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: 08/31/22
ITEM 1. | REPORTS TO STOCKHOLDERS. |
(a) The Registrant’s semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:
(b) Not Applicable.
Semiannual Report to Shareholders | August 31, 2022 |
Invesco Corporate Bond Fund
Nasdaq:
A: ACCBX ∎ C: ACCEX ∎ R: ACCZX ∎ Y: ACCHX ∎ R5: ACCWX ∎ R6: ICBFX
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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
Performance summary
|
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Fund vs. Indexes |
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Cumulative total returns, 2/28/22 to 8/31/22, 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. |
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Class A Shares | -10.09 | % | ||
Class C Shares | -10.35 | |||
Class R Shares | -10.21 | |||
Class Y Shares | -9.96 | |||
Class R5 Shares | -9.92 | |||
Class R6 Shares | -9.90 | |||
Bloomberg U.S. Credit Index▼ (Broad Market/Style-Specific Index) | -9.12 | |||
Lipper BBB Rated Funds Index∎ (Peer Group Index) | -10.71 | |||
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. | ||||
The Bloomberg 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.
2 | Invesco Corporate Bond Fund |
Average Annual Total Returns |
| |||
As of 8/31/22, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (9/23/71) | 6.52 | % | ||
10 Years | 2.41 | |||
5 Years | 0.30 | |||
1 Year | -19.72 | |||
Class C Shares | ||||
Inception (8/30/93) | 4.60 | % | ||
10 Years | 2.25 | |||
5 Years | 0.45 | |||
1 Year | -17.60 | |||
Class R Shares | ||||
Inception (6/6/11) | 3.22 | % | ||
10 Years | 2.59 | |||
5 Years | 0.93 | |||
1 Year | -16.50 | |||
Class Y Shares | ||||
Inception (8/12/05) | 4.46 | % | ||
10 Years | 3.10 | |||
5 Years | 1.43 | |||
1 Year | -16.04 | |||
Class R5 Shares | ||||
Inception (6/1/10) | 4.40 | % | ||
10 Years | 3.23 | |||
5 Years | 1.53 | |||
1 Year | -15.87 | |||
Class R6 Shares | ||||
10 Years | 3.29 | % | ||
5 Years | 1.56 | |||
1 Year | -15.93 |
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 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.
3 | Invesco Corporate Bond Fund |
Liquidity Risk Management Program
In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), 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 21-23, 2022, 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 January 1, 2021, through December 31, 2021 (the “Program Reporting Period”). The Report discussed notable events affecting liquidity over the Program Reporting Period, including the impact of the coronavirus pandemic on the Fund and the overall market. The Report noted that there were no material changes to the Program during 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. |
4 | Invesco Corporate Bond Fund |
August 31, 2022
(Unaudited)
Principal Amount | Value | |||||||
U.S. Dollar Denominated Bonds & Notes-88.03% |
| |||||||
Advertising-0.33% | ||||||||
Clear Channel Outdoor Holdings, Inc., 5.13%, 08/15/2027(b) | $ | 265,000 | $ | 237,676 | ||||
Interpublic Group of Cos., Inc. (The), 4.75%, 03/30/2030 | 3,947,000 | 3,808,928 | ||||||
Lamar Media Corp., | ||||||||
3.75%, 02/15/2028 | 2,800,000 | 2,515,618 | ||||||
4.00%, 02/15/2030(c) | 1,319,000 | 1,150,399 | ||||||
3.63%, 01/15/2031 | 523,000 | 438,995 | ||||||
8,151,616 | ||||||||
Aerospace & Defense-0.93% | ||||||||
Boeing Co. (The), | ||||||||
2.75%, 02/01/2026(c) | 3,251,000 | 3,043,147 | ||||||
2.20%, 02/04/2026 | 4,533,000 | 4,149,855 | ||||||
3.63%, 02/01/2031 | 5,981,000 | 5,298,428 | ||||||
5.93%, 05/01/2060 | 6,118,000 | 5,854,661 | ||||||
Lockheed Martin Corp., 4.15%, 06/15/2053 | 1,669,000 | 1,561,533 | ||||||
4.30%, 06/15/2062 | 2,009,000 | 1,880,679 | ||||||
TransDigm UK Holdings PLC, 6.88%, 05/15/2026 | 301,000 | 291,057 | ||||||
TransDigm, Inc., | ||||||||
6.25%, 03/15/2026(b) | 547,000 | 538,098 | ||||||
6.38%, 06/15/2026 | 141,000 | 135,528 | ||||||
22,752,986 | ||||||||
Agricultural & Farm Machinery-0.17% |
| |||||||
Cargill, Inc., | ||||||||
3.63%, 04/22/2027(b) | 2,408,000 | 2,356,397 | ||||||
4.38%, 04/22/2052(b) | 2,009,000 | 1,922,870 | ||||||
4,279,267 | ||||||||
Agricultural Products-0.02% | ||||||||
Bunge Ltd. Finance Corp., 2.75%, 05/14/2031 | 560,000 | 470,910 | ||||||
Airlines-1.99% | ||||||||
Allegiant Travel Co., 7.25%, 08/15/2027(b) | 504,000 | 501,195 | ||||||
American Airlines Pass-Through Trust, | ||||||||
Series 2016-3, Class A, 3.00%, 10/15/2028 | 3,152,190 | 2,839,035 | ||||||
Series 2017-2, Class AA, 3.35%, 10/15/2029 | 258,559 | 230,548 | ||||||
Series 2021-1, Class B, 3.95%, 07/11/2030 | 2,985,000 | 2,492,783 | ||||||
Series 2021-1, Class A, 2.88%, 07/11/2034 | 3,639,000 | 3,055,792 | ||||||
American Airlines, Inc./AAdvantage Loyalty IP Ltd., 5.50%, 04/20/2026(b) | 763,000 | 726,880 | ||||||
British Airways Pass-Through Trust (United Kingdom), | ||||||||
Series 2019-1, Class AA, | 3,375,346 | 2,977,059 | ||||||
Series 2021-1, Class A, | 1,881,732 | 1,573,194 |
Principal Amount | Value | |||||||
Airlines-(continued) |
| |||||||
Delta Air Lines Pass-Through Trust, | ||||||||
Series 2019-1, Class A, | $ | 2,906,000 | $ | 2,765,814 | ||||
Series 2020-1, Class AA, 2.00%, 06/10/2028 | 2,504,773 | 2,174,026 | ||||||
Delta Air Lines, Inc., 7.38%, 01/15/2026 | 425,000 | 434,069 | ||||||
Delta Air Lines, Inc./SkyMiles IP Ltd., | ||||||||
4.50%, 10/20/2025(b) | 3,461,622 | 3,392,814 | ||||||
4.75%, 10/20/2028(b) | 10,053,697 | 9,610,153 | ||||||
United Airlines Pass-Through Trust, | ||||||||
Series 2014-2, Class B, | 972,378 | 972,100 | ||||||
Series 2016-1, Class B, | 1,631,104 | 1,459,045 | ||||||
Series 2020-1, Class A, | 4,642,351 | 4,652,546 | ||||||
Series 2018-1, Class A, | 281,023 | 237,138 | ||||||
Series 2018-1, Class AA, | 3,267,205 | 2,929,702 | ||||||
Series 2019-1, Class A, | 1,631,050 | 1,359,933 | ||||||
Series 2019-1, Class AA, | 2,935,869 | 2,700,112 | ||||||
United Airlines, Inc., | ||||||||
4.38%, 04/15/2026(b)(c) | 686,000 | 626,380 | ||||||
4.63%, 04/15/2029(b) | 1,090,000 | 957,837 | ||||||
48,668,155 | ||||||||
Alternative Carriers-0.01% |
| |||||||
Lumen Technologies, Inc., Series P, 7.60%, 09/15/2039 | 459,000 | 361,756 | ||||||
Aluminum-0.02% | ||||||||
Novelis Corp., 4.75%, 01/30/2030(b) | 523,000 | 455,638 | ||||||
Apparel Retail-0.02% | ||||||||
Gap, Inc. (The), 3.63%, 10/01/2029(b)(c) | 851,000 | 593,977 | ||||||
Apparel, Accessories & Luxury Goods-0.06% |
| |||||||
Kontoor Brands, Inc., 4.13%, 11/15/2029(b) | 582,000 | 498,810 | ||||||
Macy’s Retail Holdings LLC, | ||||||||
5.88%, 04/01/2029(b) | 500,000 | 433,308 | ||||||
5.88%, 03/15/2030(b) | 245,000 | 209,808 | ||||||
6.13%, 03/15/2032(b) | 75,000 | 62,383 | ||||||
4.50%, 12/15/2034 | 275,000 | 192,874 | ||||||
1,397,183 | ||||||||
Application Software-0.42% |
| |||||||
salesforce.com, inc., | ||||||||
2.90%, 07/15/2051 | 5,450,000 | 4,031,241 | ||||||
3.05%, 07/15/2061 | 3,308,000 | 2,393,744 | ||||||
SS&C Technologies, Inc., 5.50%, 09/30/2027(b) | 897,000 | 851,051 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Application Software-(continued) |
| |||||||
Workday, Inc., 3.70%, 04/01/2029 | $ | 3,247,000 | $ | 3,047,469 | ||||
10,323,505 | ||||||||
Asset Management & Custody Banks-1.03% |
| |||||||
Ameriprise Financial, Inc., | ||||||||
3.00%, 04/02/2025 | 3,007,000 | 2,930,015 | ||||||
4.50%, 05/13/2032(c) | 1,736,000 | 1,733,012 | ||||||
Ares Capital Corp., | ||||||||
2.88%, 06/15/2028(c) | 375,000 | 311,855 | ||||||
3.20%, 11/15/2031(c) | 400,000 | 312,292 | ||||||
Bank of New York Mellon Corp. (The), | ||||||||
4.60%, 07/26/2030(c)(d) | 1,198,000 | 1,198,826 | ||||||
Series I, 3.75%(d)(e) | 5,507,000 | 4,652,975 | ||||||
Blackstone Secured Lending Fund, | ||||||||
2.75%, 09/16/2026(c) | 5,186,000 | 4,602,251 | ||||||
2.13%, 02/15/2027 | 4,127,000 | 3,425,988 | ||||||
2.85%, 09/30/2028 | 2,399,000 | 1,911,292 | ||||||
CI Financial Corp. (Canada), 3.20%, 12/17/2030 | 3,926,000 | 2,994,196 | ||||||
State Street Corp., 4.16%, 08/04/2033(d) | 1,193,000 | 1,153,135 | ||||||
25,225,837 | ||||||||
Auto Parts & Equipment-0.37% |
| |||||||
Avis Budget Car Rental LLC/Avis Budget Finance, Inc., | ||||||||
4.75%, 04/01/2028(b) | 4,969,000 | 4,345,813 | ||||||
5.38%, 03/01/2029(b)(c) | 1,884,000 | 1,644,967 | ||||||
Clarios Global L.P./Clarios US Finance Co., 8.50%, 05/15/2027(b) | 178,000 | 175,116 | ||||||
Nemak S.A.B. de C.V. (Mexico), | 3,204,000 | 2,446,687 | ||||||
NESCO Holdings II, Inc., 5.50%, 04/15/2029(b) | 506,000 | 446,171 | ||||||
9,058,754 | ||||||||
Automobile Manufacturers-2.62% |
| |||||||
Allison Transmission, Inc., | ||||||||
4.75%, 10/01/2027(b) | 202,000 | 188,199 | ||||||
3.75%, 01/30/2031(b) | 1,046,000 | 848,907 | ||||||
BMW US Capital LLC (Germany), 3.70%, 04/01/2032(b) | 2,337,000 | 2,182,170 | ||||||
Daimler Trucks Finance North America LLC (Germany), 3.65%, 04/07/2027(b) | 3,383,000 | 3,214,416 | ||||||
Ford Motor Co., | ||||||||
4.35%, 12/08/2026(c) | 515,000 | 497,297 | ||||||
3.25%, 02/12/2032 | 531,000 | 415,508 | ||||||
6.10%, 08/19/2032 | 4,835,000 | 4,714,899 | ||||||
4.75%, 01/15/2043 | 345,000 | 258,479 | ||||||
Ford Motor Credit Co. LLC, | ||||||||
4.39%, 01/08/2026 | 1,045,000 | 985,581 | ||||||
2.70%, 08/10/2026 | 2,367,000 | 2,052,976 | ||||||
4.95%, 05/28/2027 | 200,000 | 188,044 | ||||||
2.90%, 02/10/2029 | 334,000 | 270,919 | ||||||
5.11%, 05/03/2029(c) | 450,000 | 416,457 | ||||||
4.00%, 11/13/2030 | 332,000 | 277,761 |
Principal Amount | Value | |||||||
Automobile Manufacturers-(continued) |
| |||||||
General Motors Financial Co., Inc., | ||||||||
5.00%, 04/09/2027 | $ | 3,133,000 | $ | 3,092,823 | ||||
4.30%, 04/06/2029(c) | 4,592,000 | 4,243,402 | ||||||
Series B, 6.50%(d)(e) | 200,000 | 184,772 | ||||||
Hyundai Capital America, | ||||||||
4.30%, 02/01/2024(b) | 10,488,000 | 10,426,750 | ||||||
2.65%, 02/10/2025(b) | 3,179,000 | 3,015,776 | ||||||
2.00%, 06/15/2028(b) | 3,886,000 | 3,226,938 | ||||||
J.B. Poindexter & Co., Inc., 7.13%, 04/15/2026(b) | 992,000 | 962,528 | ||||||
Nissan Motor Acceptance Co. LLC, 1.85%, 09/16/2026(b) | 9,517,000 | 8,076,042 | ||||||
Toyota Motor Credit Corp., 4.45%, 06/29/2029(c) | 5,570,000 | 5,615,843 | ||||||
Volkswagen Group of America Finance LLC (Germany), | ||||||||
4.35%, 06/08/2027(b) | 5,852,000 | 5,700,434 | ||||||
4.60%, 06/08/2029(b) | 3,261,000 | 3,145,485 | ||||||
64,202,406 | ||||||||
Automotive Retail-0.60% |
| |||||||
Asbury Automotive Group, Inc., | ||||||||
4.50%, 03/01/2028 | 137,000 | 122,538 | ||||||
4.63%, 11/15/2029(b) | 658,000 | 565,038 | ||||||
5.00%, 02/15/2032(b) | 1,739,000 | 1,455,212 | ||||||
AutoZone, Inc., 4.75%, 08/01/2032(c) | 2,279,000 | 2,260,524 | ||||||
Group 1 Automotive, Inc., 4.00%, 08/15/2028(b) | 1,053,000 | 901,373 | ||||||
Lithia Motors, Inc., 3.88%, 06/01/2029(b) | 4,401,000 | 3,722,168 | ||||||
Sonic Automotive, Inc., | ||||||||
4.63%, 11/15/2029(b) | 3,122,000 | 2,672,604 | ||||||
4.88%, 11/15/2031(b) | 3,629,000 | 3,030,941 | ||||||
14,730,398 | ||||||||
Biotechnology-0.31% |
| |||||||
AbbVie, Inc., 4.88%, 11/14/2048 | 1,734,000 | 1,684,893 | ||||||
Amgen, Inc., | ||||||||
2.00%, 01/15/2032 | 125,000 | 101,881 | ||||||
3.15%, 02/21/2040 | 2,637,000 | 2,087,062 | ||||||
CSL Finance PLC (Australia), | ||||||||
3.85%, 04/27/2027(b) | 1,288,000 | 1,270,883 | ||||||
4.75%, 04/27/2052(b) | 1,510,000 | 1,455,261 | ||||||
4.95%, 04/27/2062(b) | 1,144,000 | 1,104,011 | ||||||
7,703,991 | ||||||||
Brewers-0.24% |
| |||||||
Anadolu Efes Biracilik ve Malt Sanayii A.S. (Turkey), 3.38%, 06/29/2028(b) | 2,337,000 | 1,729,130 | ||||||
Anheuser-Busch InBev Worldwide, Inc. (Belgium), |
| 2,003,000 |
|
| 2,582,484 |
| ||
4.35%, 06/01/2040 | 1,829,000 | 1,666,605 | ||||||
5,978,219 | ||||||||
Building Products-0.04% |
| |||||||
Advanced Drainage Systems, Inc., 6.38%, 06/15/2030(b) | 754,000 | 730,311 | ||||||
Carrier Global Corp., 2.72%, 02/15/2030 | 155,000 | 134,089 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Building Products-(continued) |
| |||||||
Owens Corning, 4.30%, 07/15/2047 | $ | 250,000 | $ | 203,668 | ||||
1,068,068 | ||||||||
Cable & Satellite-2.31% |
| |||||||
CCO Holdings LLC/CCO Holdings Capital Corp., | ||||||||
5.00%, 02/01/2028(b) | 187,000 | 171,105 | ||||||
6.38%, 09/01/2029(b)(c) | 4,452,000 | 4,329,570 | ||||||
4.75%, 03/01/2030(b) | 607,000 | 522,439 | ||||||
4.50%, 08/15/2030(b) | 676,000 | 569,327 | ||||||
4.50%, 05/01/2032 | 1,459,000 | 1,185,766 | ||||||
4.50%, 06/01/2033(b) | 1,952,000 | 1,534,848 | ||||||
4.25%, 01/15/2034(b) | 217,000 | 165,486 | ||||||
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., | ||||||||
4.91%, 07/23/2025 | 4,022,000 | 4,010,089 | ||||||
5.38%, 04/01/2038 | 249,000 | 218,712 | ||||||
3.50%, 06/01/2041 | 3,084,000 | 2,140,263 | ||||||
3.50%, 03/01/2042 | 3,918,000 | 2,710,439 | ||||||
5.75%, 04/01/2048 | 2,019,000 | 1,800,072 | ||||||
3.90%, 06/01/2052 | 3,306,000 | 2,243,504 | ||||||
6.83%, 10/23/2055 | 3,458,000 | 3,464,283 | ||||||
3.85%, 04/01/2061 | 4,132,000 | 2,647,107 | ||||||
4.40%, 12/01/2061 | 1,681,000 | 1,184,746 | ||||||
Comcast Corp., | ||||||||
3.45%, 02/01/2050(c) | 3,347,000 | 2,644,137 | ||||||
2.80%, 01/15/2051 | 6,907,000 | 4,786,143 | ||||||
2.89%, 11/01/2051 | 4,417,000 | 3,115,499 | ||||||
2.94%, 11/01/2056 | 3,855,000 | 2,616,401 | ||||||
2.99%, 11/01/2063 | 3,083,000 | 2,065,759 | ||||||
Cox Communications, Inc., 2.60%, 06/15/2031(b) | 2,666,000 | 2,223,576 | ||||||
CSC Holdings LLC, | ||||||||
6.50%, 02/01/2029(b) | 727,000 | 669,821 | ||||||
5.75%, 01/15/2030(b) | 817,000 | 634,053 | ||||||
4.50%, 11/15/2031(b) | 264,000 | 212,258 | ||||||
5.00%, 11/15/2031(b) | 200,000 | 142,921 | ||||||
DISH DBS Corp., 5.13%, 06/01/2029 | 809,000 | 480,554 | ||||||
Gray Escrow II, Inc., 5.38%, 11/15/2031(b)(c) | 801,000 | 677,958 | ||||||
Sirius XM Radio, Inc., | ||||||||
3.13%, 09/01/2026(b) | 212,000 | 189,079 | ||||||
4.00%, 07/15/2028(b) | 412,000 | 359,470 | ||||||
4.13%, 07/01/2030(b)(c) | 1,025,000 | 869,692 | ||||||
3.88%, 09/01/2031(b) | 5,085,000 | 4,112,341 | ||||||
Virgin Media Finance PLC (United Kingdom), 5.00%, 07/15/2030(b) | 296,000 | 234,340 | ||||||
Virgin Media Secured Finance PLC (United Kingdom), 5.50%, 05/15/2029(b) | 1,000,000 | 890,690 | ||||||
VZ Secured Financing B.V. (Netherlands), 5.00%, 01/15/2032(b)(c) | 949,000 | 781,753 | ||||||
56,604,201 |
Principal Amount | Value | |||||||
Casinos & Gaming-0.24% | ||||||||
Boyne USA, Inc., 4.75%, 05/15/2029(b) | $ | 1,715,000 | $ | 1,528,300 | ||||
CDI Escrow Issuer, Inc., 5.75%, 04/01/2030(b) | 2,553,000 | 2,368,393 | ||||||
Everi Holdings, Inc., 5.00%, 07/15/2029(b) | 521,000 | 468,645 | ||||||
MGM Resorts International, 6.00%, 03/15/2023 | 559,000 | 559,761 | ||||||
Mohegan Gaming & Entertainment, 8.00%, 02/01/2026(b) | 513,000 | 452,017 | ||||||
Wynn Resorts Finance LLC/Wynn Resorts Capital Corp., 5.13%, 10/01/2029(b)(c) | 533,000 | 448,061 | ||||||
5,825,177 | ||||||||
Commodity Chemicals-0.06% |
| |||||||
Mativ, Inc., 6.88%, 10/01/2026(b) | 1,493,000 | 1,363,191 | ||||||
Computer & Electronics Retail-0.41% |
| |||||||
Dell International LLC/EMC Corp., | 2,538,000 | 2,528,409 | ||||||
4.90%, 10/01/2026 | 1,493,000 | 1,499,641 | ||||||
8.35%, 07/15/2046 | 886,000 | 1,074,196 | ||||||
3.45%, 12/15/2051(b)(c) | 2,365,000 | 1,548,565 | ||||||
Leidos, Inc., 2.30%, 02/15/2031 | 4,351,000 | 3,421,436 | ||||||
10,072,247 | ||||||||
Construction & Engineering-0.04% |
| |||||||
AECOM, 5.13%, 03/15/2027 | 133,000 | 129,249 | ||||||
Great Lakes Dredge & Dock Corp., 5.25%, 06/01/2029(b) | 520,000 | 444,283 | ||||||
Howard Midstream Energy Partners LLC, 6.75%, 01/15/2027(b) | 536,000 | 485,723 | ||||||
1,059,255 | ||||||||
Construction Machinery & Heavy Trucks-0.01% |
| |||||||
Wabtec Corp., 4.95%, 09/15/2028 | 209,000 | 202,914 | ||||||
Construction Materials-0.12% |
| |||||||
CRH America Finance, Inc. (Ireland), 3.95%, | 3,123,000 | 3,020,503 | ||||||
Consumer Finance-0.86% | ||||||||
Ally Financial, Inc., | ||||||||
5.13%, 09/30/2024 | 434,000 | 439,722 | ||||||
4.63%, 03/30/2025 | 1,303,000 | 1,299,945 | ||||||
2.20%, 11/02/2028 | 247,000 | 204,162 | ||||||
American Express Co., | ||||||||
2.55%, 03/04/2027 | 2,839,000 | 2,637,931 | ||||||
4.99%, 05/26/2033(d) | 2,853,000 | 2,839,717 | ||||||
4.42%, 08/03/2033(d) | 5,222,000 | 5,041,753 | ||||||
Capital One Financial Corp., 5.27%, 05/10/2033(c)(d) | 550,000 | 540,129 | ||||||
FirstCash, Inc., 5.63%, 01/01/2030(b) | 525,000 | 470,573 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Consumer Finance-(continued) |
| |||||||
OneMain Finance Corp., | ||||||||
6.88%, 03/15/2025 | $ | 300,000 | $ | 291,978 | ||||
7.13%, 03/15/2026(c) | 925,000 | 862,748 | ||||||
3.88%, 09/15/2028 | 3,554,000 | �� | 2,776,953 | |||||
5.38%, 11/15/2029(c) | 519,000 | 430,695 | ||||||
Synchrony Financial, 4.50%, 07/23/2025 | 3,210,000 | 3,143,897 | ||||||
20,980,203 | ||||||||
Copper–0.29% |
| |||||||
Freeport-McMoRan, Inc., 5.00%, 09/01/2027(c) | 2,393,000 | 2,364,717 | ||||||
PT Freeport Indonesia (Indonesia), | ||||||||
4.76%, 04/14/2027(b) | 1,302,000 | 1,270,752 | ||||||
5.32%, 04/14/2032(b) | 1,919,000 | 1,784,207 | ||||||
6.20%, 04/14/2052(b) | 1,788,000 | 1,591,320 | ||||||
7,010,996 | ||||||||
Data Processing & Outsourced Services-0.43% |
| |||||||
Block, Inc., 3.50%, 06/01/2031(c) | 3,167,000 | 2,610,036 | ||||||
Clarivate Science Holdings Corp., | ||||||||
3.88%, 07/01/2028(b) | 3,254,000 | 2,789,487 | ||||||
4.88%, 07/01/2029(b) | 531,000 | 439,862 | ||||||
Fidelity National Information Services, Inc., 2.25%, 03/01/2031(c) | 230,000 | 187,763 | ||||||
PayPal Holdings, Inc., 2.85%, 10/01/2029(c) | 1,803,000 | 1,632,972 | ||||||
5.05%, 06/01/2052(c) | 2,853,000 | 2,787,238 | ||||||
10,447,358 | ||||||||
Distributors-0.19% | ||||||||
Genuine Parts Co., | 2,428,000 | 1,920,911 | ||||||
2.75%, 02/01/2032(c) | 3,173,000 | 2,635,393 | ||||||
4,556,304 | ||||||||
Diversified Banks-11.39% | ||||||||
Africa Finance Corp. (Supranational), 4.38%, 04/17/2026(b) | 7,620,000 | 7,373,112 | ||||||
African Export-Import Bank (The) (Supranational), | ||||||||
2.63%, 05/17/2026(b) | 1,433,000 | 1,295,934 | ||||||
3.80%, 05/17/2031(b) | 1,858,000 | 1,529,013 | ||||||
Australia & New Zealand Banking Group Ltd. (Australia), | 3,444,000 | 3,430,933 | ||||||
Banco do Brasil S.A. (Brazil), 3.25%, 09/30/2026(b) | 3,144,000 | 2,892,810 | ||||||
Banco Mercantil del Norte S.A. (Mexico), | ||||||||
5.88%(b)(d)(e) | 2,475,000 | 2,147,063 | ||||||
6.63%(b)(d)(e) | 2,457,000 | 2,092,136 | ||||||
Banco Santander S.A. (Spain), 5.29%, 08/18/2027 | 4,700,000 | 4,602,830 |
Principal Amount | Value | |||||||
Diversified Banks-(continued) |
| |||||||
Bank of America Corp., | ||||||||
3.34% (SOFR + 1.05%), 02/04/2028(f) | $ | 4,000,000 | $ | 3,865,191 | ||||
4.38%, 04/27/2028(c)(d) | 5,288,000 | 5,157,377 | ||||||
2.57%, 10/20/2032(d) | 2,900,000 | 2,372,582 | ||||||
2.97%, 02/04/2033(d) | 2,932,000 | 2,465,559 | ||||||
4.57%, 04/27/2033(d) | 4,403,000 | 4,208,093 | ||||||
5.02%, 07/22/2033(d) | 4,775,000 | 4,735,813 | ||||||
2.48%, 09/21/2036(d) | 4,593,000 | 3,563,464 | ||||||
3.85%, 03/08/2037(d) | 1,005,000 | 865,285 | ||||||
7.75%, 05/14/2038 | 2,111,000 | 2,612,168 | ||||||
Series AA, 6.10%(c)(d)(e) | 5,373,000 | 5,326,352 | ||||||
Series DD, 6.30%(c)(d)(e) | 1,637,000 | 1,675,879 | ||||||
Series RR, 4.38%(c)(d)(e) | 6,725,000 | 5,780,608 | ||||||
Series TT, 6.13%(c)(d)(e) | 8,788,000 | 8,671,998 | ||||||
Bank of China Ltd. (China), 5.00%, 11/13/2024(b) | 2,850,000 | 2,897,864 | ||||||
Bank of Nova Scotia (The) (Canada), 4.59%, 05/04/2037(d) | 7,014,000 | 6,347,217 | ||||||
Barclays PLC (United Kingdom), | 4,510,000 | 4,374,700 | ||||||
BBVA Bancomer S.A. (Mexico), 4.38%, 04/10/2024(b) | 1,666,000 | 1,662,410 | ||||||
BPCE S.A. (France), | ||||||||
2.28%, 01/20/2032(b)(d) | 3,204,000 | 2,483,408 | ||||||
5.75%, 07/19/2033(b)(d) | 2,479,000 | 2,446,135 | ||||||
Citigroup, Inc., | ||||||||
3.50%, 05/15/2023 | 3,093,000 | 3,081,255 | ||||||
3.98%, 03/20/2030(d) | 3,109,000 | 2,910,661 | ||||||
2.56%, 05/01/2032(d) | 3,562,000 | 2,915,877 | ||||||
2.52%, 11/03/2032(d) | 1,935,000 | 1,565,394 | ||||||
3.06%, 01/25/2033(d) | 1,631,000 | 1,381,453 | ||||||
3.79%, 03/17/2033(d) | 5,182,000 | 4,662,255 | ||||||
4.91%, 05/24/2033(d) | 2,951,000 | 2,890,117 | ||||||
2.90%, 11/03/2042(d) | 2,932,000 | 2,146,649 | ||||||
4.65%, 07/23/2048 | 1,593,000 | 1,504,937 | ||||||
Series A, 5.95%(d)(e) | 1,192,000 | 1,183,060 | ||||||
Series V, 4.70%(d)(e) | 2,340,000 | 1,990,463 | ||||||
Commonwealth Bank of Australia (Australia), 2.69%, 03/11/2031(b) | 224,000 | 179,866 | ||||||
Cooperatieve Rabobank U.A. (Netherlands), | ||||||||
3.65%, 04/06/2028(b)(c)(d) | 4,047,000 | 3,808,541 | ||||||
4.66%, 08/22/2028(b)(d) | 3,885,000 | 3,839,930 | ||||||
3.76%, 04/06/2033(b)(d) | 3,778,000 | 3,356,890 | ||||||
Credit Agricole S.A. (France), 4.75%(b)(d)(e) | 5,718,000 | 4,491,093 | ||||||
Development Bank of Kazakhstan JSC (Kazakhstan), 5.75%, 05/12/2025(b) | 4,795,000 | 4,784,293 | ||||||
Federation des Caisses Desjardins du Quebec (Canada), 4.55%, 08/23/2027(b) | 6,385,000 | 6,267,047 | ||||||
HSBC Holdings PLC (United Kingdom), | ||||||||
5.21%, 08/11/2028(d) | 3,440,000 | 3,359,848 | ||||||
2.36%, 08/18/2031(d) | 201,000 | 158,948 | ||||||
2.87%, 11/22/2032(d) | 386,000 | 307,045 | ||||||
5.40%, 08/11/2033(d) | 5,567,000 | 5,302,984 | ||||||
6.00%(d)(e) | 3,533,000 | 3,254,434 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Diversified Banks-(continued) |
| |||||||
ING Groep N.V. (Netherlands), 3.88%(d)(e) | $ | 212,000 | $ | 157,968 | ||||
JPMorgan Chase & Co., | ||||||||
3.63%, 12/01/2027 | 2,208,000 | 2,111,518 | ||||||
4.32%, 04/26/2028(d) | 5,200,000 | 5,082,839 | ||||||
4.85%, 07/25/2028(d) | 3,709,000 | 3,703,708 | ||||||
3.70%, 05/06/2030(d) | 3,109,000 | 2,862,986 | ||||||
2.58%, 04/22/2032(d) | 3,435,000 | 2,840,331 | ||||||
4.59%, 04/26/2033(d) | 3,143,000 | 3,029,612 | ||||||
4.91%, 07/25/2033(d) | 5,689,000 | 5,632,296 | ||||||
4.26%, 02/22/2048(d) | 1,553,000 | 1,380,846 | ||||||
Series W, 3.91%(3 mo. USD LIBOR + 1.00%), 05/15/2047(f) | 5,174,000 | 4,074,525 | ||||||
Series V, 5.60%(3 mo. USD LIBOR + 3.32%)(e)(f) | 1,664,000 | 1,649,440 | ||||||
Lloyds Banking Group PLC (United Kingdom), 4.98%, 08/11/2033(d) | 2,232,000 | 2,122,731 | ||||||
Mitsubishi UFJ Financial Group, Inc. (Japan), | ||||||||
5.02%, 07/20/2028(d) | 3,092,000 | 3,109,655 | ||||||
2.05%, 07/17/2030 | 3,778,000 | 3,073,127 | ||||||
1.80%, 07/20/2033(d) | 4,275,000 | 4,295,636 | ||||||
Mizuho Financial Group, Inc. (Japan), | ||||||||
2.20%, 07/10/2031(d) | 5,253,000 | 4,222,694 | ||||||
2.56%, 09/13/2031 | 3,186,000 | 2,505,822 | ||||||
National Australia Bank Ltd. (Australia), 2.33%, 08/21/2030(b) | 256,000 | 203,591 | ||||||
Nordea Bank Abp (Finland), | ||||||||
3.75%(b)(d)(e) | 1,221,000 | 905,296 | ||||||
6.63%(b)(d)(e) | 3,226,000 | 3,177,842 | ||||||
Standard Chartered PLC (United Kingdom), | ||||||||
7.75%(b)(d)(e) | 4,646,000 | 4,664,835 | ||||||
2.68%, 06/29/2032(b)(d) | 2,996,000 | 2,377,588 | ||||||
3.27%, 02/18/2036(b)(d) | 3,903,000 | 3,065,713 | ||||||
4.30%(b)(d)(e) | 5,262,000 | 3,809,833 | ||||||
7.75%(b)(d)(e) | 5,568,000 | 5,417,107 | ||||||
Sumitomo Mitsui Financial Group, Inc. (Japan), | ||||||||
3.04%, 07/16/2029 | 3,325,000 | 2,943,143 | ||||||
2.14%, 09/23/2030 | 5,974,000 | 4,754,526 | ||||||
Turkiye Vakiflar Bankasi T.A.O. (Turkey), 5.50%, | 3,672,000 | 3,048,329 | ||||||
U.S. Bancorp, | ||||||||
4.97%, 07/22/2033(d) | 2,829,000 | 2,791,563 | ||||||
2.49%, 11/03/2036(d) | 6,629,000 | 5,353,768 | ||||||
Wells Fargo & Co., | ||||||||
3.53%, 03/24/2028(d) | 2,643,000 | 2,498,313 | ||||||
4.81%, 07/25/2028(d) | 2,139,000 | 2,124,452 | ||||||
4.15%, 01/24/2029 | 3,109,000 | 3,016,873 | ||||||
4.90%, 07/25/2033(d) | 2,098,000 | 2,066,713 | ||||||
3.07%, 04/30/2041(d) | 1,870,000 | 1,433,462 | ||||||
5.38%, 11/02/2043 | 6,115,000 | 6,110,690 | ||||||
4.75%, 12/07/2046 | 1,642,000 | 1,502,430 | ||||||
4.61%, 04/25/2053(d) | 3,872,000 | 3,558,830 |
Principal Amount | Value | |||||||
Diversified Banks-(continued) |
| |||||||
Westpac Banking Corp. (Australia), | ||||||||
5.41%, 08/10/2033(d) | $ | 241,000 | $ | 231,951 | ||||
2.67%, 11/15/2035(d) | 101,000 | 79,578 | ||||||
279,211,134 | ||||||||
Diversified Capital Markets-2.36% |
| |||||||
Credit Suisse AG (Switzerland), 5.00%, 07/09/2027 | 5,663,000 | 5,519,897 | ||||||
Credit Suisse Group AG (Switzerland), | ||||||||
6.44%, 08/11/2028(b)(d) | 5,265,000 | 5,164,615 | ||||||
4.19%, 04/01/2031(b)(d) | 2,792,000 | 2,347,982 | ||||||
6.54%, 08/12/2033(b)(d) | 7,974,000 | 7,621,726 | ||||||
4.50%(b)(c)(d)(e) | 4,764,000 | 3,123,103 | ||||||
5.10%(b)(c)(d)(e) | 4,230,000 | 2,892,210 | ||||||
5.25%(b)(d)(e) | 4,357,000 | 3,286,224 | ||||||
7.25%(b)(d)(e) | 330,000 | 272,380 | ||||||
7.50%(b)(d)(e) | 5,779,000 | 5,105,912 | ||||||
9.75%(b)(d)(e) | 4,541,000 | 4,597,762 | ||||||
Macquarie Bank Ltd. (Australia), | 5,010,000 | 4,633,562 | ||||||
OWL Rock Core Income Corp., 4.70%, 02/08/2027 | 2,108,000 | 1,920,642 | ||||||
UBS Group AG (Switzerland), | ||||||||
4.75%, 05/12/2028(b)(d) | 3,741,000 | 3,671,815 | ||||||
3.13%, 08/13/2030(b)(d) | 6,190,000 | 5,416,648 | ||||||
4.38%(b)(d)(e) | 2,932,000 | 2,215,038 | ||||||
57,789,516 | ||||||||
Diversified Chemicals-0.05% | ||||||||
OCP S.A. (Morocco), 5.13%, 06/23/2051(b) | 1,758,000 | 1,267,887 | ||||||
Diversified Metals & Mining-0.27% |
| |||||||
Corp. Nacional del Cobre de Chile (Chile), 3.15%, 01/15/2051(b) | 1,214,000 | 825,089 | ||||||
FMG Resources August 2006 Pty. Ltd. (Australia), 4.38%, 04/01/2031(b)(c) | 2,932,000 | 2,395,298 | ||||||
Hudbay Minerals, Inc. (Canada), | 511,000 | 450,519 | ||||||
South32 Treasury Ltd. (Australia), 4.35%, 04/14/2032(b) | 2,634,000 | 2,400,298 | ||||||
Teck Resources Ltd. (Canada), 6.13%, 10/01/2035 | 503,000 | 513,315 | ||||||
6,584,519 | ||||||||
Diversified REITs-1.33% | ||||||||
CubeSmart L.P., 2.50%, 02/15/2032 | 1,772,000 | 1,431,797 | ||||||
iStar, Inc., | ||||||||
4.75%, 10/01/2024 | 828,000 | 829,399 | ||||||
5.50%, 02/15/2026 | 191,000 | 195,065 | ||||||
Trust Fibra Uno (Mexico), | ||||||||
5.25%, 12/15/2024(b) | 4,124,000 | 4,068,347 | ||||||
5.25%, 01/30/2026(b) | 3,705,000 | 3,517,008 | ||||||
4.87%, 01/15/2030(b) | 3,446,000 | 2,985,856 | ||||||
6.39%, 01/15/2050(b) | 9,390,000 | 7,644,258 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Diversified REITs-(continued) |
| |||||||
VICI Properties L.P., | ||||||||
4.75%, 02/15/2028 | $ | 3,533,000 | $ | 3,395,346 | ||||
4.95%, 02/15/2030(c) | 3,533,000 | 3,397,142 | ||||||
5.13%, 05/15/2032 | 2,812,000 | 2,683,716 | ||||||
5.63%, 05/15/2052 | 2,637,000 | 2,443,280 | ||||||
32,591,214 | ||||||||
Drug Retail-0.10% | ||||||||
CVS Pass-Through Trust, | ||||||||
6.04%, 12/10/2028 | 980,102 | 1,003,912 | ||||||
5.77%, 01/10/2033(b) | 1,523,776 | 1,561,700 | ||||||
2,565,612 | ||||||||
Education Services-0.28% | ||||||||
Grand Canyon University, 3.25%, 10/01/2023 | 6,960,000 | 6,873,000 | ||||||
Electric Utilities-3.55% | ||||||||
AEP Texas, Inc., | ||||||||
4.70%, 05/15/2032 | 1,424,000 | 1,392,895 | ||||||
5.25%, 05/15/2052 | 2,074,000 | 2,089,120 | ||||||
Alfa Desarrollo S.p.A. (Chile), 4.55%, 09/27/2051(b) | 3,108,597 | 2,242,914 | ||||||
American Electric Power Co., Inc., 3.88%, 02/15/2062(d) | 9,627,000 | 8,195,130 | ||||||
Commonwealth Edison Co., Series 127, 3.20%, 11/15/2049 | 3,435,000 | 2,693,282 | ||||||
Drax Finco PLC (United Kingdom), 6.63%, | 3,016,000 | 2,937,328 | ||||||
Duke Energy Corp., | ||||||||
4.30%, 03/15/2028 | 2,594,000 | 2,540,965 | ||||||
5.00%, 08/15/2052 | 4,087,000 | 3,888,746 | ||||||
3.25%, 01/15/2082(d) | 2,412,000 | 1,928,087 | ||||||
Electricidad Firme de Mexico Holdings S.A. de C.V. (Mexico), 4.90%, 11/20/2026(b) | 1,453,000 | 1,234,169 | ||||||
Electricite de France S.A. (France), 6.00%, 01/22/2114(b) | 6,655,000 | 6,343,446 | ||||||
Enel Finance International N.V. (Italy), 2.88%, 07/12/2041(b) | 3,155,000 | 2,002,238 | ||||||
Entergy Louisiana LLC, 4.75%, 09/15/2052 | 937,000 | 909,620 | ||||||
Eversource Energy, Series R, 1.65%, 08/15/2030 | 88,000 | 70,440 | ||||||
FirstEnergy Corp., Series B, 4.40%, 07/15/2027 | 1,000,000 | 948,810 | ||||||
Interconexion Electrica S.A. ESP (Colombia), 3.83%, 11/26/2033(b) | 1,241,000 | 1,054,062 | ||||||
Mercury Chile Holdco LLC (Chile), 6.50%, | 4,362,000 | 3,888,505 | ||||||
NextEra Energy Capital Holdings, Inc., |
| |||||||
4.63%, 07/15/2027 | 5,180,000 | 5,204,583 | ||||||
5.00%, 07/15/2032(c) | 1,709,000 | 1,741,819 | ||||||
NRG Energy, Inc., 4.45%, 06/15/2029(b) | 560,000 | 507,783 | ||||||
PacifiCorp, 2.90%, 06/15/2052 | 4,393,000 | 3,175,871 |
Principal Amount | Value | |||||||
Electric Utilities-(continued) |
| |||||||
Southern Co. (The), | ||||||||
Series B, 4.00%, 01/15/2051(d) | $ | 12,070,000 | $ | 11,206,271 | ||||
5.46% (3 mo. USD LIBOR + 3.63%), 03/15/2057(c)(f) | 11,600,000 | 11,576,568 | ||||||
Series 21-A, 3.75%, 09/15/2051(d) | 2,047,000 | 1,775,772 | ||||||
Tampa Electric Co., 5.00%, 07/15/2052 | 1,661,000 | 1,669,932 | ||||||
Virginia Electric & Power Co., | ||||||||
Series B, 3.75%, 05/15/2027 | 2,241,000 | 2,204,012 | ||||||
Series C, 4.63%, 05/15/2052 | 2,599,000 | 2,537,168 | ||||||
Vistra Operations Co. LLC, | ||||||||
5.50%, 09/01/2026(b) | 200,000 | 193,364 | ||||||
5.63%, 02/15/2027(b) | 180,000 | 173,465 | ||||||
5.00%, 07/31/2027(b) | 324,000 | 301,936 | ||||||
4.38%, 05/01/2029(b)(c) | 605,000 | 528,501 | ||||||
87,156,802 | ||||||||
Electrical Components & Equipment-0.32% |
| |||||||
Acuity Brands Lighting, Inc., 2.15%, 12/15/2030 | 4,492,000 | 3,566,611 | ||||||
EnerSys, | ||||||||
5.00%, 04/30/2023(b) | 476,000 | 474,639 | ||||||
4.38%, 12/15/2027(b)(c) | 819,000 | 746,543 | ||||||
Sensata Technologies B.V., | ||||||||
4.88%, 10/15/2023(b) | 1,543,000 | 1,558,677 | ||||||
5.88%, 09/01/2030(b)(c) | 1,648,000 | 1,612,964 | ||||||
7,959,434 | ||||||||
Electronic Components-0.73% |
| |||||||
Corning, Inc., 5.45%, 11/15/2079 | 18,890,000 | 17,544,610 | ||||||
Sensata Technologies, Inc., 3.75%, 02/15/2031(b)(c) | 541,000 | 447,660 | ||||||
17,992,270 | ||||||||
Electronic Equipment & Instruments-0.10% |
| |||||||
Vontier Corp., | ||||||||
2.40%, 04/01/2028 | 200,000 | 162,080 | ||||||
2.95%, 04/01/2031 | 2,878,000 | 2,217,931 | ||||||
2,380,011 | ||||||||
Electronic Manufacturing Services-0.21% |
| |||||||
Jabil, Inc., 3.00%, 01/15/2031 | 6,230,000 | 5,204,915 | ||||||
Environmental & Facilities Services-0.21% |
| |||||||
Covanta Holding Corp., 4.88%, 12/01/2029(b) | 3,268,000 | 2,763,094 | ||||||
GFL Environmental, Inc. (Canada), 3.50%, 09/01/2028(b) | 2,669,000 | 2,323,525 | ||||||
5,086,619 | ||||||||
Financial Exchanges & Data-1.61% |
| |||||||
B3 S.A. - Brasil, Bolsa, Balcao (Brazil), 4.13%, 09/20/2031(b) | 5,788,000 | 4,898,095 | ||||||
Cboe Global Markets, Inc., 3.00%, 03/16/2032 | 6,393,000 | 5,669,936 | ||||||
Coinbase Global, Inc., 3.38%, 10/01/2028(b) | 45,000 | 29,156 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Financial Exchanges & Data-(continued) |
| |||||||
FactSet Research Systems, Inc., 3.45%, 03/01/2032 | $ | 2,757,000 | $ | 2,412,208 | ||||
Intercontinental Exchange, Inc., | ||||||||
4.00%, 09/15/2027 | 3,734,000 | 3,683,065 | ||||||
4.35%, 06/15/2029 | 2,876,000 | 2,847,407 | ||||||
4.60%, 03/15/2033 | 2,506,000 | 2,487,709 | ||||||
4.95%, 06/15/2052 | 3,439,000 | 3,400,390 | ||||||
5.20%, 06/15/2062 | 2,606,000 | 2,576,318 | ||||||
Moody’s Corp., | ||||||||
4.25%, 08/08/2032 | 1,462,000 | 1,415,571 | ||||||
2.75%, 08/19/2041 | 3,306,000 | 2,417,337 | ||||||
5.25%, 07/15/2044 | 1,337,000 | 1,362,377 | ||||||
3.75%, 02/25/2052(c) | 2,479,000 | 2,036,524 | ||||||
3.10%, 11/29/2061 | 6,036,000 | 4,127,917 | ||||||
39,364,010 | ||||||||
Food Distributors–0.13% |
| |||||||
American Builders & Contractors Supply Co., Inc., | ||||||||
4.00%, 01/15/2028(b) | 512,000 | 463,923 | ||||||
3.88%, 11/15/2029(b) | 3,447,000 | 2,828,943 | ||||||
3,292,866 | ||||||||
Health Care Facilities-0.54% |
| |||||||
Encompass Health Corp., 4.50%, 02/01/2028(c) | 506,000 | 443,522 | ||||||
HCA, Inc., | ||||||||
5.00%, 03/15/2024 | 7,850,000 | 7,905,819 | ||||||
5.38%, 02/01/2025 | 317,000 | 320,413 | ||||||
5.25%, 04/15/2025 | 151,000 | 152,773 | ||||||
5.88%, 02/15/2026 | 166,000 | 169,712 | ||||||
5.38%, 09/01/2026 | 111,000 | 111,445 | ||||||
5.88%, 02/01/2029 | 216,000 | 220,449 | ||||||
3.50%, 09/01/2030(c) | 1,234,000 | 1,077,976 | ||||||
Tenet Healthcare Corp., | ||||||||
4.88%, 01/01/2026(b) | 1,011,000 | 961,739 | ||||||
6.13%, 06/15/2030(b) | 1,884,000 | 1,811,089 | ||||||
13,174,937 | ||||||||
Health Care REITs–0.45% |
| |||||||
CTR Partnership L.P./ CareTrust Capital Corp., 3.88%, 06/30/2028(b) | 531,000 | 450,581 | ||||||
Diversified Healthcare Trust, | ||||||||
4.75%, 05/01/2024 | 257,000 | 231,979 | ||||||
9.75%, 06/15/2025 | 241,000 | 237,203 | ||||||
4.38%, 03/01/2031 | 268,000 | 184,288 | ||||||
Healthcare Realty Holdings L.P., 2.00%, 03/15/2031(c) | 2,248,000 | 1,751,941 | ||||||
MPT Operating Partnership L.P./MPT Finance Corp., 4.63%, 08/01/2029 | 2,064,000 | 1,760,874 | ||||||
Omega Healthcare Investors, Inc., | ||||||||
3.38%, 02/01/2031 | 230,000 | 187,668 | ||||||
3.25%, 04/15/2033 | 4,383,000 | 3,331,974 | ||||||
Welltower, Inc., | ||||||||
3.10%, 01/15/2030 | 1,890,000 | 1,669,082 | ||||||
3.85%, 06/15/2032 | 1,311,000 | 1,194,103 | ||||||
10,999,693 |
Principal Amount | Value | |||||||
Health Care Services-0.75% | ||||||||
Cigna Corp., | $ | 4,554,000 | $ | 5,192,637 | ||||
4.38%, 10/15/2028 | 1,555,000 | 1,532,509 | ||||||
4.80%, 08/15/2038 | 4,325,000 | 4,175,894 | ||||||
Community Health Systems, Inc., | ||||||||
5.25%, 05/15/2030(b) | 377,000 | 286,054 | ||||||
4.75%, 02/15/2031(b) | 251,000 | 185,665 | ||||||
Piedmont Healthcare, Inc., | ||||||||
Series 2032, 2.04%, 01/01/2032 | 1,567,000 | 1,265,990 | ||||||
Series 2042, 2.72%, 01/01/2042 | 1,513,000 | 1,116,183 | ||||||
2.86%, 01/01/2052 | 1,729,000 | 1,183,027 | ||||||
Providence St. Joseph Health Obligated Group, Series 21-A, 2.70%, 10/01/2051 | 4,628,000 | 3,071,350 | ||||||
Select Medical Corp., 6.25%, 08/15/2026(b)(c) | 509,000 | 487,546 | ||||||
18,496,855 | ||||||||
Health Care Supplies-0.02% | ||||||||
Medline Borrower L.P., 3.88%, 04/01/2029(b) | 558,000 | 473,602 | ||||||
Homebuilding-0.54% | ||||||||
Lennar Corp., 4.75%, 11/29/2027 | 2,024,000 | 1,971,844 | ||||||
M.D.C. Holdings, Inc., | ||||||||
3.85%, 01/15/2030 | 6,299,000 | 5,164,552 | ||||||
6.00%, 01/15/2043 | 3,626,000 | 2,969,558 | ||||||
3.97%, 08/06/2061 | 5,286,000 | 3,028,589 | ||||||
Taylor Morrison Communities, Inc./Taylor Morrison Holdings II, Inc., 5.88%, 04/15/2023(b) | 57,000 | 56,848 | ||||||
13,191,391 | ||||||||
Hotel & Resort REITs-0.02% | ||||||||
Service Properties Trust, 4.38%, 02/15/2030 | 644,000 | 472,767 | ||||||
Hotels, Resorts & Cruise Lines-0.24% |
| |||||||
Carnival Corp., | ||||||||
10.50%, 02/01/2026(b) | 452,000 | 466,148 | ||||||
5.75%, 03/01/2027(b) | 295,000 | 229,777 | ||||||
Expedia Group, Inc., | ||||||||
4.63%, 08/01/2027 | 3,538,000 | 3,447,675 | ||||||
2.95%, 03/15/2031 | 185,000 | 154,942 | ||||||
Hilton Domestic Operating Co., Inc., 3.63%, 02/15/2032(b) | 1,980,000 | 1,601,325 | ||||||
5,899,867 | ||||||||
Household Products-0.12% | ||||||||
Colgate-Palmolive Co., 3.10%, 08/15/2027(c) | 2,571,000 | 2,505,270 | ||||||
Prestige Brands, Inc., 3.75%, 04/01/2031(b) | 582,000 | 466,569 | ||||||
2,971,839 | ||||||||
Hypermarkets & Super Centers-0.23% |
| |||||||
Walmart, Inc., 6.50%, 08/15/2037 | 4,627,000 | 5,756,800 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Independent Power Producers & Energy Traders-0.57% |
| |||||||
AES Corp. (The), 2.45%, 01/15/2031 | $ | 4,281,000 | $ | 3,533,819 | ||||
Calpine Corp., 3.75%, | 4,464,000 | 3,709,383 | ||||||
Clearway Energy Operating LLC, 4.75%, 03/15/2028(b) | 589,000 | 552,556 | ||||||
EnfraGen Energia Sur S.A./EnfraGen Spain S.A./Prime Energia S.p.A. (Spain), 5.38%, 12/30/2030(b) | 5,671,000 | 3,969,700 | ||||||
Vistra Corp., 7.00%(b)(c)(d)(e) | 2,295,000 | 2,120,029 | ||||||
13,885,487 | ||||||||
Industrial Conglomerates-0.19% |
| |||||||
Bidvest Group UK PLC (The) (South Africa), 3.63%, 09/23/2026(b) | 2,813,000 | 2,589,366 | ||||||
GE Capital International Funding Co. Unlimited Co., 4.42%, 11/15/2035 | 2,111,000 | 1,998,451 | ||||||
4,587,817 | ||||||||
Industrial Machinery-0.25% | ||||||||
EnPro Industries, Inc., 5.75%, 10/15/2026 | 996,000 | 978,973 | ||||||
Flowserve Corp., 2.80%, 01/15/2032 | 3,248,000 | 2,534,966 | ||||||
Mueller Water Products, Inc., 4.00%, 06/15/2029(b) | 518,000 | 466,967 | ||||||
Roller Bearing Co. of America, Inc., 4.38%, 10/15/2029(b) | 66,000 | 59,318 | ||||||
Weir Group PLC (The) (United Kingdom), 2.20%, 05/13/2026(b) | 2,501,000 | 2,178,172 | ||||||
6,218,396 | ||||||||
Industrial REITs-0.07% | ||||||||
LXP Industrial Trust, 2.38%, 10/01/2031 | 2,192,000 | 1,673,904 | ||||||
Insurance Brokers-0.10% | ||||||||
Willis North America, Inc., 4.65%, 06/15/2027 | 2,568,000 | 2,520,769 | ||||||
Integrated Oil & Gas-1.87% | ||||||||
BP Capital Markets America, Inc., | ||||||||
3.06%, 06/17/2041 | 4,794,000 | 3,768,742 | ||||||
2.94%, 06/04/2051 | 4,513,000 | 3,240,989 | ||||||
3.00%, 03/17/2052 | 4,304,000 | 3,132,656 | ||||||
BP Capital Markets PLC (United Kingdom), | ||||||||
4.38%(d)(e) | 4,088,000 | 3,923,458 | ||||||
4.88%(d)(e) | 1,570,000 | 1,441,064 | ||||||
Gray Oak Pipeline LLC, 2.60%, 10/15/2025(b) | 2,738,000 | 2,522,508 | ||||||
Occidental Petroleum Corp., | ||||||||
5.55%, 03/15/2026 | 322,000 | 330,211 | ||||||
8.50%, 07/15/2027 | 87,000 | 97,547 | ||||||
6.13%, 01/01/2031 | 913,000 | 950,149 | ||||||
6.20%, 03/15/2040 | 468,000 | 475,774 | ||||||
Petroleos Mexicanos (Mexico), | ||||||||
8.75%, 06/02/2029(b)(c) | 5,790,000 | 5,344,112 | ||||||
6.70%, 02/16/2032 | 3,593,000 | 2,809,726 |
Principal Amount | Value | |||||||
Integrated Oil & Gas-(continued) |
| |||||||
Petronas Capital Ltd. (Malaysia), | ||||||||
2.48%, 01/28/2032(b) | $ | 2,247,000 | $ | 1,963,424 | ||||
3.40%, 04/28/2061(b) | 6,289,000 | 4,901,254 | ||||||
Qatar Energy (Qatar), 3.30%, 07/12/2051(b) | 3,664,000 | 2,928,360 | ||||||
Saudi Arabian Oil Co. (Saudi Arabia), 4.38%, 04/16/2049(b) | 2,407,000 | 2,212,466 | ||||||
Shell International Finance B.V. (Netherlands), | ||||||||
2.88%, 11/26/2041 | 2,805,000 | 2,182,261 | ||||||
3.00%, 11/26/2051 | 4,844,000 | 3,645,966 | ||||||
45,870,667 | ||||||||
