chart is for financial accounting purposes only. Shareholders should be aware that the tax treatment of distributions likely differs from GAAP treatment. Form 1099-DIV for the calendar year will report distributions for U.S. federal income tax purposes. This notice is sent to comply with certain U.S. Securities and Exchange Commission requirements.
37 | Invesco Short Term Bond Fund |
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Go paperless with eDelivery
Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
With eDelivery, you can elect to have any or all of the following materials delivered straight to your inbox to download, save and print from your own computer:
∎ | Fund reports and prospectuses |
∎ | Quarterly statements |
∎ | Daily confirmations |
∎ | Tax forms |
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on
Form N-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Form N-PORT filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246, or at invesco.com/ proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-05686 and 033-39519 | Invesco Distributors, Inc. | STB-SAR-1 |
| ||||
Semiannual Report to Shareholders
| August 31, 2020 | |||
| ||||
Invesco U.S. Government Money Portfolio | ||||
Effective September 30, 2020, Invesco Oppenheimer Government Money Market Fund was renamed Invesco U.S. Government Money Portfolio. | ||||
Nasdaq: | ||||
Invesco Cash Reserve: GMQXX ∎ C: GMCXX ∎ R: GMLXX ∎ Y: OMBXX ∎ R6: GMRXX |
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.
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
You could lose money by investing in the Fund. Although the Fund seeks to preserve your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risks associated with an investment in the Fund.
Team managed by Invesco Advisers, Inc.
2 | Invesco U.S. Government Money Portfolio |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. |
This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
| Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.” In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it. |
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
3 | Invesco U.S. Government Money Portfolio |
August 31, 2020
(Unaudited)
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||
| ||||||||||||||||
U.S. Government Sponsored Agency Securities-36.76% | ||||||||||||||||
Federal Farm Credit Bank (FFCB)-4.10% | ||||||||||||||||
Federal Farm Credit Bank(a) | 0.25 | % | 09/01/2020 | $ | 5,000 | $ | 5,000,000 | |||||||||
Federal Farm Credit Bank(a) | 0.40 | % | 12/31/2020 | 4,000 | 3,994,622 | |||||||||||
Federal Farm Credit Bank (1 mo. USD LIBOR + 0.08%)(b) | 0.23 | % | 02/01/2021 | 10,000 | 10,003,728 | |||||||||||
Federal Farm Credit Bank (1 mo. USD LIBOR + 0.00%)(b) | 0.16 | % | 03/17/2021 | 15,000 | 15,000,000 | |||||||||||
Federal Farm Credit Bank (SOFR + 0.28%)(b) | 0.37 | % | 10/01/2021 | 15,000 | 15,000,000 | |||||||||||
Federal Farm Credit Bank (SOFR + 0.19%)(b) | 0.28 | % | 07/14/2022 | 7,000 | 7,000,000 | |||||||||||
Federal Farm Credit Bank (SOFR + 0.07%)(b) | 0.16 | % | 08/11/2022 | 10,000 | 10,000,000 | |||||||||||
| ||||||||||||||||
65,998,350 | ||||||||||||||||
| ||||||||||||||||
Federal Home Loan Bank (FHLB)-25.28% | ||||||||||||||||
Federal Home Loan Bank(a) | 0.29 | % | 09/04/2020 | 16,000 | 15,999,613 | |||||||||||
Federal Home Loan Bank (SOFR + 0.09%)(b) | 0.18 | % | 09/11/2020 | 35,000 | 35,000,000 | |||||||||||
Federal Home Loan Bank | 1.63 | % | 09/11/2020 | 5,055 | 5,056,596 | |||||||||||
Federal Home Loan Bank (SOFR + 0.08%)(b) | 0.17 | % | 09/22/2020 | 5,000 | 5,000,000 | |||||||||||
Federal Home Loan Bank(a) | 0.14 | % | 09/23/2020 | 8,000 | 7,998,582 | |||||||||||
Federal Home Loan Bank (1 mo. USD LIBOR - 0.05%)(b) | 0.12 | % | 10/15/2020 | 30,000 | 30,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.10%)(b) | 0.19 | % | 10/19/2020 | 10,000 | 10,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.03%)(b) | 0.12 | % | 10/22/2020 | 13,000 | 13,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.08%)(b) | 0.17 | % | 10/23/2020 | 7,000 | 7,000,000 | |||||||||||
Federal Home Loan Bank(a) | 0.52 | % | 11/09/2020 | 32,000 | 31,968,107 | |||||||||||
Federal Home Loan Bank(a) | 0.26 | % | 11/13/2020 | 14,000 | 13,992,619 | |||||||||||
Federal Home Loan Bank(a) | 0.30 | % | 11/16/2020 | 14,000 | 13,991,133 | |||||||||||
Federal Home Loan Bank (SOFR + 0.02%)(b) | 0.11 | % | 11/25/2020 | 15,000 | 15,000,000 | |||||||||||
Federal Home Loan Bank(a) | 0.34 | % | 11/25/2020 | 16,000 | 15,987,156 | |||||||||||
Federal Home Loan Bank (SOFR + 0.01%)(b) | 0.10 | % | 12/04/2020 | 15,000 | 15,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.12%)(b) | 0.21 | % | 12/11/2020 | 10,000 | 10,000,000 | |||||||||||
Federal Home Loan Bank(a) | 0.27 | % | 12/14/2020 | 14,000 | 13,989,080 | |||||||||||
Federal Home Loan Bank (SOFR + 0.05%)(b) | 0.14 | % | 12/15/2020 | 20,000 | 20,000,000 | |||||||||||
Federal Home Loan Bank (1 mo. USD LIBOR - 0.04%)(b) | 0.11 | % | 12/18/2020 | 10,000 | 10,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.11%)(b) | 0.20 | % | 12/18/2020 | 10,000 | 10,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.14%)(b) | 0.23 | % | 01/08/2021 | 15,000 | 15,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.13%)(b) | 0.22 | % | 03/11/2021 | 30,000 | 30,000,000 | |||||||||||
Federal Home Loan Bank | 0.38 | % | 03/11/2021 | 8,500 | 8,495,748 | |||||||||||
Federal Home Loan Bank (SOFR + 0.11%)(b) | 0.20 | % | 03/25/2021 | 7,000 | 7,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.07%)(b) | 0.16 | % | 04/21/2021 | 13,000 | 13,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.16%)(b) | 0.25 | % | 05/07/2021 | 6,000 | 6,001,035 | |||||||||||
Federal Home Loan Bank (SOFR + 0.10%)(b) | 0.19 | % | 07/09/2021 | 12,000 | 12,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.15%)(b) | 0.24 | % | 11/15/2021 | 10,000 | 10,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.06%)(b) | 0.15 | % | 02/11/2022 | 7,000 | 7,000,000 | |||||||||||
| ||||||||||||||||
407,479,669 | ||||||||||||||||
| ||||||||||||||||
Federal Home Loan Mortgage Corp. (FHLMC)-2.98% | ||||||||||||||||
Federal Home Loan Mortgage Corp. (SOFR + 0.04%)(b) | 0.13 | % | 09/10/2020 | 33,000 | 33,000,000 | |||||||||||
Federal Home Loan Mortgage Corp. (SOFR + 0.18%)(b) | 0.27 | % | 12/13/2021 | 15,000 | 15,000,000 | |||||||||||
| ||||||||||||||||
48,000,000 | ||||||||||||||||
| ||||||||||||||||
Federal National Mortgage Association (FNMA)-4.40% | ||||||||||||||||
Federal National Mortgage Association (SOFR + 0.04%)(b) | 0.13 | % | 01/29/2021 | 16,000 | 15,986,566 | |||||||||||
Federal National Mortgage Association (SOFR + 0.21%)(b) | 0.30 | % | 07/01/2021 | 15,000 | 15,000,000 | |||||||||||
Federal National Mortgage Association (SOFR + 0.23%)(b) | 0.32 | % | 07/06/2021 | 15,000 | 15,000,000 | |||||||||||
Federal National Mortgage Association (SOFR + 0.30%)(b) | 0.39 | % | 01/07/2022 | 10,000 | 10,000,000 | |||||||||||
Federal National Mortgage Association (SOFR + 0.22%)(b) | 0.31 | % | 03/16/2022 | 10,000 | 10,000,000 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 | Invesco U.S. Government Money Portfolio |
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||
| ||||||||||||||||
Federal National Mortgage Association (FNMA)-(continued) | ||||||||||||||||
Federal National Mortgage Association (SOFR + 0.20%)(b) | 0.29 | % | 06/15/2022 | $ | 5,000 | $ | 5,000,000 | |||||||||
| ||||||||||||||||
70,986,566 | ||||||||||||||||
| ||||||||||||||||
Total U.S. Government Sponsored Agency Securities (Cost $592,464,585) | 592,464,585 | |||||||||||||||
| ||||||||||||||||
U.S. Treasury Securities-36.55% | ||||||||||||||||
U.S. Treasury Bills-34.31%(a) | ||||||||||||||||
U.S. Treasury Bills | 0.14 | % | 09/01/2020 | 15,000 | 15,000,000 | |||||||||||
U.S. Treasury Bills | 0.15 | % | 09/03/2020 | 20,000 | 19,999,833 | |||||||||||
U.S. Treasury Bills | 0.12%-0.14 | % | 09/08/2020 | 60,000 | 59,998,483 | |||||||||||
U.S. Treasury Bills | 0.15%-0.40 | % | 09/10/2020 | 40,000 | 39,997,531 | |||||||||||
U.S. Treasury Bills | 0.11 | % | 09/15/2020 | 25,000 | 24,998,931 | |||||||||||
U.S. Treasury Bills | 0.14%-0.18 | % | 09/17/2020 | 25,000 | 24,998,289 | |||||||||||
U.S. Treasury Bills | 0.16 | % | 09/24/2020 | 5,000 | 4,999,505 | |||||||||||
U.S. Treasury Bills | 0.10%-0.17 | % | 10/01/2020 | 25,000 | 24,997,375 | |||||||||||
U.S. Treasury Bills | 0.19 | % | 10/08/2020 | 8,000 | 7,998,479 | |||||||||||
U.S. Treasury Bills | 0.15 | % | 10/13/2020 | 15,000 | 14,997,375 | |||||||||||
U.S. Treasury Bills | 0.15 | % | 10/27/2020 | 20,000 | 19,995,333 | |||||||||||
U.S. Treasury Bills | 0.16 | % | 10/29/2020 | 15,000 | 14,996,254 | |||||||||||
U.S. Treasury Bills | 0.17 | % | 11/03/2020 | 15,000 | 14,995,537 | |||||||||||
U.S. Treasury Bills | 0.15 | % | 11/05/2020 | 15,000 | 14,995,938 | |||||||||||
U.S. Treasury Bills | 0.18 | % | 11/10/2020 | 15,000 | 14,994,750 | |||||||||||
U.S. Treasury Bills | 0.15 | % | 11/12/2020 | 7,000 | 6,997,970 | |||||||||||
U.S. Treasury Bills | 0.19 | % | 11/17/2020 | 5,000 | 4,997,968 | |||||||||||
U.S. Treasury Bills | 0.19 | % | 11/24/2020 | 5,000 | 4,997,842 | |||||||||||
U.S. Treasury Bills | 0.10%-0.16 | % | 11/27/2020 | 50,000 | 49,985,017 | |||||||||||
U.S. Treasury Bills | 0.17 | % | 12/03/2020 | 30,000 | 29,990,300 | |||||||||||