Integrated Telecommunication Services-1.58% |
| |||||||
Altice France S.A. (France), 8.13%, 02/01/2027(b)(c) | 472,000 | 449,764 | ||||||
5.13%, 07/15/2029(b) | 603,000 | 458,829 | ||||||
5.50%, 10/15/2029(b) | 325,000 | 257,054 | ||||||
AT&T, Inc., | ||||||||
3.50%, 09/15/2053 | 7,921,000 | 5,849,162 | ||||||
3.55%, 09/15/2055 | 10,120,000 | 7,420,748 | ||||||
British Telecommunications PLC (United Kingdom), 4.25%, 11/23/2081(b)(d) | 6,220,000 | 5,447,997 | ||||||
IHS Holding Ltd. (Nigeria), | ||||||||
5.63%, 11/29/2026(b) | 2,169,000 | 1,876,011 | ||||||
6.25%, 11/29/2028(b) | 1,677,000 | 1,427,026 | ||||||
Iliad Holding S.A.S. (France), | ||||||||
6.50%, 10/15/2026(b) | 1,250,000 | 1,143,887 | ||||||
7.00%, 10/15/2028(b)(c) | 300,000 | 271,968 | ||||||
Level 3 Financing, Inc., 3.75%, 07/15/2029(b) | 1,285,000 | 1,034,040 | ||||||
Telefonica Emisiones S.A. (Spain), 7.05%, 06/20/2036 | 2,299,000 | 2,517,086 | ||||||
Verizon Communications, Inc., | ||||||||
1.75%, 01/20/2031 | 447,000 | 355,106 | ||||||
2.55%, 03/21/2031 | 1,785,000 | 1,510,369 | ||||||
2.65%, 11/20/2040 | 2,048,000 | 1,480,193 | ||||||
3.40%, 03/22/2041 | 1,952,000 | 1,574,670 | ||||||
3.00%, 11/20/2060 | 5,421,000 | 3,621,152 | ||||||
3.70%, 03/22/2061 | 2,690,000 | 2,077,363 | ||||||
38,772,425 | ||||||||
Interactive Home Entertainment-0.55% |
| |||||||
Electronic Arts, Inc., 2.95%, 02/15/2051 | 4,026,000 | 2,933,216 | ||||||
ROBLOX Corp., 3.88%, 05/01/2030(b)(c) | 5,757,000 | 4,812,337 | ||||||
Take-Two Interactive Software, Inc., 4.00%, 04/14/2032 | 2,897,000 | 2,674,187 | ||||||
WMG Acquisition Corp., | ||||||||
3.75%, 12/01/2029(b) | 835,000 | 714,969 | ||||||
3.00%, 02/15/2031(b)(c) | 2,963,000 | 2,357,229 | ||||||
13,491,938 | ||||||||
Interactive Media & Services-1.20% |
| |||||||
Match Group Holdings II LLC, | ||||||||
4.63%, 06/01/2028(b) | 790,000 | 704,380 | ||||||
5.63%, 02/15/2029(b) | 4,618,000 | 4,318,855 | ||||||
3.63%, 10/01/2031(b) | 55,000 | 43,096 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Interactive Media & Services-(continued) |
| |||||||
Meta Platforms, Inc., | ||||||||
3.85%, 08/15/2032(b) | $ | 6,660,000 | $ | 6,268,327 | ||||
4.45%, 08/15/2052(b) | 6,586,000 | 6,007,255 | ||||||
4.65%, 08/15/2062(b) | 4,570,000 | 4,132,493 | ||||||
Tencent Holdings Ltd. (China), | ||||||||
1.81%, 01/26/2026(b) | 1,509,000 | 1,388,425 | ||||||
3.60%, 01/19/2028(b) | 4,305,000 | 4,035,356 | ||||||
3.93%, 01/19/2038(b)(c) | 3,137,000 | 2,606,042 | ||||||
29,504,229 | ||||||||
Internet & Direct Marketing Retail-0.30% |
| |||||||
Alibaba Group Holding Ltd. (China), 3.15%, 02/09/2051 | 3,700,000 | 2,454,153 | ||||||
Meituan (China), 2.13%, 10/28/2025(b)(c) | 3,055,000 | 2,691,327 | ||||||
Prosus N.V. (China), 3.26%, 01/19/2027(b) | 2,374,000 | 2,056,323 | ||||||
QVC, Inc., 5.45%, 08/15/2034 | 225,000 | 161,545 | ||||||
7,363,348 | ||||||||
Internet Services & Infrastructure-0.53% |
| |||||||
Cogent Communications Group, Inc., 7.00%, 06/15/2027(b) | 496,000 | 474,613 | ||||||
Twilio, Inc., | ||||||||
3.63%, 03/15/2029(c) | 3,496,000 | 2,923,093 | ||||||
3.88%, 03/15/2031(c) | 3,079,000 | 2,489,618 | ||||||
VeriSign, Inc., 2.70%, 06/15/2031(c) | 2,420,000 | 1,989,845 | ||||||
ZoomInfo Technologies LLC/ ZoomInfo Finance Corp., 3.88%, 02/01/2029(b) | 6,035,000 | 5,236,232 | ||||||
13,113,401 | ||||||||
Investment Banking & Brokerage-2.71% |
| |||||||
Brookfield Finance, Inc. (Canada), 3.90%, 01/25/2028 | 1,143,000 | 1,081,360 | ||||||
Charles Schwab Corp. (The), | ||||||||
3.35% (SOFR + 1.05%), 03/03/2027(f) | 4,470,000 | 4,408,901 | ||||||
2.90%, 03/03/2032(c) | 2,635,000 | 2,325,211 | ||||||
5.00%(d)(e) | 2,669,000 | 2,487,937 | ||||||
Series E, 6.40%(3 mo. USD LIBOR + 3.32%)(c)(e)(f) | 3,545,000 | 3,509,068 | ||||||
Series G, 5.38%(d)(e) | 231,000 | 230,711 | ||||||
Goldman Sachs Group, Inc. (The), | ||||||||
3.50%, 04/01/2025 | 2,689,000 | 2,630,277 | ||||||
2.59% (SOFR + 0.81%), 03/09/2027(c)(f) | 8,586,000 | 8,280,933 | ||||||
3.14% (SOFR + 0.92%), 10/21/2027(f) | 1,834,000 | 1,762,900 | ||||||
3.42% (SOFR + 1.12%), 02/24/2028(f) | 1,759,000 | 1,701,086 | ||||||
4.48%, 08/23/2028(d) | 2,884,000 | 2,816,770 | ||||||
2.65%, 10/21/2032(d) | 3,465,000 | 2,847,149 | ||||||
3.10%, 02/24/2033(d) | 2,017,000 | 1,717,520 | ||||||
6.75%, 10/01/2037 | 3,703,000 | 4,110,932 | ||||||
3.44%, 02/24/2043(d) | 2,509,000 | 1,980,111 | ||||||
4.80%, 07/08/2044 | 3,326,000 | 3,176,536 | ||||||
Series FRN, 2.57%(SOFR + 0.79%), 12/09/2026(f) | 6,123,000 | 5,873,320 | ||||||
Series T, 3.80%(d)(e) | 146,000 | 120,998 | ||||||
Series V, 4.13%(d)(e) | 2,539,000 | 2,177,954 |
Principal Amount | Value | |||||||
Investment Banking & Brokerage-(continued) |
| |||||||
JAB Holdings B.V. (Austria), 4.50%, 04/08/2052(b) | $ | 8,755,000 | $ | 6,433,376 | ||||
Morgan Stanley, | ||||||||
3.62%, 04/01/2031(d) | 2,582,000 | 2,368,190 | ||||||
2.51%, 10/20/2032(d) | 2,151,000 | 1,762,912 | ||||||
4.89%, 07/20/2033(c)(d) | 1,082,000 | 1,078,283 | ||||||
Raymond James Financial, Inc., 3.75%, 04/01/2051 | 1,826,000 | 1,491,460 | ||||||
66,373,895 | ||||||||
IT Consulting & Other Services-0.20% |
| |||||||
DXC Technology Co., 2.38%, 09/15/2028(c) | 4,695,000 | 4,015,987 | ||||||
Gartner, Inc., | ||||||||
4.50%, 07/01/2028(b)(c) | 740,000 | 684,371 | ||||||
3.63%, 06/15/2029(b) | 294,000 | 253,232 | ||||||
4,953,590 | ||||||||
Leisure Products-0.36% |
| |||||||
Brunswick Corp., |
| |||||||
4.40%, 09/15/2032(c) | 6,247,000 | 5,377,408 | ||||||
5.10%, 04/01/2052 | 4,556,000 | 3,365,740 | ||||||
8,743,148 | ||||||||
Life & Health Insurance-3.27% |
| |||||||
American Equity Investment Life Holding Co., 5.00%, 06/15/2027 | 5,284,000 | 5,180,795 | ||||||
Athene Holding Ltd., | ||||||||
4.13%, 01/12/2028 | 5,272,000 | 4,948,603 | ||||||
6.15%, 04/03/2030(c) | 2,882,000 | 2,912,043 | ||||||
3.45%, 05/15/2052 | 3,774,000 | 2,571,369 | ||||||
Brighthouse Financial, Inc., 4.70%, 06/22/2047 | 1,727,000 | 1,366,669 | ||||||
Corebridge Financial, Inc., | ||||||||
4.40%, 04/05/2052(b) | 1,794,000 | 1,499,592 | ||||||
6.88%, 12/15/2052(b)(d) | 4,586,000 | 4,437,442 | ||||||
Delaware Life Global Funding, | ||||||||
Series 22-1, 3.31%, 03/10/2025(b) | 5,895,000 | 5,632,496 | ||||||
Series 21-1, 2.66%, 06/29/2026(b) | 13,992,000 | 12,800,021 | ||||||
GA Global Funding Trust, | ||||||||
2.25%, 01/06/2027(b)(c) | 3,364,000 | 3,026,276 | ||||||
2.90%, 01/06/2032(b) | 5,217,000 | 4,256,846 | ||||||
MAG Mutual Holding Co., 4.75%, 04/30/2041(g) | 11,777,000 | 10,115,152 | ||||||
MetLife, Inc., | ||||||||
5.00%, 07/15/2052 | 1,599,000 | 1,621,664 | ||||||
Series D, 5.88%(d)(e) | 300,000 | 294,358 | ||||||
Nationwide Financial Services, Inc., 3.90%, 11/30/2049(b) | 2,743,000 | 2,183,279 | ||||||
Pacific Life Global Funding II, | ||||||||
2.84% (SOFR + 0.80%), 03/30/2025(b)(f) | 6,317,000 | 6,222,160 | ||||||
2.92% (SOFR + 0.62%), 06/04/2026(b)(f) | 3,183,000 | 3,066,024 | ||||||
Pacific LifeCorp, 3.35%, 09/15/2050(b) | 2,878,000 | 2,179,732 | ||||||
Prudential Financial, Inc., | ||||||||
3.91%, 12/07/2047(c) | 1,605,000 | 1,404,201 | ||||||
6.00%, 09/01/2052(d) | 3,869,000 | 3,823,797 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Life & Health Insurance-(continued) |
| |||||||
Sammons Financial Group, Inc., 4.75%, 04/08/2032(b) | $ | 750,000 | $ | 659,317 | ||||
80,201,836 | ||||||||
Life Sciences Tools & Services-0.07% |
| |||||||
Illumina, Inc., 2.55%, 03/23/2031(c) | 2,107,000 | 1,732,113 | ||||||
Managed Health Care-0.48% | ||||||||
Centene Corp., | ||||||||
4.25%, 12/15/2027 | 255,000 | 242,525 | ||||||
4.63%, 12/15/2029 | 526,000 | 496,255 | ||||||
3.38%, 02/15/2030 | 320,000 | 274,846 | ||||||
3.00%, 10/15/2030 | 1,000,000 | 837,235 | ||||||
2.50%, 03/01/2031 | 6,080,000 | 4,860,231 | ||||||
Kaiser Foundation Hospitals, | ||||||||
Series 2021, 2.81%, 06/01/2041 | 3,275,000 | 2,513,210 | ||||||
3.00%, 06/01/2051 | 3,415,000 | 2,540,687 | ||||||
11,764,989 | ||||||||
Metal & Glass Containers-0.03% |
| |||||||
Ardagh Metal Packaging Finance USA LLC/Ardagh Metal Packaging Finance PLC, 6.00%, 06/15/2027(b) | 266,000 | 261,069 | ||||||
Ball Corp., 5.25%, 07/01/2025 | 359,000 | 358,553 | ||||||
619,622 | ||||||||
Movies & Entertainment-0.90% |
| |||||||
Magallanes, Inc., | ||||||||
4.28%, 03/15/2032(b) | 295,000 | 257,269 | ||||||
5.05%, 03/15/2042(b) | 6,594,000 | 5,400,780 | ||||||
5.14%, 03/15/2052(b) | 8,186,000 | 6,565,376 | ||||||
5.39%, 03/15/2062(b)(c) | 7,230,000 | 5,817,229 | ||||||
Netflix, Inc., | ||||||||
5.88%, 11/15/2028 | 461,000 | 467,320 | ||||||
5.38%, 11/15/2029(b) | 252,000 | 248,661 | ||||||
Tencent Music Entertainment Group (China), | ||||||||
1.38%, 09/03/2025 | 1,560,000 | 1,407,722 | ||||||
2.00%, 09/03/2030 | 2,480,000 | 1,874,784 | ||||||
22,039,141 | ||||||||
Multi-line Insurance-0.33% | ||||||||
Allianz SE (Germany), | 2,807,000 | 2,145,012 | ||||||
Liberty Mutual Group, Inc., 5.50%, 06/15/2052(b) | 3,328,000 | 3,254,961 | ||||||
Nationwide Mutual Insurance Co., 4.95%, 04/22/2044(b) | 2,862,000 | 2,597,994 | ||||||
7,997,967 | ||||||||
Multi-Utilities-0.34% | ||||||||
Algonquin Power & Utilities Corp. (Canada), 4.75%, 01/18/2082(d) | 9,298,000 | 8,065,225 | ||||||
Dominion Energy, Inc., Series C, 2.25%, 08/15/2031(c) | 354,000 | 293,718 | ||||||
8,358,943 |
Principal Amount | Value | |||||||
Office REITs-0.49% | ||||||||
Alexandria Real Estate Equities, Inc., | ||||||||
3.95%, 01/15/2027 | $ | 2,189,000 | $ | 2,138,687 | ||||
2.95%, 03/15/2034(c) | 1,706,000 | 1,440,366 | ||||||
Highwoods Realty L.P., 2.60%, 02/01/2031 | 1,917,000 | 1,532,045 | ||||||
Office Properties Income Trust, | ||||||||
4.50%, 02/01/2025 | 4,353,000 | 4,074,520 | ||||||
2.65%, 06/15/2026 | 782,000 | 630,128 | ||||||
2.40%, 02/01/2027 | 2,888,000 | 2,185,977 | ||||||
12,001,723 | ||||||||
Oil & Gas Drilling-0.12% | ||||||||
Global Partners L.P./GLP Finance Corp., 7.00%, 08/01/2027 | 313,000 | 296,174 | ||||||
Nabors Industries, Inc., 7.38%, 05/15/2027(b) | 509,000 | 492,048 | ||||||
NGL Energy Operating LLC/NGL Energy Finance Corp., 7.50%, 02/01/2026(b)(c) | 405,000 | 371,128 | ||||||
Precision Drilling Corp. (Canada), | ||||||||
7.13%, 01/15/2026(b) | 100,000 | 96,298 | ||||||
6.88%, 01/15/2029(b) | 395,000 | 363,443 | ||||||
Rockies Express Pipeline LLC, | ||||||||
4.95%, 07/15/2029(b) | 222,000 | 200,535 | ||||||
4.80%, 05/15/2030(b) | 430,000 | 362,397 | ||||||
6.88%, 04/15/2040(b) | 339,000 | 282,909 | ||||||
Valaris Ltd., | ||||||||
12.00% PIK Rate, 8.25% Cash Rate, 04/30/2028(b)(h) | 182,000 | 183,176 | ||||||
Series 1145, 12.00% PIK Rate, 8.25% Cash Rate, 04/30/2028(h) | 342,000 | 344,209 | ||||||
2,992,317 | ||||||||
Oil & Gas Equipment & Services-0.24% |
| |||||||
Baker Hughes Holdings LLC/Baker Hughes Co-Obligor, Inc., 3.34%, 12/15/2027 | 2,792,000 | 2,614,528 | ||||||
Petrofac Ltd. (United Kingdom), 9.75%, 11/15/2026(b) | 3,614,000 | 2,735,321 | ||||||
USA Compression Partners L.P./USA Compression Finance Corp., 6.88%, 09/01/2027 | 485,000 | 449,110 | ||||||
5,798,959 | ||||||||
Oil & Gas Exploration & Production-1.82% |
| |||||||
Aethon United BR L.P./Aethon United Finance Corp., 8.25%, 02/15/2026(b) | 1,046,000 | 1,047,360 | ||||||
Aker BP ASA (Norway), 3.10%, 07/15/2031(b) | 2,566,000 | 2,162,642 | ||||||
Apache Corp., 7.75%, 12/15/2029 | 2,305,000 | 2,452,393 | ||||||
Callon Petroleum Co., 8.00%, 08/01/2028(b) | 501,000 | 481,479 | ||||||
Cameron LNG LLC, | ||||||||
3.30%, 01/15/2035(b) | 3,295,000 | 2,800,401 | ||||||
3.40%, 01/15/2038(b) | 3,961,000 | 3,370,566 | ||||||
Continental Resources, Inc., 2.88%, 04/01/2032(b)(c) | 1,615,000 | 1,262,630 | ||||||
Devon Energy Corp., | ||||||||
5.25%, 10/15/2027 | 7,593,000 | 7,705,726 | ||||||
5.88%, 06/15/2028 | 4,703,000 | 4,845,685 |
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) |
| |||||||
Earthstone Energy Holdings LLC, 8.00%, 04/15/2027(b)(c) | $ | 509,000 | $ | 496,565 | ||||
Galaxy Pipeline Assets Bidco Ltd. (United Arab Emirates), | ||||||||
2.16%, 03/31/2034(b) | 3,175,642 | 2,778,889 | ||||||
2.94%, 09/30/2040(b) | 5,080,094 | 4,251,709 | ||||||
Gazprom PJSC Via Gaz Finance PLC (Russia), 2.95%, 01/27/2029(b) | 5,299,000 | 2,728,985 | ||||||
Hilcorp Energy I L.P./Hilcorp Finance Co., | ||||||||
6.25%, 11/01/2028(b) | 190,000 | 179,797 | ||||||
6.00%, 04/15/2030(b) | 1,560,000 | 1,438,304 | ||||||
6.25%, 04/15/2032(b)(c) | 1,560,000 | 1,400,414 | ||||||
Murphy Oil Corp., | ||||||||
6.38%, 07/15/2028(c) | 2,418,000 | 2,384,462 | ||||||
6.13%, 12/01/2042 | 180,000 | 141,081 | ||||||
Uzbekneftegaz JSC (Uzbekistan), 4.75%, 11/16/2028(b) | 3,661,000 | 2,709,122 | ||||||
44,638,210 | ||||||||
Oil & Gas Refining & Marketing-0.07% |
| |||||||
Parkland Corp. (Canada), 4.50%, 10/01/2029(b) | 1,951,000 | 1,654,263 | ||||||
Oil & Gas Storage & Transportation-6.42% |
| |||||||
Boardwalk Pipelines L.P., | ||||||||
3.40%, 02/15/2031 | 2,822,000 | 2,394,676 | ||||||
3.60%, 09/01/2032 | 4,659,000 | 3,930,332 | ||||||
Crestwood Midstream Partners L.P./Crestwood Midstream Finance Corp., 8.00%, 04/01/2029(b) | 1,038,000 | 1,030,523 | ||||||
Delek Logistics Partners L.P./Delek Logistics Finance Corp., 7.13%, 06/01/2028(b) | 540,000 | 505,240 | ||||||
El Paso Natural Gas Co. LLC, 8.38%, 06/15/2032 | 1,528,000 | 1,818,673 | ||||||
Enbridge, Inc. (Canada), | ||||||||
2.92% (SOFR + 0.63%), 02/16/2024(f) | 838,000 | 831,473 | ||||||
3.40%, 08/01/2051 | 1,764,000 | 1,318,411 | ||||||
Energy Transfer L.P., | ||||||||
5.88%, 01/15/2024 | 508,000 | 514,979 | ||||||
2.90%, 05/15/2025 | 3,379,000 | 3,202,915 | ||||||
3.75%, 05/15/2030 | 5,740,000 | 5,163,578 | ||||||
4.90%, 03/15/2035 | 9,088,000 | 8,288,728 | ||||||
5.00%, 05/15/2050 | 6,096,000 | 5,242,507 | ||||||
Series A, 6.25%(d)(e) | 342,000 | 285,998 | ||||||
Enterprise Products Operating LLC, | ||||||||
3.13%, 07/31/2029 | 350,000 | 316,536 | ||||||
4.80%, 02/01/2049 | 1,902,000 | 1,752,521 | ||||||
4.20%, 01/31/2050 | 2,236,000 | 1,899,963 | ||||||
3.30%, 02/15/2053 | 2,431,000 | 1,806,399 | ||||||
Series D, 6.88%, 03/01/2033 | 2,200,000 | 2,496,540 | ||||||
5.91% (3 mo. USD LIBOR + 2.99%), 08/16/2077(f) | 4,404,000 | 3,928,500 | ||||||
EQM Midstream Partners L.P., | ||||||||
7.50%, 06/01/2027(b) | 164,000 | 162,367 | ||||||
6.50%, 07/01/2027(b) | 411,000 | 397,461 | ||||||
7.50%, 06/01/2030(b) | 755,000 | 750,398 | ||||||
4.75%, 01/15/2031(b) | 283,000 | 245,265 |
Principal Amount | Value | |||||||
Oil & Gas Storage & Transportation-(continued) |
| |||||||
Genesis Energy L.P./Genesis Energy Finance Corp., | ||||||||
6.25%, 05/15/2026 | $ | 255,000 | $ | 230,828 | ||||
8.00%, 01/15/2027 | 480,000 | 455,695 | ||||||
7.75%, 02/01/2028 | 304,000 | 282,270 | ||||||
Hess Midstream Operations L.P., 5.63%, 02/15/2026(b) | 729,000 | 712,164 | ||||||
Holly Energy Partners L.P./Holly Energy Finance Corp., 6.38%, 04/15/2027(b) | 500,000 | 489,259 | ||||||
Kinder Morgan Energy Partners L.P., 4.30%, 05/01/2024 | 1,712,000 | 1,719,410 | ||||||
Kinder Morgan, Inc., | ||||||||
7.80%, 08/01/2031 | 14,405,000 | 16,671,848 | ||||||
7.75%, 01/15/2032 | 14,866,000 | 17,306,684 | ||||||
4.80%, 02/01/2033(c) | 7,818,000 | 7,536,990 | ||||||
3.25%, 08/01/2050 | 200,000 | 139,812 | ||||||
5.45%, 08/01/2052(c) | 6,891,000 | 6,710,400 | ||||||
Kinetik Holdings L.P., 5.88%, 06/15/2030(b) | 2,397,000 | 2,283,202 | ||||||
MPLX L.P., | ||||||||
4.80%, 02/15/2029 | 1,891,000 | 1,848,425 | ||||||
4.70%, 04/15/2048 | 2,232,000 | 1,908,032 | ||||||
5.50%, 02/15/2049 | 3,062,000 | 2,921,382 | ||||||
4.95%, 03/14/2052 | 5,639,000 | 4,984,459 | ||||||
NGPL PipeCo LLC, 7.77%, 12/15/2037(b) | 10,273,000 | 11,088,297 | ||||||
Northern Natural Gas Co., 3.40%, 10/16/2051(b) | 2,033,000 | 1,516,678 | ||||||
ONEOK Partners L.P., 6.85%, 10/15/2037 | 3,274,000 | 3,419,620 | ||||||
ONEOK, Inc., 6.35%, 01/15/2031 | 4,622,000 | 4,833,173 | ||||||
Plains All American Pipeline L.P., Series B, 6.13%(d)(e) | 385,000 | 328,079 | ||||||
Plains All American Pipeline L.P./PAA Finance Corp., 3.55%, 12/15/2029 | 200,000 | 175,314 | ||||||
Sunoco L.P./Sunoco Finance Corp., 5.88%, 03/15/2028 | 723,000 | 673,226 | ||||||
Targa Resources Corp., | ||||||||
5.20%, 07/01/2027 | 3,356,000 | 3,349,900 | ||||||
6.25%, 07/01/2052 | 3,471,000 | 3,581,908 | ||||||
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., | ||||||||
5.00%, 01/15/2028 | 201,000 | 196,243 | ||||||
5.50%, 03/01/2030 | 63,000 | 61,626 | ||||||
Venture Global Calcasieu Pass LLC, | 3,751,000 | 3,122,707 | ||||||
Williams Cos., Inc. (The), | ||||||||
4.55%, 06/24/2024 | 399,000 | 400,104 | ||||||
3.50%, 11/15/2030 | 1,760,000 | 1,585,901 | ||||||
2.60%, 03/15/2031 | 5,326,000 | 4,454,564 | ||||||
4.65%, 08/15/2032 | 2,248,000 | 2,169,304 | ||||||
3.50%, 10/15/2051 | 2,518,000 | 1,882,739 | ||||||
157,324,226 | ||||||||
Other Diversified Financial Services-0.83% |
| |||||||
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland), | ||||||||
4.50%, 09/15/2023 | 2,340,000 | 2,328,700 | ||||||
3.00%, 10/29/2028 | 454,000 | 386,227 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Other Diversified Financial Services-(continued) |
| |||||||
Avolon Holdings Funding Ltd. (Ireland), | ||||||||
4.25%, 04/15/2026(b) | $ | 1,745,000 | $ | 1,609,606 | ||||
2.75%, 02/21/2028(b) | 431,000 | 351,505 | ||||||
Blue Owl Finance LLC, 3.13%, 06/10/2031(b) | 495,000 | 376,312 | ||||||
Carlyle Finance LLC, 5.65%, 09/15/2048(b) | 360,000 | 345,803 | ||||||
Jackson Financial, Inc., | ||||||||
5.17%, 06/08/2027 | 2,248,000 | 2,220,841 | ||||||
5.67%, 06/08/2032(c) | 2,845,000 | 2,765,138 | ||||||
Jane Street Group/JSG Finance, Inc., 4.50%, 11/15/2029(b) | 536,000 | 486,755 | ||||||
Pershing Square Holdings Ltd., | ||||||||
3.25%, 11/15/2030(b) | 4,800,000 | 3,912,000 | ||||||
3.25%, 10/01/2031(b) | 6,400,000 | 5,073,248 | ||||||
Scientific Games Holdings L.P./Scientific Games US FinCo, Inc., 6.63%, 03/01/2030(b) | 635,000 | 565,477 | ||||||
20,421,612 | ||||||||
Packaged Foods & Meats-0.44% |
| |||||||
JBS USA LUX S.A./JBS USA Food Co./JBS USA Finance, Inc., 3.63%, 01/15/2032(b)(c) | 3,156,000 | 2,734,832 | ||||||
Minerva Luxembourg S.A. (Brazil), 4.38%, 03/18/2031(b) | 9,776,000 | 8,153,233 | ||||||
10,888,065 | ||||||||
Paper Packaging-0.58% |
| |||||||
Berry Global, Inc., 1.65%, 01/15/2027 | 16,595,000 | 14,277,476 | ||||||
Paper Products-0.12% |
| |||||||
Suzano Austria GmbH (Brazil), | ||||||||
2.50%, 09/15/2028 | 1,519,000 | 1,285,849 | ||||||
Series DM3N, 3.13%, | 2,139,000 | 1,697,435 | ||||||
2,983,284 | ||||||||
Pharmaceuticals-0.10% |
| |||||||
Bausch Health Cos., Inc., | ||||||||
4.88%, 06/01/2028(b) | 291,000 | 201,523 | ||||||
5.25%, 02/15/2031(b) | 695,000 | 268,253 | ||||||
Mayo Clinic, Series 2021, 3.20%, 11/15/2061 | 2,444,000 | 1,821,106 | ||||||
Royalty Pharma PLC, 2.20%, 09/02/2030 | 82,000 | 66,599 | ||||||
2,357,481 | ||||||||
Property & Casualty Insurance-0.55% |
| |||||||
Fairfax Financial Holdings Ltd. (Canada), | ||||||||
4.85%, 04/17/2028 | 2,414,000 | 2,341,939 | ||||||
4.63%, 04/29/2030 | 300,000 | 285,139 | ||||||
5.63%, 08/16/2032(b) | 4,831,000 | 4,738,968 | ||||||
First American Financial Corp., 2.40%, 08/15/2031 | 2,716,000 | 2,092,961 | ||||||
Progressive Corp. (The), 3.70%, 03/15/2052 | 1,211,000 | 1,025,329 | ||||||
Stewart Information Services Corp., 3.60%, 11/15/2031 | 3,508,000 | 2,895,044 | ||||||
13,379,380 |
Principal Amount | Value | |||||||
Railroads-1.41% |
| |||||||
Canadian Pacific Railway Co. (Canada), 6.13%, 09/15/2115 | $ | 13,913,000 | $ | 14,920,495 | ||||
CSX Corp., | ||||||||
4.10%, 11/15/2032 | 5,127,000 | 4,958,370 | ||||||
4.50%, 11/15/2052 | 5,127,000 | 4,784,330 | ||||||
Empresa de los Ferrocarriles del Estado (Chile), 3.83%, 09/14/2061(b) | 3,030,000 | 2,164,524 | ||||||
Norfolk Southern Corp., | ||||||||
3.40%, 11/01/2049 | 2,953,000 | 2,333,129 | ||||||
4.55%, 06/01/2053 | 5,611,000 | 5,299,628 | ||||||
34,460,476 | ||||||||
Real Estate Development-0.31% |
| |||||||
Agile Group Holdings Ltd. (China), | ||||||||
5.75%, 01/02/2025(b) | 200,000 | 82,444 | ||||||
5.50%, 04/21/2025(b) | 1,950,000 | 790,550 | ||||||
6.05%, 10/13/2025(b) | 1,493,000 | 588,373 | ||||||
5.50%, 05/17/2026(b) | 376,000 | 146,714 | ||||||
Country Garden Holdings Co. Ltd. (China), 5.40%, 05/27/2025(b) | 614,000 | 310,580 | ||||||
Essential Properties L.P., 2.95%, 07/15/2031 | 2,630,000 | 2,024,226 | ||||||
Greentown China Holdings Ltd. (China), 4.70%, 04/29/2025(b) | 899,000 | 764,150 | ||||||
Logan Group Co. Ltd. (China), 4.25%, 07/12/2025(b) | 961,000 | 158,565 | ||||||
Piedmont Operating Partnership L.P., 3.15%, 08/15/2030 | 2,163,000 | 1,782,377 | ||||||
Sino-Ocean Land Treasure Finance I Ltd. (China), 6.00%, 07/30/2024(b) | 1,090,000 | 529,195 | ||||||
Sino-Ocean Land Treasure IV Ltd. (China), 3.25%, 05/05/2026(b) | 833,000 | 343,675 | ||||||
7,520,849 | ||||||||
Regional Banks–2.73% |
| |||||||
Citizens Financial Group, Inc., | ||||||||
5.64%, 05/21/2037(d) | 3,932,000 | 3,839,903 | ||||||
Series G, 4.00%(d)(e) | 3,379,000 | 2,887,969 | ||||||
Fifth Third Bancorp, | ||||||||
2.55%, 05/05/2027(c) | 1,892,000 | 1,744,075 | ||||||
4.06%, 04/25/2028(d) | 2,162,000 | 2,108,585 | ||||||
4.77%, 07/28/2030(d) | 4,403,000 | 4,368,996 | ||||||
4.34%, 04/25/2033(c)(d) | 2,776,000 | 2,643,178 | ||||||
Huntington Bancshares, Inc., | ||||||||
4.44%, 08/04/2028(c)(d) | 2,366,000 | 2,313,697 | ||||||
2.49%, 08/15/2036(d) | 2,421,000 | 1,830,701 | ||||||
KeyBank N.A., 4.90%, 08/08/2032 | 4,848,000 | 4,633,112 | ||||||
KeyCorp, 4.79%, 06/01/2033(c)(d) | 1,804,000 | 1,759,127 | ||||||
PNC Financial Services Group, Inc. (The), | ||||||||
4.63%, 06/06/2033(d) | 6,271,000 | 5,944,518 | ||||||
6.20%(d)(e) | 5,086,000 | 5,021,916 | ||||||
Series U, 6.00%(c)(d)(e) | 5,230,000 | 5,099,250 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Regional Banks–(continued) | ||||||||
SVB Financial Group, | ||||||||
1.80%, 02/02/2031 | $ | 377,000 | $ | 284,211 | ||||
Series D, 4.25%(d)(e) | 7,204,000 | 5,757,532 | ||||||
Series E, 4.70%(d)(e) | 4,585,000 | 3,575,051 | ||||||
Synovus Financial Corp., 3.13%, 11/01/2022 | 2,100,000 | 2,097,637 | ||||||
Truist Financial Corp., | ||||||||
4.12%, 06/06/2028(d) | 3,481,000 | 3,414,536 | ||||||
4.92%, 07/28/2033(d) | 7,915,000 | 7,585,329 | ||||||
66,909,323 | ||||||||
Reinsurance–0.67% | ||||||||
Berkshire Hathaway Finance Corp., 2.85%, 10/15/2050 | 2,807,000 | 2,051,746 | ||||||
Global Atlantic Fin Co., | ||||||||
4.40%, 10/15/2029(b) | 8,302,000 | 7,397,640 | ||||||
3.13%, 06/15/2031(b) | 2,134,000 | 1,671,606 | ||||||
4.70%, 10/15/2051(b)(d) | 6,477,000 | 5,363,866 | ||||||
16,484,858 | ||||||||
Renewable Electricity–0.20% | ||||||||
Adani Green Energy Ltd. (India), 4.38%, 09/08/2024(b) | 3,156,000 | 2,848,290 | ||||||
NSTAR Electric Co., 4.55%, 06/01/2052 | 2,074,000 | 2,033,811 | ||||||
4,882,101 | ||||||||
Research & Consulting Services–0.02% |
| |||||||
Dun & Bradstreet Corp. (The), 5.00%, 12/15/2029(b)(c) | 539,000 | 478,955 | ||||||
Residential REITs–0.53% | ||||||||
American Homes 4 Rent L.P., | ||||||||
3.63%, 04/15/2032 | 3,583,000 | 3,130,056 | ||||||
4.30%, 04/15/2052 | 1,763,000 | 1,424,395 | ||||||
Invitation Homes Operating Partnership L.P., | ||||||||
2.30%, 11/15/2028 | 107,000 | 89,413 | ||||||
2.70%, 01/15/2034 | 3,259,000 | 2,485,841 | ||||||
Spirit Realty L.P., | ||||||||
3.40%, 01/15/2030 | 4,191,000 | 3,610,567 | ||||||
2.70%, 02/15/2032 | 352,000 | 274,048 | ||||||
UDR, Inc., 3.00%, 08/15/2031 | 2,290,000 | 1,955,122 | ||||||
12,969,442 | ||||||||
Restaurants–0.54% | ||||||||
1011778 BC ULC/New Red Finance, Inc. (Canada), | ||||||||
3.88%, 01/15/2028(b) | 495,000 | 440,651 | ||||||
4.00%, 10/15/2030(b) | 4,574,000 | 3,717,839 | ||||||
Aramark Services, Inc., 5.00%, 04/01/2025(b)(c) | 515,000 | 503,618 | ||||||
Arcos Dorados B.V. (Brazil), 6.13%, 05/27/2029(b) | 4,289,000 | 4,145,662 | ||||||
Papa John’s International, Inc., 3.88%, 09/15/2029(b) | 541,000 | 463,280 | ||||||
Starbucks Corp., 3.00%, 02/14/2032(c) | 3,990,000 | 3,489,653 | ||||||
Yum! Brands, Inc., 5.38%, 04/01/2032 | 516,000 | 475,690 | ||||||
13,236,393 |
Principal Amount | Value | |||||||
Retail REITs–0.67% | ||||||||
Agree L.P., | ||||||||
4.80%, 10/01/2032 | $ | 2,080,000 | $ | 1,998,232 | ||||
2.60%, 06/15/2033 | 383,000 | 299,746 | ||||||
Brixmor Operating Partnership L.P., | ||||||||
4.05%, 07/01/2030 | 2,474,000 | 2,202,623 | ||||||
2.50%, 08/16/2031 | 1,811,000 | 1,402,806 | ||||||
Kimco Realty Corp., 2.70%, 10/01/2030 | 2,052,000 | 1,746,250 | ||||||
Kite Realty Group Trust, 4.75%, 09/15/2030 | 2,359,000 | 2,146,296 | ||||||
National Retail Properties, Inc., 3.50%, 04/15/2051 | 2,737,000 | 2,045,489 | ||||||
NMG Holding Co., Inc./Neiman Marcus Group LLC, 7.13%, 04/01/2026(b) | 246,000 | 230,574 | ||||||
Realty Income Corp., 3.25%, 01/15/2031 | 2,631,000 | 2,362,777 | ||||||
Regency Centers L.P., 4.13%, 03/15/2028 | 1,981,000 | 1,906,723 | ||||||
16,341,516 | ||||||||
Semiconductor Equipment–0.26% | ||||||||
Entegris Escrow Corp., | ||||||||
4.75%, 04/15/2029(b) | 527,000 | 485,404 | ||||||
5.95%, 06/15/2030(b) | 3,019,000 | 2,868,171 | ||||||
KLA Corp., | ||||||||
4.65%, 07/15/2032 | 141,000 | 143,444 | ||||||
4.95%, 07/15/2052 | 2,559,000 | 2,577,031 | ||||||
NXP B.V./NXP Funding LLC/NXP USA, Inc. (China), 3.40%, 05/01/2030 | 289,000 | 256,268 | ||||||
6,330,318 | ||||||||
Semiconductors–1.08% | ||||||||
Broadcom, Inc., | ||||||||
2.45%, 02/15/2031(b) | 2,329,000 | 1,858,972 | ||||||
3.47%, 04/15/2034(b) | 5,146,000 | 4,171,245 | ||||||
3.14%, 11/15/2035(b) | 2,267,000 | 1,719,698 | ||||||
3.19%, 11/15/2036(b) | 6,892,000 | 5,128,316 | ||||||
Marvell Technology, Inc., 2.95%, 04/15/2031 | 5,378,000 | 4,417,305 | ||||||
Micron Technology, Inc., | ||||||||
4.98%, 02/06/2026 | 1,634,000 | 1,640,925 | ||||||
4.19%, 02/15/2027(c) | 4,782,000 | 4,659,207 | ||||||
2.70%, 04/15/2032(c) | 2,306,000 | 1,794,126 | ||||||
3.37%, 11/01/2041 | 1,336,000 | 949,182 | ||||||
Skyworks Solutions, Inc., 3.00%, 06/01/2031 | 125,000 | 101,538 | ||||||
26,440,514 | ||||||||
Soft Drinks–0.28% | ||||||||
Coca-Cola FEMSA S.A.B. de C.V. (Mexico), 1.85%, 09/01/2032 | 155,000 | 122,213 | ||||||
Coca-Cola Icecek A.S. (Turkey), 4.50%, 01/20/2029(b) | 8,012,000 | 6,796,960 | ||||||
6,919,173 | ||||||||
Sovereign Debt–2.45% | ||||||||
Airport Authority (Hong Kong), 3.25%, 01/12/2052(b) | 5,354,000 | 4,215,796 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Sovereign Debt–(continued) | ||||||||
Bahamas Government International Bond (Bahamas), 9.00%, 06/16/2029(b) | $ | 5,552,000 | $ | 4,141,234 | ||||
Banque Ouest Africaine de Developpement (Supranational), 5.00%, 07/27/2027(b) | 8,000,000 | 7,564,400 | ||||||
Bermuda Government International Bond (Bermuda), 5.00%, 07/15/2032(b) | 3,142,000 | 3,170,777 | ||||||
China Government International Bond (China), 2.50%, 10/26/2051(b) | 5,478,000 | 4,164,558 | ||||||
Dominican Republic International Bond (Dominican Republic), 5.30%, 01/21/2041(b) | 2,320,000 | 1,726,480 | ||||||
Egypt Government International Bond (Egypt), | ||||||||
3.88%, 02/16/2026(b) | 3,583,000 | 2,834,110 | ||||||
5.88%, 02/16/2031(b) | 2,762,000 | 1,890,396 | ||||||
7.50%, 02/16/2061(b) | 3,075,000 | 1,800,022 | ||||||
Ghana Government International Bond (Ghana), 7.75%, 04/07/2029(b) | 1,905,000 | 728,662 | ||||||
Guatemala Government Bond (Guatemala), 3.70%, 10/07/2033(b) | 3,197,000 | 2,597,321 | ||||||
Indonesia Government International Bond (Indonesia), 3.20%, 09/23/2061(c) | 3,826,000 | 2,806,704 | ||||||
Mexico Government International Bond (Mexico), | ||||||||
3.50%, 02/12/2034 | 4,579,000 | 3,842,002 | ||||||
4.40%, 02/12/2052 | 6,164,000 | 4,735,999 | ||||||
Morocco Government International Bond (Morocco), 4.00%, 12/15/2050(b) | 1,625,000 | 1,061,531 | ||||||
Oman Government International Bond (Oman), 6.25%, 01/25/2031(b) | 1,140,000 | 1,152,367 | ||||||
Perusahaan Penerbit SBSN Indonesia III (Indonesia), 3.55%, 06/09/2051(b) | 3,149,000 | 2,519,244 | ||||||
Turkey Government International Bond (Turkey), 4.75%, 01/26/2026 | 3,652,000 | 3,135,249 | ||||||
UAE International Government Bond (United Arab Emirates), | ||||||||
2.88%, 10/19/2041(b) | 3,229,000 | 2,659,611 | ||||||
3.25%, 10/19/2061(b) | 4,061,000 | 3,251,561 | ||||||
59,998,024 | ||||||||
Specialized Consumer Services–0.06% |
| |||||||
Carriage Services, Inc., 4.25%, 05/15/2029(b) | 1,078,000 | 917,728 | ||||||
Terminix Co. LLC (The), 7.45%, 08/15/2027 | 463,000 | 537,995 | ||||||
1,455,723 | ||||||||
Specialized Finance–0.49% | ||||||||
Blackstone Private Credit Fund, | ||||||||
1.75%, 09/15/2024 | 1,046,000 | 963,212 | ||||||
2.63%, 12/15/2026 | 202,000 | 170,687 | ||||||
3.25%, 03/15/2027(c) | 3,859,000 | 3,314,131 |
Principal Amount | Value | |||||||
Specialized Finance–(continued) | ||||||||
Mitsubishi HC Capital, Inc. (Japan), 3.64%, 04/13/2025(b)(c) | $ | 5,106,000 | $ | 4,996,529 | ||||
National Rural Utilities Cooperative Finance Corp., 2.75%, 04/15/2032 | 3,064,000 | 2,647,740 | ||||||
12,092,299 | ||||||||
Specialized REITs–1.03% | ||||||||
American Tower Corp., | ||||||||
2.70%, 04/15/2031 | 5,466,000 | 4,530,928 | ||||||
4.05%, 03/15/2032 | 1,835,000 | 1,686,097 | ||||||
3.10%, 06/15/2050 | 4,021,000 | 2,808,036 | ||||||
Crown Castle, Inc., 2.50%, 07/15/2031 | 2,424,000 | 1,992,716 | ||||||
EPR Properties, | ||||||||
4.75%, 12/15/2026 | 1,238,000 | 1,166,778 | ||||||
3.60%, 11/15/2031 | 2,589,000 | 2,033,552 | ||||||
Equinix, Inc., 3.20%, 11/18/2029 | 120,000 | 107,625 | ||||||
Extra Space Storage L.P., | ||||||||
3.90%, 04/01/2029 | 1,039,000 | 965,926 | ||||||
2.55%, 06/01/2031 | 2,053,000 | 1,677,424 | ||||||
2.35%, 03/15/2032 | 1,981,000 | 1,557,129 | ||||||
Life Storage L.P., 2.40%, 10/15/2031 | 3,179,000 | 2,539,573 | ||||||
SBA Communications Corp., | ||||||||
3.88%, 02/15/2027 | 255,000 | 232,627 | ||||||
3.13%, 02/01/2029 | 4,671,000 | 3,855,070 | ||||||
25,153,481 | ||||||||
Specialty Chemicals–1.48% | ||||||||
Braskem Idesa S.A.P.I. (Mexico), | ||||||||
7.45%, 11/15/2029(b) | 3,457,000 | 2,990,305 | ||||||
6.99%, 02/20/2032(b) | 4,356,000 | 3,382,869 | ||||||
Celanese US Holdings LLC, | ||||||||
5.90%, 07/05/2024 | 4,829,000 | 4,867,063 | ||||||
6.05%, 03/15/2025 | 5,166,000 | 5,181,209 | ||||||
6.17%, 07/15/2027 | 5,409,000 | 5,418,193 | ||||||
6.33%, 07/15/2029(c) | 1,521,000 | 1,517,493 | ||||||
6.38%, 07/15/2032(c) | 3,874,000 | 3,849,954 | ||||||
Rayonier A.M. Products, Inc., 7.63%, 01/15/2026(b) | 520,000 | 494,455 | ||||||
Sasol Financing USA LLC (South Africa), | ||||||||
4.38%, 09/18/2026 | 4,049,000 | 3,771,017 | ||||||
5.50%, 03/18/2031 | 5,790,000 | 4,872,459 | ||||||
36,345,017 | ||||||||
Specialty Stores–0.04% | ||||||||
PetSmart, Inc./PetSmart Finance Corp., 4.75%, 02/15/2028(b) | 1,045,000 | 933,086 | ||||||
Steel–0.02% | ||||||||
SunCoke Energy, Inc., 4.88%, 06/30/2029(b) | 531,000 | 441,354 | ||||||
Systems Software–0.55% | ||||||||
Camelot Finance S.A., 4.50%, 11/01/2026(b) | 1,546,000 | 1,440,068 | ||||||
Crowdstrike Holdings, Inc., 3.00%, 02/15/2029(c) | 3,514,000 | 3,114,950 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Systems Software–(continued) |
| |||||||
Oracle Corp., |
| |||||||
3.60%, 04/01/2050 | $ | 9,475,000 | $ | 6,461,219 | ||||
3.85%, 04/01/2060 | 3,664,000 | 2,433,202 | ||||||
VMware, Inc., 2.20%, 08/15/2031 | 132,000 | 103,115 | ||||||
13,552,554 | ||||||||
Technology Distributors–0.07% |
| |||||||
Avnet, Inc., 4.63%, 04/15/2026(c) | 1,806,000 | 1,788,545 | ||||||
Technology Hardware, Storage & Peripherals–0.91% |
| |||||||
Apple, Inc., |
| |||||||
3.35%, 08/08/2032(c) | 5,115,000 | 4,840,923 | ||||||
2.65%, 05/11/2050 | 3,621,000 | 2,656,645 | ||||||
3.95%, 08/08/2052(c) | 4,828,000 | 4,462,956 | ||||||
2.80%, 02/08/2061 | 8,132,000 | 5,758,192 | ||||||
4.10%, 08/08/2062 | 5,099,000 | 4,694,515 | ||||||
22,413,231 | ||||||||
Thrifts & Mortgage Finance–0.01% |
| |||||||
Rocket Mortgage LLC/Rocket Mortgage Co-Issuer, Inc., 2.88%, 10/15/2026(b) | 236,000 | 198,679 | ||||||
Tobacco–0.29% | ||||||||
Altria Group, Inc., | ||||||||
4.40%, 02/14/2026(c) | 2,789,000 | 2,775,694 | ||||||
3.70%, 02/04/2051 | 6,324,000 | 4,126,250 | ||||||
BAT Capital Corp. (United Kingdom), 2.73%, 03/25/2031 | 143,000 | 114,642 | ||||||
7,016,586 | ||||||||
Trading Companies & Distributors–0.56% |
| |||||||
AerCap Global Aviation Trust (Ireland), 6.50%, 06/15/2045(b)(d) | 7,903,000 | 7,544,085 | ||||||
Air Lease Corp., 3.00%, 09/15/2023 | 1,632,000 | 1,609,759 | ||||||
Aircastle Ltd., | ||||||||
5.00%, 04/01/2023 | 534,000 | 533,838 | ||||||
4.40%, 09/25/2023 | 3,109,000 | 3,090,959 | ||||||
Fortress Transportation and Infrastructure Investors LLC, 5.50%, 05/01/2028(b) | 1,093,000 | 931,783 | ||||||
13,710,424 | ||||||||
Trucking–1.76% | ||||||||
Aviation Capital Group LLC, | ||||||||
4.13%, 08/01/2025(b) | 4,347,000 | 4,081,880 | ||||||
3.50%, 11/01/2027(b) | 13,032,000 | 11,159,295 | ||||||
Penske Truck Leasing Co. L.P./PTL Finance Corp., 4.40%, 07/01/2027(b) | 5,785,000 | 5,628,021 | ||||||
Ryder System, Inc., | ||||||||
4.63%, 06/01/2025 | 2,923,000 | 2,921,186 | ||||||
4.30%, 06/15/2027 | 1,872,000 | 1,828,500 | ||||||
SMBC Aviation Capital Finance DAC (Ireland), | ||||||||
4.13%, 07/15/2023(b) | 3,063,000 | 3,039,294 | ||||||
1.90%, 10/15/2026(b) | 2,457,000 | 2,110,139 |
Principal Amount | Value | |||||||
Trucking–(continued) | ||||||||
Triton Container International Ltd. (Bermuda), | ||||||||
2.05%, 04/15/2026(b) | $ | 5,535,000 | $ | 4,808,331 | ||||
3.15%, 06/15/2031(b) | 2,955,000 | 2,313,443 | ||||||
Uber Technologies, Inc., 4.50%, 08/15/2029(b)(c) | 6,022,000 | 5,239,140 | ||||||
43,129,229 | ||||||||
Wireless Telecommunication Services–2.24% |
| |||||||
America Movil S.A.B. de C.V. (Mexico), 5.38%, 04/04/2032(b) | 5,085,000 | 4,655,597 | ||||||
Empresa Nacional de Telecomunicaciones S.A. (Chile), 3.05%, 09/14/2032(b) | 1,644,000 | 1,375,913 | ||||||
Rogers Communications, Inc. (Canada), | ||||||||
4.50%, 03/15/2043 | 330,000 | 284,878 | ||||||
5.00%, 03/15/2044 | 3,759,000 | 3,435,442 | ||||||
4.55%, 03/15/2052(b)(c) | 4,068,000 | 3,577,259 | ||||||
Sprint Capital Corp., 8.75%, 03/15/2032 | 315,000 | 380,678 | ||||||
Sprint Corp., | ||||||||
7.88%, 09/15/2023 | 84,000 | 86,654 | ||||||
7.63%, 02/15/2025 | 394,000 | 412,719 | ||||||
7.63%, 03/01/2026(c) | 389,000 | 411,920 | ||||||
Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC/Sprint Spectrum Co. III LLC, | ||||||||
4.74%, 03/20/2025(b) | 6,730,641 | 6,758,386 | ||||||
5.15%, 03/20/2028(b) | 9,522,000 | 9,589,108 | ||||||
T-Mobile USA, Inc., | ||||||||
2.25%, 02/15/2026 | 2,804,000 | 2,580,378 | ||||||
2.63%, 04/15/2026 | 3,110,000 | 2,882,504 | ||||||
2.70%, 03/15/2032 | 259,000 | 215,948 | ||||||
4.50%, 04/15/2050 | 2,261,000 | 1,976,751 | ||||||
3.40%, 10/15/2052 | 9,016,000 | 6,521,766 | ||||||
VEON Holdings B.V. (Netherlands), 3.38%, 11/25/2027(b) | 2,347,000 | 1,243,910 | ||||||
Vodafone Group PLC (United Kingdom), | ||||||||
3.25%, 06/04/2081(d) | 2,081,000 | 1,803,558 | ||||||
4.13%, 06/04/2081(d) | 3,895,000 | 3,064,644 | ||||||
5.13%, 06/04/2081(d) | 3,503,000 | 2,556,931 | ||||||
Xiaomi Best Time International Ltd. (China), 4.10%, 07/14/2051(b) | 1,841,000 | 1,168,131 | ||||||
54,983,075 | ||||||||
Total U.S. Dollar Denominated Bonds & Notes |
| 2,158,012,421 | ||||||
U.S. Treasury Securities–5.34% |
| |||||||
U.S. Treasury Bills–0.19% |
| |||||||
1.46% - 2.54%, | 4,757,000 | 4,729,783 | ||||||
U.S. Treasury Bonds–1.65% | ||||||||
3.38%, 08/15/2042 | 9,484,200 | 9,257,468 | ||||||
2.88%, 05/15/2052 | 33,739,300 | 31,103,417 | ||||||
40,360,885 |
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 Notes–3.50% | ||||||||
3.25%, 08/31/2024 | $ | 33,000 | $ | 32,861 | ||||
3.13%, 08/15/2025 | 2,382,000 | 2,358,180 | ||||||
3.13%, 08/31/2027 | 28,630,500 | 28,377,746 | ||||||
3.13%, 08/31/2029 | 16,594,700 | 16,433,939 | ||||||
2.75%, 08/15/2032 | 40,063,500 | 38,655,017 | ||||||
85,857,743 | ||||||||
Total U.S. Treasury Securities | 130,948,411 | |||||||
Shares | ||||||||
Preferred Stocks–2.84% | ||||||||
Asset Management & Custody Banks–0.14% |
| |||||||
Bank of New York Mellon Corp. (The), 4.70%, Series G, Pfd.(c)(d) | 3,397,000 | 3,347,879 | ||||||
Diversified Banks–1.71% | ||||||||
Bank of America Corp., 7.25%, Series L, Conv. Pfd. | 100 | 122,740 | ||||||
Bank of America Corp., 6.50%, Series Z, Pfd.(d) | 3,497,000 | 3,527,599 | ||||||
Citigroup, Inc., 6.25%, Series T, | 2,110,000 | 2,099,345 | ||||||
Citigroup, Inc., 5.00%, Series U, | 7,500,000 | 6,994,500 | ||||||
Citigroup, Inc., 4.00%, Series W, | 3,879,000 | 3,413,520 | ||||||
JPMorgan Chase & Co., 6.28% (3 mo. USD LIBOR + 3.47%), Series I, Pfd.(f) | 7,742,000 | 7,704,863 | ||||||
Wells Fargo & Co., 7.50%, Class A, Series L, Conv. Pfd. | 14,554 | 18,046,960 | ||||||
41,909,527 | ||||||||
Investment Banking & Brokerage–0.66% |
| |||||||
Charles Schwab Corp. (The), 4.00%, Series H, Pfd.(d) | 3,297,000 | 2,687,055 | ||||||
Goldman Sachs Group, Inc. (The), 5.00%, Series P, Pfd.(d) | 3,255,000 | 3,056,195 | ||||||
Morgan Stanley, 7.13%, Series E, Pfd.(d) | 256,997 | 6,571,413 | ||||||
Morgan Stanley, 6.88%, Series F, Pfd.(d) | 150,000 | 3,810,000 | ||||||
16,124,663 | ||||||||
Life & Health Insurance–0.10% | ||||||||
MetLife, Inc., 3.85%, Series G, | 2,781,000 | 2,590,229 | ||||||
Multi-Utilities–0.07% | ||||||||
CenterPoint Energy, Inc., 6.13%, Series A, Pfd.(c)(d) | 1,866,000 | 1,737,268 | ||||||
Other Diversified Financial Services–0.07% |
| |||||||
Equitable Holdings, Inc., 4.95%, Series B, | 1,724,000 | 1,681,423 | ||||||
Regional Banks–0.09% | ||||||||
PNC Financial Services Group, Inc. (The), 6.85% (3 mo. USD LIBOR + 4.07%), Series P, Pfd.(f) | 92,134 | 2,323,620 | ||||||
Total Preferred Stocks | 69,714,609 |
Principal Amount | Value | |||||||
Asset-Backed Securities–1.21% |
| |||||||
IP Lending III Ltd., Series 2022- 3A, Class SNR, 3.38%, 11/02/2026(b)(g) | $ | 3,923,000 | $ | 3,638,050 | ||||
IP Lending IV Ltd., Series 2022-4A, Class SNR, 6.05%, 04/28/2027(b)(g) | 5,941,000 | 5,839,659 | ||||||
Jimmy Johns Funding LLC, Series 2017-1A, Class A2II, 4.85%, 07/30/2047(b) | 2,668,811 | 2,489,927 | ||||||
Sonic Capital LLC, | ||||||||
Series 2020-1A, Class A2I, 3.85%, 01/20/2050(b) | 10,477,180 | 9,665,933 | ||||||
Series 2021-1A, Class A2I, 2.19%, 08/20/2051(b) | 2,526,625 | 2,034,750 | ||||||
Series 2021-1A, Class A2II, 2.64%, 08/20/2051(b) | 2,486,992 | 1,887,368 | ||||||
Wendy’s Funding LLC, Series 2018-1A, Class A2II, 3.88%, 03/15/2048(b) | 4,345,250 | 4,054,289 | ||||||
Total Asset-Backed Securities | 29,609,976 | |||||||
Municipal Obligations–0.34% |
| |||||||
California (State of) Health Facilities Financing Authority (Social Bonds), | ||||||||
Series 2022, RB, | 2,095,000 | 1,984,974 | ||||||
Series 2022, RB, | 1,545,000 | 1,459,085 | ||||||
California State University, | ||||||||
Series 2021 B, Ref. RB, | 2,340,000 | 1,744,206 | ||||||
Series 2021 B, Ref. RB, | 3,495,000 | 2,586,461 | ||||||
Florida Development Finance Corp. (Palm Bay Academy, Inc.), | ||||||||
Series 2017, Ref. RB, | 450,000 | 441,110 | ||||||
Series 2017, Ref. RB, | 360,000 | 4 | ||||||
Series 2017, Ref. RB, 0.00%, 05/15/2037(b)(g) | 350,000 | 70,000 | ||||||
Total Municipal Obligations | 8,285,840 | |||||||
Shares | ||||||||
Exchange-Traded Funds–0.20% |
| |||||||
Invesco Total Return Bond ETF | 100,000 | 4,826,000 | ||||||
Principal Amount | ||||||||
Non-U.S. Dollar Denominated Bonds & Notes–0.15%(l) |
| |||||||
Food Retail–0.02% |
| |||||||
Bellis Acquisition Co. PLC (United Kingdom), 3.25%, 02/16/2026(b) | GBP | 496,000 | 456,057 | |||||
Movies & Entertainment–0.09% |
| |||||||
Netflix, Inc., 3.88%, 11/15/2029(b) | EUR | 2,600,000 | 2,416,025 | |||||
Pharmaceuticals–0.02% |
| |||||||
Nidda Healthcare Holding GmbH (Germany), 3.50%, 09/30/2024(b) | EUR | 516,000 | 479,578 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20 | Invesco Corporate Bond Fund |
Principal Amount | Value | |||||||
Sovereign Debt–0.02% | ||||||||
Ukraine Government International Bond (Ukraine), 4.38%, 01/27/2032(b) | EUR | 2,765,000 | $ | 470,988 | ||||
Total Non-U.S. Dollar Denominated Bonds & Notes |
| 3,822,648 | ||||||
| ||||||||
Variable Rate Senior Loan Interests–0.11%(m)(n) |
| |||||||
Diversified REITs–0.11% | ||||||||
Asterix, Inc. (Canada), Term Loan, 3.90%, 03/31/2023 | $ | 3,647,005 | 2,796,310 | |||||
Shares | ||||||||
Money Market Funds–0.71% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 2.22%(k)(o) | 6,077,769 | 6,077,769 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, | 4,341,397 | 4,342,265 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, | 6,946,022 | 6,946,022 | ||||||
| ||||||||
Total Money Market Funds | 17,366,056 | |||||||
| ||||||||
Options Purchased–0.07% |
| |||||||
(Cost $3,099,902)(p) | 1,629,064 | |||||||
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.00% | 2,427,011,335 | |||||||
|
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 | |
REIT | - Real Estate Investment Trust | |
SOFR | - Secured Overnight Financing Rate | |
USD | - U.S. Dollar |
Shares | Value | |||||||
Investments Purchased with Cash Collateral from Securities on Loan |
| |||||||
Money Market Funds–7.08% |
| |||||||
Invesco Private Government Fund, 2.29%(k)(o)(q) | 48,632,277 | $ | 48,632,277 | |||||
| ||||||||
Invesco Private Prime Fund, 2.37%(k)(o)(q) | 125,041,922 | 125,054,429 | ||||||
| ||||||||
Total Investments Purchased with Cash Collateral from Securities on Loan |
| 173,686,706 | ||||||
| ||||||||
TOTAL INVESTMENTS IN |
| 2,600,698,041 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–(6.08)% |
| (149,142,085 | ) | |||||
| ||||||||
NET ASSETS–100.00% | $ | 2,451,555,956 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21 | Invesco Corporate Bond 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, 2022 was $832,314,725, which represented 33.95% of the Fund’s Net Assets. |
(c) | All or a portion of this security was out on loan at August 31, 2022. |
(d) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
(e) | Perpetual bond with no specified maturity date. |
(f) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2022. |
(g) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(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) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(j) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1L. |
(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, 2022. |
Value | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation (Depreciation) | Realized Gain (Loss) | Value August 31, 2022 | Dividend Income | ||||||||||||||||||||||
Invesco Total Return Bond ETF | $ | 5,394,000 | $ | — | $ | — | $ | (568,000 | ) | $ | — | $ | 4,826,000 | $ | 78,094 | |||||||||||||
Investments in Affiliated Money Market Funds: | ||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | 6,719,731 | 88,400,309 | (89,042,271 | ) | — | — | 6,077,769 | 7,966 | ||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 10,479,780 | 63,143,077 | (69,279,885 | ) | 971 | (1,678 | ) | 4,342,265 | 6,697 | |||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 7,679,693 | 101,028,924 | (101,762,595 | ) | — | — | 6,946,022 | 8,247 | ||||||||||||||||||||
Investments Purchased with Cash Collateral from Securities on Loan: | ||||||||||||||||||||||||||||
Invesco Private Government Fund | 72,323,771 | 170,095,133 | (193,786,627 | ) | — | — | 48,632,277 | 236,893 | * | |||||||||||||||||||
Invesco Private Prime Fund | 170,230,580 | 380,642,411 | (425,804,056 | ) | 25,403 | (39,909 | ) | 125,054,429 | 651,777 | * | ||||||||||||||||||
Total | $ | 272,827,555 | $ | 803,309,854 | $ | (879,675,434 | ) | $ | (541,626 | ) | $ | (41,587 | ) | $ | 195,878,762 | $ | 989,674 |
* | 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. |
(l) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
(m) | Variable rate senior loan interests often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with any accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, it is anticipated that the variable rate senior loan interests will have an expected average life of three to five years. |
(n) | 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. |
(o) | The rate shown is the 7-day SEC standardized yield as of August 31, 2022. |
(p) | The table below details options purchased. |
(q) | 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 Exchange-Traded Equity Options Purchased | ||||||||||||||||||||||||||||||
Description | Type of Contract | Expiration Date | Number of Contracts | Exercise Price | Notional Value* | Value | ||||||||||||||||||||||||
Equity Risk | ||||||||||||||||||||||||||||||
Alphabet, Inc. | Call | 01/20/2023 | 20 | USD | 125.00 | USD | 250,000 | $ 7,600 | ||||||||||||||||||||||
iShares China Large-Cap ETF | Call | 01/20/2023 | 2,889 | USD | 41.00 | USD | 11,844,900 | 27,446 | ||||||||||||||||||||||
Subtotal – Exchange-Traded Equity Call Options Purchased | 35,046 | |||||||||||||||||||||||||||||
Equity Risk | ||||||||||||||||||||||||||||||
iShares iBoxx High Yield Corporate Bond ETF | Put | 01/20/2023 | 4,681 | USD | 74.00 | USD | 34,639,400 | 1,394,938 | ||||||||||||||||||||||
Total Open Exchange-Traded Equity Options Purchased | $1,429,984 |
* | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
22 | Invesco Corporate Bond Fund |
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 | 03/17/2023 | 21 | USD | 4,400.00 | USD | 9,240,000 | $ | 199,080 |
* | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Exchange-Traded Equity Options Written | ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
Description | Type of Contract | Expiration Date | Number of Contracts | Exercise Price | Notional Value* | Value | ||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
Equity Risk | ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
iShares iBoxx High Yield Corporate Bond ETF | Put | 01/20/2023 | 4,681 | USD | 65.00 | USD | 30,426,500 | $ | (369,799 | ) | ||||||||||||||||||||||
|
* | 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 | 736 | December-2022 | $ | 153,329,501 | $ | (295,658 | ) | $ | (295,658 | ) | ||||||||||
| ||||||||||||||||||||
U.S. Treasury 10 Year Notes | 256 | December-2022 | 29,928,000 | (13,540 | ) | (13,540 | ) | |||||||||||||
| ||||||||||||||||||||
U.S. Treasury Long Bonds | 934 | December-2022 | 126,878,063 | (175,125 | ) | (175,125 | ) | |||||||||||||
| ||||||||||||||||||||
U.S. Treasury Ultra Bonds | 132 | December-2022 | 19,734,000 | 235,156 | 235,156 | |||||||||||||||
| ||||||||||||||||||||
Subtotal–Long Futures Contracts | (249,167 | ) | (249,167 | ) | ||||||||||||||||
| ||||||||||||||||||||
Short Futures Contracts | ||||||||||||||||||||
| ||||||||||||||||||||
Interest Rate Risk | ||||||||||||||||||||
| ||||||||||||||||||||
U.S. Treasury 5 Year Notes | 93 | December-2022 | (10,306,289 | ) | 50,133 | 50,133 | ||||||||||||||
| ||||||||||||||||||||
U.S. Treasury 10 Year Ultra Notes | 1,971 | December-2022 | (246,744,563 | ) | 2,294,377 | 2,294,377 | ||||||||||||||
| ||||||||||||||||||||
Subtotal–Short Futures Contracts | 2,344,510 | 2,344,510 | ||||||||||||||||||
| ||||||||||||||||||||
Total Futures Contracts | $ | 2,095,343 | $ | 2,095,343 | ||||||||||||||||
|
Open Forward Foreign Currency Contracts | ||||||||||||||||||||||
Settlement | Contract to | Unrealized Appreciation | ||||||||||||||||||||
Date | Counterparty | Deliver | Receive | |||||||||||||||||||
| ||||||||||||||||||||||
Currency Risk | ||||||||||||||||||||||
| ||||||||||||||||||||||
11/17/2022 | Citibank, N.A. | GBP | 285,000 | USD | 349,620 | $ | 18,056 | |||||||||||||||
| ||||||||||||||||||||||
11/17/2022 | Deutsche Bank AG | GBP | 55,000 | USD | 63,989 | 3 | ||||||||||||||||
| ||||||||||||||||||||||
11/17/2022 | Goldman Sachs International | EUR | 1,612,000 | USD | 1,674,546 | 46,249 | ||||||||||||||||
| ||||||||||||||||||||||
11/17/2022 | JP Morgan Chase Bank N.A. | CAD | 1,614,000 | USD | 1,263,510 | 35,044 | ||||||||||||||||
| ||||||||||||||||||||||
Total Forward Foreign Currency Contracts | $ | 99,352 | ||||||||||||||||||||
|
Abbreviations:
CAD –Canadian Dollar
ETF –Exchange-Traded Fund
EUR –Euro
GBP –British Pound Sterling
USD –U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
23 | Invesco Corporate Bond Fund |
Portfolio Composition
By security type, based on Net Assets
as of August 31, 2022
U.S. Dollar Denominated Bonds & Notes | 88.03 | % | ||
U.S. Treasury Securities | 5.34 | |||
Preferred Stocks | 2.84 | |||
Asset-Backed Securities | 1.21 | |||
Security Types Each Less Than 1% of Portfolio | 0.87 | |||
Money Market Funds Plus Other Assets Less Liabilities | 1.71 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
24 | Invesco Corporate Bond Fund |
Statement of Assets and Liabilities
August 31, 2022
(Unaudited)
Assets: | ||||
Investments in unaffiliated securities, at value | $ | 2,404,819,279 | ||
| ||||
Investments in affiliates, at value | 195,878,762 | |||
| ||||
Other investments: | ||||
Variation margin receivable – futures contracts | 52,886 | |||
| ||||
Unrealized appreciation on forward foreign currency contracts outstanding | 99,352 | |||
| ||||
Cash | 4,914,365 | |||
| ||||
Foreign currencies, at value (Cost $1,130,300) | 1,114,016 | |||
| ||||
Receivable for: | ||||
Investments sold | 2,069,998 | |||
| ||||
Fund shares sold | 2,483,792 | |||
| ||||
Dividends | 331,690 | |||
| ||||
Interest | 26,142,312 | |||
| ||||
Investments matured, at value | 338,213 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 171,411 | |||
| ||||
Other assets | 130,717 | |||
| ||||
Total assets | 2,638,546,793 | |||
| ||||
Liabilities: | ||||
Other investments: | ||||
Options written, at value (premiums received $566,251) | 369,799 | |||
| ||||
Payable for: | ||||
Investments purchased | 4,805,971 | |||
| ||||
Dividends | 1,163,705 | |||
| ||||
Fund shares reacquired | 5,668,323 | |||
| ||||
Collateral upon return of securities loaned | 173,677,017 | |||
| ||||
Accrued fees to affiliates | 919,831 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 2,090 | |||
| ||||
Accrued other operating expenses | 190,612 | |||
| ||||
Trustee deferred compensation and retirement plans | 193,489 | |||
| ||||
Total liabilities | 186,990,837 | |||
| ||||
Net assets applicable to shares outstanding | $ | 2,451,555,956 | ||
|
Net assets consist of: | ||||
Shares of beneficial interest | $ | 2,904,701,989 | ||
| ||||
Distributable earnings (loss) | (453,146,033 | ) | ||
| ||||
$ | 2,451,555,956 | |||
| ||||
Net Assets: |
| |||
Class A | $ | 1,083,852,674 | ||
| ||||
Class C | $ | 38,828,516 | ||
| ||||
Class R | $ | 12,489,461 | ||
| ||||
Class Y | $ | 466,404,666 | ||
| ||||
Class R5 | $ | 13,603,131 | ||
| ||||
Class R6 | $ | 836,377,508 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 171,526,091 | |||
| ||||
Class C | 6,095,978 | |||
| ||||
Class R | 1,975,367 | |||
| ||||
Class Y | 73,660,107 | |||
| ||||
Class R5 | 2,150,278 | |||
| ||||
Class R6 | 132,069,456 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 6.32 | ||
| ||||
Maximum offering price per share | $ | 6.60 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 6.37 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 6.32 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 6.33 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 6.33 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 6.33 | ||
|
* | At August 31, 2022, securities with an aggregate value of $167,876,516 were on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
25 | Invesco Corporate Bond Fund |
Statement of Operations
For the six months ended August 31, 2022
(Unaudited)
Investment income: | ||||
Interest (net of foreign withholding taxes of $(2,425)) | $ | 53,718,907 | ||
| ||||
Dividends | 973,977 | |||
| ||||
Dividends from affiliates (includes securities lending income of $240,195) | 341,199 | |||
| ||||
Total investment income | 55,034,083 | |||
| ||||
Expenses: | ||||
Advisory fees | 3,892,799 | |||
| ||||
Administrative services fees | 206,476 | |||
| ||||
Custodian fees | 21,857 | |||
| ||||
Distribution fees: | ||||
Class A | 1,455,155 | |||
| ||||
Class C | 201,616 | |||
| ||||
Class R | 32,287 | |||
| ||||
Transfer agent fees – A, C, R and Y | 1,468,549 | |||
| ||||
Transfer agent fees – R5 | 6,927 | |||
| ||||
Transfer agent fees – R6 | 144,555 | |||
| ||||
Trustees’ and officers’ fees and benefits | 17,044 | |||
| ||||
Registration and filing fees | 110,622 | |||
| ||||
Reports to shareholders | 106,466 | |||
| ||||
Professional services fees | 34,712 | |||
| ||||
Other | 19,978 | |||
| ||||
Total expenses | 7,719,043 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (19,617 | ) | ||
| ||||
Net expenses | 7,699,426 | |||
| ||||
Net investment income | 47,334,657 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Unaffiliated investment securities | (129,865,923 | ) | ||
| ||||
Affiliated investment securities | (41,587 | ) | ||
| ||||
Foreign currencies | (667,228 | ) | ||
| ||||
Forward foreign currency contracts | 1,782,094 | |||
| ||||
Futures contracts | 8,912,479 | |||
| ||||
Option contracts written | 149 | |||
| ||||
Swap agreements | (439,881 | ) | ||
| ||||
(120,319,897 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Unaffiliated investment securities | (217,840,993 | ) | ||
| ||||
Affiliated investment securities | (541,626 | ) | ||
| ||||
Foreign currencies | (10,035 | ) | ||
| ||||
Forward foreign currency contracts | (666,280 | ) | ||
| ||||
Futures contracts | 2,548,789 | |||
| ||||
Option contracts written | 330,452 | |||
| ||||
(216,179,693 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (336,499,590 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (289,164,933 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
26 | Invesco Corporate Bond Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, 2022 | February 28, 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 47,334,657 | $ | 79,440,711 | ||||
| ||||||||
Net realized gain (loss) | (120,319,897 | ) | 5,207,664 | |||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (216,179,693 | ) | (208,018,724 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (289,164,933 | ) | (123,370,349 | ) | ||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (19,551,417 | ) | (66,050,560 | ) | ||||
| ||||||||
Class C | (565,034 | ) | (2,426,197 | ) | ||||
| ||||||||
Class R | (199,980 | ) | (609,685 | ) | ||||
| ||||||||
Class Y | (9,023,367 | ) | (28,233,702 | ) | ||||
| ||||||||
Class R5 | (255,406 | ) | (859,252 | ) | ||||
| ||||||||
Class R6 | (16,743,450 | ) | (46,805,423 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (46,338,654 | ) | (144,984,819 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (64,642,355 | ) | 73,499,790 | |||||
| ||||||||
Class C | (6,979,294 | ) | (8,959,819 | ) | ||||
| ||||||||
Class R | 345,993 | 3,148,823 | ||||||
| ||||||||
Class Y | (43,688,883 | ) | 132,781,189 | |||||
| ||||||||
Class R5 | 337,663 | 1,904,087 | ||||||
| ||||||||
Class R6 | (10,550,594 | ) | 369,459,920 | |||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (125,177,470 | ) | 571,833,990 | |||||
| ||||||||
Net increase (decrease) in net assets | (460,681,057 | ) | 303,478,822 | |||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 2,912,237,013 | 2,608,758,191 | ||||||
| ||||||||
End of period | $ | 2,451,555,956 | $ | 2,912,237,013 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
27 | 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 08/31/22 | $7.15 | $0.11 | $(0.83 | ) | $(0.72 | ) | $(0.11 | ) | $– | $(0.11 | ) | $6.32 | (10.09 | )% | $1,083,853 | 0.75 | %(d) | 0.75 | %(d) | 3.43 | %(d) | 81 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.80 | 0.21 | (0.49 | ) | (0.28 | ) | (0.21 | ) | (0.16 | ) | (0.37 | ) | 7.15 | (3.79 | ) | 1,295,987 | 0.72 | 0.72 | 2.66 | 133 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 7.80 | 0.22 | 0.25 | 0.47 | (0.24 | ) | (0.23 | ) | (0.47 | ) | 7.80 | 6.14 | 1,342,071 | 0.74 | 0.74 | 2.87 | 182 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.20 | 0.09 | (0.83 | ) | (0.74 | ) | (0.09 | ) | – | (0.09 | ) | 6.37 | (10.35 | )(e) | 38,829 | 1.42 | (d)(e) | 1.42 | (d)(e) | 2.76 | (d)(e) | 81 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.86 | 0.15 | (0.49 | ) | (0.34 | ) | (0.16 | ) | (0.16 | ) | (0.32 | ) | 7.20 | (4.60 | ) | 51,444 | 1.47 | 1.47 | 1.91 | 133 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 7.87 | 0.17 | 0.24 | 0.41 | (0.19 | ) | (0.23 | ) | (0.42 | ) | 7.86 | 5.23 | 65,404 | 1.49 | 1.49 | 2.12 | 182 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.15 | 0.11 | (0.84 | ) | (0.73 | ) | (0.10 | ) | – | (0.10 | ) | 6.32 | (10.21 | ) | 12,489 | 1.00 | (d) | 1.00 | (d) | 3.18 | (d) | 81 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.81 | 0.19 | (0.49 | ) | (0.30 | ) | (0.20 | ) | (0.16 | ) | (0.36 | ) | 7.15 | (4.16 | ) | 13,750 | 0.97 | 0.97 | 2.41 | 133 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 7.81 | 0.20 | 0.25 | 0.45 | (0.22 | ) | (0.23 | ) | (0.45 | ) | 7.81 | 5.87 | 11,819 | 0.99 | 0.99 | 2.62 | 182 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.16 | 0.12 | (0.83 | ) | (0.71 | ) | (0.12 | ) | – | (0.12 | ) | 6.33 | (9.96 | ) | 466,405 | 0.50 | (d) | 0.50 | (d) | 3.68 | (d) | 81 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.82 | 0.23 | (0.50 | ) | (0.27 | ) | (0.23 | ) | (0.16 | ) | (0.39 | ) | 7.16 | (3.66 | ) | 576,512 | 0.47 | 0.47 | 2.91 | 133 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 7.82 | 0.24 | 0.25 | 0.49 | (0.26 | ) | (0.23 | ) | (0.49 | ) | 7.82 | 6.40 | 497,643 | 0.49 | 0.49 | 3.12 | 182 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.16 | 0.12 | (0.83 | ) | (0.71 | ) | (0.12 | ) | – | (0.12 | ) | 6.33 | (9.92 | ) | 13,603 | 0.43 | (d) | 0.43 | (d) | 3.75 | (d) | 81 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.81 | 0.23 | (0.48 | ) | (0.25 | ) | (0.24 | ) | (0.16 | ) | (0.40 | ) | 7.16 | (3.47 | ) | 14,978 | 0.42 | 0.42 | 2.96 | 133 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 7.81 | 0.25 | 0.24 | 0.49 | (0.26 | ) | (0.23 | ) | (0.49 | ) | 7.81 | 6.45 | 14,418 | 0.44 | 0.44 | 3.17 | 182 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.16 | 0.13 | (0.84 | ) | (0.71 | ) | (0.12 | ) | – | (0.12 | ) | 6.33 | (9.90 | ) | 836,378 | 0.36 | (d) | 0.36 | (d) | 3.82 | (d) | 81 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.82 | 0.23 | (0.49 | ) | (0.26 | ) | (0.24 | ) | (0.16 | ) | (0.40 | ) | 7.16 | (3.54 | ) | 959,566 | 0.35 | 0.35 | 3.03 | 133 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 7.82 | 0.25 | 0.25 | 0.50 | (0.27 | ) | (0.23 | ) | (0.50 | ) | 7.82 | 6.54 | 677,403 | 0.36 | 0.36 | 3.25 | 182 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |
(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) | Annualized. |
(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 0.92%, 0.95% and 0.98% for the six months ended August 31, 2022 and for the years ended February 28, 2019 and 2018, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
28 | Invesco Corporate Bond Fund |
August 31, 2022
(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 eight 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 eighth anniversary after a purchase of Class C shares.
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. |
Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices 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, and their value may be adjusted accordingly. 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades 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 using prices provided by an independent pricing service they may be considered fair valued.
Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.
Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.
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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.
Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.
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 may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available and unreliable are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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
29 | Invesco Corporate Bond Fund |
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, significant governmental actions 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.
The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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 based on relative net assets of Class R5 and Class R6. 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. 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, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “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 |
30 | Invesco Corporate Bond Fund |
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 affiliates 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. |
The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon (“BNYM”) also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the six months ended August 31, 2022, fees paid to the Adviser were less than $500. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliates on the Statement of Operations.
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.
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 exchange of the two currencies on settlement date, 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).
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 for hedging 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 instrument or asset. 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 |
31 | Invesco Corporate Bond Fund |
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 net asset value (“NAV”) per share 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. 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. Additionally, an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) includes credit related contingent features which allow Counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the Counterparty. 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, 2022, if any, 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 have investments in financial instruments that utilize the London Interbank Offered Rate (“LIBOR”) as the reference or benchmark rate for variable interest rate calculations. LIBOR is intended to measure the rate generally at which banks can lend and borrow from one another in the relevant currency on an unsecured basis. The UK Financial Conduct Authority (“FCA”), the regulator that oversees LIBOR, announced that the majority of LIBOR rates would cease to be published or would no longer be representative on January 1, 2022. Although the publication of most LIBOR rates ceased at the end of 2021, a selection of widely used USD LIBOR rates continues to be published until June 2023 to allow for an orderly transition away from these rates. |
There remains uncertainty and risks relating to the continuing LIBOR transition and its effects on the Fund and the instruments in which the Fund invests. There can be no assurance that the composition or characteristics of any alternative reference rates (“ARRs”) or financial instruments in which the Fund invests that utilize ARRs will be similar to or produce the same value or economic equivalence as LIBOR or that these instruments will have the same volume or liquidity. Additionally, there remains uncertainty and risks relating to certain “legacy” USD LIBOR instruments that were issued or entered into before December 31, 2021 and the process by which a replacement interest rate will be identified and implemented into these instruments when USD LIBOR is ultimately discontinued. The effects of such uncertainty and risks in “legacy” USD LIBOR instruments held by the Fund could result in losses to the Fund.
32 | Invesco Corporate Bond Fund |
P. | 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. |
Q. | 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. This practice does not apply to securities pledged as collateral for securities lending transactions. |
R. | Other Risks - Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
During the period, the Fund experienced a low interest rate environment 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that holds securities of that entity will be adversely impacted.
S. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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 | 0.420% | |||
| ||||
Next $750 million | 0.350% | |||
| ||||
Over $1.25 billion | 0.220% | |||
|
For the six months ended August 31, 2022, the effective advisory fee rate incurred by the Fund was 0.30%.
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, 2023, 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, 2023. 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, 2024, 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, 2022, the Adviser waived advisory fees of $17,631.
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, 2022, 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, 2022, 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, Class C and Class R shares. The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.50% of the Fund’s average daily net assets of Class R shares. 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 25% of the Fund’s average daily net assets of Class A shares and up to a maximum annual rate of 1.00% of the Fund’s average daily net assets of Class C shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plan would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund.
For the six months ended August 31, 2022, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
33 | Invesco Corporate Bond Fund |
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, 2022, IDI advised the Fund that IDI retained $45,522 in front-end sales commissions from the sale of Class A shares and $11,778 and $2,476 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 Adviser’s 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, 2022. 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 | $ | – | $ | 2,147,897,269 | $ | 10,115,152 | $ | 2,158,012,421 | ||||||||
| ||||||||||||||||
U.S. Treasury Securities | – | 130,948,411 | – | 130,948,411 | ||||||||||||
| ||||||||||||||||
Preferred Stocks | 30,874,733 | 38,839,876 | – | 69,714,609 | ||||||||||||
| ||||||||||||||||
Asset-Backed Securities | – | 20,132,267 | 9,477,709 | 29,609,976 | ||||||||||||
| ||||||||||||||||
Municipal Obligations | – | 8,215,836 | 70,004 | 8,285,840 | ||||||||||||
| ||||||||||||||||
Exchange-Traded Funds | 4,826,000 | – | – | 4,826,000 | ||||||||||||
| ||||||||||||||||
Non-U.S. Dollar Denominated Bonds & Notes | – | 3,822,648 | – | 3,822,648 | ||||||||||||
| ||||||||||||||||
Variable Rate Senior Loan Interests | – | – | 2,796,310 | 2,796,310 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 17,366,056 | 173,686,706 | – | 191,052,762 | ||||||||||||
| ||||||||||||||||
Options Purchased | 1,629,064 | – | – | 1,629,064 | ||||||||||||
| ||||||||||||||||
Total Investments in Securities | 54,695,853 | 2,523,543,013 | 22,459,175 | 2,600,698,041 | ||||||||||||
| ||||||||||||||||
Other Investments - Assets* | ||||||||||||||||
| ||||||||||||||||
Investments Matured | – | 338,213 | – | 338,213 | ||||||||||||
| ||||||||||||||||
Futures Contracts | 2,579,666 | – | – | 2,579,666 | ||||||||||||
| ||||||||||||||||
Forward Foreign Currency Contracts | – | 99,352 | – | 99,352 | ||||||||||||
| ||||||||||||||||
2,579,666 | 437,565 | – | 3,017,231 | |||||||||||||
| ||||||||||||||||
Other Investments - Liabilities* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | (484,323 | ) | – | – | (484,323 | ) | ||||||||||
| ||||||||||||||||
Options Written | (369,799 | ) | – | – | (369,799 | ) | ||||||||||
| ||||||||||||||||
(854,122 | ) | – | – | (854,122 | ) | |||||||||||
| ||||||||||||||||
Total Other Investments | 1,725,544 | 437,565 | – | 2,163,109 | ||||||||||||
| ||||||||||||||||
Total Investments | $ | 56,421,397 | $ | 2,523,980,578 | $ | 22,459,175 | $ | 2,602,861,150 | ||||||||
|
* | Futures contracts and forward foreign currency contracts are valued at unrealized appreciation (depreciation). Options written are shown at value. |
NOTE 4–Derivative Investments
The Fund may enter into an 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.
34 | Invesco Corporate Bond 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, 2022:
Value | ||||||||||||||||
Derivative Assets | Currency Risk | Equity Risk | Interest Rate Risk | Total | ||||||||||||
| ||||||||||||||||
Unrealized appreciation on futures contracts – Exchange-Traded(a) | $ | – | $ | – | $ | 2,579,666 | $ | 2,579,666 | ||||||||
| ||||||||||||||||
Unrealized appreciation on forward foreign currency contracts outstanding | 99,352 | – | – | 99,352 | ||||||||||||
| ||||||||||||||||
Options purchased, at value – Exchange-Traded(b) | – | 1,629,064 | – | 1,629,064 | ||||||||||||
| ||||||||||||||||
Total Derivative Assets | 99,352 | 1,629,064 | 2,579,666 | 4,308,082 | ||||||||||||
| ||||||||||||||||
Derivatives not subject to master netting agreements | – | (1,629,064 | ) | (2,579,666 | ) | (4,208,730 | ) | |||||||||
| ||||||||||||||||
Total Derivative Assets subject to master netting agreements | $ | 99,352 | $ | – | $ | – | $ | 99,352 | ||||||||
|
Value | ||||||||||||
Derivative Liabilities | Equity Risk | Interest Rate Risk | Total | |||||||||
| ||||||||||||
Unrealized depreciation on futures contracts – Exchange-Traded(a) | $ | – | $ | (484,323 | ) | $ | (484,323 | ) | ||||
| ||||||||||||
Options written, at value – Exchange-Traded | (369,799 | ) | – | (369,799 | ) | |||||||
| ||||||||||||
Total Derivative Liabilities | (369,799 | ) | (484,323 | ) | (854,122 | ) | ||||||
| ||||||||||||
Derivatives not subject to master netting agreements | 369,799 | 484,323 | 854,122 | |||||||||
| ||||||||||||
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. |
(b) | Options purchased, at value as reported in the Schedule of Investments. |
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, 2022.
Financial Derivative Assets | Collateral (Received)/Pledged | ||||||||||||||||||||||||
Counterparty | Forward Foreign Currency Contracts | Net Value of Derivatives | Non-Cash | Cash | Net Amount | ||||||||||||||||||||
Citibank, N.A. | $ | 18,056 | $ | 18,056 | $ | – | $ | – | $ | 18,056 | |||||||||||||||
Deutsche Bank AG | 3 | 3 | – | – | 3 | ||||||||||||||||||||
Goldman Sachs International | 46,249 | 46,249 | – | – | 46,249 | ||||||||||||||||||||
JP Morgan Chase Bank N.A. | 35,044 | 35,044 | – | – | 35,044 | ||||||||||||||||||||
Total | $ | 99,352 | $ | 99,352 | $ | – | $ | – | $ | 99,352 |
Effect of Derivative Investments for the six months ended August 31, 2022
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 | $ | - | $ | 1,782,094 | $ | - | $ | - | $ | 1,782,094 | ||||||||||
| ||||||||||||||||||||
Futures contracts | - | - | - | 8,912,479 | 8,912,479 | |||||||||||||||
| ||||||||||||||||||||
Options purchased(a) | - | - | (253,706 | ) | - | (253,706 | ) | |||||||||||||
| ||||||||||||||||||||
Options written | - | - | (387,048 | ) | 387,197 | 149 | ||||||||||||||
| ||||||||||||||||||||
Swap agreements | (439,881 | ) | - | - | - | (439,881 | ) | |||||||||||||
| ||||||||||||||||||||
Change in Net Unrealized Appreciation (Depreciation): | ||||||||||||||||||||
Forward foreign currency contracts | - | (666,280 | ) | - | - | (666,280 | ) | |||||||||||||
| ||||||||||||||||||||
Futures contracts | - | - | - | 2,548,789 | 2,548,789 | |||||||||||||||
| ||||||||||||||||||||
Options purchased(a) | - | - | (1,195,037 | ) | - | (1,195,037 | ) | |||||||||||||
| ||||||||||||||||||||
Options written | - | - | 330,452 | - | 330,452 | |||||||||||||||
| ||||||||||||||||||||
Total | $ | (439,881 | ) | $ | 1,115,814 | $ | (1,505,339 | ) | $ | 11,848,465 | $ | 11,019,059 | ||||||||
|
(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. |
35 | Invesco Corporate Bond Fund |
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 | Swaptions Written | Swap Agreements | |||||||||||||||||||||||||||||||||
Average notional value | $ | 112,399,267 | $ | 802,940,958 | $ | 23,921,200 | $ | 35,139,583 | $ | 30,426,500 | $ | 29,648,000 | $ | 50,614,000 | $ | 50,107,860 | ||||||||||||||||||||||||
Average contracts | – | – | 4,464 | 78 | 4,681 | 64 | – | – |
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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,986.
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 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 carryforward 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 28, 2022.
NOTE 9–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended August 31, 2022 was $958,236,733 and $1,032,428,730, 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 | $ 12,299,964 | |||
| ||||
Aggregate unrealized (depreciation) of investments | (336,535,282 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $(324,235,318 | ) | ||
| ||||
Cost of investments for tax purposes is $2,927,096,468. |
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2022(a) | February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 9,768,069 | $ | 64,338,297 | 32,438,345 | $ | 251,450,399 | ||||||||||
| ||||||||||||||||
Class C | 288,730 | 1,906,588 | 1,188,953 | 9,315,146 | ||||||||||||
| ||||||||||||||||
Class R | 270,161 | 1,774,588 | 758,550 | 5,846,005 | ||||||||||||
| ||||||||||||||||
Class Y | 28,461,454 | 188,358,788 | 51,395,738 | 398,167,587 | ||||||||||||
| ||||||||||||||||
Class R5 | 196,984 | 1,287,050 | 795,926 | 6,160,820 | ||||||||||||
| ||||||||||||||||
Class R6 | 22,811,299 | 152,045,084 | 66,002,220 | 512,181,475 | ||||||||||||
|
36 | Invesco Corporate Bond Fund |
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2022(a) | February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 2,586,861 | $ | 16,894,248 | 7,608,578 | $ | 58,333,573 | ||||||||||
| ||||||||||||||||
Class C | 64,935 | 427,293 | 252,111 | 1,947,156 | ||||||||||||
| ||||||||||||||||
Class R | 30,489 | 199,053 | 79,476 | 608,989 | ||||||||||||
| ||||||||||||||||
Class Y | 965,199 | 6,328,229 | 2,832,647 | 21,743,742 | ||||||||||||
| ||||||||||||||||
Class R5 | 38,910 | 254,254 | 111,498 | 857,095 | ||||||||||||
| ||||||||||||||||
Class R6 | 2,340,411 | 15,314,640 | 5,709,398 | 43,825,549 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 239,765 | 1,577,030 | 584,512 | 4,493,163 | ||||||||||||
| ||||||||||||||||
Class C | (237,974 | ) | (1,577,030 | ) | (580,247 | ) | (4,493,163 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (22,394,641 | ) | (147,451,930 | ) | (31,292,482 | ) | (240,777,345 | ) | ||||||||
| ||||||||||||||||
Class C | (1,162,500 | ) | (7,736,145 | ) | (2,035,330 | ) | (15,728,958 | ) | ||||||||
| ||||||||||||||||
Class R | (248,103 | ) | (1,627,648 | ) | (428,914 | ) | (3,306,171 | ) | ||||||||
| ||||||||||||||||
Class Y | (36,258,273 | ) | (238,375,900 | ) | (37,370,286 | ) | (287,130,140 | ) | ||||||||
| ||||||||||||||||
Class R5 | (178,642 | ) | (1,203,641 | ) | (659,521 | ) | (5,113,828 | ) | ||||||||
| ||||||||||||||||
Class R6 | (27,035,346 | ) | (177,910,318 | ) | (24,361,546 | ) | (186,547,104 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (19,452,212 | ) | $ | (125,177,470 | ) | 73,029,626 | $ | 571,833,990 | ||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 68% 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. |
37 | 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, 2022 through August 31, 2022.
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 | |||||||
(03/01/22) | (08/31/22)1 | Period2 | (08/31/22) | Period2 | Ratio | |||||||
Class A | $1,000.00 | $899.10 | $3.59 | $1,021.42 | $3.82 | 0.75% | ||||||
Class C | 1,000.00 | 896.50 | 6.79 | 1,018.05 | 7.22 | 1.42 | ||||||
Class R | 1,000.00 | 897.90 | 4.78 | 1,020.16 | 5.09 | 1.00 | ||||||
Class Y | 1,000.00 | 900.40 | 2.40 | 1,022.68 | 2.55 | 0.50 | ||||||
Class R5 | 1,000.00 | 900.80 | 2.06 | 1,023.04 | 2.19 | 0.43 | ||||||
Class R6 | 1,000.00 | 901.00 | 1.72 | 1,023.39 | 1.84 | 0.36 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2022 through August 31, 2022, 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. |
38 | Invesco Corporate Bond Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance with certain negotiated regulatory requirements. In
addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel. Also, as part of the contract renewal process, the independent Trustees reviewed and considered information provided in response to detailed follow-up requests for information submitted by the independent Trustees to management. The independent Trustees met and discussed those follow-up responses with legal counsel to the independent Trustees and the Senior Officer.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe and against the Bloomberg U.S. Credit Index (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, 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, which did not change its conclusions.