U.S. Treasury Bills | 0.16 | % | 12/08/2020 | 15,000 | 14,993,671 | |||||||||||
U.S. Treasury Bills | 0.18 | % | 12/10/2020 | 30,000 | 29,984,792 | |||||||||||
U.S. Treasury Bills | 0.15 | % | 12/22/2020 | 15,000 | 14,993,233 | |||||||||||
U.S. Treasury Bills | 0.17 | % | 12/31/2020 | 15,000 | 14,991,681 | |||||||||||
U.S. Treasury Bills | 0.17 | % | 01/07/2021 | 15,000 | 14,991,200 | |||||||||||
U.S. Treasury Bills | 0.15 | % | 01/14/2021 | 15,000 | 14,991,844 | |||||||||||
U.S. Treasury Bills | 0.13 | % | 01/21/2021 | 5,000 | 4,997,436 | |||||||||||
U.S. Treasury Bills | 0.12 | % | 02/11/2021 | 15,000 | 14,991,850 | |||||||||||
U.S. Treasury Bills | 0.12 | % | 02/18/2021 | 7,000 | 6,996,033 | |||||||||||
U.S. Treasury Bills | 0.18 | % | 05/20/2021 | 6,000 | 5,992,388 | |||||||||||
| ||||||||||||||||
552,856,838 | ||||||||||||||||
| ||||||||||||||||
U.S. Treasury Notes-2.24% | ||||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.30%)(b) | 0.41 | % | 10/31/2021 | 16,000 | 16,007,306 | |||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.11%)(b) | 0.22 | % | 04/30/2022 | 10,000 | 10,002,686 | |||||||||||
U.S. Treasury Notes | 2.13 | % | 01/31/2021 | 5,000 | 5,036,593 | |||||||||||
U.S. Treasury Notes | 3.63 | % | 02/15/2021 | 5,000 | 5,074,335 | |||||||||||
| ||||||||||||||||
36,120,920 | ||||||||||||||||
| ||||||||||||||||
Total U.S. Treasury Securities (Cost $588,977,758) | 588,977,758 | |||||||||||||||
| ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES (excluding Repurchase Agreements)-73.31% |
| 1,181,442,343 | ||||||||||||||
| ||||||||||||||||
Repurchase Amount | ||||||||||||||||
Repurchase Agreements-27.98%(c) | ||||||||||||||||
Credit Agricole Corporate & Investment Bank, agreement dated 08/31/2020, maturing value of $121,000,303 (collateralized by a domestic non-agency mortgage-backed security valued at $123,420,309; 2.50%; 09/01/2050) | 0.09 | % | 09/01/2020 | 121,000,303 | 121,000,000 | |||||||||||
RBC Dominion Securities Inc., agreement dated 08/31/2020, maturing value of $105,000,263 (collateralized by U.S. Treasury obligations valued at $107,100,296; 0.00% - 3.38%; 04/30/2021 - 05/15/2049) | 0.09 | % | 09/01/2020 | 105,000,263 | 105,000,000 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco U.S. Government Money Portfolio |
Interest Rate | Maturity Date | Repurchase Amount | Value | |||||||||||||
| ||||||||||||||||
TD Securities (USA) LLC, term agreement dated 08/27/2020, maturing value of $225,003,500 (collateralized by U.S. Treasury obligations and domestic agency mortgage-backed securities valued at $233,074,705; 0.13% - 6.38%; 10/15/2020 - 01/25/2050)(d) | 0.08% | 09/03/2020 | $ | 225,003,500 | $ | 225,000,000 | ||||||||||
| ||||||||||||||||
Total Repurchase Agreements (Cost $451,000,000) | 451,000,000 | |||||||||||||||
| ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES(e)-101.29% (Cost $1,632,442,343) | 1,632,442,343 | |||||||||||||||
| ||||||||||||||||
OTHER ASSETS LESS LIABILITIES-(1.29)% | (20,731,154 | ) | ||||||||||||||
| ||||||||||||||||
NET ASSETS-100.00% | $ | 1,611,711,189 | ||||||||||||||
|
Investment Abbreviations:
LIBOR | -London Interbank Offered Rate | |
SOFR | -Secured Overnight Financing Rate | |
USD | -U.S. Dollar |
Notes to Schedule of Investments:
(a) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(b) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2020. |
(c) | Principal amount equals value at period end. See Note 1I. |
(d) | The Fund may demand payment of the term repurchase agreement upon one to seven business days’ notice depending on the timing of the demand. |
(e) | Also represents cost for federal income tax purposes. |
Portfolio Composition by Maturity*
In days, as of 08/31/2020
1-7 | 30.2 | % | ||
8-30 | 14.9 | |||
31-60 | 8.9 | |||
61-90 | 12.6 | |||
91-180 | 18.4 | |||
181+ | 15.0 |
* | The number of days to maturity of each holding is determined in accordance with the provisions of Rule 2a-7 under the Investment Company Act of 1940. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco U.S. Government Money Portfolio |
Statement of Assets and Liabilities
August 31, 2020
(Unaudited)
Assets: | ||||
Investments in securities, excluding repurchase agreements, at value and cost | $ | 1,181,442,343 | ||
Repurchase agreements, at value and cost | 451,000,000 | |||
Cash | 224,864 | |||
Receivable for: | ||||
Fund shares sold | 1,975,915 | |||
| ||||
Interest | 219,376 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 144,018 | |||
Other assets | 81,098 | |||
| ||||
Total assets | 1,635,087,614 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 19,994,692 | |||
| ||||
Fund shares reacquired | 2,249,765 | |||
| ||||