39 | Invesco Corporate Bond Fund |
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 is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board 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 considered information from Invesco Advisers regarding the levels of the Fund’s breakpoints in light of current assets. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination 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. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.
The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent
and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.
The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
40 | Invesco Corporate Bond Fund |
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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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/ corporate/about-us/esg. 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 number(s): 811-05686 and 033-39519 | Invesco Distributors, Inc. | VK-CBD-SAR-1 |
| ||
Semiannual Report to Shareholders
| August 31, 2022
| |
Invesco Global Real Estate Fund | ||
Nasdaq: A: AGREX ∎ C: CGREX ∎ R: RGREX ∎ Y: ARGYX ∎ R5: IGREX ∎ R6: FGREX |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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 |
Performance summary
| ||||
Fund vs. Indexes |
| |||
Cumulative total returns, 2/28/22 to 8/31/22, 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 | -11.75 | % | ||
Class C Shares | -12.08 | |||
Class R Shares | -11.79 | |||
Class Y Shares | -11.64 | |||
Class R5 Shares | -11.54 | |||
Class R6 Shares | -11.60 | |||
MSCI World Index▼ (Broad Market Index) | -10.94 | |||
Custom Invesco Global Real Estate Index∎ (Style-Specific Index) | -12.92 | |||
Lipper Global Real Estate Funds Classification Average◆ (Peer Group) | -12.99 | |||
Source(s): qRIMES Technologies Corp.; ∎Invesco, RIMES Technologies Corp.; ◆Lipper Inc. | ||||
The MSCI World IndexSM 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; the FTSE EPRA NAREIT Global Index (Net) from July 1, 2014 through June 30, 2021, and the FTSE EPRA NAREIT Developed Index (Net) from July 1, 2021 onward. 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 nonresident 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. |
|
2 | Invesco Global Real Estate Fund |
Average Annual Total Returns | ||||
As of 8/31/22, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (4/29/05) | 3.99 | % | ||
10 Years | 3.11 | |||
5 Years | -0.19 | |||
1 Year | -20.61 | |||
Class C Shares | ||||
Inception (4/29/05) | 3.97 | % | ||
10 Years | 3.06 | |||
5 Years | 0.19 | |||
1 Year | -17.44 | |||
Class R Shares | ||||
Inception (4/29/05) | 4.07 | % | ||
10 Years | 3.43 | |||
5 Years | 0.69 | |||
1 Year | -16.14 | |||
Class Y Shares | ||||
Inception (10/3/08) | 4.83 | % | ||
10 Years | 3.95 | |||
5 Years | 1.19 | |||
1 Year | -15.79 | |||
Class R5 Shares | ||||
Inception (4/29/05) | 4.80 | % | ||
10 Years | 4.15 | |||
5 Years | 1.31 | |||
1 Year | -15.67 | |||
Class R6 Shares | ||||
10 Years | 4.21 | % | ||
5 Years | 1.38 | |||
1 Year | -15.68 |
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.
3 | Invesco Global Real Estate Fund |
Liquidity Risk Management Program
In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), 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 21-23, 2022, 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 January 1, 2021, through December 31, 2021 (the “Program Reporting Period”). The Report discussed notable events affecting liquidity over the Program Reporting Period, including the impact of the coronavirus pandemic on the Fund and the overall market. The Report noted that there were no material changes to the Program during 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. |
4 | Invesco Global Real Estate Fund |
August 31, 2022
(Unaudited)
Shares | Value | |||||||
| ||||||||
Common Stocks & Other Equity Interests–99.45% |
| |||||||
Australia–2.83% | ||||||||
GPT Group (The) | 895,442 | $ | 2,563,183 | |||||
| ||||||||
National Storage REIT | 883,028 | 1,459,283 | ||||||
| ||||||||
NEXTDC Ltd.(a) | 180,034 | 1,278,360 | ||||||
| ||||||||
Stockland | 583,784 | 1,440,879 | ||||||
| ||||||||
6,741,705 | ||||||||
| ||||||||
Belgium–1.96% | ||||||||
Aedifica S.A. | 28,750 | 2,720,760 | ||||||
| ||||||||
Cofinimmo S.A. | 13,286 | 1,348,202 | ||||||
| ||||||||
VGP N.V. | 4,083 | 593,824 | ||||||
| ||||||||
4,662,786 | ||||||||
| ||||||||
Canada–2.33% | ||||||||
Chartwell Retirement Residences | 366,400 | 2,898,615 | ||||||
| ||||||||
Summit Industrial Income REIT | 189,546 | 2,658,421 | ||||||
| ||||||||
5,557,036 | ||||||||
| ||||||||
France–0.41% | ||||||||
Klepierre S.A. | 47,209 | 968,016 | ||||||
| ||||||||
Germany–2.27% | ||||||||
Aroundtown S.A. | 298,569 | 870,039 | ||||||
| ||||||||
Instone Real Estate Group SE(b) | 57,633 | 511,112 | ||||||
| ||||||||
Sirius Real Estate Ltd. | 963,996 | 908,944 | ||||||
| ||||||||
Vonovia SE | 114,535 | 3,106,672 | ||||||
| ||||||||
5,396,767 | ||||||||
| ||||||||
Hong Kong–4.92% | ||||||||
Hang Lung Properties Ltd. | 1,071,000 | 1,782,596 | ||||||
| ||||||||
Hongkong Land Holdings Ltd. | 399,600 | 1,928,960 | ||||||
| ||||||||
Hysan Development Co. Ltd. | 403,000 | 1,136,326 | ||||||
| ||||||||
Kerry Properties Ltd. | 438,500 | 1,012,572 | ||||||
| ||||||||
Link REIT | 262,800 | 2,033,446 | ||||||
| ||||||||
Sun Hung Kai Properties Ltd. | 243,100 | 2,849,880 | ||||||
| ||||||||
Swire Properties Ltd. | 424,800 | 979,846 | ||||||
| ||||||||
11,723,626 | ||||||||
| ||||||||
Israel–0.99% | ||||||||
Azrieli Group Ltd. | 28,358 | 2,353,629 | ||||||
| ||||||||
Japan–11.55% | ||||||||
Advance Residence Investment Corp. | 703 | 1,858,189 | ||||||
| ||||||||
Daiwa House REIT Investment Corp.(a) | 573 | 1,325,055 | ||||||
| ||||||||
GLP J-Reit | 1,428 | 1,741,079 | ||||||
| ||||||||
Japan Hotel REIT Investment Corp. | 3,529 | 1,742,540 | ||||||
| ||||||||
Japan Metropolitan Fund Investment Corp. | 2,201 | 1,746,916 | ||||||
| ||||||||
Japan Prime Realty Investment Corp. | 570 | 1,689,322 | ||||||
| ||||||||
Japan Real Estate Investment Corp. | 449 | 2,081,721 | ||||||
| ||||||||
Kenedix Office Investment Corp. | 247 | 1,277,282 | ||||||
| ||||||||
Mitsubishi Estate Logistics REIT Investment Corp. | 248 | 852,257 | ||||||
| ||||||||
Mitsui Fudosan Co. Ltd. | 88,600 | 1,789,155 | ||||||
| ||||||||
Mitsui Fudosan Logistics Park, Inc. | 324 | 1,269,182 | ||||||
| ||||||||
Nippon Accommodations Fund, Inc. | 283 | 1,388,845 | ||||||
| ||||||||
Nomura Real Estate Holdings, Inc. | 46,200 | 1,131,926 | ||||||
|
Shares | Value | |||||||
| ||||||||
Japan–(continued) | ||||||||
Nomura Real Estate Master Fund, Inc. | 1,226 | $ | 1,498,851 | |||||
| ||||||||
Sumitomo Realty & Development Co. Ltd. | 25,900 | 633,822 | ||||||
| ||||||||
Tokyo Tatemono Co. Ltd. | 96,500 | 1,446,531 | ||||||
| ||||||||
Tokyu Fudosan Holdings Corp. | 548,000 | 2,947,193 | ||||||
| ||||||||
United Urban Investment Corp. | 1,022 | 1,087,594 | ||||||
| ||||||||
27,507,460 | ||||||||
| ||||||||
Macau–0.82% | ||||||||
Galaxy Entertainment Group Ltd. | 351,000 | 1,964,607 | ||||||
| ||||||||
Malta–0.02% | ||||||||
BGP Holdings PLC(c) | 9,888,325 | 43,784 | ||||||
| ||||||||
Singapore–2.88% | ||||||||
Ascendas REIT | 455,700 | 918,120 | ||||||
| ||||||||
CapitaLand Integrated Commercial Trust | 926,500 | 1,371,245 | ||||||
| ||||||||
CapitaLand Investment Ltd. | 814,700 | 2,145,661 | ||||||
| ||||||||
Digital Core REIT Management Pte Ltd. | 1,969,800 | 1,484,175 | ||||||
| ||||||||
Keppel REIT | 11,200 | 8,650 | ||||||
| ||||||||
Mapletree Pan Asia Commercial Trust | 712,300 | 936,536 | ||||||
| ||||||||
6,864,387 | ||||||||
| ||||||||
Sweden–1.30% | ||||||||
Castellum AB | 116,810 | 1,638,138 | ||||||
| ||||||||
Samhallsbyggnadsbolaget i Norden AB, | 156,153 | 250,736 | ||||||
| ||||||||
Wihlborgs Fastigheter AB | 168,260 | 1,207,808 | ||||||
| ||||||||
3,096,682 | ||||||||
| ||||||||
United Kingdom–3.14% | ||||||||
Assura PLC | 1,952,506 | 1,475,911 | ||||||
| ||||||||
Capital & Counties Properties PLC | 214,777 | 299,303 | ||||||
| ||||||||
Derwent London PLC | 34,595 | 977,480 | ||||||
| ||||||||
LondonMetric Property PLC | 583,755 | 1,473,029 | ||||||
| ||||||||
Segro PLC | 180,014 | 1,965,558 | ||||||
| ||||||||
UNITE Group PLC (The) | 106,424 | 1,295,423 | ||||||
| ||||||||
7,486,704 | ||||||||
| ||||||||
United States–64.03% | ||||||||
Alexandria Real Estate Equities, Inc. | 38,930 | 5,971,862 | ||||||
| ||||||||
American Homes 4 Rent, Class A | 72,903 | 2,592,431 | ||||||
| ||||||||
American Tower Corp. | 15,472 | 3,930,662 | ||||||
| ||||||||
AvalonBay Communities, Inc. | 48,148 | 9,673,415 | ||||||
| ||||||||
Brixmor Property Group, Inc. | 112,822 | 2,423,417 | ||||||
| ||||||||
CubeSmart | 86,446 | 3,980,838 | ||||||
| ||||||||
Digital Realty Trust, Inc. | 44,381 | 5,486,823 | ||||||
| ||||||||
Duke Realty Corp. | 48,511 | 2,854,872 | ||||||
| ||||||||
Equinix, Inc. | 12,082 | 7,942,344 | ||||||
| ||||||||
Equity LifeStyle Properties, Inc.(d) | 62,512 | 4,382,091 | ||||||
| ||||||||
Equity Residential | 23,066 | 1,687,970 | ||||||
| ||||||||
Essential Properties Realty Trust, Inc. | 82,754 | 1,873,551 | ||||||
| ||||||||
Federal Realty Investment Trust | 20,293 | 2,055,072 | ||||||
| ||||||||
Gaming and Leisure Properties, Inc. | 55,378 | 2,673,096 | ||||||
| ||||||||
Healthcare Realty Trust, Inc. | 193,933 | 4,716,451 | ||||||
| ||||||||
Healthpeak Properties, Inc. | 93,219 | 2,446,999 | ||||||
| ||||||||
Hilton Worldwide Holdings, Inc. | 3,052 | 388,703 | ||||||
| ||||||||
Invitation Homes, Inc. | 277,117 | 10,053,805 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco Global Real Estate Fund |
Shares | Value | |||||||
| ||||||||
United States–(continued) | ||||||||
Kimco Realty Corp. | 305,242 | $ | 6,434,501 | |||||
| ||||||||
Lamar Advertising Co., Class A | 8,484 | 796,563 | ||||||
| ||||||||
Life Storage, Inc. | 41,227 | 5,246,136 | ||||||
| ||||||||
Prologis, Inc. | 119,337 | 14,858,650 | ||||||
| ||||||||
Realty Income Corp. | 94,853 | 6,476,563 | ||||||
| ||||||||
Rexford Industrial Realty, Inc.(d) | 95,050 | 5,913,060 | ||||||
| ||||||||
Ryman Hospitality Properties, Inc.(a) | 11,161 | 917,657 | ||||||
| ||||||||
SITE Centers Corp. | 61,369 | 795,342 | ||||||
| ||||||||
Sun Communities, Inc. | 43,561 | 6,695,761 | ||||||
| ||||||||
Terreno Realty Corp.(d) | 30,856 | 1,881,907 | ||||||
| ||||||||
UDR, Inc. | 210,795 | 9,458,372 | ||||||
| ||||||||
Ventas, Inc. | 89,698 | 4,292,946 | ||||||
| ||||||||
VICI Properties, Inc.(d) | 273,860 | 9,034,641 | ||||||
| ||||||||
Welltower, Inc. | 59,804 | 4,583,977 | ||||||
| ||||||||
152,520,478 | ||||||||
| ||||||||
Total Common Stocks & Other Equity Interests |
| 236,887,667 | ||||||
| ||||||||
Money Market Funds–0.27% | ||||||||
Invesco Government & Agency Portfolio, Institutional Class, 2.22%(e)(f) | 221,698 | 221,698 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 2.26%(e)(f) | 157,994 | 158,025 | ||||||
|
Shares | Value | |||||||
| ||||||||
Money Market Funds–(continued) | ||||||||
Invesco Treasury Portfolio, Institutional Class, 2.14%(e)(f) | 253,370 | $ | 253,370 | |||||
| ||||||||
Total Money Market Funds (Cost $633,093) |
| 633,093 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES (excluding Investments purchased with cash collateral from securities on loan)-99.72% |
| 237,520,760 | ||||||
| ||||||||
Investments Purchased with Cash Collateral from |
| |||||||
Money Market Funds–3.01% | ||||||||
Invesco Private Government Fund, 2.29%(e)(f)(g) | 2,010,089 | 2,010,089 | ||||||
| ||||||||
Invesco Private Prime Fund, 2.37%(e)(f)(g) | 5,168,284 | 5,168,801 | ||||||
| ||||||||
Total Investments Purchased with Cash Collateral from Securities on Loan |
| 7,178,890 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES–102.73% |
| 244,699,650 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–(2.73)% |
| (6,511,344 | ) | |||||
| ||||||||
NET ASSETS–100.00% | $ | 238,188,306 | ||||||
|
Investment Abbreviations: |
REIT – Real Estate Investment Trust |
Notes to Schedule of Investments:
(a) | Non-income producing security. |
(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, 2022 was $511,112, which represented less than 1% of the Fund’s Net Assets. |
(c) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(d) | All or a portion of this security was out on loan at August 31, 2022. |
(e) | 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, 2022. |
Value February 28, 2022 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation (Depreciation) | Realized Gain (Loss) | Value August 31, 2022 | Dividend Income | ||||||||||||||||||||||
Investments in Affiliated Money Market Funds: | ||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | 1,892,614 | $ | 16,041,637 | $ | (17,712,553 | ) | $ - | $ | - | $ 221,698 | $ 3,931 | ||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 1,265,303 | 11,458,312 | (12,565,692 | ) | (11 | ) | 113 | 158,025 | 3,772 | |||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 2,162,988 | 18,333,299 | (20,242,917 | ) | - | - | 253,370 | 5,716 | ||||||||||||||||||||
Investments Purchased with Cash Collateral from Securities on Loan: |
| |||||||||||||||||||||||||||
Invesco Private Government Fund | 4,102,625 | 36,088,500 | (38,181,036 | ) | - | - | 2,010,089 | 20,797 | * | |||||||||||||||||||
Invesco Private Prime Fund | 9,572,791 | 83,747,050 | (88,150,452 | ) | 1,289 | (1,877 | ) | 5,168,801 | 58,128 | * | ||||||||||||||||||
Total | $ | 18,996,321 | $ | 165,668,798 | $ | (176,852,650 | ) | $1,278 | $ | (1,764 | ) | $7,811,983 | $92,344 |
* | 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. |
(f) | The rate shown is the 7-day SEC standardized yield as of August 31, 2022. |
(g) | 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.
6 | Invesco Global Real Estate Fund |
Portfolio Composition
By country, based on Net Assets
as of August 31, 2022
United States | 64.03 | % | ||
Japan | 11.55 | |||
Hong Kong | 4.92 | |||
United Kingdom | 3.14 | |||
Singapore | 2.88 | |||
Australia | 2.83 | |||
Canada | 2.33 | |||
Germany | 2.27 | |||
Countries each less than 2% of portfolio | 5.50 | |||
Money Market Funds Plus Other Assets Less Liabilities | 0.55 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Global Real Estate Fund |
Statement of Assets and Liabilities
August 31, 2022
(Unaudited)
Assets: | ||||
Investments in unaffiliated securities, at value | $ | 236,887,667 | ||
| ||||
Investments in affiliated money market funds, at value (Cost $7,811,486) | 7,811,983 | |||
| ||||
Foreign currencies, at value (Cost $269,676) | 266,587 | |||
| ||||
Receivable for: | ||||
Investments sold | 1,496,879 | |||
| ||||
Fund shares sold | 72,759 | |||
| ||||
Dividends | 705,607 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 120,625 | |||
| ||||
Other assets | 56,492 | |||
| ||||
Total assets | 247,418,599 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 1,357,982 | |||
| ||||
Fund shares reacquired | 271,888 | |||
| ||||
Collateral upon return of securities loaned | 7,178,393 | |||
| ||||
Accrued fees to affiliates | 198,286 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 1,593 | |||
| ||||
Accrued other operating expenses | 89,066 | |||
| ||||
Trustee deferred compensation and retirement plans | 133,085 | |||
| ||||
Total liabilities | 9,230,293 | |||
| ||||
Net assets applicable to shares outstanding | $ | 238,188,306 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 213,089,175 | ||
| ||||
Distributable earnings | 25,099,131 | |||
| ||||
$ | 238,188,306 | |||
|
Net Assets: | ||||
Class A | $ | 92,816,870 | ||
| ||||
Class C | $ | 4,033,328 | ||
| ||||
Class R | $ | 21,649,603 | ||
| ||||
Class Y | $ | 55,179,987 | ||
| ||||
Class R5 | $ | 28,734,672 | ||
| ||||
Class R6 | $ | 35,773,846 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 9,151,333 | |||
| ||||
Class C | 397,318 | |||
| ||||
Class R | 2,135,506 | |||
| ||||
Class Y | 5,444,627 | |||
| ||||
Class R5 | 2,843,750 | |||
| ||||
Class R6 | 3,543,341 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 10.14 | ||
| ||||
Maximum offering price per share (Net asset value of $10.14 ÷ 94.50%) | $ | 10.73 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 10.15 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 10.14 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 10.13 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 10.10 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 10.10 | ||
|
* | At August 31, 2022, securities with an aggregate value of $6,958,988 were on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Global Real Estate Fund |
Statement of Operations
For the six months ended August 31, 2022
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $169,242) | $ | 5,792,668 | ||
| ||||
Dividends from affiliated money market funds (includes securities lending income of $8,889) | 22,308 | |||
| ||||
Total investment income | 5,814,976 | |||
| ||||
Expenses: | ||||
Advisory fees | 1,251,876 | |||
| ||||
Administrative services fees | 29,685 | |||
| ||||
Custodian fees | 65,193 | |||
| ||||
Distribution fees: | ||||
Class A | 128,052 | |||
| ||||
Class C | 23,196 | |||
| ||||
Class R | 57,846 | |||
| ||||
Transfer agent fees – A, C, R and Y | 216,746 | |||
| ||||
Transfer agent fees – R5 | 39,788 | |||
| ||||
Transfer agent fees – R6 | 9,594 | |||
| ||||
Trustees’ and officers’ fees and benefits | 9,187 | |||
| ||||
Registration and filing fees | 47,537 | |||
| ||||
Reports to shareholders | 44,359 | |||
| ||||
Professional services fees | 31,387 | |||
| ||||
Other | 8,022 | |||
| ||||
Total expenses | 1,962,468 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (2,418 | ) | ||
| ||||
Net expenses | 1,960,050 | |||
| ||||
Net investment income | 3,854,926 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Unaffiliated investment securities | 18,815,816 | |||
| ||||
Affiliated investment securities | (1,764 | ) | ||
| ||||
Foreign currencies | (105,639 | ) | ||
| ||||
18,708,413 | ||||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Unaffiliated investment securities | (55,410,685 | ) | ||
| ||||
Affiliated investment securities | 1,278 | |||
| ||||
Foreign currencies | (26,570 | ) | ||
| ||||
(55,435,977 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (36,727,564 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (32,872,638 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Global Real Estate Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, | February 28, | |||||||
2022 | 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 3,854,926 | $ | 6,639,953 | ||||
| ||||||||
Net realized gain | 18,708,413 | 64,685,103 | ||||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (55,435,977 | ) | (11,992,317 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (32,872,638 | ) | 59,332,739 | |||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (1,232,165 | ) | (2,928,183 | ) | ||||
| ||||||||
Class C | (38,932 | ) | (102,987 | ) | ||||
| ||||||||
Class R | (244,351 | ) | (596,650 | ) | ||||
| ||||||||
Class Y | (846,667 | ) | (2,580,238 | ) | ||||
| ||||||||
Class R5 | (1,151,687 | ) | (3,281,554 | ) | ||||
| ||||||||
Class R6 | (984,588 | ) | (5,367,899 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (4,498,390 | ) | (14,857,511 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (1,407,273 | ) | (9,486,671 | ) | ||||
| ||||||||
Class C | (413,206 | ) | (890,718 | ) | ||||
| ||||||||
Class R | 183,408 | (847,531 | ) | |||||
| ||||||||
Class Y | (4,260,465 | ) | (54,497,517 | ) | ||||
| ||||||||
Class R5 | (49,158,197 | ) | (48,145,806 | ) | ||||
| ||||||||
Class R6 | (127,923,195 | ) | (14,940,083 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (182,978,928 | ) | (128,808,326 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (220,349,956 | ) | (84,333,098 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 458,538,262 | 542,871,360 | ||||||
| ||||||||
End of period | $ | 238,188,306 | $ | 458,538,262 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | 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 | Net gains realized and unrealized) | Total from investment operations | Dividends from net investment income | Distributions realized | Total distributions | Net asset of period | Total return (b) | Net assets, (000’s omitted) | Ratio of net assets | Ratio of fee waivers | Ratio of net investment to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | $ | 11.63 | $ | 0.12 | $ | (1.48 | ) | $ | (1.36 | ) | $ | (0.13 | ) | $ | – | $ | (0.13 | ) | $ | 10.14 | (11.75 | )% | $ | 92,817 | 1.36 | %(d) | 1.36 | %(d) | 2.11 | %(d) | 40 | % | ||||||||||||||||||||||||
Year ended 02/28/22 | 10.77 | 0.12 | 1.04 | 1.16 | (0.30 | ) | – | (0.30 | ) | 11.63 | 10.80 | 107,880 | 1.30 | 1.30 | 1.01 | 88 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.65 | 0.17 | (0.56 | ) | (0.39 | ) | (0.21 | ) | (0.28 | ) | (0.49 | ) | 10.77 | (2.96 | ) | 108,687 | 1.32 | 1.32 | 1.70 | 160 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 11.64 | 0.08 | (1.48 | ) | (1.40 | ) | (0.09 | ) | – | (0.09 | ) | 10.15 | (12.08 | ) | 4,033 | 2.11 | (d) | 2.11 | (d) | 1.36 | (d) | 40 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.78 | 0.03 | 1.05 | 1.08 | (0.22 | ) | – | (0.22 | ) | 11.64 | 9.96 | 5,057 | 2.05 | 2.05 | 0.26 | 88 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.65 | 0.10 | (0.56 | ) | (0.46 | ) | (0.13 | ) | (0.28 | ) | (0.41 | ) | 10.78 | (3.68 | ) | 5,493 | 2.07 | 2.07 | 0.95 | 160 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 11.62 | 0.10 | (1.46 | ) | (1.36 | ) | (0.12 | ) | – | (0.12 | ) | 10.14 | (11.79 | ) | 21,650 | 1.61 | (d) | 1.61 | (d) | 1.86 | (d) | 40 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.77 | 0.09 | 1.03 | 1.12 | (0.27 | ) | – | (0.27 | ) | 11.62 | 10.42 | 24,519 | 1.55 | 1.55 | 0.76 | 88 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.64 | 0.15 | (0.56 | ) | (0.41 | ) | (0.18 | ) | (0.28 | ) | (0.46 | ) | 10.77 | (3.14 | ) | 23,490 | 1.57 | 1.57 | 1.45 | 160 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 11.62 | 0.13 | (1.47 | ) | (1.34 | ) | (0.15 | ) | – | (0.15 | ) | 10.13 | (11.64 | ) | 55,180 | 1.11 | (d) | 1.11 | (d) | 2.36 | (d) | 40 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.77 | 0.15 | 1.03 | 1.18 | (0.33 | ) | – | (0.33 | ) | 11.62 | 10.98 | 67,783 | 1.05 | 1.05 | 1.26 | 88 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.65 | 0.20 | (0.57 | ) | (0.37 | ) | (0.23 | ) | (0.28 | ) | (0.51 | ) | 10.77 | (2.69 | ) | 113,549 | 1.07 | 1.07 | 1.95 | 160 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 11.58 | 0.14 | (1.47 | ) | (1.33 | ) | (0.15 | ) | – | (0.15 | ) | 10.10 | (11.54 | ) | 28,735 | 0.99 | (d) | 0.99 | (d) | 2.48 | (d) | 40 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.73 | 0.17 | 1.03 | 1.20 | (0.35 | ) | – | (0.35 | ) | 11.58 | 11.17 | 87,664 | 0.91 | 0.91 | 1.40 | 88 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.61 | 0.21 | (0.56 | ) | (0.35 | ) | (0.25 | ) | (0.28 | ) | (0.53 | ) | 10.73 | (2.57 | ) | 124,597 | 0.94 | 0.94 | 2.08 | 160 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 11.58 | 0.15 | (1.47 | ) | (1.32 | ) | (0.16 | ) | – | (0.16 | ) | 10.10 | (11.51 | ) | 35,774 | 0.92 | (d) | 0.92 | (d) | 2.55 | (d) | 40 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.73 | 0.18 | 1.03 | 1.21 | (0.36 | ) | – | (0.36 | ) | 11.58 | 11.26 | 165,636 | 0.83 | 0.83 | 1.48 | 88 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.61 | 0.22 | (0.56 | ) | (0.34 | ) | (0.26 | ) | (0.28 | ) | (0.54 | ) | 10.73 | (2.48 | ) | 167,055 | 0.85 | 0.85 | 2.17 | 160 | ||||||||||||||||||||||||||||||||||||
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 |
(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) | Annualized. |
(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.
11 | Invesco Global Real Estate Fund |
August 31, 2022
(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 eight 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 eighth anniversary after a purchase of Class C shares.
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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades 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 using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.
Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.
Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices 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, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.
Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.
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 may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available and unreliable are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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, significant governmental actions 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.
The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used.
12 | Invesco Global Real Estate Fund |
Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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 based on relative net assets of Class R5 and Class R6. 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. 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, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “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 |
13 | Invesco Global Real Estate Fund |
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.
The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon (“BNYM”) also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the six months ended August 31, 2022, the Fund paid the Adviser $572 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.
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.
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 exchange of the two currencies on settlement date, 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).
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 for hedging 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. | 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.
M. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2022, the effective advisory fee rate incurred by the Fund was 0.75%.
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
14 | Invesco Global Real Estate Fund |
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, 2023, 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, 2023. 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, 2024, 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, 2022, the Adviser waived advisory fees of $1,808.
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, 2022, 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, 2022, 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, 2022, 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, 2022, IDI advised the Fund that IDI retained $3,705 in front-end sales commissions from the sale of Class A shares and $7 and $0 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 Adviser’s 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, 2022. 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.
15 | Invesco Global Real Estate Fund |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| ||||||||||||||||
Investments in Securities | ||||||||||||||||
| ||||||||||||||||
Australia | $ | – | $ | 6,741,705 | $ | – | $ | 6,741,705 | ||||||||
| ||||||||||||||||
Belgium | – | 4,662,786 | – | 4,662,786 | ||||||||||||
| ||||||||||||||||
Canada | 5,557,036 | – | – | 5,557,036 | ||||||||||||
| ||||||||||||||||
France | – | 968,016 | – | 968,016 | ||||||||||||
| ||||||||||||||||
Germany | – | 5,396,767 | – | 5,396,767 | ||||||||||||
| ||||||||||||||||
Hong Kong | – | 11,723,626 | – | 11,723,626 | ||||||||||||
| ||||||||||||||||
Israel | – | 2,353,629 | – | 2,353,629 | ||||||||||||
| ||||||||||||||||
Japan | – | 27,507,460 | – | 27,507,460 | ||||||||||||
| ||||||||||||||||
Macau | – | 1,964,607 | – | 1,964,607 | ||||||||||||
| ||||||||||||||||
Malta | – | – | 43,784 | 43,784 | ||||||||||||
| ||||||||||||||||
Singapore | – | 6,864,387 | – | 6,864,387 | ||||||||||||
| ||||||||||||||||
Sweden | – | 3,096,682 | – | 3,096,682 | ||||||||||||
| ||||||||||||||||
United Kingdom | – | 7,486,704 | – | 7,486,704 | ||||||||||||
| ||||||||||||||||
United States | 152,520,478 | – | – | 152,520,478 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 633,093 | 7,178,890 | – | 7,811,983 | ||||||||||||
| ||||||||||||||||
Total Investments | $ | 158,710,607 | $ | 85,945,259 | $ | 43,784 | $ | 244,699,650 | ||||||||
|
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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $610.
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 carryforward 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 28, 2022.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended August 31, 2022 was $130,675,567 and $311,470,816, 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 | $ | 15,936,948 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (17,070,238 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (1,133,290 | ) | |
|
Cost of investments for tax purposes is $245,832,940.
16 | Invesco Global Real Estate Fund |
NOTE 9–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2022(a) | Year ended February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 451,096 | $ | 5,022,697 | 1,070,428 | $ | 12,747,642 | ||||||||||
| ||||||||||||||||
Class C | 37,719 | 419,351 | 94,122 | 1,128,552 | ||||||||||||
| ||||||||||||||||
Class R | 308,293 | 3,370,548 | 573,756 | 6,828,350 | ||||||||||||
| ||||||||||||||||
Class Y | 265,150 | 2,954,909 | 1,057,626 | 12,365,470 | ||||||||||||
| ||||||||||||||||
Class R5 | 619,233 | 6,804,964 | 1,892,974 | 22,276,270 | ||||||||||||
| ||||||||||||||||
Class R6 | 505,455 | 5,764,328 | 2,322,240 | 27,388,791 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 102,931 | 1,127,319 | 226,269 | 2,670,148 | ||||||||||||
| ||||||||||||||||
Class C | 3,303 | 36,415 | 7,866 | 93,000 | ||||||||||||
| ||||||||||||||||
Class R | 22,303 | 244,343 | 50,494 | 596,149 | ||||||||||||
| ||||||||||||||||
Class Y | 45,187 | 495,110 | 126,802 | 1,493,421 | ||||||||||||
| ||||||||||||||||
Class R5 | 99,800 | 1,086,814 | 269,883 | 3,153,094 | ||||||||||||
| ||||||||||||||||
Class R6 | 85,507 | 959,490 | 452,413 | 5,308,016 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 24,578 | 272,915 | 57,167 | 675,193 | ||||||||||||
| ||||||||||||||||
Class C | (24,542 | ) | (272,915 | ) | (57,084 | ) | (675,193 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (705,186 | ) | (7,830,204 | ) | (2,165,101 | ) | (25,579,654 | ) | ||||||||
| ||||||||||||||||
Class C | (53,738 | ) | (596,057 | ) | (119,811 | ) | (1,437,077 | ) | ||||||||
| ||||||||||||||||
Class R | (304,773 | ) | (3,431,483 | ) | (696,095 | ) | (8,272,030 | ) | ||||||||
| ||||||||||||||||
Class Y | (698,988 | ) | (7,710,484 | ) | (5,896,319 | ) | (68,356,408 | ) | ||||||||
| ||||||||||||||||
Class R5 | (5,445,190 | ) | (57,049,975 | ) | (6,204,845 | ) | (73,575,170 | ) | ||||||||
| ||||||||||||||||
Class R6 | (11,352,498 | ) | (134,647,013 | ) | (4,040,623 | ) | (47,636,890 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (16,014,360 | ) | $ | (182,978,928 | ) | (10,977,838 | ) | $ | (128,808,326 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 37% 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 |
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, 2022 through August 31, 2022.
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) | |||||||||||
Beginning Account Value (03/01/22) | Ending Account Value (08/31/22)1 | Expenses Paid During Period2 | Ending Account Value (08/31/22) | Expenses Paid During Period2 | Annualized Ratio | |||||||
Class A | $1,000.00 | $882.50 | $6.45 | $1,018.35 | $6.92 | 1.36% | ||||||
Class C | 1,000.00 | 879.20 | 9.99 | 1,014.57 | 10.71 | 2.11 | ||||||
Class R | 1,000.00 | 882.10 | 7.64 | 1,017.09 | 8.19 | 1.61 | ||||||
Class Y | 1,000.00 | 883.60 | 5.27 | 1,019.61 | 5.65 | 1.11 | ||||||
Class R5 | 1,000.00 | 884.60 | 4.70 | 1,020.21 | 5.04 | 0.99 | ||||||
Class R6 | 1,000.00 | 884.00 | 4.37 | 1,020.57 | 4.69 | 0.92 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2022 through August 31, 2022, 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. |
18 | Invesco Global Real Estate Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed 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 and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled
Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe and against the Custom Invesco Global Real Estate Index (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 year period and the fifth 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 noted that stock selection in the developed American countries and overweight exposure to certain holdings in developed Asian countries 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
19 | Invesco Global Real Estate Fund |
performance as well as other performance metrics, which did not change its 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 is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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 also considered the fees charged by Invesco Advisers and its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates 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. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.
The Board also compared the Fund’s effective advisory fee rate (defined for this purpose as 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, 2021.
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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board 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 also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination 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 from Invesco Advisers periodic reports that include a representation to the effect 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. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.
The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.
The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
20 | 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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/ corporate/about-us/esg. 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 number(s): 811-05686 and 033-39519 | Invesco Distributors, Inc. | GRE-SAR-1 |
2 | Fund Information | |
3 | Schedule of Investments | |
6 | Financial Statements | |
9 | Financial Highlights | |
11 | Notes to Financial Statements | |
15 | Fund Expenses | |
16 | Approval of Investment Advisory and Sub-Advisory Contracts |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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 |
August 31, 2022
(Unaudited)
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||
U.S. Treasury Securities-31.34% | ||||||||||||||
U.S. Treasury Bills-17.72%(a) | ||||||||||||||
U.S. Treasury Bills | 0.82% | 09/15/2022 | $ | 5,000 | $ | 4,998,404 | ||||||||
U.S. Treasury Bills | 0.09%-0.10% | 10/06/2022 | 50,000 | 49,995,557 | ||||||||||
U.S. Treasury Bills | 2.20% | 11/01/2022 | 100,000 | 99,629,764 | ||||||||||
U.S. Treasury Bills | 2.51% | 11/03/2022 | 30,000 | 29,869,275 | ||||||||||
U.S. Treasury Bills | 2.25% | 11/08/2022 | 50,000 | 49,789,389 | ||||||||||
U.S. Treasury Bills | 2.60% | 11/10/2022 | 30,000 | 29,849,500 | ||||||||||
U.S. Treasury Bills | 2.62% | 11/15/2022 | 75,000 | 74,593,750 | ||||||||||
U.S. Treasury Bills | 2.63% | 11/17/2022 | 30,000 | 29,832,525 | ||||||||||
U.S. Treasury Bills | 2.59% | 11/22/2022 | 50,000 | 49,707,306 | ||||||||||
U.S. Treasury Bills | 2.76% | 11/25/2022 | 10,000 | 9,935,271 | ||||||||||
U.S. Treasury Bills | 2.71% | 11/29/2022 | 35,000 | 34,767,240 | ||||||||||
U.S. Treasury Bills | 2.76% | 12/06/2022 | 35,000 | 34,745,200 | ||||||||||
U.S. Treasury Bills | 2.81% | 12/13/2022 | 35,000 | 34,721,614 | ||||||||||
U.S. Treasury Bills | 2.92% | 12/20/2022 | 25,000 | 24,779,236 | ||||||||||
U.S. Treasury Bills | 2.96% | 01/26/2023 | 30,000 | 29,642,300 | ||||||||||
U.S. Treasury Bills | 1.18% | 02/23/2023 | 5,000 | 4,971,562 | ||||||||||
591,827,893 | ||||||||||||||
U.S. Treasury Floating Rate Notes-13.02% | ||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.06%)(b) | 2.96% | 10/31/2022 | 45,000 | 44,999,805 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.05%)(b) | 2.95% | 01/31/2023 | 20,000 | 20,000,051 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.03%)(b) | 2.94% | 04/30/2023 | 40,000 | 40,001,137 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.04%)(b) | 2.94% | 10/31/2023 | 40,000 | 39,999,882 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate -0.08%)(b) | 2.83% | 04/30/2024 | 191,000 | 190,807,728 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.04%)(b) | 2.94% | 07/31/2024 | 99,000 | 98,983,736 | ||||||||||
434,792,339 | ||||||||||||||
U.S. Treasury Notes-0.60% | ||||||||||||||
U.S. Treasury Notes (Cost $20,010,743) | 1.50% | 09/15/2022 | 20,000 | 20,010,743 | ||||||||||
Total U.S. Treasury Securities (Cost $1,046,630,975) | 1,046,630,975 | |||||||||||||
U.S. Government Sponsored Agency Securities-8.63% | ||||||||||||||
Federal Farm Credit Bank (FFCB)-6.95% | ||||||||||||||
Federal Farm Credit Bank (SOFR + 0.08%)(b) | 2.37% | 10/14/2022 | 16,000 | 16,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.01%)(b) | 2.30% | 11/16/2022 | 10,000 | 9,999,958 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.07%)(b) | 2.36% | 11/18/2022 | 8,000 | 8,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.06%)(b) | 2.35% | 01/20/2023 | 16,000 | 16,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.02%)(b) | 2.31% | 06/12/2023 | 5,000 | 5,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.02%)(b) | 2.31% | 06/23/2023 | 2,500 | 2,499,913 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.03%)(b) | 2.32% | 07/07/2023 | 8,000 | 8,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.03%)(b) | 2.32% | 09/08/2023 | 5,000 | 5,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.03%)(b) | 2.32% | 09/18/2023 | 10,000 | 10,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.32% | 09/20/2023 | 28,000 | 28,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.03%)(b) | 2.32% | 09/27/2023 | 5,000 | 5,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.06%)(b) | 2.35% | 11/07/2023 | 4,000 | 4,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.06%)(b) | 2.35% | 12/13/2023 | 7,000 | 7,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.32% | 01/04/2024 | 5,500 | 5,500,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.32% | 01/25/2024 | 15,000 | 15,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.33% | 02/05/2024 | 10,000 | 10,000,000 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3 | Invesco Government Money Market Fund |
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||
Federal Farm Credit Bank (FFCB)-(continued) | ||||||||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34 | % | 02/20/2024 | $ | 8,000 | $ | 8,000,000 | |||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34 | % | 02/23/2024 | 8,000 | 8,000,000 | |||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.33 | % | 03/18/2024 | 40,000 | 40,000,000 | |||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.33 | % | 04/04/2024 | 5,000 | 5,000,000 | |||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34 | % | 04/25/2024 | 10,000 | 10,000,000 | |||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34 | % | 05/09/2024 | 5,000 | 5,000,000 | |||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34 | % | 05/24/2024 | 1,000 | 1,000,000 | |||||||||||
231,999,871 | ||||||||||||||||
Federal Home Loan Bank (FHLB)-0.90% | ||||||||||||||||
Federal Home Loan Bank (SOFR + 0.09%)(b) | 2.38 | % | 09/08/2022 | 10,000 | 10,000,000 | |||||||||||
Federal Home Loan Bank (SOFR + 0.09%)(b) | 2.38 | % | 10/05/2022 | 20,000 | 20,000,000 | |||||||||||
30,000,000 | ||||||||||||||||
Federal Home Loan Mortgage Corp. (FHLMC)-0.45% | ||||||||||||||||
Federal Home Loan Mortgage Corp. (SOFR + 0.09%)(b) | 2.38 | % | 09/16/2022 | 15,000 | 15,000,000 | |||||||||||
Federal National Mortgage Association (FNMA)-0.06% | ||||||||||||||||
Federal National Mortgage Association | 1.38 | % | 09/06/2022 | 2,173 | 2,173,179 | |||||||||||
U.S. International Development Finance Corp. (DFC)-0.27% | ||||||||||||||||
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | 2.46 | % | 06/15/2025 | 3,000 | 3,000,000 | |||||||||||
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | 2.46 | % | 02/15/2028 | 6,111 | 6,111,111 | |||||||||||
9,111,111 | ||||||||||||||||
Total U.S. Government Sponsored Agency Securities | 288,284,161 | |||||||||||||||
TOTAL INVESTMENTS IN SECURITIES (excluding Repurchase |
| 1,334,915,136 | ||||||||||||||
Repurchase Amount | ||||||||||||||||
Repurchase Agreements-59.90%(d) | ||||||||||||||||
BMO Capital Markets Corp., joint term agreement dated 08/29/2022, aggregate maturing value of $250,383,333 (collateralized by agency mortgage-backed securities, U.S. government sponsored agency obligations and U.S. Treasury obligations valued at $255,000,094; 0.25% - 4.61%; 07/31/2023 - 07/20/2068)(e) | 2.30 | % | 09/22/2022 | 125,191,667 | 125,000,000 | |||||||||||
BofA Securities, Inc., joint agreement dated 08/31/2022, aggregate maturing value of $945,060,375 (collateralized by agency mortgage-backed securities valued at $963,900,001; 0.28% - 8.18%; 07/25/2024 - 04/20/2072) | 2.30 | % | 09/01/2022 | 160,010,222 | 160,000,000 | |||||||||||
Citigroup Global Markets, Inc., joint term agreement dated 08/31/2022, aggregate maturing value of $800,359,333 (collateralized by U.S. Treasury obligations valued at $816,000,076; 0.13% - 6.25%; 07/31/2023 - 08/15/2052)(e) | 2.31 | % | 09/07/2022 | 100,044,917 | 100,000,000 | |||||||||||
Federal Reserve Bank of New York, joint agreement dated 08/31/2022, aggregate maturing value of $54,303,469,167 (collateralized by U.S. Treasury obligations valued at $54,303,469,345; 0.13% - 2.38%; 09/15/2023 - 02/15/2031) | 2.30 | % | 09/01/2022 | 200,012,778 | 200,000,000 | |||||||||||
ING Financial Markets, LLC, joint term agreement dated 07/28/2022, aggregate maturing value of $501,796,667 (collateralized by agency mortgage-backed securities valued at $510,000,000; 1.50% - 8.00%; 08/01/2028 - 09/01/2057) | 2.31 | % | 09/22/2022 | 35,125,767 | 35,000,000 | |||||||||||
J.P. Morgan Securities LLC, joint agreement dated 08/31/2022, aggregate maturing value of $1,500,095,833 (collateralized by agency mortgage-backed securities valued at $1,530,000,030; 2.50% - 5.00%; 06/01/2050 - 09/01/2052) | 2.30 | % | 09/01/2022 | 160,010,222 | 160,000,000 | |||||||||||
J.P. Morgan Securities LLC, joint open agreement dated 04/27/2022 (collateralized by agency mortgage-backed securities valued at $918,000,002; 1.00% - 7.50%; 09/20/2027 - 02/16/2063)(f) | 2.32 | % | 09/01/2022 | 40,079,900 | 40,000,000 | |||||||||||
Metropolitan Life Insurance Co., joint term agreement dated 08/31/2022, aggregate maturing value of $350,169,913 (collateralized by U.S. Treasury obligations valued at $355,812,473; 0.00%; 08/15/2027 - 11/15/2045)(e) | 2.32 | % | 09/07/2022 | 25,012,628 | 25,001,350 | |||||||||||
Mitsubishi UFJ Trust & Banking Corp., joint agreement dated 08/31/2022, aggregate maturing value of $500,031,944 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $510,000,071; 0.00% - 5.50%; 08/25/2027 - 06/16/2061) | 2.30 | % | 09/01/2022 | 300,019,167 | 300,000,000 |
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 | Repurchase Amount | Value | |||||||||||||
Mitsubishi UFJ Trust & Banking Corp., joint term agreement dated 08/31/2022, aggregate maturing value of $1,736,157,847 (collateralized by U.S. Treasury obligations valued at $1,772,542,842; 0.50% - 1.38%; 02/28/2025 -11/15/2040)(e) | 2.32 | % | 09/07/2022 | $ | 62,240,565 | $ | 62,212,500 | |||||||||
RBC Dominion Securities Inc., joint agreement dated 08/31/2022, aggregate maturing value of $1,500,095,833 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,530,000,000; 0.25% - 5.50%; 09/30/2022 - 06/25/2059) | 2.30 | % | 09/01/2022 | 300,019,167 | 300,000,000 | |||||||||||
Societe Generale, joint open agreement dated 08/26/2022 (collateralized by U.S. Treasury obligations valued at $1,020,000,494; 0.00% - 3.25%; 09/01/2022 - 05/15/2032)(f) | 2.30 | % | 09/01/2022 | 100,006,389 | 100,000,000 | |||||||||||
Standard Chartered Bank, joint term agreement dated 08/25/2022, aggregate maturing value of $1,000,447,222 (collateralized by U.S. Treasury obligations valued at $1,020,456,176; 0.13% - 3.63%; 09/30/2022 - 05/15/2052)(e) | 2.30 | % | 09/01/2022 | 150,067,083 | 150,000,000 | |||||||||||
Sumitomo Mitsui Banking Corp., joint agreement dated 08/31/2022, aggregate maturing value of $1,800,115,500 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,836,000,000; 1.13% - 4.50%; 02/28/2025 - 10/20/2051) | 2.31 | % | 09/01/2022 | 243,063,079 | 243,047,483 | |||||||||||
| ||||||||||||||||
Total Repurchase Agreements (Cost $2,000,261,333) | 2,000,261,333 | |||||||||||||||
| ||||||||||||||||
TOTAL INVESTMENTS IN SECURITIES(g)-99.87% (Cost $3,335,176,469) | 3,335,176,469 | |||||||||||||||
| ||||||||||||||||
OTHER ASSETS LESS LIABILITIES-0.13% | 4,211,172 | |||||||||||||||
| ||||||||||||||||
NET ASSETS-100.00% | $ | 3,339,387,641 | ||||||||||||||
|
Investment Abbreviations:
SOFR -Secured Overnight Financing Rate
VRD -Variable Rate Demand
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, 2022. |
(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, 2022. |
(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 rate, principal amount and collateral are redetermined periodically. The Maturity Date represents the next reset date, and the Repurchase Amount is calculated based on the next reset date. |
(g) | Also represents cost for federal income tax purposes. |
Portfolio Composition by Maturity*
In days, as of 08/31/2022
1-7 | 59.2 | % | ||
8-30 | 2.6 | |||
31-60 | 2.6 | |||
61-90 | 14.1 | |||
91-180 | 4.9 | |||
181+ | 16.6 |
* | 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.
5 | Invesco Government Money Market Fund |
Statement of Assets and Liabilities
August 31, 2022
(Unaudited)
Assets: | ||||
Investments in unaffiliated securities, excluding repurchase agreements, at value and cost | $ | 1,334,915,136 | ||
Repurchase agreements, at value and cost | 2,000,261,333 | |||
Cash | 999 | |||
Receivable for: | ||||
Fund shares sold | 11,747,119 | |||
Interest | 2,384,301 | |||
Investment for trustee deferred compensation and retirement plans | 304,681 | |||
Other assets | 3,912 | |||
| ||||
Total assets | 3,349,617,481 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 7,727,069 | |||
Dividends | 74,321 | |||
Accrued fees to affiliates | 1,995,651 | |||
Accrued trustees’ and officers’ fees and benefits | 6,232 | |||
Accrued operating expenses | 88,633 | |||
Trustee deferred compensation and retirement plans | 337,934 | |||
| ||||
Total liabilities | 10,229,840 | |||
| ||||
Net assets applicable to shares outstanding | $ | 3,339,387,641 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 3,340,593,914 | ||
| ||||
Distributable earnings | (1,206,273 | ) | ||
| ||||
$ | 3,339,387,641 | |||
|
Net Assets: | ||||
Invesco Cash Reserve | $ | 2,412,763,024 | ||
| ||||
Class A | $ | 356,051,975 | ||
| ||||
Class AX | $ | 66,851,077 | ||
| ||||
Class C | $ | 132,911,123 | ||
| ||||
Class CX | $ | 243,858 | ||
| ||||
Class R | $ | 165,384,556 | ||
| ||||
Class Y | $ | 81,266,904 | ||
| ||||
Investor Class | $ | 123,539,445 | ||
| ||||
Class R6 | $ | 375,679 | ||
| ||||
Shares outstanding, no par value, | ||||
Invesco Cash Reserve | 2,413,582,533 | |||
| ||||
Class A | 356,171,435 | |||
| ||||
Class AX | 66,874,054 | |||
| ||||
Class C | 132,956,697 | |||
| ||||
Class CX | 243,941 | |||
| ||||
Class R | 165,439,595 | |||
| ||||
Class Y | 81,292,551 | |||
| ||||
Investor Class | 123,580,451 | |||
| ||||
Class R6 | 375,785 | |||
| ||||
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.
6 | Invesco Government Money Market Fund |
Statement of Operations
For the six months ended August 31, 2022
(Unaudited)
Investment income: | ||||
Interest | $ | 17,851,505 | ||
| ||||
Expenses: | ||||
Advisory fees | 2,513,148 | |||
Administrative services fees | 749,390 | |||
Custodian fees | 3,130 | |||
Distribution fees: | ||||
Invesco Cash Reserve | 1,822,529 | |||
Class A | 355,217 | |||
Class AX | 51,382 | |||
Class C | 500,115 | |||
Class CX | 1,108 | |||
Class R | 329,835 | |||
Transfer agent fees - Invesco Cash Reserve, A, AX, C, CX, R, Y and Investor | 1,522,808 | |||
Trustees’ and officers’ fees and benefits | 21,525 | |||
Registration and filing fees | 121,675 | |||
Reports to shareholders | 27,696 | |||
Professional services fees | 35,715 | |||
Other | 7,649 | |||
| ||||
Total expenses | 8,062,922 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (748,575 | ) | ||
| ||||
Net expenses | 7,314,347 | |||
| ||||
Net investment income | 10,537,158 | |||
| ||||
Net realized gain (loss) from unaffiliated investment securities | (978,609 | ) | ||
| ||||
Net increase in net assets resulting from operations | $ | 9,558,549 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Government Money Market Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, | February 28, | |||||||
2022 | 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 10,537,158 | $ | 183,636 | ||||
| ||||||||
Net realized gain (loss) | (978,609 | ) | 13,825 | |||||
| ||||||||
Net increase in net assets resulting from operations | 9,558,549 | 197,461 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Invesco Cash Reserve | (7,808,821 | ) | (134,956 | ) | ||||
Class A | (1,096,376 | ) | (19,204 | ) | ||||
Class AX | (219,044 | ) | (3,633 | ) | ||||
Class C | (225,109 | ) | (6,863 | ) | ||||
Class CX | (331 | ) | (16 | ) | ||||
Class R | (404,410 | ) | (9,586 | ) | ||||
Class Y | (303,786 | ) | (3,841 | ) | ||||
Investor Class | (477,938 | ) | (5,530 | ) | ||||
Class R6 | (1,343 | ) | (7 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (10,537,158 | ) | (183,636 | ) | ||||
| ||||||||
Share transactions-net: | ||||||||
Invesco Cash Reserve | 22,623,189 | (308,616,596 | ) | |||||
Class A | 15,218,740 | (60,295,189 | ) | |||||
Class AX | (3,164,561 | ) | (3,966,263 | ) | ||||
Class C | 10,894,398 | (22,275,650 | ) | |||||
Class CX | 295 | (125,638 | ) | |||||
Class R | 5,519,850 | (23,146,020 | ) | |||||
Class Y | 13,290,033 | 12,187,061 | ||||||
Investor Class | 3,083,964 | 5,825,443 | ||||||
Class R6 | 249,604 | (1,296 | ) | |||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | 67,715,512 | (400,414,148 | ) | |||||
| ||||||||
Net increase (decrease) in net assets | 66,736,903 | (400,400,323 | ) | |||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 3,272,650,738 | 3,673,051,061 | ||||||
| ||||||||
End of period | $ | 3,339,387,641 | $ | 3,272,650,738 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Government Money Market 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 (realized) | Total from investment operations | Dividends from net investment income | 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 | ||||||||||||||||||||||||||||||||||
Invesco Cash Reserve | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | $ | 1.00 | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | 1.00 | 0.33 | % | $ | 2,412,763 | 0.42 | %(c) | 0.45 | %(c) | 0.65 | %(c) | ||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | )(d) | 0.00 | (0.00 | ) | 1.00 | 0.01 | 2,390,850 | 0.07 | 0.51 | 0.01 | |||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.06 | 2,699,457 | 0.23 | 0.50 | 0.05 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.31 | 356,052 | 0.46 | (c) | 0.50 | (c) | 0.61 | (c) | ||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | )(d) | 0.00 | (0.00 | ) | 1.00 | 0.01 | 340,937 | 0.07 | 0.56 | 0.01 | |||||||||||||||||||||||||||||||
Period ended 02/28/21(e) | 1.00 | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | 1.00 | 0.01 | 401,229 | 0.20 | (c) | 0.54 | (c) | 0.08 | (c) | |||||||||||||||||||||||||||
Class AX | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.33 | 66,851 | 0.42 | (c) | 0.45 | (c) | 0.65 | (c) | ||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | )(d) | 0.00 | (0.00 | ) | 1.00 | 0.01 | 70,035 | 0.07 | 0.51 | 0.01 | |||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.06 | 74,001 | 0.23 | 0.50 | 0.05 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.17 | 132,911 | 0.75 | (c) | 1.05 | (c) | 0.32 | (c) | ||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | )(d) | 0.00 | (0.00 | ) | 1.00 | 0.01 | 122,057 | 0.07 | 1.11 | 0.01 | |||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.02 | 144,331 | 0.23 | 1.11 | 0.05 | |||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
Class CX | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.14 | 244 | 0.80 | (c) | 1.20 | (c) | 0.27 | (c) | ||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | )(d) | 0.00 | (0.00 | ) | 1.00 | 0.01 | 244 | 0.07 | 1.26 | 0.01 | |||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.02 | 369 | 0.29 | 1.25 | (0.01 | ) | ||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.25 | 165,385 | 0.58 | (c) | 0.70 | (c) | 0.49 | (c) | ||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | )(d) | 0.00 | (0.00 | ) | 1.00 | 0.01 | 159,912 | 0.07 | 0.76 | 0.01 | |||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.04 | 183,057 | 0.22 | 0.74 | 0.06 | ||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.39 | 81,267 | 0.29 | (c) | 0.30 | (c) | 0.78 | (c) | ||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | )(d) | 0.00 | (0.00 | ) | 1.00 | 0.01 | 67,999 | 0.07 | 0.36 | 0.01 | |||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.08 | 55,813 | 0.21 | 0.35 | 0.07 | ||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.39 | 123,539 | 0.29 | (c) | 0.30 | (c) | 0.78 | (c) | ||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | )(d) | 0.00 | (0.00 | ) | 1.00 | 0.01 | 120,491 | 0.07 | 0.36 | 0.01 | |||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | 1.00 | 0.08 | 114,665 | 0.21 | 0.35 | 0.07 | |||||||||||||||||||||||||||||||
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 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Government Money Market Fund |
Net asset value, beginning of period | Net investment income(a) | Net gains (losses) on securities (realized) | Total from investment operations | Dividends from net investment income | 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 | ||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | $ | 1.00 | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | 1.00 | 0.42 | % | $ | 376 | 0.19 | %(c) | 0.20 | %(c) | 0.88 | %(c) | ||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | )(d) | 0.00 | (0.00 | ) | 1.00 | 0.01 | 126 | 0.07 | 0.27 | 0.01 | |||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | 1.00 | 0.10 | 127 | 0.18 | 0.31 | 0.10 | ||||||||||||||||||||||||||||||||
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(f) | 1.00 | 0.01 | (0.00 | ) | 0.01 | (0.01 | ) | 1.00 | 0.69 | 10 | 0.37 | (c) | 0.37 | (c) | 0.70 | (c) |
(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) | Annualized. |
(d) | Net gains (losses) on securities (both realized and unrealized) per share may not correlate with the Fund’s net realized and unrealized gain (loss) due to timing of shareholder transactions in relation to the fluctuating market values of the Fund’s investments. |
(e) | Commencement date of May 15, 2020. |
(f) | Commencement date of April 04, 2017. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Government Money Market Fund |
August 31, 2022
(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 eight 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 eighth anniversary after a purchase of Class C shares.
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. |
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 (“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 |
11 | Invesco Government Money Market Fund |
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. 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of the Fund that holds securities of that entity will be adversely impacted. |
K. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
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, June 30, 2023, 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 1.40%, 1.45%, 1.40%, 2.00%, 2.15%, 1.65%, 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 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 June 30, 2023. 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 agreed to waive fees and/or reimburse 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, 2022, Invesco voluntarily reimbursed class level expenses of $344,420, $77,488, $10,057, $201,059, $493, $97,770, $3,327, $5,773, and $1 for 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 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, 2022, 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, 2022, 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. 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
12 | Invesco Government Money Market Fund |
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. Expenses before fee waivers under this agreement are shown as Distribution fees in the Statement of Operations. For the the six months ended August 31, 2022, expenses incurred after voluntary yield waivers and reimbursements were $1,592,640, $294,472, $44,664, $304,964, $627 and $239,833 for Invesco Cash Reserve, Class A, Class AX, Class C, Class CX, 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, 2022, IDI advised the Fund that IDI retained $3,967, $2,178, $12,311 and $0 from Invesco Cash Reserve, Class A, Class C and Class CX shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 - | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of August 31, 2022, 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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $8,187.
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 28, 2022.
13 | Invesco Government Money Market Fund |
NOTE 8–Share Information
Summary of Share Activity | ||||||||||||||||||||
Six months ended August 31, 2022(a) | Year ended February 28, 2022 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Sold: | ||||||||||||||||||||
Invesco Cash Reserve | 1,211,132,680 | $ | 1,211,132,680 | 1,782,722,725 | $ | 1,782,722,725 | ||||||||||||||
Class A | 90,521,877 | 90,521,877 | 100,774,227 | 100,774,227 | ||||||||||||||||
Class AX | 3,505,923 | 3,505,923 | 11,478,496 | 11,478,496 | ||||||||||||||||
Class C | 61,332,331 | 61,332,331 | 74,697,650 | 74,697,650 | ||||||||||||||||
Class CX | 8,428 | 8,428 | 19,228 | 19,228 | ||||||||||||||||
Class R | 42,558,576 | 42,558,576 | 77,680,745 | 77,680,745 | ||||||||||||||||
Class Y | 40,126,659 | 40,126,659 | 53,892,255 | 53,892,255 | ||||||||||||||||
Investor Class | 20,583,321 | 20,583,321 | 42,473,954 | 42,473,954 | ||||||||||||||||
Class R6 | 284,411 | 284,411 | 63,781 | 63,781 | ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||||||
Invesco Cash Reserve | 7,309,534 | 7,309,534 | 134,956 | 134,956 | ||||||||||||||||
Class A | 1,022,823 | 1,022,823 | 18,714 | 18,714 | ||||||||||||||||
Class AX | 213,048 | 213,048 | 3,468 | 3,468 | ||||||||||||||||
Class C | 219,650 | 219,650 | 6,863 | 6,863 | ||||||||||||||||
Class CX | 328 | 328 | 10 | 10 | ||||||||||||||||
Class R | 400,744 | 400,744 | 9,586 | 9,586 | ||||||||||||||||
Class Y | 293,467 | 293,467 | 3,841 | 3,841 | ||||||||||||||||
Investor Class | 475,619 | 475,619 | 5,530 | 5,530 | ||||||||||||||||
Class R6 | 1,257 | 1,257 | 5 | 5 | ||||||||||||||||
Automatic Conversion of Class C and CX shares to Invesco Cash Reserve shares: | ||||||||||||||||||||
Invesco Cash Reserve | 5,084,172 | 5,084,172 | 11,821,653 | 11,821,653 | ||||||||||||||||
Class C | (5,076,845 | ) | (5,076,845 | ) | (11,793,413 | ) | (11,793,413 | ) | ||||||||||||
Class CX | (7,327 | ) | (7,327 | ) | (28,240 | ) | (28,240 | ) | ||||||||||||
Issued in connection with acquisitions: | ||||||||||||||||||||
Reacquired: | ||||||||||||||||||||
Invesco Cash Reserve | (1,200,903,197 | ) | (1,200,903,197 | ) | (2,103,295,930 | ) | (2,103,295,930 | ) | ||||||||||||
Class A | (76,325,960 | ) | (76,325,960 | ) | (161,088,130 | ) | (161,088,130 | ) | ||||||||||||
Class AX | (6,883,532 | ) | (6,883,532 | ) | (15,448,227 | ) | (15,448,227 | ) | ||||||||||||
Class C | (45,580,738 | ) | (45,580,738 | ) | (85,186,750 | ) | (85,186,750 | ) | ||||||||||||
Class CX | (1,134 | ) | (1,134 | ) | (116,636 | ) | (116,636 | ) | ||||||||||||
Class R | (37,439,470 | ) | (37,439,470 | ) | (100,836,351 | ) | (100,836,351 | ) | ||||||||||||
Class Y | (27,130,093 | ) | (27,130,093 | ) | (41,709,035 | ) | (41,709,035 | ) | ||||||||||||
Investor Class | (17,974,976 | ) | (17,974,976 | ) | (36,654,041 | ) | (36,654,041 | ) | ||||||||||||
Class R6 | (36,064 | ) | (36,064 | ) | (65,082 | ) | (65,082 | ) | ||||||||||||
Net increase in share activity | 67,715,512 | $ | 67,715,512 | (400,414,148 | ) | $ | (400,414,148 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 40% 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. |
14 | 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, 2022 through August 31, 2022.
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.
Class | Beginning Account Value (03/01/22) | ACTUAL | HYPOTHETICAL (5% annual return before expenses) | Annualized Expense Ratio | ||||||||
Ending Account Value (08/31/22)1 | Expenses Paid During Period | Ending Account Value (08/31/22) | Expenses Paid During Period | |||||||||
Invesco Cash Reserve | $1,000.00 | $1,003.30 | $2.12 | $1,023.09 | $2.14 | 0.42% | ||||||
A | 1,000.00 | 1,003.10 | 2.32 | 1,022.89 | 2.35 | 0.46 | ||||||
AX | 1,000.00 | 1,003.30 | 2.12 | 1,023.09 | 2.14 | 0.42 | ||||||
C | 1,000.00 | 1,001.70 | 3.78 | 1,021.42 | 3.82 | 0.75 | ||||||
CX | 1,000.00 | 1,001.40 | 4.04 | 1,021.17 | 4.08 | 0.80 | ||||||
R | 1,000.00 | 1,002.50 | 2.93 | 1,022.28 | 2.96 | 0.58 | ||||||
Y | 1,000.00 | 1,003.90 | 1.46 | 1,023.74 | 1.48 | 0.29 | ||||||
Investor | 1,000.00 | 1,003.90 | 1.46 | 1,023.74 | 1.48 | 0.29 | ||||||
R6 | 1,000.00 | 1,004.20 | 0.96 | 1,024.25 | 0.97 | 0.19 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2022 through August 31, 2022, 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. |
15 | Invesco Government Money Market Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance with certain negotiated regulatory requirements. In
addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed 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 and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco
Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe and against the T-Bill 3 Month Index (Index). The Board noted that performance of Class Y 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 Y shares of the Fund was below 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, which did not change its 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 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
16 | Invesco Government Money Market Fund |
and certain non-portfolio management administrative services fees, but that Broadridge is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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 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 further noted that Invesco Advisers has voluntarily undertaken to waive fees to the extent necessary to assist the Fund in attempting to maintain a positive yield.
The Board also compared the Fund’s effective advisory fee rate (defined for this purpose as 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, 2021.
The Board also considered the fees charged by Invesco Advisers and its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates 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. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.
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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board noted that the Fund does not benefit from economies of scale through contractual breakpoints, but does share in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.
17 | Invesco Government Money Market 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
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∎ 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 portfolio 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, respectively, 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/ corporate/about-us/esg. 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 number(s): 811-05686 and 033-39519 | Invesco Distributors, Inc. | GMKT-SAR-1 |
Semiannual Report to Shareholders | August 31, 2022 |
Invesco High Yield Fund
Nasdaq:
A: AMHYX ∎ C: AHYCX ∎ Y: AHHYX ∎ Investor: HYINX ∎ R5: AHIYX ∎ R6: HYIFX
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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
|
| |||
Fund vs. Indexes |
| |||
Cumulative total returns, 2/28/22 to 8/31/22, 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 | -6.97 | % | ||
Class C Shares | -7.35 | |||
Class Y Shares | -6.82 | |||
Investor Class Shares | -6.97 | |||
Class R5 Shares | -6.84 | |||
Class R6 Shares | -6.79 | |||
Bloomberg U.S. Aggregate Bond Index▼ (Broad Market Index) | -7.76 | |||
Bloomberg U.S. Corporate High Yield 2% Issuer Cap Index▼ (Style-Specific Index) | -7.78 | |||
Lipper High Current Yield Bond Funds Index◾ (Peer Group Index) | -7.05 | |||
Source(s): ▼RIMES Technologies Corp.; ◾Lipper Inc. | ||||
The Bloomberg U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market. The Bloomberg 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 Lipper High Current Yield Bond Funds Index is an unmanaged index considered representative of high-yield 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.
2 | Invesco High Yield Fund |
Average Annual Total Returns |
| |||
As of 8/31/22, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (7/11/78) | 6.81 | % | ||
10 Years | 2.84 | |||
5 Years | 0.47 | |||
1 Year | -13.31 | |||
Class C Shares | ||||
Inception (8/4/97) | 3.10 | % | ||
10 Years | 2.66 | |||
5 Years | 0.59 | |||
1 Year | -11.00 | |||
Class Y Shares | ||||
Inception (10/3/08) | 6.40 | % | ||
10 Years | 3.55 | |||
5 Years | 1.63 | |||
1 Year | -9.14 | |||
Investor Class Shares | ||||
Inception (9/30/03) | 5.64 | % | ||
10 Years | 3.30 | |||
5 Years | 1.37 | |||
1 Year | -9.19 | |||
Class R5 Shares | ||||
Inception (4/30/04) | 5.65 | % | ||
10 Years | 3.62 | |||
5 Years | 1.71 | |||
1 Year | -8.93 | |||
Class R6 Shares | ||||
10 Years | 3.72 | % | ||
5 Years | 1.82 | |||
1 Year | -8.84 |
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.
3 | Invesco High Yield Fund |
Liquidity Risk Management Program
In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), 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 21-23, 2022, 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 January 1, 2021, through December 31, 2021 (the “Program Reporting Period”). The Report discussed notable events affecting liquidity over the Program Reporting Period, including the impact of the coronavirus pandemic on the Fund and the overall market. The Report noted that there were no material changes to the Program during 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. |
4 | Invesco High Yield Fund |
August 31, 2022
(Unaudited)
Principal Amount | Value | |||||||
| ||||||||
U.S. Dollar Denominated Bonds & Notes–90.46% |
| |||||||
Advertising–1.01% |
| |||||||
Clear Channel Outdoor Holdings, Inc., 5.13%, 08/15/2027(b) | $ | 2,153,000 | $ | 1,931,004 | ||||
| ||||||||
Lamar Media Corp., | ||||||||
4.00%, 02/15/2030 | 300,000 | 261,653 | ||||||
| ||||||||
3.63%, 01/15/2031 | 6,875,000 | 5,770,737 | ||||||
| ||||||||
7,963,394 | ||||||||
| ||||||||
Aerospace & Defense–0.51% |
| |||||||
TransDigm UK Holdings PLC, 6.88%, 05/15/2026 | 4,177,000 | 4,039,026 | ||||||
| ||||||||
Airlines–0.75% |
| |||||||
American Airlines, Inc./AAdvantage Loyalty IP Ltd., 5.50%, 04/20/2026(b) | 6,199,000 | 5,905,539 | ||||||
| ||||||||
Alternative Carriers–0.41% |
| |||||||
Lumen Technologies, Inc., Series P, 7.60%, 09/15/2039 | 4,050,000 | 3,191,967 | ||||||
| ||||||||
Aluminum–0.48% |
| |||||||
Novelis Corp., 4.75%, 01/30/2030(b) | 4,282,000 | 3,730,478 | ||||||
| ||||||||
Apparel Retail–0.95% |
| |||||||
Gap, Inc. (The), 3.63%, 10/01/2029(b) | 10,688,000 | 7,459,957 | ||||||
| ||||||||
Apparel, Accessories & Luxury Goods–1.26% |
| |||||||
Kontoor Brands, Inc., 4.13%, 11/15/2029(b) | 4,764,000 | 4,083,046 | ||||||
| ||||||||
Macy’s Retail Holdings LLC, | ||||||||
5.88%, 03/15/2030(b) | 2,074,000 | 1,776,091 | ||||||
| ||||||||
4.50%, 12/15/2034 | 5,735,000 | 4,022,299 | ||||||
| ||||||||
9,881,436 | ||||||||
| ||||||||
Application Software–0.89% |
| |||||||
SS&C Technologies, Inc., 5.50%, 09/30/2027(b) | 7,328,000 | 6,952,623 | ||||||
| ||||||||
Auto Parts & Equipment–1.32% |
| |||||||
Clarios Global L.P., 6.75%, 05/15/2025(b) | 1,032,000 | 1,027,929 | ||||||
| ||||||||
Clarios Global L.P./Clarios US Finance Co., 8.50%, 05/15/2027(b) | 5,596,000 | 5,505,345 | ||||||
| ||||||||
NESCO Holdings II, Inc., 5.50%, 04/15/2029(b) | 4,346,000 | 3,832,129 | ||||||
| ||||||||
10,365,403 | ||||||||
| ||||||||
Automobile Manufacturers–5.45% |
| |||||||
Allison Transmission, Inc., | ||||||||
4.75%, 10/01/2027(b) | 7,085,000 | 6,600,953 | ||||||
| ||||||||
3.75%, 01/30/2031(b) | 6,440,000 | 5,226,543 | ||||||
| ||||||||
Ford Motor Co., | ||||||||
3.25%, 02/12/2032 | 4,512,000 | 3,530,640 | ||||||
| ||||||||
4.75%, 01/15/2043 | 2,184,000 | 1,636,286 | ||||||
| ||||||||
5.29%, 12/08/2046 | 250,000 | 201,034 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Automobile Manufacturers–(continued) |
| |||||||
Ford Motor Credit Co. LLC, | ||||||||
5.13%, 06/16/2025 | $ | 1,418,000 | $ | 1,387,052 | ||||
| ||||||||
3.38%, 11/13/2025 | 1,644,000 | 1,503,175 | ||||||
| ||||||||
4.39%, 01/08/2026 | 4,893,000 | 4,614,784 | ||||||
| ||||||||
4.95%, 05/28/2027 | 2,100,000 | 1,974,462 | ||||||
| ||||||||
5.11%, 05/03/2029 | 4,746,000 | 4,392,233 | ||||||
| ||||||||
4.00%, 11/13/2030 | 4,562,000 | 3,816,706 | ||||||
| ||||||||
J.B. Poindexter & Co., Inc., 7.13%, 04/15/2026(b) | 8,157,000 | 7,914,655 | ||||||
| ||||||||
42,798,523 | ||||||||
| ||||||||
Automotive Retail–3.82% |
| |||||||
Asbury Automotive Group, Inc., | ||||||||
4.50%, 03/01/2028 | 1,175,000 | 1,050,961 | ||||||
| ||||||||
4.63%, 11/15/2029(b) | 5,796,000 | 4,977,141 | ||||||
| ||||||||
Group 1 Automotive, Inc., 4.00%, 08/15/2028(b) | 7,126,000 | 6,099,892 | ||||||
| ||||||||
LCM Investments Holdings II LLC, 4.88%, 05/01/2029(b) | 4,949,000 | 4,138,796 | ||||||
| ||||||||
Lithia Motors, Inc., 3.88%, 06/01/2029(b) | 8,908,000 | 7,533,985 | ||||||
| ||||||||
Sonic Automotive, Inc., 4.63%, 11/15/2029(b) | 7,196,000 | 6,160,172 | ||||||
| ||||||||
29,960,947 | ||||||||
| ||||||||
Cable & Satellite–8.54% |
| |||||||
CCO Holdings LLC/CCO Holdings Capital Corp., | ||||||||
5.13%, 05/01/2027(b) | 2,063,000 | 1,960,881 | ||||||
| ||||||||
5.00%, 02/01/2028(b) | 3,007,000 | 2,751,405 | ||||||
| ||||||||
4.75%, 03/01/2030(b) | 3,494,000 | 3,007,251 | ||||||
| ||||||||
4.50%, 08/15/2030(b) | 10,996,000 | 9,260,831 | ||||||
| ||||||||
4.50%, 05/01/2032 | 2,026,000 | 1,646,581 | ||||||
| ||||||||
4.25%, 01/15/2034(b) | 4,765,000 | 3,633,837 | ||||||
| ||||||||
CSC Holdings LLC, | ||||||||
6.50%, 02/01/2029(b) | 4,670,000 | 4,302,704 | ||||||
| ||||||||
5.75%, 01/15/2030(b) | 6,581,000 | 5,107,350 | ||||||
| ||||||||
4.63%, 12/01/2030(b) | 1,991,000 | 1,427,059 | ||||||
| ||||||||
4.50%, 11/15/2031(b) | 2,330,000 | 1,873,335 | ||||||
| ||||||||
5.00%, 11/15/2031(b) | 836,000 | 597,408 | ||||||
| ||||||||
DISH DBS Corp., 5.13%, 06/01/2029 | 6,503,000 | 3,862,847 | ||||||
| ||||||||
DISH Network Corp., Conv., 3.38%, 08/15/2026 | 7,514,000 | 5,425,569 | ||||||
| ||||||||
Gray Escrow II, Inc., 5.38%, 11/15/2031(b) | 6,781,000 | 5,739,371 | ||||||
| ||||||||
Sirius XM Radio, Inc., | ||||||||
3.13%, 09/01/2026(b) | 7,155,000 | 6,381,401 | ||||||
| ||||||||
4.00%, 07/15/2028(b) | 3,673,000 | 3,204,692 | ||||||
| ||||||||
3.88%, 09/01/2031(b) | 647,000 | 523,242 | ||||||
| ||||||||
Virgin Media Secured Finance PLC (United Kingdom), 5.50%, 05/15/2029(b) | 2,440,000 | 2,173,284 | ||||||
| ||||||||
VZ Secured Financing B.V. (Netherlands), 5.00%, 01/15/2032(b) | 5,040,000 | 4,151,776 | ||||||
| ||||||||
67,030,824 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco High Yield Fund |
Principal Amount | Value | |||||||
| ||||||||
Casinos & Gaming–2.09% |
| |||||||
Codere Finance 2 (Luxembourg) S.A. (Spain), 11.63% PIK Rate, 2.00% Cash Rate, 11/30/2027(b)(c) | $ | 568,775 | $ | 499,385 | ||||
| ||||||||
Everi Holdings, Inc., 5.00%, 07/15/2029(b) | 4,610,000 | 4,146,744 | ||||||
| ||||||||
Midwest Gaming Borrower LLC/ Midwest Gaming Finance Corp., 4.88%, 05/01/2029(b) | 4,718,000 | 4,148,254 | ||||||
| ||||||||
Mohegan Gaming & Entertainment, 8.00%, 02/01/2026(b) | 4,405,000 | 3,881,356 | ||||||
| ||||||||
Wynn Resorts Finance LLC/Wynn Resorts Capital Corp., 5.13%, 10/01/2029(b) | 4,467,000 | 3,755,139 | ||||||
| ||||||||
16,430,878 | ||||||||
| ||||||||
Commodity Chemicals–0.78% |
| |||||||
Mativ, Inc., 6.88%, 10/01/2026(b) | 6,687,000 | 6,105,599 | ||||||
| ||||||||
Construction & Engineering–1.25% |
| |||||||
Great Lakes Dredge & Dock Corp., 5.25%, 06/01/2029(b) | 4,691,000 | 4,007,943 | ||||||
| ||||||||
Howard Midstream Energy Partners LLC, 6.75%, 01/15/2027(b) | 6,405,000 | 5,804,206 | ||||||
| ||||||||
9,812,149 | ||||||||
| ||||||||
Consumer Finance–1.19% |
| |||||||
FirstCash, Inc., 5.63%, 01/01/2030(b) | 6,269,000 | 5,619,093 | ||||||
| ||||||||
OneMain Finance Corp., 7.13%, 03/15/2026 | 3,959,000 | 3,692,559 | ||||||
| ||||||||
9,311,652 | ||||||||
| ||||||||
Copper–0.73% |
| |||||||
First Quantum Minerals Ltd. (Zambia), 6.88%, 10/15/2027(b) | 6,017,000 | 5,746,777 | ||||||
| ||||||||
Data Processing & Outsourced Services–0.50% |
| |||||||
Clarivate Science Holdings Corp., 4.88%, 07/01/2029(b) | 4,724,000 | 3,913,196 | ||||||
| ||||||||
Diversified Metals & Mining–0.75% |
| |||||||
Hudbay Minerals, Inc. (Canada), | ||||||||
4.50%, 04/01/2026(b) | 2,250,000 | 2,045,250 | ||||||
| ||||||||
6.13%, 04/01/2029(b) | 4,364,000 | 3,847,485 | ||||||
| ||||||||
5,892,735 | ||||||||
| ||||||||
Diversified REITs–1.28% | ||||||||
iStar, Inc., | ||||||||
4.75%, 10/01/2024 | 6,842,000 | 6,853,563 | ||||||
| ||||||||
5.50%, 02/15/2026 | 3,097,000 | 3,162,920 | ||||||
| ||||||||
10,016,483 | ||||||||
| ||||||||
Electric Utilities–0.77% |
| |||||||
NRG Energy, Inc., 4.45%, 06/15/2029(b) | 4,540,000 | 4,116,669 | ||||||
| ||||||||
Vistra Operations Co. LLC, | ||||||||
5.63%, 02/15/2027(b) | 1,600,000 | 1,541,912 | ||||||
| ||||||||
5.00%, 07/31/2027(b) | 435,000 | 405,376 | ||||||
| ||||||||
6,063,957 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Electrical Components & Equipment–2.75% |
| |||||||
EnerSys, | ||||||||
5.00%, 04/30/2023(b) | $ | 5,020,000 | $ | 5,005,643 | ||||
| ||||||||
4.38%, 12/15/2027(b) | 6,083,000 | 5,544,837 | ||||||
| ||||||||
Sensata Technologies B.V., | ||||||||
4.88%, 10/15/2023(b) | 5,586,000 | 5,642,755 | ||||||
| ||||||||
4.00%, 04/15/2029(b) | 843,000 | 729,026 | ||||||
| ||||||||
5.88%, 09/01/2030(b) | 4,730,000 | 4,629,440 | ||||||
| ||||||||
21,551,701 | ||||||||
| ||||||||
Electronic Components–0.44% |
| |||||||
Sensata Technologies, Inc., | ||||||||
4.38%, 02/15/2030(b) | 1,348,000 | 1,203,090 | ||||||
| ||||||||
3.75%, 02/15/2031(b) | 2,756,000 | 2,280,499 | ||||||
| ||||||||
3,483,589 | ||||||||
| ||||||||
Food Distributors–0.78% |
| |||||||
American Builders & Contractors Supply Co., Inc., 4.00%, 01/15/2028(b) | 6,755,000 | 6,120,709 | ||||||
| ||||||||
Health Care Facilities–2.27% |
| |||||||
Encompass Health Corp., 4.50%, 02/01/2028 | 4,516,000 | 3,958,388 | ||||||
| ||||||||
HCA, Inc., | ||||||||
5.38%, 02/01/2025 | 2,458,000 | 2,484,460 | ||||||
| ||||||||
5.88%, 02/15/2026 | 699,000 | 714,630 | ||||||
| ||||||||
5.38%, 09/01/2026 | 1,344,000 | 1,349,390 | ||||||
| ||||||||
5.88%, 02/01/2029 | 2,281,000 | 2,327,977 | ||||||
| ||||||||
3.50%, 09/01/2030 | 1,150,000 | 1,004,597 | ||||||
| ||||||||
Tenet Healthcare Corp., 4.88%, 01/01/2026(b) | 6,268,000 | 5,962,592 | ||||||
| ||||||||
17,802,034 | ||||||||
| ||||||||
Health Care REITs–1.40% |
| |||||||
CTR Partnership L.P./ CareTrust Capital Corp., 3.88%, 06/30/2028(b) | 4,712,000 | 3,998,374 | ||||||
| ||||||||
Diversified Healthcare Trust, | ||||||||
4.75%, 05/01/2024 | 2,354,000 | 2,124,820 | ||||||
| ||||||||
9.75%, 06/15/2025 | 84,000 | 82,677 | ||||||
| ||||||||
4.38%, 03/01/2031 | 6,990,000 | 4,806,604 | ||||||
| ||||||||
11,012,475 | ||||||||
| ||||||||
Health Care Services–2.11% |
| |||||||
Community Health Systems, Inc., | ||||||||
8.00%, 03/15/2026(b) | 4,268,000 | 3,995,915 | ||||||
| ||||||||
5.25%, 05/15/2030(b) | 3,527,000 | 2,676,164 | ||||||
| ||||||||
4.75%, 02/15/2031(b) | 2,352,000 | 1,739,774 | ||||||
| ||||||||
Hadrian Merger Sub, Inc., 8.50%, 05/01/2026(b) | 2,361,000 | 2,263,810 | ||||||
| ||||||||
Select Medical Corp., 6.25%, 08/15/2026(b) | 6,110,000 | 5,852,464 | ||||||
| ||||||||
16,528,127 | ||||||||
| ||||||||
Health Care Supplies–0.25% |
| |||||||
Medline Borrower L.P., 3.88%, 04/01/2029(b) | 2,341,000 | 1,986,924 | ||||||
| ||||||||
Hotel & Resort REITs–0.51% |
| |||||||
Service Properties Trust, | ||||||||
4.95%, 10/01/2029 | 1,975,000 | 1,495,292 | ||||||
| ||||||||
4.38%, 02/15/2030 | 3,423,000 | 2,512,859 | ||||||
| ||||||||
4,008,151 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco High Yield Fund |
Principal Amount | Value | |||||||
| ||||||||
Hotels, Resorts & Cruise Lines–0.53% |
| |||||||
Carnival Corp., 10.50%, 02/01/2026(b) | $ | 4,011,000 | $ | 4,136,544 | ||||
| ||||||||
Household Products–1.00% |
| |||||||
Prestige Brands, Inc., 3.75%, 04/01/2031(b) | 9,795,000 | 7,852,309 | ||||||
| ||||||||
Independent Power Producers & Energy Traders–1.55% |
| |||||||
Calpine Corp., 3.75%, 03/01/2031(b) | 4,782,000 | 3,973,627 | ||||||
| ||||||||
Clearway Energy Operating LLC, 4.75%, 03/15/2028(b) | 4,411,000 | 4,138,069 | ||||||
| ||||||||
Vistra Corp., 7.00%(b)(d)(e) | 4,372,000 | 4,038,679 | ||||||
| ||||||||
12,150,375 | ||||||||
| ||||||||
Industrial Machinery–2.10% |
| |||||||
EnPro Industries, Inc., 5.75%, 10/15/2026 | 6,221,000 | 6,114,652 | ||||||
| ||||||||
Mueller Water Products, Inc., 4.00%, 06/15/2029(b) | 6,864,000 | 6,187,759 | ||||||
| ||||||||
Roller Bearing Co. of America, Inc., 4.38%, 10/15/2029(b) | 4,639,000 | 4,169,301 | ||||||
| ||||||||
16,471,712 | ||||||||
| ||||||||
Integrated Oil & Gas–2.01% |
| |||||||
Occidental Petroleum Corp., | ||||||||
3.20%, 08/15/2026 | 1,684,000 | 1,593,855 | ||||||
| ||||||||
8.50%, 07/15/2027 | 1,314,000 | 1,473,290 | ||||||
| ||||||||
6.13%, 01/01/2031 | 7,190,000 | 7,482,554 | ||||||
| ||||||||
6.45%, 09/15/2036 | 1,545,000 | 1,653,103 | ||||||
| ||||||||
6.20%, 03/15/2040 | 3,485,000 | 3,542,886 | ||||||
| ||||||||
15,745,688 | ||||||||
| ||||||||
Integrated Telecommunication Services–3.23% |
| |||||||
Altice France S.A. (France), | ||||||||
8.13%, 02/01/2027(b) | 3,027,000 | 2,884,398 | ||||||
| ||||||||
5.13%, 07/15/2029(b) | 5,515,000 | 4,196,419 | ||||||
| ||||||||
5.50%, 10/15/2029(b) | 2,885,000 | 2,281,847 | ||||||
| ||||||||
Iliad Holding S.A.S. (France), | ||||||||
6.50%, 10/15/2026(b) | 2,417,000 | 2,211,821 | ||||||
| ||||||||
7.00%, 10/15/2028(b) | 6,343,000 | 5,750,310 | ||||||
| ||||||||
Level 3 Financing, Inc., | ||||||||
3.75%, 07/15/2029(b) | 7,419,000 | 5,970,069 | ||||||
| ||||||||
3.88%, 11/15/2029(b) | 2,380,000 | 2,022,788 | ||||||
| ||||||||
25,317,652 | ||||||||
| ||||||||
Interactive Home Entertainment–1.01% |
| |||||||
Sea Ltd. (Singapore), Conv., 0.25%, 09/15/2026 | 2,680,000 | 1,973,859 | ||||||
| ||||||||
WMG Acquisition Corp., 3.75%, 12/01/2029(b) | 6,940,000 | 5,942,375 | ||||||
| ||||||||
7,916,234 | ||||||||
| ||||||||
Interactive Media & Services–0.77% |
| |||||||
Match Group Holdings II LLC, 4.63%, 06/01/2028(b) | 6,810,000 | 6,071,932 | ||||||
| ||||||||
Internet Services & Infrastructure–0.49% |
| |||||||
Cogent Communications Group, Inc., 7.00%, 06/15/2027(b) | 4,037,000 | 3,862,928 | ||||||
|
�� Principal Amount | Value | |||||||
| ||||||||
IT Consulting & Other Services–0.89% |
| |||||||
Gartner, Inc., | ||||||||
4.50%, 07/01/2028(b) | $ | 5,444,000 | $ | 5,034,747 | ||||
| ||||||||
3.63%, 06/15/2029(b) | 2,248,000 | 1,936,281 | ||||||
| ||||||||
6,971,028 | ||||||||
| ||||||||
Managed Health Care–1.26% |
| |||||||
Centene Corp., | ||||||||
4.25%, 12/15/2027 | 4,007,000 | 3,810,977 | ||||||
| ||||||||
3.00%, 10/15/2030 | 7,228,000 | 6,051,535 | ||||||
| ||||||||
9,862,512 | ||||||||
| ||||||||
Oil & Gas Drilling–3.27% |
| |||||||
Global Partners L.P./GLP Finance Corp., 7.00%, 08/01/2027 | 2,521,000 | 2,385,477 | ||||||
| ||||||||
Nabors Industries Ltd., | ||||||||
7.25%, 01/15/2026(b) | 460,000 | 418,917 | ||||||
| ||||||||
7.50%, 01/15/2028(b) | 2,634,000 | 2,326,282 | ||||||
| ||||||||
Nabors Industries, Inc., 7.38%, 05/15/2027(b) | 1,047,000 | 1,012,130 | ||||||
| ||||||||
NGL Energy Operating LLC/NGL Energy Finance Corp., 7.50%, 02/01/2026(b) | 4,328,000 | 3,966,028 | ||||||
| ||||||||
Precision Drilling Corp. (Canada), | ||||||||
7.13%, 01/15/2026(b) | 789,000 | 759,792 | ||||||
| ||||||||
6.88%, 01/15/2029(b) | 3,247,000 | 2,987,597 | ||||||
| ||||||||
Rockies Express Pipeline LLC, | ||||||||
4.95%, 07/15/2029(b) | 1,876,000 | 1,694,609 | ||||||
| ||||||||
6.88%, 04/15/2040(b) | 2,508,000 | 2,093,026 | ||||||
| ||||||||
Valaris Ltd., | ||||||||
12.00% PIK Rate, 8.25% Cash Rate, 04/30/2028(b)(c) | 2,771,000 | 2,788,901 | ||||||
| ||||||||
Series 1145, 12.00% PIK Rate, 8.25% Cash Rate, 04/30/2028(c) | 5,164,000 | 5,197,359 | ||||||
| ||||||||
25,630,118 | ||||||||
| ||||||||
Oil & Gas Equipment & Services–1.26% |
| |||||||
USA Compression Partners L.P./USA Compression Finance Corp., 6.88%, 09/01/2027 | 6,408,000 | 5,933,808 | ||||||
| ||||||||
Weatherford International Ltd., 8.63%, 04/30/2030(b) | 4,329,000 | 3,920,575 | ||||||
| ||||||||
9,854,383 | ||||||||
| ||||||||
Oil & Gas Exploration & Production–5.25% |
| |||||||
Aethon United BR L.P./Aethon United Finance Corp., 8.25%, 02/15/2026(b) | 11,796,000 | 11,811,335 | ||||||
| ||||||||
Apache Corp., 7.75%, 12/15/2029 | 3,730,000 | 3,968,515 | ||||||
| ||||||||
Callon Petroleum Co., | ||||||||
8.00%, 08/01/2028(b) | 2,058,000 | 1,977,810 | ||||||
| ||||||||
7.50%, 06/15/2030(b) | 4,138,000 | 3,832,305 | ||||||
| ||||||||
Earthstone Energy Holdings LLC, 8.00%, 04/15/2027(b) | 4,123,000 | 4,022,275 | ||||||
| ||||||||
Hilcorp Energy I L.P./Hilcorp Finance Co., | ||||||||
6.25%, 11/01/2028(b) | 1,564,000 | 1,480,013 | ||||||
| ||||||||
6.00%, 04/15/2030(b) | 3,422,000 | 3,155,050 | ||||||
| ||||||||
6.25%, 04/15/2032(b) | 3,422,000 | 3,071,933 | ||||||
| ||||||||
SM Energy Co., | ||||||||
6.75%, 09/15/2026 | 1,258,000 | 1,238,916 | ||||||
| ||||||||
6.63%, 01/15/2027 | 4,586,000 | 4,477,725 | ||||||
| ||||||||
6.50%, 07/15/2028 | 2,221,000 | 2,142,343 | ||||||
| ||||||||
41,178,220 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco High Yield Fund |
Principal Amount | Value | |||||||
| ||||||||
Oil & Gas Storage & Transportation–4.23% |
| |||||||
Crestwood Midstream Partners L.P./Crestwood Midstream Finance Corp., 8.00%, 04/01/2029(b) | $ | 8,384,000 | $ | 8,323,606 | ||||
| ||||||||
Delek Logistics Partners L.P./Delek Logistics Finance Corp., 7.13%, 06/01/2028(b) | 6,551,000 | 6,129,312 | ||||||
| ||||||||
EQM Midstream Partners L.P., | ||||||||
7.50%, 06/01/2027(b) | 1,343,000 | 1,329,630 | ||||||
| ||||||||
6.50%, 07/01/2027(b) | 3,941,000 | 3,811,179 | ||||||
| ||||||||
4.75%, 01/15/2031(b) | 2,057,000 | 1,782,720 | ||||||
| ||||||||
Genesis Energy L.P./Genesis Energy Finance Corp., | ||||||||
6.25%, 05/15/2026 | 5,380,000 | 4,870,013 | ||||||
| ||||||||
8.00%, 01/15/2027 | 1,759,000 | 1,669,933 | ||||||
| ||||||||
7.75%, 02/01/2028 | 1,313,000 | 1,219,146 | ||||||
| ||||||||
Holly Energy Partners L.P./Holly Energy Finance Corp., 6.38%, 04/15/2027(b) | 4,182,000 | 4,092,163 | ||||||
| ||||||||
33,227,702 | ||||||||
| ||||||||
Other Diversified Financial Services–1.27% |
| |||||||
Jane Street Group/JSG Finance, Inc., 4.50%, 11/15/2029(b) | 4,401,000 | 3,996,658 | ||||||
| ||||||||
Scientific Games Holdings L.P./Scientific Games US FinCo, Inc., 6.63%, 03/01/2030(b) | 6,663,000 | 5,933,507 | ||||||
| ||||||||
9,930,165 | ||||||||
| ||||||||
Pharmaceuticals–1.11% |
| |||||||
Bausch Health Cos., Inc., | ||||||||
4.88%, 06/01/2028(b) | 2,370,000 | 1,641,272 | ||||||
| ||||||||
5.25%, 02/15/2031(b) | 5,765,000 | 2,225,146 | ||||||
| ||||||||
Par Pharmaceutical, Inc., 7.50%, 04/01/2027(b)(f) | 5,729,000 | 4,876,697 | ||||||
| ||||||||
8,743,115 | ||||||||
| ||||||||
Real Estate Operating Companies–0.26% |
| |||||||
DigitalBridge Group, Inc., Conv., 5.00%, 04/15/2023 | 2,014,000 | 2,016,518 | ||||||
| ||||||||
Research & Consulting Services–0.53% |
| |||||||
Dun & Bradstreet Corp. (The), 5.00%, 12/15/2029(b) | 4,682,000 | 4,160,425 | ||||||
| ||||||||
Restaurants–2.29% |
| |||||||
1011778 BC ULC/New Red Finance, Inc. (Canada), | ||||||||
3.88%, 01/15/2028(b) | 2,268,000 | 2,018,985 | ||||||
| ||||||||
4.00%, 10/15/2030(b) | 4,916,000 | 3,995,823 | ||||||
| ||||||||
Papa John’s International, Inc., 3.88%, 09/15/2029(b) | 9,397,000 | 8,047,027 | ||||||
| ||||||||
Yum! Brands, Inc., 5.38%, 04/01/2032 | 4,210,000 | 3,881,115 | ||||||
| ||||||||
17,942,950 | ||||||||
| ||||||||
Retail REITs–0.75% |
| |||||||
NMG Holding Co., Inc./Neiman Marcus Group LLC, 7.13%, 04/01/2026(b) | 6,318,000 | 5,921,826 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Semiconductor Equipment–0.98% |
| |||||||
Entegris Escrow Corp., | ||||||||
4.75%, 04/15/2029(b) | $ | 6,269,000 | $ | 5,774,188 | ||||
| ||||||||
5.95%, 06/15/2030(b) | 2,023,000 | 1,921,931 | ||||||
| ||||||||
7,696,119 | ||||||||
| ||||||||
Specialized Consumer Services–1.78% |
| |||||||
Carriage Services, Inc., 4.25%, 05/15/2029(b) | 8,931,000 | 7,603,184 | ||||||
| ||||||||
Terminix Co. LLC (The), 7.45%, 08/15/2027 | 5,474,000 | 6,360,651 | ||||||
| ||||||||
13,963,835 | ||||||||
| ||||||||
Specialized REITs–0.95% |
| |||||||
SBA Communications Corp., 3.88%, 02/15/2027 | 8,181,000 | 7,463,215 | ||||||
| ||||||||
Specialty Chemicals–1.21% |
| |||||||
Braskem Idesa S.A.P.I. (Mexico), | ||||||||
7.45%, 11/15/2029(b) | 3,733,000 | 3,229,045 | ||||||
| ||||||||
6.99%, 02/20/2032(b) | 2,643,000 | 2,052,554 | ||||||
| ||||||||
Rayonier A.M. Products, Inc., 7.63%, 01/15/2026(b) | 4,390,000 | 4,174,341 | ||||||
| ||||||||
9,455,940 | ||||||||
| ||||||||
Specialty Stores–0.25% |
| |||||||
PetSmart, Inc./PetSmart Finance Corp., 4.75%, 02/15/2028(b) | 2,240,000 | 2,000,107 | ||||||
| ||||||||
Steel–0.50% |
| |||||||
SunCoke Energy, Inc., 4.88%, 06/30/2029(b) | 4,688,000 | 3,896,548 | ||||||
| ||||||||
Systems Software–2.08% |
| |||||||
Camelot Finance S.A., 4.50%, 11/01/2026(b) | 13,014,000 | 12,122,281 | ||||||
| ||||||||
Crowdstrike Holdings, Inc., 3.00%, 02/15/2029 | 4,712,000 | 4,176,905 | ||||||
| ||||||||
16,299,186 | ||||||||
| ||||||||
Trading Companies & Distributors–0.98% |
| |||||||
Fortress Transportation and Infrastructure Investors LLC, 5.50%, 05/01/2028(b) | 8,990,000 | 7,663,975 | ||||||
| ||||||||
Wireless Telecommunication Services–1.43% |
| |||||||
Rogers Communications, Inc. (Canada), 4.55%, 03/15/2052(b) | 2,189,000 | 1,924,931 | ||||||
| ||||||||
Vmed O2 UK Financing I PLC (United Kingdom), 4.75%, 07/15/2031(b) | 4,170,000 | 3,437,644 | ||||||
| ||||||||
Vodafone Group PLC (United Kingdom), 4.13%, 06/04/2081(d) | 7,471,000 | 5,878,295 | ||||||
| ||||||||
11,240,870 | ||||||||
| ||||||||
Total U.S. Dollar Denominated Bonds & Notes |
| 709,711,384 | ||||||
| ||||||||
Variable Rate Senior Loan Interests–3.76%(g)(h) |
| |||||||
Commodity Chemicals–1.05% | ||||||||
Mativ Holdings, Inc., Term Loan B, 6.31% (1 mo. USD LIBOR + 3.75%), 04/20/2028(i) | 8,670,876 | 8,215,655 | ||||||
| ||||||||
Food Distributors–0.53% |
| |||||||
United Natural Foods, Inc., Term Loan, 5.82% (1 mo. USD LIBOR + 3.25%), 10/22/2025 | 4,212,804 | 4,186,032 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco High Yield Fund |
Principal Amount | Value | |||||||
| ||||||||
Hotels, Resorts & Cruise Lines–0.52% |
| |||||||
IRB Holding Corp., Term Loan, 5.44% (3 mo. SOFR + 3.15%), 12/15/2027 | $ | 4,211,379 | $ | 4,085,922 | ||||
| ||||||||
Integrated Telecommunication Services–0.66% |
| |||||||
Patagonia Holdco LLC, | ||||||||
First Lien Term Loan B, 8.03% (1 mo. SOFR + 5.75%), 08/01/2029 | 3,024,000 | 2,582,995 | ||||||
| ||||||||
8.39% (1 mo. SOFR + 5.75%), 08/01/2029 | 3,024,000 | 2,582,995 | ||||||
| ||||||||
5,165,990 | ||||||||
| ||||||||
Pharmaceuticals–0.51% |
| |||||||
Endo LLC, Term Loan, 0.00% (1 mo. USD LIBOR + 5.00%), 03/27/2028 | 4,572,125 | 4,013,114 | ||||||
| ||||||||
Specialty Stores–0.49% |
| |||||||
PetSmart LLC, Term Loan, 6.27% (3 mo. USD LIBOR + 3.75%), 02/11/2028 | 3,940,233 | 3,859,793 | ||||||
| ||||||||
Total Variable Rate Senior Loan Interests |
| 29,526,506 | ||||||
| ||||||||
Non-U.S. Dollar Denominated Bonds & Notes–1.15%(j) |
| |||||||
Casinos & Gaming–0.16% | ||||||||
Codere Finance 2 (Luxembourg) S.A. (Spain), 3.00% PIK Rate, 8.00% Cash Rate, | EUR | 1,202,991 | 1,225,463 | |||||
| ||||||||
Food Retail–0.47% |
| |||||||
Bellis Acquisition Co. PLC (United Kingdom), 3.25%, 02/16/2026(b) | GBP | 4,033,000 | 3,708,226 | |||||
| ||||||||
Paper Packaging–0.01% |
| |||||||
Mossi & Ghisolfi Finance Luxembourg S.A. (Brazil), 5.33% (3 mo. EURIBOR + 5.63%)(e)(f)(k) | EUR | 4,100,000 | 82,406 | |||||
| ||||||||
Pharmaceuticals–0.51% |
| |||||||
Nidda Healthcare Holding GmbH (Germany), 3.50%, 09/30/2024(b) | EUR | 4,275,000 | 3,973,246 | |||||
| ||||||||
Total Non-U.S. Dollar Denominated Bonds & Notes |
| 8,989,341 | ||||||
|
Shares | Value | |||||||
| ||||||||