Dividends | 41 | |||
| ||||
Accrued fees to affiliates | 596,800 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 11,571 | |||
| ||||
Accrued operating expenses | 268,306 | |||
| ||||
Trustee deferred compensation and retirement plans | 255,250 | |||
| ||||
Total liabilities | 23,376,425 | |||
| ||||
Net assets applicable to shares outstanding | $ | 1,611,711,189 | ||
|
Net assets consist of: | ||||
Shares of beneficial interest | $ | 1,611,734,386 | ||
Distributable earnings (loss) | (23,197 | ) | ||
$ | 1,611,711,189 | |||
| ||||
Net Assets: | ||||
Invesco Cash Reserve | $ | 44,221,739 | ||
| ||||
Class C | $ | 10,074,323 | ||
| ||||
Class R | $ | 4,815,361 | ||
| ||||
Class Y | $ | 1,552,589,766 | ||
| ||||
Class R6 | $ | 10,000 | ||
| ||||
Shares outstanding, no par value, unlimited number of shares authorized: | ||||
Invesco Cash Reserve | 44,221,510 | |||
| ||||
Class C | 10,074,272 | |||
| ||||
Class R | 4,815,335 | |||
| ||||
Class Y | 1,552,581,720 | |||
| ||||
Class R6 | 10,000 | |||
| ||||
Net asset value, offering and redemption price per share for each class | $ | 1.00 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco U.S. Government Money Portfolio |
Statement of Operations
For the six months ended August 31, 2020
(Unaudited)
Investment income: | ||||
Interest | $ | 2,469,821 | ||
| ||||
Expenses: | ||||
Advisory fees | 3,319,361 | |||
Administrative services fees | 363,612 | |||
Custodian fees | 11,532 | |||
Distribution fees: | ||||
Invesco Cash Reserve | 26,188 | |||
| ||||
Class C | 45,490 | |||
| ||||
Class R | 9,136 | |||
| ||||
Transfer agent fees - Invesco Cash Reserve, C, R and Y | 2,243,019 | |||
Transfer agent fees - R6 | 5 | |||
Registration and filing fees | 66,623 | |||
Reports to shareholders | 23,365 | |||
Professional services fees | 110,642 | |||
Other | 21,746 | |||
| ||||
Total expenses | 6,240,719 | |||
| ||||
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) | (4,323,317 | ) | ||
| ||||
Net expenses | 1,917,402 | |||
| ||||
Net investment income | 552,419 | |||
| ||||
Net realized gain (loss) from investment securities | (992 | ) | ||
| ||||
Net increase in net assets resulting from operations | $ | 551,427 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco U.S. Government Money Portfolio |
Statement of Changes in Net Assets
For the six months ended August 31, 2020, period ended February 29, 2020, and year ended July 31, 2019
(Unaudited)
Six Months Ended August 31, 2020 | Seven Months Ended February 29, 2020 | Year Ended July 31, 2019 | ||||||||||
| ||||||||||||
Operations: | ||||||||||||
Net investment income | $ | 552,419 | $ | 12,026,291 | $ | 31,102,173 | ||||||
| ||||||||||||
Net realized gain (loss) | (992 | ) | - | 31,408 | ||||||||
| ||||||||||||
Change in net unrealized appreciation (depreciation) | - | (47,365 | ) | 47,365 | ||||||||
| ||||||||||||
Net increase in net assets resulting from operations | 551,427 | 11,978,926 | 31,180,946 | |||||||||
| ||||||||||||
Distributions to shareholders from distributable earnings: | ||||||||||||
Invesco Cash Reserve | (5,600 | ) | (41,857 | ) | (5,567 | ) | ||||||
| ||||||||||||
Class C | (460 | ) | (1,306 | ) | (468 | ) | ||||||
| ||||||||||||
Class R | (289 | ) | (1,860 | ) | (231 | ) | ||||||
| ||||||||||||
Class Y | (546,065 | ) | (11,896,579 | ) | (31,093,379 | ) | ||||||
| ||||||||||||
Class R6 | (5 | ) | (84 | ) | (33 | ) | ||||||
| ||||||||||||
Total distributions from distributable earnings | (552,419 | ) | (11,941,686 | ) | (31,099,678 | ) | ||||||
| ||||||||||||
Share transactions-net: | ||||||||||||
Invesco Cash Reserve | 31,347,526 | 9,588,748 | 3,285,030 | |||||||||
| ||||||||||||
Class C | 7,761,136 | 1,816,077 | 497,059 | |||||||||
| ||||||||||||
Class R | 3,716,172 | 917,040 | 182,123 | |||||||||
| ||||||||||||
Class Y | (6,031,729 | ) | (111,179,730 | (83,864,491 | ) | |||||||
| ||||||||||||
Class R6 | - | - | 10,000 | |||||||||
| ||||||||||||
Net increase (decrease) in net assets resulting from share transactions | 36,793,105 | (98,857,865 | ) | (79,890,279 | ) | |||||||
| ||||||||||||
Net increase (decrease) in net assets | 36,792,113 | (98,820,625 | ) | (79,809,011 | ) | |||||||
| ||||||||||||
Net assets: | ||||||||||||
Beginning of period | 1,574,919,076 | 1,673,739,701 | 1,753,548,712 | |||||||||
| ||||||||||||
End of period | $ | 1,611,711,189 | $ | 1,574,919,076 | $ | 1,673,739,701 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco U.S. Government Money Portfolio |