Common Stocks & Other Equity Interests–0.28% |
| |||||||
Cable & Satellite–0.28% | ||||||||
Altice USA, Inc., Class A(l) | 223,000 | $ | 2,230,000 | |||||
| ||||||||
Leisure Products–0.00% |
| |||||||
HF Holdings, Inc.(i) | 36,820 | 0 | ||||||
| ||||||||
Total Common Stocks & Other Equity Interests (Cost $9,983,988) |
| 2,230,000 | ||||||
| ||||||||
Principal Amount | ||||||||
U.S. Treasury Securities–0.07% |
| |||||||
U.S. Treasury Bills–0.07% | ||||||||
1.11%, 09/15/2022 (Cost $523,805)(m) | $ | 524,000 | 523,805 | |||||
| ||||||||
Shares | ||||||||
Money Market Funds–2.84% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, | 6,732,703 | 6,732,703 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 2.26%(n)(o) | 7,895,710 | 7,897,289 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, 2.14%(n)(o) | 7,694,518 | 7,694,518 | ||||||
| ||||||||
Total Money Market Funds |
| 22,324,510 | ||||||
| ||||||||
Options Purchased–0.11% | ||||||||
(Cost $1,098,129)(p) |
| 830,073 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES–98.67% |
| 774,135,619 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–1.33% |
| 10,431,953 | ||||||
| ||||||||
NET ASSETS–100.00% | $ | 784,567,572 | ||||||
|
Investment Abbreviations: | ||
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 | |
SOFR | – Secured Overnight Financing Rate | |
USD | – U.S. Dollar |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco High Yield 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, 2022 was $533,142,926, which represented 67.95% 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) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
(e) | Perpetual bond with no specified maturity date. |
(f) | 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, 2022 was $4,959,103, which represented less than 1% of the Fund’s Net Assets. |
(g) | Variable rate senior loan interests often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with any accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, it is anticipated that the variable rate senior loan interests will have an expected average life of three to five years. |
(h) | 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. |
(i) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(j) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
(k) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2022. |
(l) | Non-income producing security. |
(m) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(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, 2022. |
Value February 28, 2022 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain (Loss) | Value August 31, 2022 | Dividend Income | ||||||||||||||||||||
Investments in Affiliated Money Market Funds: | ||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ 3,552,487 | $ | 83,803,058 | $ | (80,622,842 | ) | $ | - | $ | - | $ 6,732,703 | $ 38,703 | ||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 5,859,107 | 59,859,328 | (57,823,121 | ) | 1,665 | 310 | 7,897,289 | 43,135 | ||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 4,059,986 | 95,774,924 | (92,140,392 | ) | - | - | 7,694,518 | 42,285 | ||||||||||||||||||
Investments Purchased with Cash Collateral from Securities on Loan: | ||||||||||||||||||||||||||
Invesco Private Government Fund | 909,625 | 20,843,067 | (21,752,692 | ) | - | - | - | 3,219* | ||||||||||||||||||
Invesco Private Prime Fund | 2,122,457 | 46,076,957 | (48,198,259 | ) | 79 | (1,234) | - | 9,144* | ||||||||||||||||||
Total | $16,503,662 | $ | 306,357,334 | $ | (300,537,306 | ) | $ | 1,744 | $ | (924) | $22,324,510 | $136,486 |
* | 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. |
(o) | The rate shown is the 7-day SEC standardized yield as of August 31, 2022. |
(p) | The table below details options purchased. |
Open Exchange-Traded Equity Options Purchased | ||||||||||||||||||||||||||||||||
Description | Type of Contract | Expiration Date | Number of Contracts | Exercise Price | Notional Value(a) | Value | ||||||||||||||||||||||||||
Equity Risk | ||||||||||||||||||||||||||||||||
iShares China Large-Cap ETF | Call | 01/20/2023 | 886 | USD | 41.00 | USD | 3,632,600 | $ | 8,417 | |||||||||||||||||||||||
VanEck Oil Services ETF | Call | 01/20/2023 | 117 | USD | 275.00 | USD | 3,217,500 | 190,125 | ||||||||||||||||||||||||
Subtotal – Exchange-Traded Equity Call Options Purchased | 198,542 | |||||||||||||||||||||||||||||||
Equity Risk | ||||||||||||||||||||||||||||||||
iShares iBoxx High Yield Corporate Bond ETF | Put | 01/20/2023 | 292 | USD | 74.00 | USD | 2,160,800 | 87,016 | ||||||||||||||||||||||||
iShares iBoxx High Yield Corporate Bond ETF | Put | 01/20/2023 | 1,171 | USD | 77.00 | USD | 9,016,700 | 544,515 | ||||||||||||||||||||||||
Subtotal – Exchange-Traded Equity Put Options Purchased | 631,531 | |||||||||||||||||||||||||||||||
Total Open Exchange-Traded Equity Options Purchased | $ | 830,073 |
(a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco High Yield Fund |
Open Exchange-Traded Equity Options Written | ||||||||||||||||||||||||||||||||
Description | Type of Contract | Expiration Date | Number of Contracts | Exercise Price | Notional Value(a) | Value | ||||||||||||||||||||||||||
Equity Risk | ||||||||||||||||||||||||||||||||
VanEck Oil Services ETF | Call | 01/20/2023 | 117 | USD | 365.00 | USD | 4,270,500 | $ | (31,005 | ) | ||||||||||||||||||||||
Equity Risk | ||||||||||||||||||||||||||||||||
iShares iBoxx High Yield Corporate Bond ETF | Put | 01/20/2023 | 292 | USD | 65.00 | USD | 1,898,000 | (23,068 | ) | |||||||||||||||||||||||
Total Open Exchange-Traded Equity Options Written |
| $ | (54,073 | ) |
(a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Forward Foreign Currency Contracts | ||||||||||||||||||||||
Settlement | Contract to | Unrealized | ||||||||||||||||||||
Date | Counterparty | Deliver | Receive | Appreciation | ||||||||||||||||||
Currency Risk | ||||||||||||||||||||||
11/17/2022 | Citibank N.A. | GBP | 100,000 | USD | 122,674 | $ | 6,335 | |||||||||||||||
11/17/2022 | Deutsche Bank AG | EUR | 3,300,000 | USD | 3,372,038 | 38,677 | ||||||||||||||||
11/17/2022 | Deutsche Bank AG | GBP | 1,600,000 | USD | 1,929,610 | 68,199 | ||||||||||||||||
11/17/2022 | Goldman Sachs International | EUR | 1,452,000 | USD | 1,508,337 | 41,659 | ||||||||||||||||
11/17/2022 | State Street Bank & Trust Co. | GBP | 1,162,000 | USD | 1,413,478 | 61,628 | ||||||||||||||||
Total Forward Foreign Currency Contracts | $ | 216,498 |
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 (Depreciation) | |||||||||||||||||||||||||||
Credit Risk | ||||||||||||||||||||||||||||||||||||
Markit iTraxx Crossover Index, Series 37, Version 1 | Sell | 5.00 | % | Quarterly | 06/20/2027 | 5.912 | % | EUR 16,500,000 | $14,223 | $ | (560,095 | ) | $(574,318 | ) |
(a) | Centrally cleared swap agreements collateralized by $1,707,934 cash held with . |
(b) | Implied credit spreads represent the current level, as of August 31, 2022, 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:
ETF –Exchange-Traded Fund
EUR –Euro
GBP –British Pound Sterling
USD –U.S. Dollar
Portfolio Composition
By security type, based on Net Assets
as of August 31, 2022
U.S. Dollar Denominated Bonds & Notes | 90.46 | % | ||
Variable Rate Senior Loan Interests | 3.76 | |||
Non-U.S. Dollar Denominated Bonds & Notes | 1.15 | |||
Security Types Each Less Than 1% of Portfolio | 0.46 | |||
Money Market Funds Plus Other Assets Less Liabilities | 4.17 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco High Yield Fund |
Statement of Assets and Liabilities
August 31, 2022
(Unaudited)
Assets: | ||||
Investments in unaffiliated securities, at value | $ | 751,811,109 | ||
| ||||
Investments in affiliated money market funds, at value | 22,324,510 | |||
| ||||
Other investments: | ||||
Unrealized appreciation on forward foreign currency contracts outstanding | 216,498 | |||
| ||||
Deposits with brokers: | ||||
Cash collateral – centrally cleared swap agreements | 1,707,934 | |||
| ||||
Foreign currencies, at value (Cost $284,283) | 281,745 | |||
| ||||
Receivable for: | ||||
Investments sold | 3,774,111 | |||
| ||||
Fund shares sold | 337,422 | |||
| ||||
Dividends | 47,328 | |||
| ||||
Interest | 11,713,554 | |||
| ||||
Cash segregated as collateral | 25 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 235,957 | |||
| ||||
Other assets | 86,183 | |||
| ||||
Total assets | 792,536,376 | |||
| ||||
Liabilities: | ||||
Other investments: | ||||
Options written, at value (premiums received $189,714) | 54,073 | |||
| ||||
Variation margin payable – centrally cleared swap agreements | 89,412 | |||
| ||||
Payable for: | ||||
Investments purchased | 2,479,680 | |||
| ||||
Dividends | 758,727 | |||
| ||||
Fund shares reacquired | 1,171,142 | |||
| ||||
Amount due custodian | 2,599,733 | |||
| ||||
Accrued fees to affiliates | 420,515 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 1,588 | |||
| ||||
Accrued other operating expenses | 96,125 | |||
| ||||
Trustee deferred compensation and retirement plans | 297,809 | |||
| ||||
Total liabilities | 7,968,804 | |||
| ||||
Net assets applicable to shares outstanding | $ | 784,567,572 | ||
|
Net assets consist of: | ||||
Shares of beneficial interest | $ | 1,122,766,773 | ||
| ||||
Distributable earnings (loss) | (338,199,201 | ) | ||
| ||||
$ | 784,567,572 | |||
| ||||
Net Assets: | ||||
Class A | $ | 568,764,212 | ||
| ||||
Class C | $ | 18,221,095 | ||
| ||||
Class Y | $ | 41,885,594 | ||
| ||||
Investor Class | $ | 61,124,907 | ||
| ||||
Class R5 | $ | 22,132,778 | ||
| ||||
Class R6 | $ | 72,438,986 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 164,335,346 | |||
| ||||
Class C | 5,276,427 | |||
| ||||
Class Y | 12,075,874 | |||
| ||||
Investor Class | 17,677,468 | |||
| ||||
Class R5 | 6,418,578 | |||
| ||||
Class R6 | 20,949,594 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 3.46 | ||
| ||||
Maximum offering price per share | $ | 3.61 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 3.45 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 3.47 | ||
| ||||
Investor Class: | ||||
Net asset value and offering price per share | $ | 3.46 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 3.45 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 3.46 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco High Yield Fund |
Statement of Operations
For the six months ended August 31, 2022
(Unaudited)
Investment income: | ||||
Interest | $ | 22,199,025 | ||
| ||||
Dividends | 135,537 | |||
| ||||
Dividends from affiliated money market funds (includes securities lending income of $52,211) | 176,334 | |||
| ||||
Total investment income | 22,510,896 | |||
| ||||
Expenses: | ||||
Advisory fees | 2,274,477 | |||
| ||||
Administrative services fees | 63,202 | |||
| ||||
Custodian fees | 11,844 | |||
| ||||
Distribution fees: | ||||
Class A | 751,802 | |||
| ||||
Class C | 101,270 | |||
| ||||
Investor Class | 81,485 | |||
| ||||
Transfer agent fees – A, C, Y and Investor | 602,873 | |||
| ||||
Transfer agent fees – R5 | 11,919 | |||
| ||||
Transfer agent fees – R6 | 12,456 | |||
| ||||
Trustees’ and officers’ fees and benefits | 13,027 | |||
| ||||
Registration and filing fees | 52,220 | |||
| ||||
Reports to shareholders | 55,870 | |||
| ||||
Professional services fees | 38,432 | |||
| ||||
Other | 13,388 | |||
| ||||
Total expenses | 4,084,265 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (11,836 | ) | ||
| ||||
Net expenses | 4,072,429 | |||
| ||||
Net investment income | 18,438,467 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Unaffiliated investment securities | (18,754,025 | ) | ||
| ||||
Affiliated investment securities | (924 | ) | ||
| ||||
Foreign currencies | (120,651 | ) | ||
| ||||
Forward foreign currency contracts | 201,225 | |||
| ||||
Option contracts written | (1,110,971 | ) | ||
| ||||
Swap agreements | 786,085 | |||
| ||||
(18,999,261 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Unaffiliated investment securities | (60,445,907 | ) | ||
| ||||
Affiliated investment securities | 1,744 | |||
| ||||
Foreign currencies | (4,952 | ) | ||
| ||||
Forward foreign currency contracts | 176,791 | |||
| ||||
Option contracts written | 570,220 | |||
| ||||
Swap agreements | (574,318 | ) | ||
| ||||
(60,276,422 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (79,275,683 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (60,837,216 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 | Invesco High Yield Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, | February 28, | |||||||
2022 | 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 18,438,467 | $ | 36,901,456 | ||||
| ||||||||
Net realized gain (loss) | (18,999,261 | ) | 14,291,291 | |||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (60,276,422 | ) | (46,924,009 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (60,837,216 | ) | 4,268,738 | |||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (14,320,672 | ) | (29,655,741 | ) | ||||
| ||||||||
Class C | (405,263 | ) | (935,438 | ) | ||||
| ||||||||
Class Y | (1,069,877 | ) | (2,411,889 | ) | ||||
| ||||||||
Investor Class | (1,551,303 | ) | (3,293,321 | ) | ||||
| ||||||||
Class R5 | (604,949 | ) | (1,673,240 | ) | ||||
| ||||||||
Class R6 | (1,952,517 | ) | (4,399,047 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (19,904,581 | ) | (42,368,676 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (13,440,454 | ) | 10,360,973 | |||||
| ||||||||
Class C | (2,395,811 | ) | (3,255,144 | ) | ||||
| ||||||||
Class Y | 600,559 | (3,584,636 | ) | |||||
| ||||||||
Investor Class | (1,220,985 | ) | (3,689,781 | ) | ||||
| ||||||||
Class R5 | (3,516,119 | ) | (9,426,910 | ) | ||||
| ||||||||
Class R6 | (537,915 | ) | 1,080,660 | |||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (20,510,725 | ) | (8,514,838 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (101,252,522 | ) | (46,614,776 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 885,820,094 | 932,434,870 | ||||||
| ||||||||
End of period | $ | 784,567,572 | $ | 885,820,094 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 | Invesco High Yield 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 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 08/31/22 | $3.81 | $0.08 | $(0.34 | ) | $(0.26 | ) | $(0.09 | ) | $ | – | $(0.09 | ) | $3.46 | (6.97 | )% | $568,764 | 1.03 | %(d) | 1.03 | %(d) | 4.40 | %(d) | 47 | % | ||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 3.97 | 0.15 | (0.13 | ) | 0.02 | (0.18 | ) | – | (0.18 | ) | 3.81 | 0.36 | 640,948 | 1.03 | 1.03 | 3.90 | 88 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 3.96 | 0.19 | 0.05 | 0.24 | (0.22 | ) | (0.01 | ) | (0.23 | ) | 3.97 | 6.59 | 657,549 | 1.07 | 1.07 | 4.89 | 101 | |||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 3.80 | 0.07 | (0.35 | ) | (0.28 | ) | (0.07 | ) | – | (0.07 | ) | 3.45 | (7.35 | ) | 18,221 | 1.78 | (d) | 1.78 | (d) | 3.65 | (d) | 47 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 3.96 | 0.12 | (0.13 | ) | (0.01 | ) | (0.15 | ) | – | (0.15 | ) | 3.80 | (0.40 | ) | 22,626 | 1.78 | 1.78 | 3.15 | 88 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 3.95 | 0.16 | 0.05 | 0.21 | (0.19 | ) | (0.01 | ) | (0.20 | ) | 3.96 | 5.79 | 26,860 | 1.82 | 1.82 | 4.14 | 101 | |||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 3.82 | 0.08 | (0.34 | ) | (0.26 | ) | (0.09 | ) | – | (0.09 | ) | 3.47 | (6.82 | ) | 41,886 | 0.78 | (d) | 0.78 | (d) | 4.65 | (d) | 47 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 3.98 | 0.16 | (0.13 | ) | 0.03 | (0.19 | ) | – | (0.19 | ) | 3.82 | 0.63 | 45,483 | 0.78 | 0.78 | 4.15 | 88 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 3.97 | 0.19 | 0.06 | 0.25 | (0.23 | ) | (0.01 | ) | (0.24 | ) | 3.98 | 6.85 | 51,180 | 0.82 | 0.82 | 5.14 | 101 | |||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 3.81 | 0.08 | (0.34 | ) | (0.26 | ) | (0.09 | ) | – | (0.09 | ) | 3.46 | (6.97 | ) | 61,125 | 1.03 | (d) | 1.03 | (d) | 4.40 | (d) | 47 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 3.97 | 0.15 | (0.13 | ) | 0.02 | (0.18 | ) | – | (0.18 | ) | 3.81 | 0.36 | 68,375 | 1.03 | 1.03 | 3.90 | 88 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 3.96 | 0.18 | 0.06 | 0.24 | (0.22 | ) | (0.01 | ) | (0.23 | ) | 3.97 | 6.59 | 74,887 | 1.07 | 1.07 | 4.89 | 101 | |||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 3.80 | 0.09 | (0.35 | ) | (0.26 | ) | (0.09 | ) | – | (0.09 | ) | 3.45 | (6.84 | ) | 22,133 | 0.71 | (d) | 0.71 | (d) | 4.72 | (d) | 47 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 3.96 | 0.17 | (0.14 | ) | 0.03 | (0.19 | ) | – | (0.19 | ) | 3.80 | 0.67 | 27,997 | 0.72 | 0.72 | 4.21 | 88 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 3.94 | 0.20 | 0.06 | 0.26 | (0.23 | ) | (0.01 | ) | (0.24 | ) | 3.96 | 7.21 | 38,676 | 0.74 | 0.74 | 5.22 | 101 | |||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 3.81 | 0.09 | (0.35 | ) | (0.26 | ) | (0.09 | ) | – | (0.09 | ) | 3.46 | (6.79 | ) | 72,439 | 0.64 | (d) | 0.64 | (d) | 4.79 | (d) | 47 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 3.97 | 0.17 | (0.14 | ) | 0.03 | (0.19 | ) | – | (0.19 | ) | 3.81 | 0.75 | 80,390 | 0.64 | 0.64 | 4.29 | 88 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 3.95 | 0.20 | 0.07 | 0.27 | (0.24 | ) | (0.01 | ) | (0.25 | ) | 3.97 | 7.29 | 83,282 | 0.65 | 0.65 | 5.31 | 101 | |||||||||||||||||||||||||||||||||||||||
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 |
(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) | Annualized. |
(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% for the year ended February 28, 2018. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 | Invesco High Yield Fund |
August 31, 2022
(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 eight 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 eighth anniversary after a purchase of Class C shares.
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. |
Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices 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, and their value may be adjusted accordingly. 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades 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 using prices provided by an independent pricing service they may be considered fair valued.
Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.
Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.
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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.
Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.
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 may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available and unreliable are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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
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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, significant governmental actions 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.
The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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 based on relative net assets of Class R5 and Class R6. 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. 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, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “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 |
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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.
The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon (“BNYM”) also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the six months ended August 31, 2022, the Fund paid the Adviser $1,650 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.
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.
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 exchange of the two currencies on settlement date, 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).
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 for hedging 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. | Call Options Purchased and Written – The Fund may write 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. An uncovered call option exists without the ownership of the underlying security. 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. |
Additionally, the Fund may enter into an option on a swap agreement, also called a “swaption”. A swaption is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based premium. A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the Counterparties.
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. The risk in writing an uncovered call option is that the Fund may incur significant losses if the value of the written security exceeds the exercise price of the option.
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.
M. | 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. |
Additionally, the Fund may enter into an option on a swap agreement, also called a “swaption”. A swaption is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based premium. A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the Counterparties.
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,
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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.
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 net asset value (“NAV”) per share 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. 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. Additionally, an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) includes credit related contingent features which allow Counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the Counterparty. 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, 2022, if any, 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. | Bank Loan Risk – Although the resale, or secondary market for floating rate loans has grown substantially over the past decade, both in overall size and number of market participants, there is no organized exchange or board of trade on which floating rate loans are traded. Instead, the secondary market for floating rate loans is a private, unregulated interdealer or interbank resale market. Such a market may therefore be subject to irregular trading activity, wide |
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bid/ask spreads, and extended trade settlement periods, which may impair the Fund’s ability to sell bank loans within its desired time frame or at an acceptable price and its ability to accurately value existing and prospective investments. Extended trade settlement periods may result in cash not being immediately available to the Fund. As a result, the Fund may have to sell other investments or engage in borrowing transactions to raise cash to meet its obligations. Similar to other asset classes, bank loan funds may be exposed to counterparty credit risk, or the risk than an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund seeks to manage counterparty credit risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. |
P. | LIBOR Risk – The Fund may have investments in financial instruments that utilize the London Interbank Offered Rate (“LIBOR”) as the reference or benchmark rate for variable interest rate calculations. LIBOR is intended to measure the rate generally at which banks can lend and borrow from one another in the relevant currency on an unsecured basis. The UK Financial Conduct Authority (“FCA”), the regulator that oversees LIBOR, announced that the majority of LIBOR rates would cease to be published or would no longer be representative on January 1, 2022. Although the publication of most LIBOR rates ceased at the end of 2021, a selection of widely used USD LIBOR rates continues to be published until June 2023 to allow for an orderly transition away from these rates. |
There remains uncertainty and risks relating to the continuing LIBOR transition and its effects on the Fund and the instruments in which the Fund invests. There can be no assurance that the composition or characteristics of any alternative reference rates (“ARRs”) or financial instruments in which the Fund invests that utilize ARRs will be similar to or produce the same value or economic equivalence as LIBOR or that these instruments will have the same volume or liquidity. Additionally, there remains uncertainty and risks relating to certain “legacy” USD LIBOR instruments that were issued or entered into before December 31, 2021 and the process by which a replacement interest rate will be identified and implemented into these instruments when USD LIBOR is ultimately discontinued. The effects of such uncertainty and risks in “legacy” USD LIBOR instruments held by the Fund could result in losses to the Fund.
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. | Other Risks – During the period, the Fund experienced a low interest rate environment 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that holds securities of that entity will be adversely impacted. |
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’ claims. Junk bonds are less liquid than investment grade debt securities and their prices tend to be more volatile.
S. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2022, the effective advisory fee rate incurred by the Fund was 0.55%.
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, 2023, 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, 2023. 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, 2024, 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, 2022, the Adviser waived advisory fees of $9,933.
20 | Invesco High Yield 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, 2022, 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, 2022, 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, 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 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, 2022, 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, 2022, IDI advised the Fund that IDI retained $15,787 in front-end sales commissions from the sale of Class A shares and $2,987 and $1,679 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 Adviser’s 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, 2022. 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 | $ | – | $ | 709,711,384 | $ | – | $ | 709,711,384 | ||||||||
| ||||||||||||||||
Variable Rate Senior Loan Interests | – | 21,310,851 | 8,215,655 | 29,526,506 | ||||||||||||
| ||||||||||||||||
Non-U.S. Dollar Denominated Bonds & Notes | – | 8,989,341 | – | 8,989,341 | ||||||||||||
| ||||||||||||||||
Common Stocks & Other Equity Interests | 2,230,000 | – | 0 | 2,230,000 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Securities | – | 523,805 | – | 523,805 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 22,324,510 | – | – | 22,324,510 | ||||||||||||
| ||||||||||||||||
Options Purchased | 830,073 | – | – | 830,073 | ||||||||||||
| ||||||||||||||||
Total Investments in Securities | 25,384,583 | 740,535,381 | 8,215,655 | 774,135,619 | ||||||||||||
| ||||||||||||||||
Other Investments - Assets* | ||||||||||||||||
| ||||||||||||||||
Forward Foreign Currency Contracts | – | 216,498 | – | 216,498 | ||||||||||||
| ||||||||||||||||
Other Investments - Liabilities* | ||||||||||||||||
| ||||||||||||||||
Options Written | (54,073 | ) | – | – | (54,073 | ) | ||||||||||
| ||||||||||||||||
Swap Agreements | – | (574,318 | ) | – | (574,318 | ) | ||||||||||
| ||||||||||||||||
(54,073 | ) | (574,318 | ) | – | (628,391 | ) | ||||||||||
| ||||||||||||||||
Total Other Investments | (54,073 | ) | (357,820 | ) | – | (411,893 | ) | |||||||||
| ||||||||||||||||
Total Investments | $ | 25,330,510 | $ | 740,177,561 | $ | 8,215,655 | $ | 773,723,726 | ||||||||
|
* | Forward foreign currency contracts and swap agreements are valued at unrealized appreciation (depreciation). Options written are shown at value. |
21 | Invesco High Yield Fund |
Change in | ||||||||||||||||||
Accrued | Realized | Unrealized | Transfers | Transfers | ||||||||||||||
Value | Purchases | Proceeds | Discounts/ | Gain | Appreciation | into | out of | Value | ||||||||||
02/28/22 | at Cost | from Sales | Premiums | (Loss) | (Depreciation) | Level 3 | Level 3 | 08/31/22 | ||||||||||
Variable Rate Senior Loan Interests | $9,276,450 | $– | $(779,867) | $– | $(7,073) | $(273,855) | $– | $– | $8,215,655 | |||||||||
Common Stocks & Other Equity Interests | 0 | – | – | – | – | 0 | – | – | 0 | |||||||||
Total | $9,276,450 | $– | $(779,867) | $– | $(7,073) | $(273,855) | $– | $– | $8,215,655 |
The following table summarizes the valuation techniques and significant unobservable inputs used in determining fair value measurements for those investments classified as level 3 at period end:
Range of | ||||||||||||||
Fair Value | Valuation | Unobservable | Unobservable | Unobservable | ||||||||||
at 08/31/22 | Technique | Inputs | Inputs | Input Used | ||||||||||
| ||||||||||||||
Mativ Holdings, Inc., Term Loan B | $8,215,655 | Valuation Service | N/A | N/A | N/A | (a) | ||||||||
|
(a) | Securities classified as Level 3 whose unadjusted values were provided by a pricing service and for which such inputs are unobservable. The Adviser periodically reviews pricing vendor methodologies and inputs to confirm they are determined using unobservable inputs and have been appropriately classified. Such securities’ fair valuations could change significantly based on changes in unobservable inputs used by the pricing service. |
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, 2022:
Value | ||||||||||||||||||||
Currency | Equity | |||||||||||||||||||
Derivative Assets | Risk | Risk | Total | |||||||||||||||||
| ||||||||||||||||||||
Unrealized appreciation on forward foreign currency contracts outstanding | $ | 216,498 | $ | – | $ | 216,498 | ||||||||||||||
| ||||||||||||||||||||
Options purchased, at value – Exchange-Traded(a) | – | 830,073 | 830,073 | |||||||||||||||||
| ||||||||||||||||||||
Total Derivative Assets | 216,498 | 830,073 | 1,046,571 | |||||||||||||||||
| ||||||||||||||||||||
Derivatives not subject to master netting agreements | – | (830,073 | ) | (830,073 | ) | |||||||||||||||
| ||||||||||||||||||||
Total Derivative Assets subject to master netting agreements | $ | 216,498 | $ | – | $ | 216,498 | ||||||||||||||
|
Value | ||||||||||||||||||||
Credit | Equity | |||||||||||||||||||
Derivative Liabilities | Risk | Risk | Total | |||||||||||||||||
| ||||||||||||||||||||
Unrealized depreciation on swap agreements – Centrally Cleared | $ | (574,318 | ) | $ | – | $ | (574,318 | ) | ||||||||||||
| ||||||||||||||||||||
Options written, at value – Exchange-Traded | – | (54,073 | ) | (54,073 | ) | |||||||||||||||
| ||||||||||||||||||||
Total Derivative Liabilities | (574,318 | ) | (54,073 | ) | (628,391 | ) | ||||||||||||||
| ||||||||||||||||||||
Derivatives not subject to master netting agreements | 574,318 | 54,073 | 628,391 | |||||||||||||||||
| ||||||||||||||||||||
Total Derivative Liabilities subject to master netting agreements | $ | – | $ | – | $ | – | ||||||||||||||
|
(a) | Options purchased, at value as reported in the Schedule of Investments. |
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, 2022.
Financial | |||||||||||||||||||||||||
Derivative | Collateral | ||||||||||||||||||||||||
Assets | (Received)/Pledged | ||||||||||||||||||||||||
Forward Foreign | Net Value of | Net | |||||||||||||||||||||||
Counterparty | Currency Contracts | Derivatives | Non-Cash | Cash | Amount | ||||||||||||||||||||
Citibank N.A. | $ | 6,335 | $ | 6,335 | $ | – | $ | – | $ | 6,335 | |||||||||||||||
Deutsche Bank AG | 106,876 | 106,876 | – | – | 106,876 | ||||||||||||||||||||
Goldman Sachs International | 41,659 | 41,659 | – | – | 41,659 | ||||||||||||||||||||
State Street Bank & Trust Co. | 61,628 | 61,628 | – | – | 61,628 | ||||||||||||||||||||
Total | $ | 216,498 | $ | 216,498 | $ | – | $ | – | $ | 216,498 |
22 | Invesco High Yield Fund |
Effect of Derivative Investments for the six months ended August 31, 2022
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 | Equity | ||||||||||||||||||||||||||
Risk | Risk | Risk | Total | |||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Realized Gain (Loss): | ||||||||||||||||||||||||||||
Forward foreign currency contracts | $ | - | $ | 201,225 | $ | - | $ | 201,225 | ||||||||||||||||||||
| ||||||||||||||||||||||||||||
Options purchased(a) | - | - | 1,463,045 | 1,463,045 | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Options written | - | - | (1,110,971 | ) | (1,110,971 | ) | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Swap agreements | 786,085 | - | - | 786,085 | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Change in Net Unrealized Appreciation (Depreciation): | ||||||||||||||||||||||||||||
Forward foreign currency contracts | - | 176,791 | - | 176,791 | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Options purchased(a) | - | - | (698,591 | ) | (698,591 | ) | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Options written | - | - | 570,220 | 570,220 | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Swap agreements | (574,318 | ) | - | - | (574,318 | ) | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Total | $ | 211,767 | $ | 378,016 | $ | 223,703 | $ | 813,486 | ||||||||||||||||||||
|
(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 | Equity Options Purchased | Equity Options Written | Swap Agreements | ||||||||||||||||||||||||||||||||
Average notional value | $ | 2,827,216 | $ | 14,107,050 | $ | 4,903,167 | $ | 18,480,420 | |||||||||||||||||||||||||||
Average contracts | – | 1,919 | 214 | – |
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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,903.
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 carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
23 | Invesco High Yield Fund |
The Fund had a capital loss carryforward as of February 28, 2022, as follows:
Capital Loss Carryforward* | |||||||||||||||||||||||||
Expiration | Short-Term | Long-Term | Total | ||||||||||||||||||||||
Not subject to expiration | $ | 54,411,386 | $ | 168,654,635 | $ | 223,066,021 |
* | 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended August 31, 2022 was $373,308,459 and $400,159,406, 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 | $ | 2,582,113 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (97,433,487 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (94,851,374 | ) | |
|
Cost of investments for tax purposes is $868,589,323.
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2022(a) | February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 9,688,561 | $ | 34,631,498 | 36,290,763 | $ | 143,829,705 | ||||||||||
| ||||||||||||||||
Class C | 224,182 | 802,957 | 1,503,055 | 5,955,768 | ||||||||||||
| ||||||||||||||||
Class Y | 1,490,360 | 5,306,924 | 5,913,568 | 23,509,650 | ||||||||||||
| ||||||||||||||||
Investor Class | 11,488,127 | 41,002,566 | 16,538,567 | 65,705,922 | ||||||||||||
| ||||||||||||||||
Class R5 | 753,580 | 2,657,893 | 1,438,848 | 5,659,073 | ||||||||||||
| ||||||||||||||||
Class R6 | 2,692,035 | 9,671,362 | 8,860,823 | 35,102,627 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 2,977,757 | 10,608,680 | 5,564,336 | 21,993,448 | ||||||||||||
| ||||||||||||||||
Class C | 75,353 | 268,010 | 160,718 | 633,994 | ||||||||||||
| ||||||||||||||||
Class Y | 203,366 | 726,384 | 403,328 | 1,598,498 | ||||||||||||
| ||||||||||||||||
Investor Class | 356,915 | 1,271,158 | 686,860 | 2,713,877 | ||||||||||||
| ||||||||||||||||
Class R5 | 168,988 | 600,799 | 422,999 | 1,667,465 | ||||||||||||
| ||||||||||||||||
Class R6 | 505,320 | 1,799,503 | 1,052,348 | 4,156,051 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 202,179 | 723,373 | 555,275 | 2,198,379 | ||||||||||||
| ||||||||||||||||
Class C | (202,665 | ) | (723,373 | ) | (556,681 | ) | (2,198,379 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (16,620,405 | ) | (59,404,005 | ) | (39,798,531 | ) | (157,660,559 | ) | ||||||||
| ||||||||||||||||
Class C | (767,973 | ) | (2,743,405 | ) | (1,936,919 | ) | (7,646,527 | ) | ||||||||
| ||||||||||||||||
Class Y | (1,518,522 | ) | (5,432,749 | ) | (7,264,253 | ) | (28,692,784 | ) | ||||||||
| ||||||||||||||||
Investor Class | (12,119,034 | ) | (43,494,709 | ) | (18,134,741 | ) | (72,109,580 | ) | ||||||||
| ||||||||||||||||
Class R5 | (1,873,873 | ) | (6,774,811 | ) | (4,263,782 | ) | (16,753,448 | ) | ||||||||
| ||||||||||||||||
Class R6 | (3,350,424 | ) | (12,008,780 | ) | (9,793,276 | ) | (38,178,018 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (5,626,173 | ) | $ | (20,510,725 | ) | (2,356,695 | ) | $ | (8,514,838 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 41% 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. |
24 | 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, 2022 through August 31, 2022.
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) | |||||||||||
Beginning Account Value (03/01/22) | Ending Account Value (08/31/22)1 | Expenses Paid During Period2 | Ending Account Value (08/31/22) | Expenses Paid During Period2 | Annualized Ratio | |||||||
Class A | $1,000.00 | $930.30 | $5.01 | $1,020.01 | $5.24 | 1.03% | ||||||
Class C | 1,000.00 | 926.50 | 8.64 | 1,016.23 | 9.05 | 1.78 | ||||||
Class Y | 1,000.00 | 931.80 | 3.80 | 1,021.27 | 3.97 | 0.78 | ||||||
Investor Class | 1,000.00 | 930.30 | 5.01 | 1,020.01 | 5.24 | 1.03 | ||||||
Class R5 | 1,000.00 | 931.60 | 3.46 | 1,021.63 | 3.62 | 0.71 | ||||||
Class R6 | 1,000.00 | 932.10 | 3.12 | 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, 2022 through August 31, 2022, 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 Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed 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 and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled
Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe and against the Bloomberg U.S. Corporate High Yield 2% Issuer Cap Index (Index). The Board noted that performance of Class A shares of the Fund was in the fourth quintile of its performance for the one year period and the fifth quintile of its performance universe 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 noted that the Fund’s security selection in certain industries and sectors negatively impacted Fund performance. The Board considered that the Fund underwent a change in portfolio management and investment process in 2020. 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, which did not change its conclusions.
26 | Invesco High Yield Fund |
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 is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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 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 its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates 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. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.
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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board 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 also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial
fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination 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. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds
attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.
The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.
The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
27 | Invesco High Yield 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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/ corporate/about-us/esg. 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 number(s): 811-05686 and 033-39519 | Invesco Distributors, Inc. | HYI-SAR-1 |
Semiannual Report to Shareholders | August 31, 2022 |
Invesco High Yield Bond Factor Fund
Nasdaq:
A: OGYAX ∎ C: OGYCX ∎ R: OGYNX ∎ Y: OGYYX ∎ R5: GBHYX ∎ R6: OGYIX
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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
Performance summary |
| |||
Fund vs. Indexes |
| |||
Cumulative total returns, 2/28/22 to 8/31/22, 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 | -8.34 | % | ||
Class C Shares | -8.60 | |||
Class R Shares | -8.46 | |||
Class Y Shares | -8.22 | |||
Class R5 Shares | -8.23 | |||
Class R6 Shares | -8.22 | |||
Bloomberg U.S. Corporate High Yield 2% Issuer Cap Indexq (Broad Market/Style-Specific Index) | -7.78 | |||
Source(s): qRIMES Technologies Corp. | ||||
The Bloomberg 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.
2 | Invesco High Yield Bond Factor Fund |
Average Annual Total Returns |
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As of 8/31/22, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (11/8/13) | 1.91 | % | ||
5 Years | 0.68 | |||
1 Year | -15.00 | |||
Class C Shares | ||||
Inception (11/8/13) | 1.76 | % | ||
5 Years | 0.84 | |||
1 Year | -12.80 | |||
Class R Shares | ||||
Inception (11/8/13) | 2.16 | % | ||
5 Years | 1.30 | |||
1 Year | -11.59 | |||
Class Y Shares | ||||
Inception (11/8/13) | 2.70 | % | ||
5 Years | 1.83 | |||
1 Year | -11.14 | |||
Class R5 Shares | ||||
Inception | 2.50 | % | ||
5 Years | 1.71 | |||
1 Year | -11.14 | |||
Class R6 Shares | ||||
Inception (11/8/13) | 2.73 | % | ||
5 Years | 1.87 | |||
1 Year | -11.04 |
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 Oppenheimer Global High Yield Fund. The Fund was subsequently renamed the Invesco High Yield Bond Factor Fund (the Fund). Returns shown above, for periods ending on or 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. For periods prior to February 28, 2020, performance shown is that of the Fund using its previous investment strategy. Therefore, the past performance shown for periods prior to February 28, 2020 may have differed had the Fund’s current investment strategy been in effect.
Class R5 shares incepted on May 24, 2019. Performance shown on and 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.
3 | Invesco High Yield Bond Factor Fund |
Liquidity Risk Management Program
In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), 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 21-23, 2022, 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 January 1, 2021, through December 31, 2021 (the “Program Reporting Period”). The Report discussed notable events affecting liquidity over the Program Reporting Period, including the impact of the coronavirus pandemic on the Fund and the overall market. The Report noted that there were no material changes to the Program during 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. |
4 | Invesco High Yield Bond Factor Fund |
August 31, 2022
(Unaudited)
Principal Amount | Value | |||||||
| ||||||||
U.S. Dollar Denominated Bonds & Notes–93.97% |
| |||||||
Aerospace & Defense–2.11% | ||||||||
Bombardier, Inc. (Canada), 7.50%, 03/15/2025(b) | $ | 31,000 | $ | 30,377 | ||||
| ||||||||
Howmet Aerospace, Inc., 5.90%, 02/01/2027 | 100,000 | 100,694 | ||||||
| ||||||||
Rolls-Royce PLC (United Kingdom), 5.75%, 10/15/2027(b) | 200,000 | 181,040 | ||||||
| ||||||||
Spirit AeroSystems, Inc., 7.50%, 04/15/2025(b) | 78,000 | 76,417 | ||||||
| ||||||||
TransDigm, Inc., 6.25%, 03/15/2026(b) | 231,000 | 227,240 | ||||||
| ||||||||
615,768 | ||||||||
| ||||||||
Airlines–2.43% |
| |||||||
American Airlines Pass-Through Trust, Series 16-1, Class A, 4.10%, 01/15/2028 | 21,431 | 16,992 | ||||||
| ||||||||
American Airlines, Inc., 11.75%, 07/15/2025(b) | 101,000 | 111,735 | ||||||
| ||||||||
American Airlines, Inc./AAdvantage Loyalty IP Ltd., 5.50%, 04/20/2026(b) | 245,000 | 233,402 | ||||||
| ||||||||
Delta Air Lines, Inc., 7.38%, 01/15/2026 | 111,000 | 113,369 | ||||||
| ||||||||
Hawaiian Brand Intellectual Property Ltd./HawaiianMiles Loyalty Ltd., 5.75%, 01/20/2026(b) | 82,000 | 74,960 | ||||||
| ||||||||
Spirit Loyalty Cayman Ltd./Spirit IP Cayman Ltd., 8.00%, 09/20/2025(b) | 33,000 | 33,558 | ||||||
| ||||||||
United Airlines, Inc., 4.38%, 04/15/2026(b) | 135,000 | 123,267 | ||||||
| ||||||||
707,283 | ||||||||
| ||||||||
Alternative Carriers–0.86% |
| |||||||
Lumen Technologies, Inc., | ||||||||
5.63%, 04/01/2025 | 60,000 | 58,283 | ||||||
| ||||||||
4.50%, 01/15/2029(b) | 38,000 | 28,405 | ||||||
| ||||||||
Series P, 7.60%, 09/15/2039 | 121,000 | 95,365 | ||||||
| ||||||||
Series U, 7.65%, 03/15/2042 | 86,000 | 67,080 | ||||||
| ||||||||
249,133 | ||||||||
| ||||||||
Aluminum–0.27% |
| |||||||
Arconic Corp., 6.00%, 05/15/2025(b) | 80,000 | 78,700 | ||||||
| ||||||||
Apparel Retail–0.40% |
| |||||||
Foot Locker, Inc., 4.00%, 10/01/2029(b) | 76,000 | 62,042 | ||||||
| ||||||||
Gap, Inc. (The), 3.63%, 10/01/2029(b) | 79,000 | 55,140 | ||||||
| ||||||||
117,182 | ||||||||
| ||||||||
Apparel, Accessories & Luxury Goods–1.02% |
| |||||||
G-III Apparel Group Ltd., 7.88%, 08/15/2025(b) | 66,000 | 65,221 | ||||||
| ||||||||
Macy’s Retail Holdings LLC, | ||||||||
5.88%, 04/01/2029(b) | 68,000 | 58,930 | ||||||
| ||||||||
5.88%, 03/15/2030(b) | 133,000 | 113,896 | ||||||
| ||||||||
Under Armour, Inc., 3.25%, 06/15/2026 | 68,000 | 60,167 | ||||||
| ||||||||
298,214 | ||||||||
| ||||||||
Auto Parts & Equipment–1.24% |
| |||||||
Adient US LLC, 9.00%, 04/15/2025(b) | 127,000 | 131,624 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Auto Parts & Equipment–(continued) |
| |||||||
Clarios Global L.P./Clarios US Finance Co., 8.50%, 05/15/2027(b) | $ | 93,000 | $ | 91,494 | ||||
| ||||||||
ZF North America Capital, Inc. (Germany), 4.75%, 04/29/2025(b) | 150,000 | 139,184 | ||||||
| ||||||||
362,302 | ||||||||
| ||||||||
Automobile Manufacturers–2.98% |
| |||||||
Ford Motor Co., | ||||||||
9.00%, 04/22/2025 | 55,000 | 61,603 | ||||||
| ||||||||
7.13%, 11/15/2025 | 75,000 | 80,441 | ||||||
| ||||||||
6.63%, 10/01/2028 | 152,000 | 155,981 | ||||||
| ||||||||
Ford Motor Credit Co. LLC, 4.13%, 08/04/2025 | 350,000 | 331,096 | ||||||
| ||||||||
J.B. Poindexter & Co., Inc., 7.13%, 04/15/2026(b) | 90,000 | 87,326 | ||||||
| ||||||||
Jaguar Land Rover Automotive PLC (United Kingdom), 5.88%, 01/15/2028(b) | 200,000 | 152,423 | ||||||
| ||||||||
868,870 | ||||||||
| ||||||||
Automotive Retail–0.51% |
| |||||||
Carvana Co., 10.25%, 05/01/2030(b) | 71,000 | 56,623 | ||||||
| ||||||||
Penske Automotive Group, Inc., 3.50%, 09/01/2025 | 97,000 | 91,216 | ||||||
| ||||||||
147,839 | ||||||||
| ||||||||
Biotechnology–0.18% |
| |||||||
Emergent BioSolutions, Inc., 3.88%, 08/15/2028(b) | 74,000 | 51,902 | ||||||
| ||||||||
Broadcasting–2.18% |
| |||||||
AMC Networks, Inc., 4.75%, 08/01/2025 | 98,000 | 90,884 | ||||||
| ||||||||
iHeartCommunications, Inc., | ||||||||
6.38%, 05/01/2026 | 97,229 | 91,998 | ||||||
| ||||||||
8.38%, 05/01/2027 | 64,671 | 57,040 | ||||||
| ||||||||
Liberty Interactive LLC, 8.25%, 02/01/2030 | 195,000 | 149,434 | ||||||
| ||||||||
TEGNA, Inc., 4.75%, 03/15/2026(b) | 83,000 | 81,629 | ||||||
| ||||||||
Univision Communications, Inc., 5.13%, 02/15/2025(b) | 122,000 | 117,998 | ||||||
| ||||||||
Urban One, Inc., 7.38%, 02/01/2028(b) | 51,000 | 45,869 | ||||||
| ||||||||
634,852 | ||||||||
| ||||||||
Building Products–1.17% |
| |||||||
Builders FirstSource, Inc., 4.25%, 02/01/2032(b) | 104,000 | 83,146 | ||||||
| ||||||||
Cornerstone Building Brands, Inc., 6.13%, 01/15/2029(b) | 72,000 | 49,180 | ||||||
| ||||||||
Standard Industries, Inc., | ||||||||
5.00%, 02/15/2027(b) | 91,000 | 83,336 | ||||||
| ||||||||
4.75%, 01/15/2028(b) | 41,000 | 35,908 | ||||||
| ||||||||
4.38%, 07/15/2030(b) | 111,000 | 88,270 | ||||||
| ||||||||
339,840 | ||||||||
| ||||||||
Cable & Satellite–4.85% |
| |||||||
CCO Holdings LLC/CCO Holdings Capital Corp., 5.50%, 05/01/2026(b) | 74,000 | 73,354 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco High Yield Bond Factor Fund |
Principal Amount | Value | |||||||
| ||||||||
Cable & Satellite–(continued) |
| |||||||
CSC Holdings LLC, | ||||||||
5.75%, 01/15/2030(b) | $ | 200,000 | $ | 155,215 | ||||
| ||||||||
4.63%, 12/01/2030(b) | 200,000 | 143,351 | ||||||
| ||||||||
DIRECTV Financing LLC/DIRECTV Financing Co-Obligor, Inc., 5.88%, 08/15/2027(b) | 312,000 | 285,911 | ||||||
| ||||||||
DISH DBS Corp., | ||||||||
7.75%, 07/01/2026 | 124,000 | 97,915 | ||||||
| ||||||||
5.25%, 12/01/2026(b) | 35,000 | 28,963 | ||||||
| ||||||||
7.38%, 07/01/2028 | 108,000 | 70,914 | ||||||
| ||||||||
5.75%, 12/01/2028(b) | 50,000 | 38,487 | ||||||
| ||||||||
LCPR Senior Secured Financing DAC, 6.75%, 10/15/2027(b) | 180,000 | 170,190 | ||||||
| ||||||||
Telenet Finance Luxembourg Notes | 70,000 | 64,260 | ||||||
| ||||||||
Telesat Canada/Telesat LLC (Canada), 5.63%, 12/06/2026(b) | 188,000 | 109,872 | ||||||
| ||||||||
UPC Broadband Finco B.V. (Netherlands), 4.88%, 07/15/2031(b) | 200,000 | 173,247 | ||||||
| ||||||||
1,411,679 | ||||||||
| ||||||||
Casinos & Gaming–5.10% |
| |||||||
Affinity Gaming, 6.88%, 12/15/2027(b) | 170,000 | 147,878 | ||||||
| ||||||||
Caesars Entertainment, Inc., 8.13%, 07/01/2027(b) | 83,000 | 81,650 | ||||||
| ||||||||
Caesars Resort Collection LLC/CRC Finco, Inc., 5.75%, 07/01/2025(b) | 70,000 | 68,688 | ||||||
| ||||||||
International Game Technology PLC, 6.50%, 02/15/2025(b) | 200,000 | 198,751 | ||||||
| ||||||||
Las Vegas Sands Corp., 2.90%, 06/25/2025 | 200,000 | 184,471 | ||||||
| ||||||||
Melco Resorts Finance Ltd. (Hong Kong), 5.75%, 07/21/2028(b) | 200,000 | 136,100 | ||||||
| ||||||||
MGM China Holdings Ltd. (Macau), 5.38%, 05/15/2024(b) | 200,000 | 176,775 | ||||||
| ||||||||
MGM Resorts International, | ||||||||
6.75%, 05/01/2025 | 49,000 | 49,034 | ||||||
| ||||||||
5.75%, 06/15/2025 | 98,000 | 95,227 | ||||||
| ||||||||
Premier Entertainment Sub LLC/Premier Entertainment Finance Corp., 5.63%, 09/01/2029(b) | 143,000 | 105,834 | ||||||
| ||||||||
Sabre GLBL, Inc., | ||||||||
9.25%, 04/15/2025(b) | 44,000 | 43,409 | ||||||
| ||||||||
7.38%, 09/01/2025(b) | 210,000 | 199,237 | ||||||
| ||||||||
1,487,054 | ||||||||
| ||||||||
Coal & Consumable Fuels–0.84% |
| |||||||
Alliance Resource Operating Partners L.P./Alliance Resource Finance Corp., 7.50%, 05/01/2025(b) | 196,000 | 194,301 | ||||||
| ||||||||
Enviva Partners L.P./Enviva Partners Finance Corp., 6.50%, 01/15/2026(b) | 50,000 | 48,630 | ||||||
| ||||||||
Murray Energy Corp., 3.00% PIK Rate, 9.00% Cash Rate, 04/15/2024(b)(c)(d) | 130,760 | 667 | ||||||
| ||||||||
243,598 | ||||||||
| ||||||||
Commodity Chemicals–0.57% |
| |||||||
Koppers, Inc., 6.00%, 02/15/2025(b) | 86,000 | 80,814 | ||||||
| ||||||||
Methanex Corp. (Canada), 5.25%, 12/15/2029 | 102,000 | 85,803 | ||||||
| ||||||||
166,617 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Communications Equipment–1.24% |
| |||||||
CommScope Technologies LLC, 6.00%, 06/15/2025(b) | $ | 99,000 | $ | 90,087 | ||||
| ||||||||
Hughes Satellite Systems Corp., 6.63%, 08/01/2026 | 64,000 | 60,665 | ||||||
| ||||||||
Viasat, Inc., 5.63%, 04/15/2027(b) | 229,000 | 211,010 | ||||||
| ||||||||
361,762 | ||||||||
| ||||||||
Construction & Engineering–0.32% |
| |||||||
Arcosa, Inc., 4.38%, 04/15/2029(b) | 34,000 | 30,856 | ||||||
| ||||||||
Artera Services LLC, 9.03%, 12/04/2025(b) | 75,000 | 61,758 | ||||||
| ||||||||
92,614 | ||||||||
| ||||||||
Construction Materials–0.38% |
| |||||||
Camelot Return Merger Sub, Inc., 8.75%, 08/01/2028(b) | 56,000 | 50,923 | ||||||
| ||||||||
Eco Material Technologies, Inc., 7.88%, 01/31/2027(b) | 64,000 | 59,779 | ||||||
| ||||||||
110,702 | ||||||||
| ||||||||
Consumer Finance–2.46% |
| |||||||
ASG Finance Designated Activity Co. (Cyprus), 7.88%, 12/03/2024(b) | 200,000 | 184,500 | ||||||
| ||||||||
Credit Acceptance Corp., 5.13%, 12/31/2024(b) | 139,000 | 131,338 | ||||||
| ||||||||
Navient Corp., | ||||||||
5.88%, 10/25/2024 | 101,000 | 97,123 | ||||||
| ||||||||
6.75%, 06/25/2025 | 160,000 | 154,626 | ||||||
| ||||||||
5.63%, 08/01/2033 | 79,000 | 59,121 | ||||||
| ||||||||
OneMain Finance Corp., 7.13%, 03/15/2026 | 95,000 | 88,607 | ||||||
| ||||||||
715,315 | ||||||||
| ||||||||
Department Stores–0.28% |
| |||||||
Nordstrom, Inc., 6.95%, 03/15/2028 | 85,000 | 82,053 | ||||||
| ||||||||
Diversified Banks–1.00% |
| |||||||
Banco Mercantil del Norte S.A. (Mexico), 7.50%(b)(e)(f) | 160,000 | 145,812 | ||||||
| ||||||||
Intesa Sanpaolo S.p.A. (Italy), 4.20%, 06/01/2032(b)(e) | 200,000 | 145,677 | ||||||
| ||||||||
291,489 | ||||||||
| ||||||||
Diversified Capital Markets–0.63% |
| |||||||
Deutsche Bank AG (Germany), 4.30%, 05/24/2028(e) | 200,000 | 182,959 | ||||||
| ||||||||
Diversified Metals & Mining–0.33% |
| |||||||
Mineral Resources Ltd. (Australia), 8.13%, 05/01/2027(b) | 95,000 | 95,344 | ||||||
| ||||||||
Diversified REITs–0.49% |
| |||||||
HAT Holdings I LLC/HAT Holdings II LLC, 3.38%, 06/15/2026(b) | 60,000 | 52,163 | ||||||
| ||||||||
Uniti Group L.P./Uniti Fiber Holdings, Inc./CSL Capital LLC, 7.88%, 02/15/2025(b) | 91,000 | 90,016 | ||||||
| ||||||||
142,179 | ||||||||
| ||||||||
Diversified Support Services–0.19% |
| |||||||
MPH Acquisition Holdings LLC, 5.75%, 11/01/2028(b) | 70,000 | 55,671 | ||||||
|
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 | |||||||
| ||||||||
Drug Retail–0.32% |
| |||||||
Rite Aid Corp., | ||||||||
7.50%, 07/01/2025(b) | $ | 56,000 | $ | 47,756 | ||||
| ||||||||
8.00%, 11/15/2026(b) | 55,000 | 44,921 | ||||||
| ||||||||
92,677 | ||||||||
| ||||||||
Electric Utilities–0.89% |
| |||||||
DPL, Inc., 4.13%, 07/01/2025 | 46,000 | 43,470 | ||||||
| ||||||||
FirstEnergy Corp., 2.05%, 03/01/2025 | 47,000 | 43,959 | ||||||
| ||||||||
Talen Energy Supply LLC, 7.25%, 05/15/2027(b)(d) | 127,000 | 130,651 | ||||||
| ||||||||
Terraform Global Operating L.P., 6.13%, 03/01/2026(b) | 44,000 | 41,651 | ||||||
| ||||||||
259,731 | ||||||||
| ||||||||
Electrical Components & Equipment–0.37% |
| |||||||
WESCO Distribution, Inc., 7.13%, 06/15/2025(b) 107,000 107,152 | ||||||||
| ||||||||
Electronic Components–0.18% |
| |||||||
Likewize Corp., 9.75%, 10/15/2025(b) | 55,000 | 52,787 | ||||||
| ||||||||
Environmental & Facilities Services–0.92% |
| |||||||
GFL Environmental, Inc. (Canada), 4.25%, 06/01/2025(b) | 170,000 | 162,473 | ||||||
| ||||||||
Harsco Corp., 5.75%, 07/31/2027(b) | 65,000 | 46,197 | ||||||
| ||||||||
Stericycle, Inc., 5.38%, 07/15/2024(b) | 60,000 | 58,799 | ||||||
| ||||||||
267,469 | ||||||||
| ||||||||
Fertilizers & Agricultural Chemicals–0.29% |
| |||||||
Eurochem Finance DAC (Russia), 5.50%, 03/13/2024(b) | 200,000 | 84,500 | ||||||
| ||||||||
Financial Exchanges & Data–0.72% |
| |||||||
Coinbase Global, Inc., | ||||||||
3.38%, 10/01/2028(b) | 164,000 | 106,258 | ||||||
| ||||||||
3.63%, 10/01/2031(b) | 172,000 | 104,980 | ||||||
| ||||||||
211,238 | ||||||||
| ||||||||
Food Distributors–0.63% |
| |||||||
C&S Group Enterprises LLC, 5.00%, 12/15/2028(b) | 150,000 | 111,221 | ||||||
| ||||||||
US Foods, Inc., 6.25%, 04/15/2025(b) | 72,000 | 72,445 | ||||||
| ||||||||
183,666 | ||||||||
| ||||||||
Food Retail–0.66% |
| |||||||
Albertson’s Cos., Inc./Safeway, Inc./New Albertson’s L.P./Albertson’s LLC, 4.63%, 01/15/2027(b) | 209,000 | 190,972 | ||||||
| ||||||||
Footwear–0.33% |
| |||||||
Abercrombie & Fitch Management Co., 8.75%, 07/15/2025(b) | 97,000 | 94,824 | ||||||
| ||||||||
Health Care Equipment–0.43% |
| |||||||
Varex Imaging Corp., 7.88%, 10/15/2027(b) | 131,000 | 126,713 | ||||||
| ||||||||
Health Care Facilities–0.70% |
| |||||||
Change Healthcare Holdings LLC/Change Healthcare Finance, Inc., 5.75%, 03/01/2025(b) | 30,000 | 29,679 | ||||||
| ||||||||
RegionalCare Hospital Partners Holdings, Inc./LifePoint Health, Inc., 9.75%, 12/01/2026(b) | 31,000 | 29,576 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Health Care Facilities–(continued) | ||||||||
Tenet Healthcare Corp., 4.88%, 01/01/2026(b) | $ | 151,000 | $ | 143,643 | ||||
| ||||||||
202,898 | ||||||||
| ||||||||
Health Care REITs–0.11% |
| |||||||
Diversified Healthcare Trust, 9.75%, 06/15/2025 | 34,000 | 33,464 | ||||||
| ||||||||
Health Care Services–2.21% |
| |||||||
Community Health Systems, Inc., | ||||||||
8.00%, 03/15/2026(b) | 152,000 | 142,310 | ||||||
| ||||||||
5.63%, 03/15/2027(b) | 215,000 | 182,726 | ||||||
| ||||||||
6.88%, 04/15/2029(b) | 86,000 | 53,883 | ||||||
| ||||||||
6.13%, 04/01/2030(b) | 33,000 | 20,500 | ||||||
| ||||||||
Omnicare, Inc., 4.75%, 12/01/2022 | 30,000 | 30,000 | ||||||
| ||||||||
Prime Healthcare Services, Inc., 7.25%, 11/01/2025(b) | 61,000 | 54,082 | ||||||
| ||||||||
US Acute Care Solutions LLC, 6.38%, 03/01/2026(b) | 178,000 | 159,268 | ||||||
| ||||||||
642,769 | ||||||||
| ||||||||
Health Care Technology–0.32% |
| |||||||
Minerva Merger Sub, Inc., 6.50%, 02/15/2030(b) | 109,000 | 92,678 | ||||||
| ||||||||
Home Furnishings–0.80% |
| |||||||
Tempur Sealy International, Inc., | ||||||||
4.00%, 04/15/2029(b) | 143,000 | 117,704 | ||||||
| ||||||||
3.88%, 10/15/2031(b) | 150,000 | 115,684 | ||||||
| ||||||||
233,388 | ||||||||
| ||||||||
Home Improvement Retail–0.33% |
| |||||||
JELD-WEN, Inc., | ||||||||
4.63%, 12/15/2025(b) | 66,000 | 56,854 | ||||||
| ||||||||
4.88%, 12/15/2027(b) | 49,000 | 38,054 | ||||||
| ||||||||
94,908 | ||||||||
| ||||||||
Homebuilding–1.47% |
| |||||||
Beazer Homes USA, Inc., 5.88%, 10/15/2027 | 101,000 | 83,216 | ||||||
| ||||||||
LGI Homes, Inc., 4.00%, 07/15/2029(b) | 187,000 | 146,110 | ||||||
| ||||||||
Mattamy Group Corp. (Canada), 4.63%, 03/01/2030(b) | 38,000 | 30,845 | ||||||
| ||||||||
New Home Co., Inc. (The), 7.25%, 10/15/2025(b) | 100,000 | 82,687 | ||||||
| ||||||||
Tri Pointe Homes, Inc., 5.25%, 06/01/2027 | 95,000 | 86,843 | ||||||
| ||||||||
429,701 | ||||||||
| ||||||||
Hotel & Resort REITs–0.95% |
| |||||||
Service Properties Trust, | ||||||||
4.65%, 03/15/2024 | 159,000 | 148,283 | ||||||
| ||||||||
4.35%, 10/01/2024 | 72,000 | 64,535 | ||||||
| ||||||||
4.95%, 02/15/2027 | 78,000 | 63,281 | ||||||
| ||||||||
276,099 | ||||||||
| ||||||||
Hotels, Resorts & Cruise Lines–3.25% |
| |||||||
Carnival Corp., | ||||||||
7.63%, 03/01/2026(b) | 185,000 | 157,749 | ||||||
| ||||||||
5.75%, 03/01/2027(b) | 226,000 | 176,032 | ||||||
| ||||||||
6.00%, 05/01/2029(b) | 117,000 | 88,847 | ||||||
|
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) |
| |||||||
Royal Caribbean Cruises Ltd., | ||||||||
11.50%, 06/01/2025(b) | $ | 152,000 | $ | 161,518 | ||||
| ||||||||
5.50%, 04/01/2028(b) | 83,000 | 62,770 | ||||||
| ||||||||
Travel + Leisure Co., | ||||||||
5.65%, 04/01/2024 | 7,000 | 6,944 | ||||||
| ||||||||
Series J, 6.00%, 04/01/2027 | 174,000 | 165,464 | ||||||
| ||||||||
VOC Escrow Ltd., 5.00%, 02/15/2028(b) | 151,000 | 127,810 | ||||||
| ||||||||
947,134 | ||||||||
| ||||||||
Housewares & Specialties–0.66% |
| |||||||
Newell Brands, Inc., | ||||||||
4.45%, 04/01/2026 | 147,000 | 138,440 | ||||||
| ||||||||
5.63%, 04/01/2036 | 60,000 | 53,817 | ||||||
| ||||||||
192,257 | ||||||||
| ||||||||
Independent Power Producers & Energy Traders–0.48% |
| |||||||
EnfraGen Energia Sur S.A./EnfraGen Spain S.A./Prime Energia S.p.A. (Spain), 5.38%, 12/30/2030(b) | 200,000 | 140,000 | ||||||
| ||||||||
Industrial Conglomerates–0.30% |
| |||||||
Icahn Enterprises L.P./Icahn Enterprises Finance Corp., 6.25%, 05/15/2026 92,000 88,355 | ||||||||
| ||||||||
Insurance Brokers–0.36% |
| |||||||
Alliant Holdings Intermediate LLC/Alliant Holdings Co-Issuer, 6.75%, 10/15/2027(b) | 32,000 | 29,121 | ||||||
| ||||||||
HUB International Ltd., 7.00%, 05/01/2026(b) | 78,000 | 76,514 | ||||||
| ||||||||
105,635 | ||||||||
| ||||||||
Integrated Oil & Gas–1.25% |
| |||||||
Occidental Petroleum Corp., | ||||||||
2.90%, 08/15/2024 | 184,000 | 179,500 | ||||||
| ||||||||
8.00%, 07/15/2025 | 41,000 | 44,589 | ||||||
| ||||||||
5.88%, 09/01/2025 | 50,000 | 51,319 | ||||||
| ||||||||
5.55%, 03/15/2026 | 88,000 | 90,244 | ||||||
| ||||||||
365,652 | ||||||||
| ||||||||
Integrated Telecommunication Services–3.41% |
| |||||||
Avaya, Inc., 6.13%, 09/15/2028(b) | 94,000 | 51,549 | ||||||
| ||||||||
Connect Finco S.a.r.l./Connect US Finco LLC (United Kingdom), 6.75%, 10/01/2026(b) | 229,000 | 210,273 | ||||||
| ||||||||
Consolidated Communications, Inc., 6.50%, 10/01/2028(b) | 73,000 | 58,926 | ||||||
| ||||||||
Embarq Corp., 8.00%, 06/01/2036 | 162,000 | 126,141 | ||||||
| ||||||||
Frontier Communications Holdings LLC, 5.88%, 11/01/2029 | 72,000 | 58,876 | ||||||
| ||||||||
Level 3 Financing, Inc., 5.25%, 03/15/2026 | 64,000 | 65,165 | ||||||
| ||||||||
Ligado Networks LLC, 15.50%15.50% PIK Rate, 0.00% Cash Rate, 11/01/2023(b)(c) | 43,924 | 22,552 | ||||||
| ||||||||
Telecom Italia S.p.A. (Italy), 5.30%, 05/30/2024(b)(g) | 305,000 | 293,962 | ||||||
| ||||||||
Windstream Escrow LLC/Windstream Escrow Finance Corp., 7.75%, 08/15/2028(b) | 123,000 | 105,915 | ||||||
| ||||||||
993,359 | ||||||||
| ||||||||
Interactive Home Entertainment–0.35% |
| |||||||
Cinemark USA, Inc., 8.75%, 05/01/2025(b) | 100,000 | 102,990 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Interactive Media & Services–0.02% |
| |||||||
Diamond Sports Group LLC/Diamond Sports Finance Co., 5.38%, 08/15/2026(b) | $ | 94,000 | $ | 6,580 | ||||
| ||||||||
Internet & Direct Marketing Retail–1.31% |
| |||||||
Photo Holdings Merger Sub, Inc., 8.50%, 10/01/2026(b) | 271,000 | 202,781 | ||||||
| ||||||||
QVC, Inc., | ||||||||
4.45%, 02/15/2025 | 69,000 | 63,571 | ||||||
| ||||||||
4.75%, 02/15/2027 | 73,000 | 60,403 | ||||||
| ||||||||
5.45%, 08/15/2034 | 78,000 | 56,002 | ||||||
| ||||||||
382,757 | ||||||||
| ||||||||
Internet Services & Infrastructure–0.47% |
| |||||||
Cogent Communications Group, Inc., 3.50%, 05/01/2026(b) | 67,000 | 60,438 | ||||||
| ||||||||
Condor Merger Sub, Inc., 7.38%, 02/15/2030(b) | 93,000 | 77,762 | ||||||
| ||||||||
138,200 | ||||||||
| ||||||||
Investment Banking & Brokerage–0.27% |
| |||||||
NFP Corp., 6.88%, 08/15/2028(b) | 96,000 | 79,043 | ||||||
| ||||||||
Leisure Facilities–0.64% |
| |||||||
Cedar Fair L.P./Canada’s Wonderland Co./Magnum Management Corp., 5.50%, 05/01/2025(b) | 88,000 | 86,435 | ||||||
| ||||||||
Vail Resorts, Inc., 6.25%, 05/15/2025(b) | 100,000 | 100,272 | ||||||
| ||||||||
186,707 | ||||||||
| ||||||||
Life & Health Insurance–0.34% |
| |||||||
Genworth Holdings, Inc., 6.50%, 06/15/2034 | 111,000 | 97,888 | ||||||
| ||||||||
Marine–0.29% |
| |||||||
NCL Corp. Ltd., 5.88%, 03/15/2026(b) | 64,000 | 51,840 | ||||||
| ||||||||
Seaspan Corp. (Hong Kong), 5.50%, 08/01/2029(b) | 38,000 | 31,350 | ||||||
| ||||||||
83,190 | ||||||||
| ||||||||
Metal & Glass Containers–1.11% |
| |||||||
Ardagh Packaging Finance PLC/Ardagh Holdings USA, Inc., 5.25%, 04/30/2025(b) | 200,000 | 189,406 | ||||||
| ||||||||
Ball Corp., 4.88%, 03/15/2026 | 53,000 | 51,383 | ||||||
| ||||||||
LABL, Inc., 6.75%, 07/15/2026(b) | 55,000 | 52,332 | ||||||
| ||||||||
Mauser Packaging Solutions Holding Co., 7.25%, 04/15/2025(b) | 34,000 | 30,999 | ||||||
| ||||||||
324,120 | ||||||||
| ||||||||
Mortgage REITs–0.61% |
| |||||||
Ladder Capital Finance Holdings LLLP/Ladder Capital Finance Corp., 4.75%, 06/15/2029(b) | 96,000 | 81,478 | ||||||
| ||||||||
Rithm Capital Corp., 6.25%, 10/15/2025(b) | 109,000 | 96,850 | ||||||
| ||||||||
178,328 | ||||||||
| ||||||||
Movies & Entertainment–2.06% |
| |||||||
Banijay Entertainment S.A.S.U. (France), 5.38%, 03/01/2025(b) | 200,000 | 188,835 | ||||||
| ||||||||
Netflix, Inc., | ||||||||
5.88%, 02/15/2025 | 85,000 | 87,065 | ||||||
| ||||||||
4.38%, 11/15/2026 | 82,000 | 79,647 | ||||||
| ||||||||
5.88%, 11/15/2028 | 87,000 | 88,193 | ||||||
|
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 | |||||||
| ||||||||
Movies & Entertainment–(continued) |
| |||||||
Resorts World Las Vegas LLC/RWLV Capital, Inc., 4.63%, 04/06/2031(b) | $ | 200,000 | $ | 155,215 | ||||
| ||||||||
598,955 | ||||||||
| ||||||||
Multi-Utilities–0.48% |
| |||||||
Algonquin Power & Utilities Corp. (Canada), 4.75%, 01/18/2082(e) | 162,000 | 140,521 | ||||||
| ||||||||
Office Services & Supplies–0.50% |
| |||||||
ACCO Brands Corp., 4.25%, 03/15/2029(b) | 25,000 | 20,883 | ||||||
| ||||||||
Pitney Bowes, Inc., | ||||||||
6.88%, 03/15/2027(b) | 70,000 | 53,057 | ||||||
| ||||||||
7.25%, 03/15/2029(b) | 105,000 | 71,609 | ||||||
| ||||||||
145,549 | ||||||||
| ||||||||
Oil & Gas Drilling–1.78% |
| |||||||
Harvest Midstream I L.P., 7.50%, 09/01/2028(b) | 130,000 | 123,189 | ||||||
| ||||||||
NGL Energy Operating LLC/NGL Energy Finance Corp., 7.50%, 02/01/2026(b) | 200,000 | 183,273 | ||||||
| ||||||||
Rockies Express Pipeline LLC, | ||||||||
3.60%, 05/15/2025(b) | 95,000 | 87,427 | ||||||
| ||||||||
7.50%, 07/15/2038(b) | 50,000 | 44,022 | ||||||
| ||||||||
6.88%, 04/15/2040(b) | 98,000 | 81,785 | ||||||
| ||||||||
519,696 | ||||||||
| ||||||||
Oil & Gas Equipment & Services–1.01% |
| |||||||
Oceaneering International, Inc., 4.65%, 11/15/2024 | 64,000 | 59,797 | ||||||
| ||||||||
USA Compression Partners L.P./USA Compression Finance Corp., 6.88%, 04/01/2026 | 112,000 | 105,232 | ||||||
| ||||||||
Weatherford International Ltd., | ||||||||
11.00%, 12/01/2024(b) | 33,000 | 33,589 | ||||||
| ||||||||
8.63%, 04/30/2030(b) | 106,000 | 95,999 | ||||||
| ||||||||
294,617 | ||||||||
| ||||||||
Oil & Gas Exploration & Production–3.07% |
| |||||||
CrownRock L.P./CrownRock Finance, Inc., 5.63%, 10/15/2025(b) | 84,000 | 82,862 | ||||||
| ||||||||
EQT Corp., 6.13%, 02/01/2025 | 123,000 | 126,574 | ||||||
| ||||||||
Gulfport Energy Corp., | ||||||||
8.00%, 05/17/2026 | 1,756 | 1,770 | ||||||
| ||||||||
8.00%, 05/17/2026(b) | 39,502 | 39,821 | ||||||
| ||||||||
Gulfport Energy Operating Corp., 6.38%, 05/15/2025 | 135,000 | 422 | ||||||
| ||||||||
Hilcorp Energy I L.P./Hilcorp Finance Co., 5.75%, 02/01/2029(b) | 73,000 | 66,556 | ||||||
| ||||||||
Moss Creek Resources Holdings, Inc., | ||||||||
7.50%, 01/15/2026(b) | 62,000 | 56,482 | ||||||
| ||||||||
10.50%, 05/15/2027(b) | 37,000 | 35,794 | ||||||
| ||||||||
Murphy Oil Corp., 6.13%, 12/01/2042 | 110,000 | 86,216 | ||||||
| ||||||||
Par Petroleum LLC/Par Petroleum Finance Corp., 7.75%, 12/15/2025(b) | 83,000 | 81,051 | ||||||
| ||||||||
PDC Energy, Inc., 6.13%, 09/15/2024 | 66,000 | 65,554 | ||||||
| ||||||||
Southwestern Energy Co., 5.70%, 01/23/2025 | 71,000 | 71,085 | ||||||
| ||||||||
Vermilion Energy, Inc. (Canada), 5.63%, 03/15/2025(b) | 186,000 | 178,974 | ||||||
| ||||||||
893,161 | ||||||||
| ||||||||
Oil & Gas Refining & Marketing–2.01% |
| |||||||
CVR Energy, Inc., 5.25%, 02/15/2025(b) | 97,000 | 91,648 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Oil & Gas Refining & Marketing–(continued) |
| |||||||
EnLink Midstream Partners L.P., | ||||||||
4.15%, 06/01/2025 | $ | 30,000 | $ | 29,283 | ||||
| ||||||||
4.85%, 07/15/2026 | 175,000 | 172,402 | ||||||
| ||||||||
NuStar Logistics L.P., | ||||||||
6.00%, 06/01/2026 | 56,000 | 52,939 | ||||||
| ||||||||
5.63%, 04/28/2027 | 52,000 | 47,424 | ||||||
| ||||||||
Parkland Corp. (Canada), 4.50%, 10/01/2029(b) | 35,000 | 29,677 | ||||||
| ||||||||
PBF Holding Co. LLC/PBF Finance Corp., 7.25%, 06/15/2025 | 166,000 | 161,435 | ||||||
| ||||||||
584,808 | ||||||||
| ||||||||
Oil & Gas Storage & Transportation–4.47% |
| |||||||
Buckeye Partners L.P., 4.13%, 03/01/2025(b) | 100,000 | 93,647 | ||||||
| ||||||||
EQM Midstream Partners L.P., | ||||||||
4.00%, 08/01/2024 | 100,000 | 94,720 | ||||||
| ||||||||
6.50%, 07/15/2048 | 36,000 | 30,598 | ||||||
| ||||||||
Genesis Energy L.P./Genesis Energy Finance Corp., | ||||||||
8.00%, 01/15/2027 | 124,000 | 117,721 | ||||||
| ||||||||
7.75%, 02/01/2028 | 47,000 | 43,640 | ||||||
| ||||||||
Holly Energy Partners L.P./Holly Energy Finance Corp., 5.00%, 02/01/2028(b) | 42,000 | 39,167 | ||||||
| ||||||||
ITT Holdings LLC, 6.50%, 08/01/2029(b) | 75,000 | 63,458 | ||||||
| ||||||||
Neptune Energy Bondco PLC (United Kingdom), 6.63%, 05/15/2025(b) | 200,000 | 193,381 | ||||||
| ||||||||
New Fortress Energy, Inc., | ||||||||
6.75%, 09/15/2025(b) | 160,000 | 154,988 | ||||||
| ||||||||
6.50%, 09/30/2026(b) | 120,000 | 113,841 | ||||||
| ||||||||
Northriver Midstream Finance L.P. (Canada), 5.63%, 02/15/2026(b) | 47,000 | 45,189 | ||||||
| ||||||||
Summit Midstream Holdings LLC/Summit Midstream Finance Corp., 8.50%, 10/15/2026(b) | 62,000 | 60,146 | ||||||
| ||||||||
Sunoco L.P./Sunoco Finance Corp., 4.50%, 04/30/2030 | 51,000 | 43,586 | ||||||
| ||||||||
Tallgrass Energy Partners L.P./Tallgrass Energy Finance Corp., | ||||||||
6.00%, 03/01/2027(b) | 70,000 | 63,985 | ||||||
| ||||||||
5.50%, 01/15/2028(b) | 130,000 | 112,585 | ||||||
| ||||||||
Western Midstream Operating L.P., 3.35%, 02/01/2025 | 33,000 | 31,197 | ||||||
| ||||||||
1,301,849 | ||||||||
| ||||||||
Other Diversified Financial Services–1.44% |
| |||||||
Midcap Financial Issuer Trust, 5.63%, 01/15/2030(b) | 200,000 | 152,865 | �� | |||||
| ||||||||
Operadora de Servicios Mega S.A. de C.V. Sofom ER (Mexico), 8.25%, 02/11/2025(b) | 200,000 | 119,500 | ||||||
| ||||||||
United Wholesale Mortgage LLC, | ||||||||
5.50%, 11/15/2025(b) | 99,000 | 87,523 | ||||||
| ||||||||
5.50%, 04/15/2029(b) | 75,000 | 58,477 | ||||||
| ||||||||
418,365 | ||||||||
| ||||||||
Packaged Foods & Meats–0.00% |
| |||||||
Kraft Heinz Foods Co. (The), 3.88%, 05/15/2027 | 1,000 | 967 | ||||||
| ||||||||
Paper Packaging–0.69% |
| |||||||
Berry Global, Inc., 4.50%, 02/15/2026(b) | 91,000 | 87,494 | ||||||
|
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 | |||||||
| ||||||||
Paper Packaging–(continued) |
| |||||||
Sealed Air Corp., 5.50%, 09/15/2025(b) | $ | 115,000 | $ | 114,595 | ||||
| ||||||||
202,089 | ||||||||
| ||||||||
Paper Products–0.77% |
| |||||||
Clearwater Paper Corp., 5.38%, 02/01/2025(b) | 24,000 | 23,849 | ||||||
| ||||||||
Domtar Corp., 6.75%, 10/01/2028(b) | 143,000 | 128,668 | ||||||
| ||||||||
Sylvamo Corp., 7.00%, 09/01/2029(b) | 76,000 | 72,310 | ||||||
| ||||||||
224,827 | ||||||||
| ||||||||
Personal Products–0.25% |
| |||||||
Herbalife Nutrition Ltd./HLF Financing, Inc., 7.88%, 09/01/2025(b) | 76,000 | 73,312 | ||||||
| ||||||||
Pharmaceuticals–1.86% |
| |||||||
Bausch Health Cos., Inc., | ||||||||
5.50%, 11/01/2025(b) | 173,000 | 142,934 | ||||||
| ||||||||
5.00%, 01/30/2028(b) | 153,000 | 57,621 | ||||||
| ||||||||
6.25%, 02/15/2029(b) | 77,000 | 29,191 | ||||||
| ||||||||
7.25%, 05/30/2029(b) | 60,000 | 23,193 | ||||||
| ||||||||
5.25%, 01/30/2030(b) | 233,000 | 86,563 | ||||||
| ||||||||
P&L Development LLC/PLD Finance Corp., 7.75%, 11/15/2025(b) | 130,000 | 92,759 | ||||||
| ||||||||
Par Pharmaceutical, Inc., 7.50%, 04/01/2027(b)(d) | 130,000 | 110,660 | ||||||
| ||||||||
542,921 | ||||||||
| ||||||||
Precious Metals & Minerals–0.00% |
| |||||||
Northwest Acquisitions ULC/Dominion Finco, Inc., 7.13%, 11/01/2022(b)(d) | 142,000 | 9 | ||||||
| ||||||||
Regional Banks–0.21% |
| |||||||
Synovus Financial Corp., 5.90%, 02/07/2029(e) | 61,000 | 60,465 | ||||||
| ||||||||
Reinsurance–0.55% |
| |||||||
Enstar Finance LLC, | ||||||||
5.75%, 09/01/2040(e) | 71,000 | 66,193 | ||||||
| ||||||||
5.50%, 01/15/2042(e) | 109,000 | 93,182 | ||||||
| ||||||||
159,375 | ||||||||
| ||||||||
Renewable Electricity–0.29% |
| |||||||
Sunnova Energy Corp., 5.88%, 09/01/2026(b) | 92,000 | 85,027 | ||||||
| ||||||||
Restaurants–0.52% |
| |||||||
Aramark Services, Inc., | ||||||||
5.00%, 04/01/2025(b) | 43,000 | 42,050 | ||||||
| ||||||||
6.38%, 05/01/2025(b) | 109,000 | 108,183 | ||||||
| ||||||||
150,233 | ||||||||
| ||||||||
Retail REITs–0.71% |
| |||||||
American Finance Trust, Inc./American Finance Operating Partner L.P., 4.50%, 09/30/2028(b) | 108,000 | 86,797 | ||||||
| ||||||||
Brookfield Property REIT, Inc./BPR Cumulus LLC/BPR Nimbus LLC/GGSI Sellco LLC, | ||||||||
5.75%, 05/15/2026(Acquired 07/05/2022; Cost $ 60,920)(b) | 66,000 | 61,644 | ||||||
| ||||||||
4.50%, 04/01/2027(Acquired 08/24/2022; Cost $ 59,820)(b) | 67,000 | 57,505 | ||||||
| ||||||||
205,946 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Security & Alarm Services–0.82% |
| |||||||
CoreCivic, Inc., | ||||||||
8.25%, 04/15/2026 | $ | 83,000 | $ | 82,165 | ||||
| ||||||||
4.75%, 10/15/2027 | 75,000 | 63,188 | ||||||
| ||||||||
Prime Security Services Borrower LLC/Prime Finance, Inc., 5.75%, 04/15/2026(b) | 96,000 | 92,487 | ||||||
| ||||||||
237,840 | ||||||||
| ||||||||
Specialized Consumer Services–0.13% |
| |||||||
WW International, Inc., 4.50%, 04/15/2029(b) | 60,000 | 37,553 | ||||||
| ||||||||
Specialized REITs–0.95% |
| |||||||
Iron Mountain, Inc., | ||||||||
4.88%, 09/15/2029(b) | 147,000 | 127,729 | ||||||
| ||||||||
5.25%, 07/15/2030(b) | 167,000 | 147,991 | ||||||
| ||||||||
275,720 | ||||||||
| ||||||||
Specialty Chemicals–1.00% |
| |||||||
Avient Corp., 5.75%, 05/15/2025(b) | 82,000 | 80,974 | ||||||
| ||||||||
Rayonier A.M. Products, Inc., 7.63%, 01/15/2026(b) | 222,000 | 211,094 | ||||||
| ||||||||
292,068 | ||||||||
| ||||||||
Specialty Stores–1.22% |
| |||||||
Bath & Body Works, Inc., | ||||||||
9.38%, 07/01/2025(b) | 50,000 | 52,975 | ||||||
| ||||||||
6.63%, 10/01/2030(b) | 62,000 | 56,401 | ||||||
| ||||||||
LSF9 Atlantis Holdings LLC/Victra Finance Corp., 7.75%, 02/15/2026(b) | 118,000 | 109,338 | ||||||
| ||||||||
Michaels Cos., Inc. (The), 7.88%, 05/01/2029(b) | 36,000 | 23,995 | ||||||
| ||||||||
Sally Holdings LLC/Sally Capital, Inc., 5.63%, 12/01/2025 | 94,000 | 90,230 | ||||||
| ||||||||
Staples, Inc., 7.50%, 04/15/2026(b) | 28,000 | 23,696 | ||||||
| ||||||||
356,635 | ||||||||
| ||||||||
Steel–0.44% |
| |||||||
Cleveland-Cliffs, Inc., 6.75%, 03/15/2026(b) | 61,000 | 61,757 | ||||||
| ||||||||
Infrabuild Australia Pty. Ltd. (Australia), 12.00%, 10/01/2024(b) | 69,000 | 65,225 | ||||||
| ||||||||
126,982 | ||||||||
| ||||||||
Systems Software–0.73% |
| |||||||
NortonLifeLock, Inc., 5.00%, 04/15/2025(b) | 87,000 | 85,980 | ||||||
| ||||||||
Veritas US, Inc./Veritas Bermuda Ltd., 7.50%, 09/01/2025(b) | 166,000 | 128,111 | ||||||
| ||||||||
214,091 | ||||||||
| ||||||||
Technology Hardware, Storage & Peripherals–1.31% |
| |||||||
Seagate HDD Cayman, | ||||||||
4.13%, 01/15/2031 | 92,000 | 75,508 | ||||||
| ||||||||
3.38%, 07/15/2031 | 61,000 | 47,787 | ||||||
| ||||||||
Xerox Corp., 6.75%, 12/15/2039 | 128,000 | 108,171 | ||||||
| ||||||||
Xerox Holdings Corp., | ||||||||
5.00%, 08/15/2025(b) | 100,000 | 92,885 | ||||||
| ||||||||
5.50%, 08/15/2028(b) | 65,000 | 56,950 | ||||||
| ||||||||
381,301 | ||||||||
| ||||||||
Thrifts & Mortgage Finance–0.69% |
| |||||||
| ||||||||
Enact Holdings, Inc., 6.50%, 08/15/2025(b) | 90,000 | 86,090 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco High Yield Bond Factor Fund |
Principal Amount | Value | |||||||
| ||||||||
Thrifts & Mortgage Finance–(continued) |
| |||||||
NMI Holdings, Inc., 7.38%, 06/01/2025(b) | $ | 82,000 | $ | 82,958 | ||||
| ||||||||
PennyMac Financial Services, Inc., 5.75%, 09/15/2031(b) | 38,000 | 30,862 | ||||||
| ||||||||
199,910 | ||||||||
| ||||||||
Tires & Rubber–0.20% |
| |||||||
FXI Holdings, Inc., 12.25%, 11/15/2026(b) | 68,000 | 56,865 | ||||||
| ||||||||
Tobacco–0.35% |
| |||||||
Vector Group Ltd., 5.75%, 02/01/2029(b) | 118,000 | 102,480 | ||||||
| ||||||||
Wireless Telecommunication Services–1.68% |
| |||||||
Sprint Corp., | ||||||||
7.88%, 09/15/2023 | 155,000 | 159,897 | ||||||
| ||||||||
7.13%, 06/15/2024 | 200,000 | 206,746 | ||||||
| ||||||||
T-Mobile USA, Inc., 2.25%, 02/15/2026 | 135,000 | 124,234 | ||||||
| ||||||||
490,877 | ||||||||
| ||||||||
Total U.S. Dollar Denominated Bonds & Notes |
| 27,375,764 | ||||||
| ||||||||
Shares | ||||||||
Exchange-Traded Funds–3.23% |
| |||||||
Invesco High Yield Bond Factor ETF (Cost $1,109,352)(h) | 43,455 | 940,366 | ||||||
| ||||||||
Principal Amount | ||||||||
U.S. Treasury Securities–0.33% |
| |||||||
U.S. Treasury Bills–0.33% |
| |||||||
1.46% - 2.54%, 11/17/2022 | $ | 97,000 | 96,445 | |||||
| ||||||||
Shares | ||||||||
Common Stocks & Other Equity Interests–0.28% |
| |||||||
Advertising–0.00% |
| |||||||
Tenerity LLC, Wts., expiring 04/10/2024(k) | 39 | 0 | ||||||
| ||||||||
Apparel, Accessories & Luxury Goods–0.03% |
| |||||||
Claire’s Holdings LLC | 20 | 6,940 | ||||||
|
Investment Abbreviations:
ETF | - Exchange-Traded Fund | |
LIBOR | - London Interbank Offered Rate | |
Pfd. | - Preferred | |
PIK | - Pay-in-Kind | |
REIT | - Real Estate Investment Trust | |
USD | - U.S. Dollar | |
Wts. | - Warrants |
Shares | Value | |||||||
| ||||||||
Coal & Consumable Fuels–0.08% | ||||||||
ACNR Holdings, Inc. | 232 | $ | 24,244 | |||||
| ||||||||
Oil & Gas Equipment & Services–0.17% |
| |||||||
Superior Energy Services, Inc. | 761 | 50,226 | ||||||
| ||||||||
Total Common Stocks & Other Equity Interests |
| 81,410 | ||||||
| ||||||||
Principal Amount | ||||||||
Variable Rate Senior Loan Interests–0.04%(l)(m) |
| |||||||
Apparel, Accessories & Luxury Goods–0.04% |
| |||||||
Claire’s Stores, Inc., Term Loan, 9.02% (1 mo. USD LIBOR + 6.50%), 12/18/2026 (Cost $10,673) | $ | 12,297 | 11,738 | |||||
| ||||||||
Shares | ||||||||
Preferred Stocks–0.00% |
| |||||||
Apparel, Accessories & Luxury Goods–0.00% |
| |||||||
Claire’s Holdings LLC, Series A, Pfd. | 5 | 1,294 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES |
| 28,507,017 | ||||||
| ||||||||
Investments Purchased with Cash Collateral from Securities on Loan |
| |||||||
Money Market Funds–1.03% | ||||||||
Invesco Private Government Fund, 2.29%(h)(n)(o) | 84,280 | 84,280 | ||||||
| ||||||||
Invesco Private Prime Fund, 2.37%(h)(n)(o) | 216,698 | 216,720 | ||||||
| ||||||||
Total Investments Purchased with Cash Collateral from Securities on Loan |
| 301,000 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES–98.88% (Cost $32,062,953) |
| 28,808,017 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–1.12% |
| 325,158 | ||||||
| ||||||||
NET ASSETS–100.00% | $ | 29,133,175 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | 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, 2022 was $19,534,697, which represented 67.05% 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, 2022 was $241,987, 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) | All or a portion of this security was out on loan at August 31, 2022. |
(h) | 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, 2022. |
Value February 28, 2022 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation (Depreciation) | Realized Gain (Loss) | Value August 31, 2022 | Dividend Income | ||||||||||||||
Invesco High Yield Bond Factor ETF | $1,059,867 | $ | - | $ | - | $(119,501) | $ - | $ 940,366 | $27,381 | |||||||||||
Investments in Affiliated Money Market Funds: | ||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | 82,499 | 585,166 | (667,665 | ) | - | - | - | 36 | ||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 57,351 | 417,975 | (475,317 | ) | - | (9) | - | 26 | ||||||||||||
Invesco Treasury Portfolio, Institutional Class | 94,285 | 668,761 | (763,046 | ) | - | - | - | 34 | ||||||||||||
Investments Purchased with Cash Collateral from Securities on Loan: | ||||||||||||||||||||
Invesco Private Government Fund | 194,457 | 432,299 | (542,476 | ) | - | - | 84,280 | 199* | ||||||||||||
Invesco Private Prime Fund | 453,733 | 932,045 | (1,168,978 | ) | 2 | (82) | 216,720 | 547* | ||||||||||||
Total | $1,942,192 | $ | 3,036,246 | $ | (3,617,482 | ) | $(119,499) | $(91) | $1,241,366 | $28,223 |
* | 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. |
(i) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1K. |
(j) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(k) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(l) | Variable rate senior loan interests often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with any accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, it is anticipated that the variable rate senior loan interests will have an expected average life of three to five years. |
(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) | The rate shown is the 7-day SEC standardized yield as of August 31, 2022. |
(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 1J. |
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-2022 | $ | 221,641 | $ | 281 | $ | 281 | ||||||||||||
U.S. Treasury 10 Year Notes | 27 | December-2022 | 3,156,469 | (17,296 | ) | (17,296 | ) | |||||||||||||
U.S. Treasury 10 Year Ultra Notes | 6 | December-2022 | 751,125 | (3,797 | ) | (3,797 | ) | |||||||||||||
U.S. Treasury Ultra Bonds | 1 | December-2022 | 149,500 | 1,625 | 1,625 | |||||||||||||||
Subtotal-Long Futures Contracts |
| (19,187 | ) | (19,187 | ) | |||||||||||||||
Short Futures Contracts | ||||||||||||||||||||
Interest Rate Risk | ||||||||||||||||||||
U.S. Treasury 2 Year Notes | 11 | December-2022 | (2,291,610 | ) | 3,953 | 3,953 | ||||||||||||||
Total Futures Contracts |
| $ | (15,234 | ) | $ | (15,234 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco High Yield Bond Factor Fund |
Portfolio Composition
By security type, based on Net Assets
as of August 31, 2022
U.S. Dollar Denominated Bonds & Notes | 93.97% | |||
| ||||
Exchange-Traded Funds | 3.23 | |||
| ||||
Security Types Each Less Than 1% of Portfolio | 0.65 | |||
| ||||
Money Market Funds Plus Other Assets Less Liabilities | 2.15 | |||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 | Invesco High Yield Bond Factor Fund |
Statement of Assets and Liabilities
August 31, 2022
(Unaudited)
Assets: | ||||
Investments in unaffiliated securities, at value (Cost $ 30,652,601)* | $ | 27,566,651 | ||
| ||||
Investments in affiliates, at value | 1,241,366 | |||
| ||||
Cash | 158,239 | |||
| ||||
Receivable for: | ||||
Fund shares sold | 4,295 | |||
| ||||
Dividends | 22 | |||
| ||||
Interest | 513,225 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 23,953 | |||
| ||||
Other assets | 60,089 | |||
| ||||
Total assets | 29,567,840 | |||
| ||||
Liabilities: | ||||
Other investments: | ||||
Variation margin payable - futures contracts | 8,020 | |||
| ||||
Payable for: | ||||
Dividends | 22,320 | |||
| ||||
Fund shares reacquired | 484 | |||
| ||||
Collateral upon return of securities loaned | 301,000 | |||
| ||||
Accrued fees to affiliates | 17,197 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 849 | |||
| ||||
Accrued other operating expenses | 57,372 | |||
| ||||
Trustee deferred compensation and retirement plans | 23,953 | |||
| ||||
Collateral with broker | 3,470 | |||
| ||||
Total liabilities | 434,665 | |||
| ||||
Net assets applicable to shares outstanding | $ | 29,133,175 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 37,951,652 | ||
| ||||
Distributable earnings (loss) | (8,818,477 | ) | ||
| ||||
$ | 29,133,175 | |||
|
Net Assets: | ||||
Class A | $ | 20,270,712 | ||
| ||||
Class C | $ | 3,462,845 | ||
| ||||
Class R | $ | 3,696,440 | ||
| ||||
Class Y | $ | 1,677,217 | ||
| ||||
Class R5 | $ | 8,786 | ||
| ||||
Class R6 | $ | 17,175 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 2,558,791 | |||
| ||||
Class C | 437,180 | |||
| ||||
Class R | 466,460 | |||
| ||||
Class Y | 211,617 | |||
| ||||
Class R5 | 1,109 | |||
| ||||
Class R6 | 2,167 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 7.92 | ||
| ||||
Maximum offering price per share | $ | 8.27 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 7.92 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 7.92 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 7.93 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 7.92 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 7.93 | ||
|
* | At August 31, 2022, security with a value of $293,783 was on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 | Invesco High Yield Bond Factor Fund |
Statement of Operations
For the six months ended August 31, 2022
(Unaudited)
Investment income: | ||||
Interest | $ | 906,295 | ||
| ||||
Dividends from affiliates (includes securities lending income of $(26)) | 27,451 | |||
| ||||
Total investment income | 933,746 | |||
| ||||
Expenses: | ||||
Advisory fees | 57,519 | |||
| ||||
Administrative services fees | 2,385 | |||
| ||||
Custodian fees | 2,648 | |||
| ||||
Distribution fees: | ||||
Class A | 24,960 | |||
| ||||
Class C | 20,076 | |||
| ||||
Class R | 9,162 | |||
| ||||
Transfer agent fees – A, C, R and Y | 40,587 | |||
| ||||
Transfer agent fees – R5 | 3 | |||
| ||||
Transfer agent fees – R6 | 16 | |||
| ||||
Trustees’ and officers’ fees and benefits | 7,457 | |||
| ||||
Registration and filing fees | 34,992 | |||
| ||||
Reports to shareholders | 6,509 | |||
| ||||
Professional services fees | 47,731 | |||
| ||||
Other | 6,392 | |||
| ||||
Total expenses | 260,437 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (145,642 | ) | ||
| ||||
Net expenses | 114,795 | |||
| ||||
Net investment income | 818,951 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Unaffiliated investment securities | (1,135,807 | ) | ||
| ||||
Affiliated investment securities | (91 | ) | ||
| ||||
Futures contracts | (246,244 | ) | ||
| ||||
Swap agreements | (14,422 | ) | ||
| ||||
(1,396,564 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Unaffiliated investment securities | (2,032,396 | ) | ||
| ||||
Affiliated investment securities | (119,499 | ) | ||
| ||||
Futures contracts | (49,293 | ) | ||
| ||||
Swap agreements | 9,427 | |||
| ||||
(2,191,761 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (3,588,325 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (2,769,374 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 | Invesco High Yield Bond Factor Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, 2022 | February 28, 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 818,951 | $ | 1,598,519 | ||||
Net realized gain (loss) | (1,396,564 | ) | 436,196 | |||||
Change in net unrealized appreciation (depreciation) | (2,191,761 | ) | (2,007,572 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (2,769,374 | ) | 27,143 | |||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (504,894 | ) | (1,131,081 | ) | ||||
Class C | (78,806 | ) | (184,884 | ) | ||||
Class R | (81,865 | ) | (144,223 | ) | ||||
Class Y | (46,319 | ) | (119,542 | ) | ||||
Class R5 | (229 | ) | (474 | ) | ||||
Class R6 | (1,020 | ) | (2,667 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (713,133 | ) | (1,582,871 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (476,420 | ) | (1,629,812 | ) | ||||
Class C | (499,455 | ) | (606,991 | ) | ||||
Class R | 296,891 | 817,615 | ||||||
Class Y | (1,004,245 | ) | 1,631,535 | |||||
Class R6 | (55,975 | ) | 61,568 | |||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (1,739,204 | ) | 273,915 | |||||
| ||||||||
Net increase (decrease) in net assets | (5,221,711 | ) | (1,281,813 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 34,354,886 | 35,636,699 | ||||||
| ||||||||
End of period | $ | 29,133,175 | $ | 34,354,886 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 | 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 of period | Net investment income(a) | Net gains on securities | 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 net assets fee waivers | 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 08/31/22 | $ | 8.85 | $ | 0.22 | $ | (0.95 | ) | $ | (0.73 | ) | $ | (0.20 | ) | $ | – | $ | (0.20 | ) | $ | 7.92 | (8.34 | )%(d) | $ | 20,271 | 0.63 | %(d)(e) | 1.55 | %(d)(e) | 5.38 | %(d)(e) | 56 | % | ||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 9.24 | 0.41 | (0.40 | ) | 0.01 | (0.40 | ) | – | (0.40 | ) | 8.85 | 0.06 | (d) | 23,143 | 0.63 | (d) | 1.21 | (d) | 4.41 | (d) | 63 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.99 | 0.46 | 0.29 | 0.75 | (0.48 | ) | (0.02 | ) | (0.50 | ) | 9.24 | 8.73 | (d) | 25,804 | 0.64 | (d) | 2.07 | (d) | 5.29 | (d) | 161 | |||||||||||||||||||||||||||||||||||||||||||||||||
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 | (e) | 2.40 | (e) | 4.72 | (e) | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 8.84 | 0.19 | (0.95 | ) | (0.76 | ) | (0.16 | ) | – | (0.16 | ) | 7.92 | (8.60 | ) | 3,463 | 1.38 | (e) | 2.32 | (e) | 4.63 | (e) | 56 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 9.23 | 0.34 | (0.40 | ) | (0.06 | ) | (0.33 | ) | – | (0.33 | ) | 8.84 | (0.69 | ) | 4,417 | 1.38 | 1.98 | 3.66 | 63 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.98 | 0.40 | 0.28 | 0.68 | (0.41 | ) | (0.02 | ) | (0.43 | ) | 9.23 | 7.93 | 5,224 | 1.39 | 2.84 | 4.54 | 161 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (e) | 3.17 | (e) | 4.02 | (e) | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 8.85 | 0.21 | (0.95 | ) | (0.74 | ) | (0.19 | ) | – | (0.19 | ) | 7.92 | (8.46 | ) | 3,696 | 0.88 | (e) | 1.82 | (e) | 5.13 | (e) | 56 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 9.24 | 0.38 | (0.39 | ) | (0.01 | ) | (0.38 | ) | – | (0.38 | ) | 8.85 | (0.19 | ) | 3,807 | 0.88 | 1.48 | 4.16 | 63 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.99 | 0.44 | 0.28 | 0.72 | (0.45 | ) | (0.02 | ) | (0.47 | ) | 9.24 | 8.46 | 3,151 | 0.89 | 2.34 | 5.04 | 161 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (e) | 2.67 | (e) | 4.48 | (e) | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 8.85 | 0.24 | (0.95 | ) | (0.71 | ) | (0.21 | ) | – | (0.21 | ) | 7.93 | (8.11 | ) | 1,677 | 0.38 | (e) | 1.32 | (e) | 5.63 | (e) | 56 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 9.24 | 0.43 | (0.39 | ) | 0.04 | (0.43 | ) | – | (0.43 | ) | 8.85 | 0.31 | 2,899 | 0.38 | 0.98 | 4.66 | 63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.99 | 0.49 | 0.28 | 0.77 | (0.50 | ) | (0.02 | ) | (0.52 | ) | 9.24 | 9.00 | 1,425 | 0.39 | 1.84 | 5.54 | 161 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (e) | 2.17 | (e) | 5.01 | (e) | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 8.85 | 0.23 | (0.95 | ) | (0.72 | ) | (0.21 | ) | – | (0.21 | ) | 7.92 | (8.23 | ) | 9 | 0.38 | (e) | 1.13 | (e) | 5.63 | (e) | 56 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 9.24 | 0.43 | (0.39 | ) | 0.04 | (0.43 | ) | – | (0.43 | ) | 8.85 | 0.31 | 10 | 0.38 | 0.91 | 4.66 | 63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.99 | 0.49 | 0.28 | 0.77 | (0.50 | ) | (0.02 | ) | (0.52 | ) | 9.24 | 9.00 | 10 | 0.39 | 1.52 | 5.54 | 161 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (e) | 1.84 | (e) | 5.02 | (e) | 127 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period ended 05/31/19(f) | 9.02 | 0.01 | (0.06 | ) | (0.05 | ) | (0.00 | ) | – | (0.00 | ) | 8.97 | 3.48 | 10 | 1.22 | (e) | 1.22 | (e) | 5.91 | (e) | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 8.85 | 0.24 | (0.95 | ) | (0.71 | ) | (0.21 | ) | – | (0.21 | ) | 7.93 | (8.11 | ) | 17 | 0.38 | (e) | 1.13 | (e) | 5.63 | (e) | 56 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 9.24 | 0.42 | (0.38 | ) | 0.04 | (0.43 | ) | – | (0.43 | ) | 8.85 | 0.31 | 80 | 0.38 | 0.91 | 4.66 | 63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 9.00 | 0.48 | 0.28 | 0.76 | (0.50 | ) | (0.02 | ) | (0.52 | ) | 9.24 | 8.88 | 23 | 0.39 | 1.52 | 5.54 | 161 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | (e) | 1.81 | (e) | 5.05 | (e) | 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 |
(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, 2022 and for the years ended February 28, 2022 and 2021, 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.