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period | Net investment income(a) | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends from net investment income | Distributions from net realized gains | Total distributions | Net asset value, end of period | Total return(b) | Net assets, end of period | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed(c) | Ratio of net | ||||||||||||||||||||||||||||||||||||||||
Invesco Cash Reserve | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | $ | 1.00 | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | - | $ | (0.00 | ) | $ | 1.00 | 0.03 | % | $ | 44,222 | 0.23 | %(d) | 0.90 | %(d) | 0.07 | %(d) | |||||||||||||||||||||||
Seven months ended 02/29/20 | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | - | (0.01 | ) | 1.00 | 0.66 | 12,874 | 0.72 | (e) | 0.94 | (e) | 1.14 | (e) | |||||||||||||||||||||||||||||||||
Period ended 07/31/19(f) | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | 1.00 | 0.30 | 3,285 | 0.67 | (e) | 0.86 | (e) | 1.67 | (e) | |||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.01 | 10,074 | 0.23 | (d) | 1.75 | (d) | 0.07 | (d) | |||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.17 | 2,313 | 1.55 | (e) | 1.79 | (e) | 0.31 | (e) | |||||||||||||||||||||||||||||||||
Period ended 07/31/19(f) | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | 1.00 | 0.16 | 497 | 1.43 | (e) | 1.64 | (e) | 0.91 | (e) | |||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.01 | 4,815 | 0.23 | (d) | 1.25 | (d) | 0.07 | (d) | |||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.46 | 1,099 | 1.05 | (e) | 1.28 | (e) | 0.81 | (e) | |||||||||||||||||||||||||||||||||
Period ended 07/31/19(f) | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | 1.00 | 0.23 | 182 | 1.08 | (e) | 1.08 | (e) | 1.27 | (e) | |||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.03 | 1,552,590 | 0.23 | (d) | 0.75 | (d) | 0.07 | (d) | |||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | - | (0.01 | ) | 1.00 | 0.74 | 1,558,623 | 0.58 | (e) | 0.80 | (e) | 1.28 | (e) | |||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 1.00 | 0.02 | 0.00 | 0.02 | (0.02 | ) | (0.00 | ) | (0.02 | ) | 1.00 | 1.77 | 1,669,766 | 0.58 | 0.62 | 1.76 | ||||||||||||||||||||||||||||||||||||
Year ended 07/31/18 | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | - | (0.01 | ) | 1.00 | 0.84 | 40,384 | 0.60 | 0.61 | 0.83 | ||||||||||||||||||||||||||||||||||||
Year ended 07/31/17 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.10 | 42,261 | 0.51 | 0.64 | 0.07 | |||||||||||||||||||||||||||||||||||||
Year ended 07/31/16 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.01 | 92,494 | 0.45 | 0.64 | 0.01 | |||||||||||||||||||||||||||||||||||||
Year ended 07/31/15 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | 1.00 | 0.01 | 73,743 | 0.21 | 0.65 | 0.01 | ||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/20 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.04 | 10 | 0.21 | (d) | 0.58 | (d) | 0.09 | (d) | |||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | - | (0.01 | ) | 1.00 | 0.80 | 10 | 0.48 | (e) | 0.54 | (e) | 1.38 | (e) | |||||||||||||||||||||||||||||||||
Period ended 07/31/19(f) | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | 1.00 | 0.34 | 10 | 0.48 | (e) | 0.48 | (e) | 1.88 | (e) |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.00% for the seven months ended February 20, 2020 and the years ended July 31, 2019, 2018 and 2017, respectively. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $34,633, $9,024, $3,625, $1,571,449 and $10 for Invesco Cash Reserve, Class C, Class R, Class Y and Class R6 shares, respectively. |
(e) | Annualized. |
(f) | Commencement date after the close of business on May 24, 2019. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco U.S. Government Money Portfolio |
August 31, 2020
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco U.S. Government Money Portfolio, formerly, Invesco Oppenheimer Government Money Market Fund, (the “Fund”) is a series portfolio of AIM Investment Securities Funds (Invesco Investment Securities Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue 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 such Fund or each class.
The Fund’s investment objective is to seek income consistent with stability of principal.
The Fund currently consists of five different classes of shares: Invesco Cash Reserve, Class C, Class R, Class Y and Class R6. Class Y shares are available only to certain investors. Class C shares are sold with a contingent deferred sales charges (“CDSC”). Invesco Cash Reserve, Class R, Class Y and Class R6 shares are sold at net asset value. Class C shares held for ten years after purchase are eligible for automatic conversion into Invesco Cash Reserve shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares. Effective November 30, 2020, the automatic conversion pursuant to the Conversion Feature will change from ten years to eight years. The first conversion of Class C shares to Invesco Cash Reserve shares would occur at the end of December 2020 for all Class C shares that were held for more than eight years as of November 30, 2020.
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 Fund is a “government money market fund” as defined in Rule 2a-7 under the 1940 Act and seeks to maintain a stable or constant NAV of $1.00 per share using an amortized cost method of valuation. “Government money market funds” are required to invest at least 99.5% of their total assets in cash, Government Securities (as defined in the 1940 Act), and/ or repurchase agreements collateralized fully by cash or Government Securities. The Board of Trustees has elected not to subject the Fund to the liquidity fee and redemption gate requirement at this time, as permitted by Rule 2a-7.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations - The Fund’s securities are recorded on the basis of amortized cost which approximates value as permitted by Rule 2a-7 under the 1940 Act. This method values a security at its cost on the date of purchase and, thereafter, assumes a constant amortization to maturity of any premiums or accretion of any discounts. |
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.
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.
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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. |
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 gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized 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 realized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination - For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions - Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. |
E. | Federal Income Taxes - The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. |
Therefore, no provision for federal income taxes is recorded in the financial statements.
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses - Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R6 are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America |
11 | Invesco U.S. Government Money Portfolio |
(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications - Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. Currently, the risk of material loss as a result of such indemnification claims is considered remote. |
I. | Repurchase Agreements - The Fund may enter into repurchase agreements. Collateral on repurchase agreements, including the Fund’s pro-rata interest in joint repurchase agreements, is taken into possession by the Fund upon entering into the repurchase agreement. Collateral consisting of U.S. Government Securities and U.S. Government Sponsored Agency Securities is marked to market daily to ensure its market value is at least 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements, pursuant to procedures approved by the Board of Trustees, are through participation with other mutual funds, private accounts and certain non-registered investment companies managed by the investment adviser or its affiliates (“Joint repurchase agreements”). The principal amount of the repurchase agreement is equal to the value at period-end. If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, the Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the collateral and loss of income. |
J. | Other Risks - Investments in obligations issued by agencies and instrumentalities of the U.S. Government may vary in the level of support they receive from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the Fund may not be able to recover its investment in such issuer from the U.S. Government. |
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 $ 500 million | 0.450% | |||
Next $500 million | 0.425% | |||
Next $500 million | 0.400% | |||
Next $1.5 billion | 0.375% | |||
Over $3 billion | 0.350% |
* The advisory fee paid by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with the Adviser.
For the the six months ended August 31, 2020, the effective advisory fees incurred by the Fund was 0.41%.
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 June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares 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 Invesco Cash Reserve, Class C, Class R, Class Y, and Class R6 shares to 0.73%, 1.58%, 1.08%, 0.58%, and 0.48%, 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 expenses 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 on June 30, 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.
Further, Invesco and/or Invesco Distributors, Inc. (“IDI”) voluntarily waived fees and/or reimbursed expenses in order to increase the Fund’s yield. Voluntary fee waivers and/or reimbursements may be modified or discontinued at any time upon consultation with the Board of Trustees without further notice to investors.
For the six months ended August 31, 2020, the Adviser contractually reimbursed class level advisory fees of $29,978, $7,811, $3,137, $1,360,193, and $5 of Invesco Cash Reserve, Class C, Class R, Class Y and Class R6 shares, respectively, and voluntarily waived Fund level expenses of $1,999,478 and reimbursed class level expenses of $43,647, $50,039, $10,964 and $792,171 of Invesco Cash Reserve, Class C, Class R and Class Y shares, respectively, in order to increase the Fund’s yield.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Also, Invesco has entered into a sub-administration agreement whereby The Bank of New York Mellon (“BNY Mellon”) serves as custodian and fund accountant and provides certain administrative services 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 August 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with IDI to serve as the distributor for the Invesco Cash Reserve, Class C, and Class R shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Invesco Cash Reserve, Class C and Class R shares (collectively the “Plan”). The Fund pursuant to the Plan, pays IDI compensation at the annual rate of 0.15% of the average daily net assets of Invesco Cash Reserve 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. 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
12 | Invesco U.S. Government Money Portfolio |
the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund plans. For the the six months ended August 31, 2020, expenses incurred under the plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended August 31, 2020, IDI advised the Fund that IDI imposed CDSC on redemptions by shareholders for Class C shares of $1,275.
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 August 31, 2020, all of the securities in this Fund were valued based on Level 2 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–Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended August 31, 2020, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $25,894.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with BNY Mellon, 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–Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have any capital loss carryforward as of February 29, 2020.
NOTE 8–Share Information
Summary of Share Activity | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
Six months ended August 31, 2020 | Seven months ended February 29, 2020 | Year ended July 31, 2019 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
| ||||||||||||||||||||||||
Sold: | ||||||||||||||||||||||||
Invesco Cash Reserve(a) | 59,035,564 | $ | 59,035,564 | 19,448,381 | $ | 19,448,381 | 4,653,258 | $ | 4,653,258 | |||||||||||||||
| ||||||||||||||||||||||||
Class C(a) | 19,249,668 | 19,249,668 | 5,008,613 | 5,008,613 | 851,427 | 851,427 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class R(a) | 7,355,963 | 7,355,963 | 1,843,940 | 1,843,940 | 717,627 | 717,627 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class Y(b) | 271,842,543 | 271,842,543 | 224,046,864 | 224,046,864 | 862,431,158 | 862,431,159 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class R6(a) | - | - | - | - | 10,001 | 10,001 | ||||||||||||||||||
|
13 | Invesco U.S. Government Money Portfolio |
Summary of Share Activity | ||||||||||||||||||||||||
| ||||||||||||||||||||||||
Six months ended August 31, 2020 | Seven months ended February 29, 2020 | Year ended July 31, 2019 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
| ||||||||||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||||||||||
Invesco Cash Reserve | 5,600 | $ | 5,600 | 40,352 | $ | 40,146 | 3,652 | $ | 3,652 | |||||||||||||||
| ||||||||||||||||||||||||
Class C | 460 | 460 | 1,313 | 1,313 | 317 | 317 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class R | 289 | 289 | 1,720 | 1,720 | 97 | 97 | ||||||||||||||||||
| ||||||||||||||||||||||||
Class Y(b) | 546,065 | 546,065 | 12,699,968 | 12,644,326 | 30,525,669 | 30,499,662 | ||||||||||||||||||
| ||||||||||||||||||||||||
Automatic Conversion of Class C shares to Invesco Cash Reserve shares: | ||||||||||||||||||||||||
Invesco Cash Reserve | 203,817 | 203,817 | 4,880 | 4,880 | - | - | ||||||||||||||||||
| ||||||||||||||||||||||||
Class C | (203,817 | ) | (203,817 | ) | (4,880 | ) | (4,880 | ) | - | - | ||||||||||||||
| ||||||||||||||||||||||||
Reacquired: | ||||||||||||||||||||||||
Invesco Cash Reserve | (27,897,455 | ) | (27,897,455 | ) | (9,904,659 | ) | (9,904,659 | ) | (1,371,880 | ) | (1,371,880 | ) | ||||||||||||
| ||||||||||||||||||||||||
Class C | (11,285,175 | ) | (11,285,175 | ) | (3,188,969 | ) | (3,188,969 | ) | (354,685 | ) | (354,685 | ) | ||||||||||||
| ||||||||||||||||||||||||
Class R | (3,640,080 | ) | (3,640,080 | ) | (928,620 | ) | (928,620 | ) | (535,601 | ) | (535,601 | ) | ||||||||||||
| ||||||||||||||||||||||||
Class Y(b) | (278,420,337 | ) | (278,420,337 | ) | (347,870,920 | ) | (347,870,920 | ) | (976,795,312 | ) | (976,795,312 | ) | ||||||||||||
| ||||||||||||||||||||||||
Class R6 | - | - | - | - | (1 | ) | (1 | ) | ||||||||||||||||
| ||||||||||||||||||||||||
Net increase (decrease) in share activity | 36,793,105 | $ | 36,793,105 | (98,802,017 | ) | $ | (98,857,865 | ) | (79,864,273 | ) | $ | (79,890,279 | ) | |||||||||||
|
(a) | Commencement date after the close of business on May 24, 2019. |
(b) | Effective as of the close of business May 24, 2019 all outstanding Class A shares were converted to Class Y shares. |
NOTE 9–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.
14 | Invesco U.S. Government Money Portfolio |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2020 through August 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||
(5% annual return before | ||||||||||||
ACTUAL | expenses) | |||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||
Class | (03/01/20) | (08/31/20)1 | Period2 | (08/31/20) | Period2 | Ratio | ||||||
Invesco Cash Reserve | $1,000.00 | $1,000.30 | $1.16 | $1,024.05 | $1.17 | 0.23% | ||||||
C | 1,000.00 | 1,000.10 | 1.16 | 1,024.05 | 1.17 | 0.23 | ||||||
R | 1,000.00 | 1,000.10 | 1.16 | 1,024.05 | 1.17 | 0.23 | ||||||
Y | 1,000.00 | 1,000.30 | 1.16 | 1,024.05 | 1.17 | 0.23 | ||||||
R6 | 1,000.00 | 1,000.40 | 1.06 | 1,024.15 | 1.07 | 0.21 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2020 through August 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
15 | Invesco U.S. Government Money Portfolio |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 3, 2020, the Board of Trustees (the Board or the Trustees) of AIM Investment Securities Funds (Invesco Investment Securities Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco U.S. Government Money Portfolio’s (formerly, Invesco Oppenheimer Government Money Market Fund) (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory contracts with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited and OppenheimerFunds, Inc. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2020. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider, as well as information on the composition of the peer groups provided by Broadridge and its methodology for determining peer groups. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to
meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 3, 2020.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board also reviewed and considered information regarding the benefits to the Fund resulting from Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the Transaction) and the resources that Invesco Advisers has committed to managing the Invesco family of funds following the Transaction. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated
Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2019 to the performance of funds in the Broadridge performance universe and against the Lipper T-Bill 3 Month Index. The Board noted that performance of Class Y shares of the Fund was in the third quintile of its performance universe for the one, three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of the Fund was above the performance of the Index for the one, three and five year periods. The Board considered that the Fund was created in connection with the Transaction and that the Fund’s performance prior to the closing of the Transaction after the close of business on May 24, 2019 is that of its predecessor fund. The Board recognized that the performance data reflects a snapshot in time as of a particular date and that selecting a different performance period could produce different results. The Board also reviewed more recent Fund performance as well as other performance metrics and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class Y shares of the Fund was above the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components. The Board noted that the Fund’s contractual management fees and total expense ratio
16 | Invesco U.S. Government Money Portfolio |
were each in the fourth quintile of its expense group and discussed with management reasons for such relative contractual management fees and total expenses.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund for the term disclosed in the Fund’s registration statement in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board also considered the fees charged by Invesco Advisers and the Affiliated Sub-Advisers to other similarly managed client accounts. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to certain other types of client accounts, including, among others: management of cash flows as a result of redemptions and purchases; necessary infrastructure such as officers, office space, technology, legal and distribution; oversight of service providers; costs and business risks associated with launching new funds and sponsoring and maintaining the product line; and compliance with federal and state laws and regulations.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual Fund-by-Fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain Funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
17 | Invesco U.S. Government Money Portfolio |
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Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings in various monthly and quarterly regulatory filings. The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) monthly on Form N-MFP. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. The most recent list of portfolio holdings is available at invesco.com/us. Shareholders can also look up the Fund’s Form N-MFP filings on the SEC website, sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services Department at 800 959 4246, or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-05686 and 033-39519 Invesco Distributors, Inc. O-GMKT-SAR-1
ITEM 2. | CODE OF ETHICS. |
Not applicable for a semi-annual 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 COMPANIES. |
Not applicable.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None
ITEM 11. | CONTROLS AND PROCEDURES. |
(a) | As of October 14, 2020, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the PEO and PFO, to assess the effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of October 14, 2020, the Registrant’s disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure. |
(b) | There have been no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the 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. |
13(a)(1) | Not applicable. |
13(a)(2) |
13(a)(3) | Not applicable. |
13(a)(4) | Not applicable |
13(b) |
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 Securities Funds (Invesco Investment Securities Funds)
By: | /s/ Sheri Morris | |
Sheri Morris | ||
Principal Executive Officer | ||
Date: | November 6, 2020 |
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ Sheri Morris | |
Sheri Morris | ||
Principal Executive Officer | ||
Date: | November 6, 2020 |
By: | /s/ Kelli Gallegos | |
Kelli Gallegos | ||
Principal Financial Officer | ||
Date: | November 6, 2020 |