17 | Invesco High Yield Bond Factor Fund |
August 31, 2022
(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.
Prior to February 28, 2020, the Fund sought to gain exposure to Regulation S securities primarily through investments in a wholly-owned and controlled subsidiary of the Fund organized under the laws of the Cayman Islands (the “Subsidiary”). The Subsidiary was organized by the Fund to invest in Regulation S securities. The Fund could invest up to 25% of its total assets in the Subsidiary under its previous strategy. Effective February 28, 2020, the Fund no longer invests in Regulation S securities or the Subsidiary, and the Subsidiary was liquidated. For periods prior to February 28, 2020, the Financial Highlights report the operations of the Fund and the Subsidiary on a consolidated basis.
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 eight 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 eighth anniversary after a purchase of Class C shares.
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. |
Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices 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, and their value may be adjusted accordingly. 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades 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 using prices provided by an independent pricing service they may be considered fair valued.
Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.
Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.
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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.
Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.
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 may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available and unreliable are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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.
18 | Invesco High Yield Bond Factor Fund |
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, significant governmental actions 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.
The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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 based on relative net assets of Class R5 and Class R6. 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. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | 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 |
19 | Invesco High Yield Bond Factor Fund |
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. |
J. | 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, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “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 affiliates 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. |
The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon (“BNYM”) also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the six months ended August 31, 2022, there were no securities lending transactions with the Adviser. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliates on the Statement of Operations.
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 instrument or asset. 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. | 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 net asset value (“NAV”) per share 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
20 | Invesco High Yield Bond Factor Fund |
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. 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. Additionally, an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) includes credit related contingent features which allow Counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the Counterparty. 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, 2022, if any, 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. | 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. |
O. | 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’ claims. Junk bonds are less liquid than investment grade debt securities and their prices tend to be more volatile. |
During the period, the Fund experienced a low interest rate environment 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that holds securities of that entity will be adversely impacted.
P. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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% | |||
|
* | 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, 2022, 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). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Fund.
21 | Invesco High Yield Bond Factor Fund |
The Adviser has contractually agreed, through at least June 30, 2023, 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, 2023. 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. To the extent that the annualized expense ratio does not exceed the expense limits, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
Further, the Adviser has contractually agreed, through at least June 30, 2024, 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, 2022, the Adviser waived advisory fees of $57,519, reimbursed fund level expenses of $47,113 and reimbursed class level expenses of $28,057, $5,254, $4,786, $2,491, $3 and $16 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, 2022, 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, 2022, 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 Plans, 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, 2022, 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, 2022, IDI advised the Fund that IDI retained $3,374 in front-end sales commissions from the sale of Class A shares and $0 and $752 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 Adviser’s 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, 2022. 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 | $ | – | $ | 27,375,764 | $– | $ | 27,375,764 | |||||||||
| ||||||||||||||||
Exchange-Traded Funds | 940,366 | – | – | 940,366 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Securities | – | 96,445 | – | 96,445 | ||||||||||||
| ||||||||||||||||
Common Stocks & Other Equity Interests | – | 81,410 | 0 | 81,410 | ||||||||||||
| ||||||||||||||||
Variable Rate Senior Loan Interests | – | 11,738 | – | 11,738 | ||||||||||||
| ||||||||||||||||
Preferred Stocks | – | 1,294 | – | 1,294 | ||||||||||||
| ||||||||||||||||
Money Market Funds | – | 301,000 | – | 301,000 | ||||||||||||
| ||||||||||||||||
Total Investments in Securities | 940,366 | 27,867,651 | 0 | 28,808,017 | ||||||||||||
|
22 | Invesco High Yield Bond Factor Fund |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| ||||||||||||||||
Other Investments - Assets* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | $ | 5,859 | $ | – | $– | $ | 5,859 | |||||||||
| ||||||||||||||||
Other Investments - Liabilities* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | (21,093 | ) | – | – | (21,093 | ) | ||||||||||
| ||||||||||||||||
Total Other Investments | (15,234 | ) | – | – | (15,234 | ) | ||||||||||
| ||||||||||||||||
.Total Investments | $ | 925,132 | $ | 27,867,651 | $0 | $ | 28,792,783 | |||||||||
|
* | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an 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, 2022:
Value | ||||
Interest | ||||
Derivative Assets | Rate Risk | |||
| ||||
Unrealized appreciation on futures contracts –Exchange-Traded(a) | $ | 5,859 | ||
| ||||
Derivatives not subject to master netting agreements | (5,859 | ) | ||
| ||||
Total Derivative Assets subject to master netting agreements | $ | – | ||
| ||||
Value | ||||
Interest | ||||
Derivative Liabilities | Rate Risk | |||
| ||||
Unrealized depreciation on futures contracts –Exchange-Traded(a) | $ | (21,093 | ) | |
| ||||
Derivatives not subject to master netting agreements | 21,093 | |||
| ||||
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, 2022
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 | Interest | |||||||||||
Risk | Rate Risk | Total | ||||||||||
| ||||||||||||
Realized Gain (Loss): | ||||||||||||
Futures contracts | $ | - | $ | (246,244 | ) | $ | (246,244 | ) | ||||
| ||||||||||||
Swap agreements | (14,422 | ) | - | (14,422 | ) | |||||||
| ||||||||||||
Change in Net Unrealized Appreciation (Depreciation): | ||||||||||||
Futures contracts | - | (49,293 | ) | (49,293 | ) | |||||||
| ||||||||||||
Swap agreements | 9,427 | - | 9,427 | |||||||||
| ||||||||||||
Total | $ | (4,995 | ) | $ | (295,537 | ) | $ | (300,532 | ) | |||
|
The table below summarizes the average notional value of derivatives held during the period.
Futures Contracts | Swap Agreements | |||||||
| ||||||||
Average notional value | $7,099,647 | $1,300,000 | ||||||
|
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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $403.
23 | Invesco High Yield Bond Factor Fund |
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 carryforward 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 28, 2022, as follows:
Capital Loss Carryforward* | ||||||||||||
| ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
| ||||||||||||
Not subject to expiration | $ | 1,294,896 | $ | 2,933,906 | $ | 4,228,802 | ||||||
|
* | 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended August 31, 2022 was $16,791,906 and $18,247,073, 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 | $ | 298,521 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (3,598,577 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (3,300,056 | ) | |
|
Cost of investments for tax purposes is $32,092,839.
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2022(a) | February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 173,824 | $ | 1,440,578 | 689,863 | $ | 6,375,087 | ||||||||||
| ||||||||||||||||
Class C | 32,130 | 269,228 | 126,528 | 1,169,030 | ||||||||||||
| ||||||||||||||||
Class R | 83,039 | 688,105 | 163,457 | 1,501,493 | ||||||||||||
| ||||||||||||||||
Class Y | 26,902 | 228,762 | 256,496 | 2,387,754 | ||||||||||||
| ||||||||||||||||
Class R6 | 2,231 | 18,765 | 10,371 | 96,882 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 49,608 | 406,874 | 99,297 | 916,194 | ||||||||||||
| ||||||||||||||||
Class C | 7,336 | 60,206 | 15,850 | 146,223 | ||||||||||||
| ||||||||||||||||
Class R | 9,898 | 81,086 | 15,519 | 143,078 | ||||||||||||
| ||||||||||||||||
Class Y | 3,796 | 31,111 | 7,059 | 65,148 | ||||||||||||
| ||||||||||||||||
Class R6 | 111 | 928 | 281 | 2,577 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 26,499 | 215,957 | 46,045 | 424,513 | ||||||||||||
| ||||||||||||||||
Class C | (26,501 | ) | (215,957 | ) | (46,056 | ) | (424,513 | ) | ||||||||
|
24 | Invesco High Yield Bond Factor Fund |
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2022(a) | February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (307,193 | ) | $ | (2,539,829 | ) | (1,012,748 | ) | $ | (9,345,606 | ) | ||||||
| ||||||||||||||||
Class C | (75,161 | ) | (612,932 | ) | (162,685 | ) | (1,497,731 | ) | ||||||||
| ||||||||||||||||
Class R | (56,656 | ) | (472,300 | ) | (89,820 | ) | (826,956 | ) | ||||||||
| ||||||||||||||||
Class Y | (146,613 | ) | (1,264,118 | ) | (90,213 | ) | (821,367 | ) | ||||||||
| ||||||||||||||||
Class R6 | (9,243 | ) | (75,668 | ) | (4,089 | ) | (37,891 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (205,993 | ) | $ | (1,739,204 | ) | 25,155 | $ | 273,915 | ||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 13% 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. |
25 | 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, 2022 through August 31, 2022.
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 (03/01/22) | ACTUAL | HYPOTHETICAL (5% annual return before expenses) | Annualized Expense Ratio | |||||||||
Ending Account Value (08/31/22)1 | Expenses Paid During Period2 | Ending Account Value (08/31/22) | Expenses Paid During Period2 | |||||||||
Class A | $1,000.00 | $916.60 | $3.04 | $1,022.03 | $3.21 | 0.63% | ||||||
Class C | 1,000.00 | 914.00 | 6.66 | 1,018.25 | 7.02 | 1.38 | ||||||
Class R | 1,000.00 | 915.40 | 4.25 | 1,020.77 | 4.48 | 0.88 | ||||||
Class Y | 1,000.00 | 917.80 | 1.84 | 1,023.29 | 1.94 | 0.38 | ||||||
Class R5 | 1,000.00 | 917.70 | 1.84 | 1,023.29 | 1.94 | 0.38 | ||||||
Class R6 | 1,000.00 | 917.80 | 1.84 | 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, 2022 through August 31, 2022, 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 High Yield Bond Factor Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed 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 and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled
Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe and against the Bloomberg U.S. Corporate High Yield 2% Issuer Cap Index (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 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 Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the “Transaction”) and that the Fund’s performance prior to the closing of the Transaction 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 further considered that the Fund had
27 | Invesco High Yield Bond Factor Fund |
changed its name, investment strategy and index against which future performance will be compared in 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 performance of the Fund prior to such date to be particularly relevant. The Board also reviewed more recent Fund performance as well as other performance metrics, which did not change its 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 was reduced at certain breakpoint levels effective in 2020 in connection with its repositioning as a factor-based fund. 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 is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board 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 also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination 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. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.
The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.
The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
28 | Invesco High Yield 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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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 number(s): 811-05686 and 033-39519 | Invesco Distributors, Inc. | O-GLHY-SAR-1 |
Semiannual Report to Shareholders | August 31, 2022 |
Invesco Income Fund
Nasdaq:
A: AGOVX ∎ C: AGVCX ∎ R: AGVRX ∎ Y: AGVYX ∎ Investor: AGIVX ∎ R5: AGOIX ∎ R6: AGVSX
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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
Performance summary
|
| |||
Fund vs. Indexes |
| |||
Cumulative total returns, 2/28/22 to 8/31/22, 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 | -4.65 | % | ||
Class C Shares | -5.02 | |||
Class R Shares | -4.77 | |||
Class Y Shares | -4.52 | |||
Investor Class Shares | -4.60 | |||
Class R5 Shares | -4.36 | |||
Class R6 Shares | -4.46 | |||
Bloomberg U.S. Aggregate Bond Index▼ (Broad Market Index) | -7.76 | |||
Source(s): ▼RIMES Technologies Corp. | ||||
The Bloomberg 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. |
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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.
2 | Invesco Income Fund |
Average Annual Total Returns |
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As of 8/31/22, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (4/28/87) | 4.17 | % | ||
10 Years | -0.35 | |||
5 Years | -1.54 | |||
1 Year | -10.59 | |||
Class C Shares | ||||
Inception (8/4/97) | 2.79 | % | ||
10 Years | -0.49 | |||
5 Years | -1.40 | |||
1 Year | -8.29 | |||
Class R Shares | ||||
Inception (6/3/02) | 2.12 | % | ||
10 Years | -0.17 | |||
5 Years | -0.94 | |||
1 Year | -6.91 | |||
Class Y Shares | ||||
Inception (10/3/08) | 1.83 | % | ||
10 Years | 0.34 | |||
5 Years | -0.42 | |||
1 Year | -6.43 | |||
Investor Class Shares | ||||
Inception (9/30/03) | 2.16 | % | ||
10 Years | 0.13 | |||
5 Years | -0.61 | |||
1 Year | -6.59 | |||
Class R5 Shares | ||||
Inception (4/29/05) | 2.55 | % | ||
10 Years | 0.45 | |||
5 Years | -0.30 | |||
1 Year | -6.23 | |||
Class R6 Shares | ||||
10 Years | 0.27 | % | ||
5 Years | -0.31 | |||
1 Year | -6.30 |
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.
3 | Invesco Income Fund |
Liquidity Risk Management Program
In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), 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 21-23, 2022, 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 January 1, 2021, through December 31, 2021 (the “Program Reporting Period”). The Report discussed notable events affecting liquidity over the Program Reporting Period, including the impact of the coronavirus pandemic on the Fund and the overall market. The Report noted that there were no material changes to the Program during 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. |
4 | Invesco Income Fund |
August 31, 2022
(Unaudited)
Principal Amount | Value | |||||||
| ||||||||
Asset-Backed Securities–71.03% |
| |||||||
AMSR Trust, | ||||||||
Series 2020-SFR5, Class D, 2.18%, 11/17/2037(a) | $ | 5,000,000 | $ | 4,614,252 | ||||
| ||||||||
Series 2022-SFR3, CLass D, 4.00%, 10/17/2039(a) | 3,380,000 | 3,062,306 | ||||||
| ||||||||
Angel Oak Mortgage Trust, | ||||||||
Series 2019-5, Class B1, 3.96%, 10/25/2049(a)(b) | 2,361,000 | 2,190,961 | ||||||
| ||||||||
Series 2020-3, Class M1, 3.81%, 04/25/2065(a)(b) | 5,000,000 | 4,627,255 | ||||||
| ||||||||
Series 2021-1, Class M1, 2.22%, 01/25/2066(a)(b) | 3,164,000 | 2,449,634 | ||||||
| ||||||||
Series 2021-7, Class M1, 3.26%, 10/25/2066(a)(b) | 5,000,000 | 3,787,920 | ||||||
| ||||||||
Series 2022-2, Class M1, 4.18%, 01/25/2067(a)(b) | 5,893,000 | 5,006,202 | ||||||
| ||||||||
Arroyo Mortgage Trust, Series | 4,463,000 | 4,299,354 | ||||||
| ||||||||
Avis Budget Rental Car Funding (AESOP) LLC, Series 2022-3A, Class C, 6.48%, 02/20/2027(a) | 4,000,000 | 3,970,446 | ||||||
| ||||||||
Banc of America Commercial Mortgage Trust, Series 2015-UBS7, Class XA, IO, 0.90%, 09/15/2048(c) | 15,272,868 | 286,858 | ||||||
| ||||||||
Bank, Series 2018-BNK14, Class E, 3.00%, 09/15/2060(a) | 5,750,000 | 3,759,354 | ||||||
| ||||||||
BBCMS Mortgage Trust, Series 2018-C2, Class C, 5.13%, 12/15/2051(b) | 2,500,000 | 2,322,848 | ||||||
| ||||||||
BBCMS Trust, Series 2022-C17, Class A5, 4.44%, 09/15/2055 | 14,600,000 | 14,622,709 | ||||||
| ||||||||
Bear Stearns Adjustable Rate Mortgage Trust, Series 2004-10, Class 12A1, 3.00%, 01/25/2035(b) | 269,161 | 261,613 | ||||||
| ||||||||
Benchmark Mortgage Trust, | ||||||||
Series 2018-B3, Class C, 4.69%, 04/10/2051(b) | 4,375,000 | 4,024,004 | ||||||
| ||||||||
Series 2019-B14, Class C, 3.90%, 12/15/2062(b) | 4,650,000 | 3,960,225 | ||||||
| ||||||||
Series 2019-B15, Class C, 3.84%, 12/15/2072(b) | 1,000,000 | 835,292 | ||||||
| ||||||||
Series 2019-B9, Class C, 4.97%, 03/15/2052(b) | 4,000,000 | 3,697,023 | ||||||
| ||||||||
Series 2020-B17, Class C, 3.37%, 03/15/2053(b) | 3,000,000 | 2,461,516 | ||||||
| ||||||||
Blackbird Capital Aircraft Lease Securitization Ltd., Series 2016- 1A, Class B, 5.68%, | 4,564,779 | 3,697,550 | ||||||
| ||||||||
BX Commercial Mortgage Trust, | 5,000,000 | 4,789,697 | ||||||
| ||||||||
Cantor Commercial Real Estate Lending, Series 2019-CF1, Class 65D, 4.66%, 05/15/2052(a)(b) | 4,517,000 | 3,991,582 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
CBAM LLC, Series 2021-15A, Class C, 4.76% (3 mo. USD LIBOR + 2.25%), 01/15/2036(a)(e) | $ | 5,000,000 | $ | 4,762,715 | ||||
| ||||||||
Chase Mortgage Finance Corp., | ||||||||
Series 2016-SH1, Class M3, 3.75%, 04/25/2045(a)(b) | 1,166,617 | 1,047,257 | ||||||
| ||||||||
Series 2016-SH2, Class M3, 3.75%, 12/25/2045(a)(b) | 1,613,365 | 1,478,319 | ||||||
| ||||||||
Citigroup Commercial Mortgage Trust, | ||||||||
Series 2013-GC11, Class D, 4.33%, 04/10/2023(a)(b) | 4,885,000 | 4,761,457 | ||||||
| ||||||||
Series 2015-GC29, Class D, 3.11%, 04/10/2048(a) | 5,000,000 | 4,356,188 | ||||||
| ||||||||
COLT Mortgage Loan Trust, Series 2020-3, Class A3, 2.38%, 04/27/2065(a)(b) | 592,460 | 570,108 | ||||||
| ||||||||
Commercial Mortgage Trust, Series 2014-CR19, Class C, 4.85%, 08/10/2024(b) | 4,578,800 | 4,423,087 | ||||||
| ||||||||
Credit Suisse Mortgage Capital Ctfs., Series 2020-SPT1, Class A3, 2.73%, 04/25/2065(a)(d) | 5,000,000 | 4,799,596 | ||||||
| ||||||||
Credit Suisse Mortgage Capital Trust, Series 2022-ATH2, Class M1, 4.98%, 05/25/2067(a)(b) | 4,000,000 | 3,689,985 | ||||||
| ||||||||
Series 2022-ATH3, Class A3, 6.39%, 08/25/2067(a)(b) | 5,000,000 | 5,012,091 | ||||||
| ||||||||
CSAIL Commercial Mortgage Trust, Series 2016-C6, Class E, 4.08%, 01/15/2049(a)(b) | 3,000,000 | 1,959,565 | ||||||
| ||||||||
Dryden 76 CLO Ltd., Series 2019-76A, Class CR, 4.71% (3 mo. USD LIBOR + 2.00%), 10/20/2034(a)(e) | 3,000,000 | 2,828,154 | ||||||
| ||||||||
Ellington Financial Mortgage Trust, Series 2022-3, Class A1, 5.00%, 08/25/2067(a)(d) | 3,963,257 | 3,923,917 | ||||||
| ||||||||
Flagstar Mortgage Trust, | ||||||||
Series 2018-5, Class B1, 4.47%, 09/25/2048(a)(b) | 1,562,399 | 1,457,506 | ||||||
| ||||||||
Series 2018-5, Class B2, 4.47%, 09/25/2048(a)(b) | 1,872,122 | 1,743,516 | ||||||
| ||||||||
Series 2018-6RR, Class B2, 4.92%, 10/25/2048(a)(b) | 2,757,630 | 2,604,209 | ||||||
| ||||||||
Series 2018-6RR, Class B3, 4.92%, 10/25/2048(a)(b) | 2,757,630 | 2,585,131 | ||||||
| ||||||||
FRTKL, Series 2021-SFR1, Class E2, 2.52%, 09/17/2038(a) | 3,250,000 | 2,799,204 | ||||||
| ||||||||
Galton Funding Mortgage Trust, Series 2019-H1, Class B1, 3.89%, 10/25/2059(a)(b) | 5,480,000 | 5,255,635 | ||||||
| ||||||||
GCAT Trust, | ||||||||
Series 2019-NQM3, Class B1, 3.95%, 11/25/2059(a)(b) | 4,000,000 | 3,513,806 | ||||||
| ||||||||
Series 2020-NQM2, Class M1, 3.59%, 04/25/2065(a)(b) | 3,500,000 | 3,215,094 | ||||||
| ||||||||
GS Mortgage Securities Corp. Trust, | ||||||||
Series 2017-SLP, Class E, 4.74%, 10/10/2032(a)(b) | 5,050,000 | 4,964,150 | ||||||
| ||||||||
Series 2018-TWR, Class G, 6.57% (1 mo. USD LIBOR + 4.17%), 07/15/2023(a)(e) | 3,000,000 | 2,734,119 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco Income Fund |
Principal Amount | Value | |||||||
| ||||||||
GS Mortgage Securities Trust, Series 2017-GS6, Class C, 4.32%, 05/10/2050(b) | $ | 2,774,000 | $ | 2,509,091 | ||||
| ||||||||
Homeward Opportunities Fund Trust, | ||||||||
Series 2022-1, Class M1, 5.08%, 07/25/2067(a)(d) | 3,996,166 | 3,879,286 | ||||||
| ||||||||
Series 2022-1, Class M1, 5.08%, 07/25/2067(a)(b) | 2,878,000 | 2,537,449 | ||||||
| ||||||||
Imperial Fund Mortgage Trust, Series 2022-NQM1, Class M1, 4.08%, 02/25/2067(a)(b) | 7,053,000 | 5,992,635 | ||||||
| ||||||||
JP Morgan Chase Commercial Mortgage Securities Trust, | ||||||||
Series 2018-PHH, Class E, 5.10% (1 mo. USD LIBOR + 2.71%), 06/15/2023(a)(e) | 2,000,000 | 679,600 | ||||||
| ||||||||
Series 2018-PHH, Class F, 5.70% (1 mo. USD LIBOR + 3.31%), 06/15/2023(a)(e) | 2,000,000 | 378,000 | ||||||
| ||||||||
JPMBB Commercial Mortgage Securities Trust, Series 2013-C12, Class C, 4.23%, 07/15/2045(b) | 4,760,000 | 4,661,375 | ||||||
| ||||||||
Life Mortgage Trust, Series 2021-BMR, Class D, 3.79% (1 mo. USD LIBOR + 1.40%), 03/15/2038(a)(e) | 5,701,227 | 5,470,981 | ||||||
| ||||||||
MACH 1 Cayman Ltd., Series 2019-1, Class B, 4.34%, 10/15/2039(a) | 1,953,845 | 1,617,336 | ||||||
| ||||||||
Morgan Stanley Bank of America Merrill Lynch Trust, | ||||||||
Series 2015-C20, Class D, 3.07%, 02/15/2048(a) | 3,200,000 | 2,811,479 | ||||||
| ||||||||
Series 2015-C24, Class D, 3.26%, 07/15/2025(a) | 5,000,000 | 4,298,490 | ||||||
| ||||||||
Morgan Stanley Capital I Trust, Series 2018-H4, Class C, 5.24%, 12/15/2051(b) | 5,000,000 | 4,654,288 | ||||||
| ||||||||
New Residential Mortgage Loan Trust, Series 2021-NQ1R, Class M1, 2.27%, 07/25/2055(a)(b) | 2,250,000 | 1,886,172 | ||||||
| ||||||||
OBX Trust, | ||||||||
Series 2022-NQM7, Class A1, 5.11%, 08/25/2062(a)(d) | 6,300,000 | 6,297,086 | ||||||
| ||||||||
Series 2022-NQM7, Class A3, 5.70%, 08/25/2062(a)(d) | 1,300,000 | 1,285,233 | ||||||
| ||||||||
Octagon Investment Partners 48 Ltd., Series 2020-3A, Class CR, 4.76% (3 mo. USD LIBOR + 2.05%), 10/20/2034(a)(e) | 3,000,000 | 2,825,535 | ||||||
| ||||||||
OHA Loan Funding Ltd., Series 2015-1A, Class CR3, 4.79% (3 mo. USD LIBOR + 2.05%), 01/19/2037(a)(e) | 5,000,000 | 4,692,505 | ||||||
| ||||||||
PRKCM Trust, Series 2021-AFC1, Class M1, 3.11%, 08/25/2056(a)(b) | 6,966,000 | 5,108,284 | ||||||
| ||||||||
Progress Residential Trust, Series 2022-SFR5, Class D, 5.73%, 06/17/2039(a) | 3,000,000 | 2,971,428 | ||||||
| ||||||||
Residential Mortgage Loan Trust, Series 2019-3, Class B1, 3.81%, 09/25/2059(a)(b) | 3,276,000 | 3,019,291 | ||||||
| ||||||||
Sapphire Aviation Finance II Ltd., Series 2020-1A, Class B, 4.34%, 03/15/2040(a) | 3,039,185 | 2,048,052 | ||||||
| ||||||||
Seasoned Credit Risk Transfer Trust, Series 2017-4, Class M, 4.75%, 06/25/2057(a)(b) | 3,000,000 | 2,909,256 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
SG Residential Mortgage Trust, | ||||||||
Series 2021-2, Class M1, 3.05%, 12/25/2061(a)(b) | $ | 5,634,000 | $ | 4,231,705 | ||||
| ||||||||
Series 2022-1, Class M1, 3.99%, 03/27/2062(a)(b) | 4,000,000 | 3,455,396 | ||||||
| ||||||||
Sonic Capital LLC, Series 2021-1A, Class A2II, 2.64%, 08/20/2051(a) | 1,357,442 | 1,030,157 | ||||||
| ||||||||
Starwood Mortgage Residential Trust, | ||||||||
Series 2020-3, Class A3, 2.59%, 04/25/2065(a)(b) | 3,000,000 | 2,899,326 | ||||||
| ||||||||
Series 2022-1, Class M1, 3.69%, 12/25/2066(a)(b) | 6,000,000 | 4,832,575 | ||||||
| ||||||||
Textainer Marine Containers Ltd., Series 2021-3A, Class B, 2.43%, 08/20/2046(a) | 4,600,000 | 3,876,009 | ||||||
| ||||||||
Textainer Marine Containers VII Ltd. (China), | ||||||||
Series 2020-1A, Class B, 4.94%, 08/21/2045(a) | 2,965,532 | 2,839,504 | ||||||
| ||||||||
Series 2021-2A, Class B, 2.82%, 04/20/2046(a) | 4,466,667 | 3,903,169 | ||||||
| ||||||||
TIF Funding II LLC, Series 2021-1A, Class B, 2.54%, 02/20/2046(a) | 1,622,990 | 1,391,283 | ||||||
| ||||||||
TRK Trust, Series 2022-INV1, Class M1, 4.07%, 02/25/2057(a)(b) | 8,000,000 | 7,077,920 | ||||||
| ||||||||
Verus Securitization Trust, | ||||||||
Series 2020-INV1, Class A3, 3.89%, 03/25/2060(a)(b) | 2,800,000 | 2,727,022 | ||||||
| ||||||||
Series 2021-R2, Class M1, 2.24%, 02/25/2064(a) | 4,281,000 | 4,033,321 | ||||||
| ||||||||
Series 2022-INV1, Class A3, 5.83%, 08/25/2067(a)(b) | 5,000,000 | 4,948,126 | ||||||
| ||||||||
Vista Point Securitization Trust, | ||||||||
Series 2020-1, Class M1, 4.15%, 03/25/2065(a)(b) | 2,100,000 | 2,047,982 | ||||||
| ||||||||
Series 2020-2, Class M1, 3.40%, 04/25/2065(a)(b) | 1,650,000 | 1,553,900 | ||||||
| ||||||||
Voya CLO Ltd., Series 2014-1A, Class CR2, 5.28% (3 mo. Term SOFR + 3.06%), 04/18/2031(a)(e) | 1,300,000 | 1,128,756 | ||||||
| ||||||||
Wells Fargo Commercial Mortgage Trust, Series 2014-LC18, Class D, 3.96%, 12/15/2024(a)(b) | 6,000,000 | 5,312,953 | ||||||
| ||||||||
Series 2017-C39, Class C, 4.12%, 09/15/2050 | 2,309,000 | 2,059,086 | ||||||
| ||||||||
Series 2017-RC1, Class D, 3.25%, 01/15/2060(a) | 4,000,000 | 3,139,451 | ||||||
| ||||||||
Zaxby’s Funding LLC, Series 2021-1A, Class A2, 3.24%, 07/30/2051(a) | 2,376,000 | 2,026,555 | ||||||
| ||||||||
Total Asset-Backed Securities |
| 294,250,458 | ||||||
| ||||||||
Agency Credit Risk Transfer Notes–10.80% |
| |||||||
Fannie Mae Connecticut Avenue Securities, Series 2022-R04, Class 1M2, 5.28% (30 Day Average SOFR + 3.10%), 03/25/2042(a)(e) | 1,285,000 | 1,284,088 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Income Fund |
Principal Amount | Value | |||||||
| ||||||||
Freddie Mac, | ||||||||
Series 2021-DNA2, Class M2, STACR®, 4.48% (30 Day Average SOFR + 2.30%), 08/25/2033(a)(e) | $ | 6,630,000 | $ | 6,536,180 | ||||
| ||||||||
Series 2021-DNA5, Class M2, STACR®, 3.83% (30 Day Average SOFR + 1.65%), 01/25/2034(a)(e) | 816,338 | 814,354 | ||||||
| ||||||||
Series 2021-HQA3, Class M2, STACR®, 4.28% (30 Day Average SOFR + 2.10%), 09/25/2041(a)(e) | 4,250,000 | 3,891,006 | ||||||
| ||||||||
Series 2022-DNA3, Class M1B, STACR®, 5.08% (30 Day Average SOFR + 2.90%), 04/25/2042(a)(e) | 5,000,000 | 4,977,486 | ||||||
| ||||||||
Series 2022-HQA2, Class M1B, STACR®, 6.18% (30 Day Average SOFR + 4.00%), 07/25/2042(a)(e) | 3,000,000 | 3,043,458 | ||||||
| ||||||||
Series 2022-HQA3, Class M1, | ||||||||
STACR®, 5.36% (30 Day Average SOFR + 3.55%), 08/25/2042(a)(e) | 5,370,000 | 5,327,449 | ||||||
| ||||||||
4.11% (30 Day Average SOFR + 2.30%), 08/25/2042(a)(e) | 4,973,000 | 5,004,169 | ||||||
| ||||||||
Series 2022-HQA3, Class M2, STACR®, 7.16% (30 Day Average SOFR + 5.35%), 08/25/2042(a)(e) | 4,000,000 | 4,024,767 | ||||||
| ||||||||
Series 2018-HRP2, Class M3, STACR®, 4.84% (1 mo. USD LIBOR + 2.40%), 02/25/2047(a)(e) | 4,896,415 | 4,900,303 | ||||||
| ||||||||
Series 2020-DNA5, Class M2, STACR®, 4.98% (30 Day Average SOFR + 2.80%), 10/25/2050(a)(e) | 2,259,685 | 2,260,605 | ||||||
| ||||||||
Freddie Mac Multifamily Connecticut Avenue Securities Trust, Series 2019-01, Class M10, 5.69% (1 mo. USD LIBOR + 3.25%), 10/25/2049(a)(e) | 1,317,940 | 1,262,837 | ||||||
| ||||||||
Series 2019-01, Class B10, 7.94% (1 mo. USD LIBOR + 5.50%), 10/25/2049(a)(e) | 1,500,000 | 1,435,468 | ||||||
| ||||||||
Total Agency Credit Risk Transfer Notes | 44,762,170 | |||||||
| ||||||||
Shares | ||||||||
Preferred Stocks-6.37% | ||||||||
Mortgage REITs-6.37% | ||||||||
AG Mortgage Investment Trust, Inc., 8.00%, Series C, Pfd.(f) | 150,000 | 2,890,500 | ||||||
| ||||||||
AGNC Investment Corp., 7.00%, Series C, Pfd.(f) | 16,015 | 390,607 | ||||||
| ||||||||
Annaly Capital Management, Inc., 6.50%, Series G, Pfd.(f) | 150,000 | 3,366,000 | ||||||
| ||||||||
Chimera Investment Corp., 8.00%, Series B, Pfd.(f) | 150,000 | 3,325,500 | ||||||
| ||||||||
Chimera Investment Corp., 7.75%, Series C, Pfd.(f) | 49,884 | 1,020,627 | ||||||
| ||||||||
Chimera Investment Corp., 8.00%, Series D, Pfd.(f) | 62,288 | 1,337,946 | ||||||
| ||||||||
Dynex Capital, Inc., 6.90%, Series C, Pfd.(f) | 160,000 | 3,636,799 | ||||||
| ||||||||
MFA Financial, Inc., 6.50%, Series C, Pfd.(f) | 150,000 | 2,923,500 | ||||||
| ||||||||
PennyMac Mortgage Investment Trust, 8.00%, Series B, Pfd.(f) | 79,989 | 1,932,534 | ||||||
| ||||||||
Rithm Capital Corp., 7.13%, Series B, Pfd.(f) | 100,000 | 2,156,000 | ||||||
|
Shares | Value | |||||||
| ||||||||
Mortgage REITs-(continued) | ||||||||
Two Harbors Investment Corp., 7.25%, Series C, Pfd.(f) | 150,000 | $ | 3,172,500 | |||||
| ||||||||
Two Harbors Investment Corp., 8.13%, Series A, Pfd.(f) | 9,496 | 217,458 | ||||||
| ||||||||
Total Preferred Stocks (Cost $27,925,464) |
| 26,369,971 | ||||||
| ||||||||
Principal Amount | ||||||||
U.S. Treasury Securities-0.72% |
| |||||||
U.S. Treasury Bills-0.72% |
| |||||||
0.80% - 0.94%, 09/15/2022(g)(h) | $ | 466,000 | 465,808 | |||||
| ||||||||
1.46% - 2.54%, 11/17/2022(g)(h) | 2,515,000 | 2,500,610 | ||||||
| ||||||||
Total U.S. Treasury Securities (Cost $2,971,467) |
| 2,966,418 | ||||||
| ||||||||
U.S. Government Sponsored Agency Mortgage-Backed Securities-0.50% |
| |||||||
Collateralized Mortgage Obligations-0.34% |
| |||||||
Freddie Mac Multifamily Structured Credit Risk, Series 2021-MN1, Class M2, | 1,500,000 | 1,394,876 | ||||||
| ||||||||
Federal Home Loan Mortgage Corp. (FHLMC)-0.00% |
| |||||||
9.00%, 04/01/2025 | 9,044 | 9,295 | ||||||
| ||||||||
9.50%, 04/01/2025 | 2,317 | 2,321 | ||||||
| ||||||||
6.50%, 06/01/2029 to 08/01/2032 | 2,276 | 2,393 | ||||||
| ||||||||
7.00%, 03/01/2032 to 05/01/2032 | 795 | 813 | ||||||
| ||||||||
14,822 | ||||||||
| ||||||||
Federal National Mortgage Association (FNMA)-0.01% |
| |||||||
6.00%, 04/01/2024 | 46 | 47 | ||||||
| ||||||||
6.75%, 07/01/2024 | 18,390 | 19,151 | ||||||
| ||||||||
6.95%, 07/01/2025 to 10/01/2025 | 10,391 | 10,394 | ||||||
| ||||||||
6.50%, 01/01/2026 to 10/01/2036 | 3,265 | 3,422 | ||||||
| ||||||||
7.00%, 06/01/2029 | 272 | 280 | ||||||
| ||||||||
8.00%, 10/01/2029 | 17 | 17 | ||||||
| ||||||||
33,311 | ||||||||
| ||||||||
Government National Mortgage Association (GNMA)-0.15% |
| |||||||
8.00%, 03/15/2023 to 02/15/2036 | 276,256 | 294,629 | ||||||
| ||||||||
7.00%, 05/15/2023 to 12/15/2036 | 259,526 | 263,357 | ||||||
| ||||||||
6.50%, 07/15/2024 to 09/15/2032 | 17,264 | 17,376 | ||||||
| ||||||||
6.95%, 07/20/2025 to 11/20/2026 | 33,800 | 33,875 | ||||||
| ||||||||
8.50%, 01/15/2037 | 13,979 | 14,162 | ||||||
| ||||||||
623,399 | ||||||||
| ||||||||
Total U.S. Government Sponsored Agency |
| 2,066,408 | ||||||
| ||||||||
Shares | ||||||||
Money Market Funds-13.93% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, | 34,634,797 | 34,634,797 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Income Fund |
Shares | Value | |||||||
| ||||||||
Money Market Funds–(continued) |
| |||||||
Invesco Treasury Portfolio, Institutional | 23,089,865 | $ | 23,089,865 | |||||
| ||||||||
Total Money Market Funds |
| 57,724,662 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES–103.35% |
| 428,140,087 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–(3.35)% |
| (13,878,808 | ) | |||||
| ||||||||
NET ASSETS–100.00% | $ | 414,261,279 | ||||||
|
Investment Abbreviations:
Ctfs. | – Certificates | |
IO | – Interest Only | |
LIBOR | – London Interbank Offered Rate | |
Pfd. | – Preferred | |
REIT | – Real Estate Investment Trust | |
SOFR | – Secured Overnight Financing Rate | |
STACR® | – Structured Agency Credit Risk | |
USD | – U.S. Dollar |
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, 2022 was $289,628,489, which represented 69.91% of the Fund’s Net Assets. |
(b) | 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, 2022. |
(c) | 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, 2022. |
(d) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
(e) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2022. |
(f) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
(g) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1M. |
(h) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(i) | 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, 2022. |
Value February 28, 2022 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain | Value August 31, 2022 | Dividend Income | |||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: | |||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | 17,855,736 | $ | 113,395,998 | $ | (96,616,937 | ) | $ | - | $ | - | $ | 34,634,797 | $ | 88,528 | ||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 11,903,824 | 75,597,332 | (64,411,291 | ) | - | - | 23,089,865 | 55,462 | |||||||||||||||||||||||||||
Investments Purchased with Cash Collateral from Securities on Loan: | |||||||||||||||||||||||||||||||||||
Invesco Private Government Fund | - | 1,203,749 | (1,203,749 | ) | - | - | - | 207* | |||||||||||||||||||||||||||
Invesco Private Prime Fund | - | 3,040,750 | (3,040,772 | ) | - | 22 | - | 603* | |||||||||||||||||||||||||||
Total | $ | 29,759,560 | $ | 193,237,829 | $ | (165,272,749 | ) | $ | - | $ | 22 | $ | 57,724,662 | $ | 144,800 |
* | 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. |
(j) | The rate shown is the 7-day SEC standardized yield as of August 31, 2022. |
Open Futures Contracts(a) | ||||||||||||||||||||
Short Futures Contracts | Number of Contracts | Expiration Month | Notional Value | Value | Unrealized Appreciation | |||||||||||||||
Interest Rate Risk | ||||||||||||||||||||
U.S. Treasury 2 Year Notes | 629 | December-2022 | $ | (131,038,391 | ) | $ | 231,234 | $ | 231,234 | |||||||||||
U.S. Treasury 5 Year Notes | 492 | December-2022 | (54,523,594 | ) | 265,219 | 265,219 | ||||||||||||||
U.S. Treasury 10 Year Notes | 279 | December-2022 | (32,616,844 | ) | 262,960 | 262,960 | ||||||||||||||
U.S. Treasury 10 Year Ultra Notes | 333 | December-2022 | (41,687,438 | ) | 387,634 | 387,634 | ||||||||||||||
Total Futures Contracts | $ | 1,147,047 | $ | 1,147,047 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Income Fund |
(a) | Futures contracts collateralized by $1,045,619 cash held with Merrill Lynch International, the futures commission merchant. |
Portfolio Composition
By security type, based on Total Investments
as of August 31, 2022
Asset-Backed Securities | 68.7% | |||
| ||||
Money Market Funds | 13.5 | |||
| ||||
Agency Credit Risk Transfer Notes | 10.4 | |||
| ||||
Preferred Stocks | 6.2 | |||
| ||||
Security Type, each less than 1% of Total Investments | 1.2 | |||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Income Fund |
Statement of Assets and Liabilities
August 31, 2022
(Unaudited)
Assets: | ||||
Investments in unaffiliated securities, at value (Cost $405,373,717) | $ | 370,415,425 | ||
| ||||
Investments in affiliated money market funds, at value (Cost $57,724,662) | 57,724,662 | |||
| ||||
Other investments: | ||||
Variation margin receivable – futures contracts | 101,428 | |||
| ||||
Foreign currencies, at value (Cost $963) | 816 | |||
| ||||
Receivable for: | ||||
Fund shares sold | 27,899 | |||
| ||||
Dividends | 391,363 | |||
| ||||
Interest | 1,076,532 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 161,099 | |||
| ||||
Other assets | 67,594 | |||
| ||||
Total assets | 429,966,818 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 15,038,319 | |||
| ||||
Dividends | 99,970 | |||
| ||||
Fund shares reacquired | 126,957 | |||
| ||||
Accrued fees to affiliates | 189,390 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 1,496 | |||
| ||||
Accrued other operating expenses | 74,495 | |||
| ||||
Trustee deferred compensation and retirement plans | 173,612 | |||
| ||||
Collateral with broker | 1,300 | |||
| ||||
Total liabilities | 15,705,539 | |||
| ||||
Net assets applicable to shares outstanding | $ | 414,261,279 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 504,155,298 | ||
| ||||
Distributable earnings (loss) | (89,894,019 | ) | ||
| ||||
$ | 414,261,279 | |||
|
Net Assets: | ||||
Class A | $ | 274,913,773 | ||
| ||||
Class C | $ | 5,430,052 | ||
| ||||
Class R | $ | 3,868,524 | ||
| ||||
Class Y | $ | 6,748,029 | ||
| ||||
Investor Class | $ | 15,982,069 | ||
| ||||
Class R5 | $ | 387,867 | ||
| ||||
Class R6 | $ | 106,930,965 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 37,973,273 | |||
| ||||
Class C | 749,583 | |||
| ||||
Class R | 533,974 | |||
| ||||
Class Y | 930,867 | |||
| ||||
Investor Class | 2,204,122 | |||
| ||||
Class R5 | 53,533 | |||
| ||||
Class R6 | 14,788,141 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 7.24 | ||
| ||||
Maximum offering price per share | $ | 7.56 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 7.24 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 7.24 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 7.25 | ||
| ||||
Investor Class: | ||||
Net asset value and offering price per share | $ | 7.25 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 7.25 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 7.23 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Income Fund |
Statement of Operations
For the six months ended August 31, 2022
(Unaudited)
Investment income: | ||||
Interest | $ | 8,165,301 | ||
| ||||
Dividends | 1,066,115 | |||
| ||||
Dividends from affiliated money market funds (includes securities lending income of $ 3,980) | 147,970 | |||
| ||||
Total investment income | 9,379,386 | |||
| ||||
Expenses: | ||||
Advisory fees | 987,598 | |||
| ||||
Administrative services fees | 34,822 | |||
| ||||
Custodian fees | 9,499 | |||
| ||||
Distribution fees: | ||||
Class A | 359,759 | |||
| ||||
Class C | 30,795 | |||
| ||||
Class R | 9,881 | |||
| ||||
Investor Class | 13,339 | |||
| ||||
Transfer agent fees – A, C, R, Y and Investor | 313,171 | |||
| ||||
Transfer agent fees – R5 | 194 | |||
| ||||
Transfer agent fees – R6 | 16,227 | |||
| ||||
Trustees’ and officers’ fees and benefits | 9,326 | |||
| ||||
Registration and filing fees | 44,370 | |||
| ||||
Reports to shareholders | 14,029 | |||
| ||||
Professional services fees | 28,992 | |||
| ||||
Other | 11,391 | |||
| ||||
Total expenses | 1,883,393 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (11,913 | ) | ||
| ||||
Net expenses | 1,871,480 | |||
| ||||
Net investment income | 7,507,906 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Unaffiliated investment securities | (14,378,909 | ) | ||
| ||||
Affiliated investment securities | 22 | |||
| ||||
Futures contracts | 7,123,784 | |||
| ||||
Swap agreements | (619,463 | ) | ||
| ||||
(7,874,566 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Unaffiliated investment securities | (23,216,823 | ) | ||
| ||||
Foreign currencies | (95 | ) | ||
| ||||
Futures contracts | 1,745,530 | |||
| ||||
Swap agreements | 184,535 | |||
| ||||
(21,286,853 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (29,161,419 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (21,653,513 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco Income Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, 2022 | February 28, 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 7,507,906 | $ | 15,231,621 | ||||
| ||||||||
Net realized gain (loss) | (7,874,566 | ) | 2,576,637 | |||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (21,286,853 | ) | (16,093,815 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (21,653,513 | ) | 1,714,443 | |||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (4,342,690 | ) | (9,324,418 | ) | ||||
| ||||||||
Class C | (69,440 | ) | (139,919 | ) | ||||
| ||||||||
Class R | (54,636 | ) | (110,349 | ) | ||||
| ||||||||
Class Y | (115,378 | ) | (1,057,242 | ) | ||||
| ||||||||
Investor Class | (258,860 | ) | (557,785 | ) | ||||
| ||||||||
Class R5 | (6,534 | ) | (13,740 | ) | ||||
| ||||||||
Class R6 | (2,073,320 | ) | (5,839,584 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (6,920,858 | ) | (17,043,037 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (9,761,442 | ) | (24,264,150 | ) | ||||
| ||||||||
Class C | (752,628 | ) | 1,304,560 | |||||
| ||||||||
Class R | 76,299 | 335,353 | ||||||
| ||||||||
Class Y | (461,024 | ) | (41,290,606 | ) | ||||
| ||||||||
Investor Class | (544,369 | ) | (1,442,967 | ) | ||||
| ||||||||
Class R5 | 7,818 | 28,957 | ||||||
| ||||||||
Class R6 | (47,054,591 | ) | (60,422,394 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (58,489,937 | ) | (125,751,247 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (87,064,308 | ) | (141,079,841 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 501,325,587 | 642,405,428 | ||||||
| ||||||||
End of period | $ | 414,261,279 | $ | 501,325,587 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | 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 | 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 to average net assets | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | $7.71 | $0.12 | $(0.48 | ) | $(0.36 | ) | $(0.11 | ) | $- | $(0.11 | ) | $7.24 | (4.65 | )% | $274,914 | 0.95 | %(d) | 0.95 | %(d) | 3.28 | %(d) | 56 | % | |||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.94 | 0.20 | (0.20 | ) | 0.00 | (0.23 | ) | - | (0.23 | ) | 7.71 | (0.06 | ) | 303,030 | 0.91 | 0.91 | 2.56 | 220 | ||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.68 | 0.23 | (0.66 | ) | (0.43 | ) | (0.30 | ) | (0.01 | ) | (0.31 | ) | 7.94 | (4.62 | ) | 336,319 | 0.97 | 0.97 | 3.16 | 276 | ||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.51 | 0.35 | 0.22 | 0.57 | (0.40 | ) | - | (0.40 | ) | 8.68 | 6.75 | 405,061 | 1.00 | 1.00 | 4.08 | 97 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.65 | 0.27 | (e) | (0.13 | ) | 0.14 | (0.28 | ) | - | (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 | ) | - | (0.16 | ) | 8.65 | (0.34 | ) | 482,902 | 0.98 | 0.98 | 1.34 | 25 | |||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.71 | 0.09 | (0.48 | ) | (0.39 | ) | (0.08 | ) | - | (0.08 | ) | 7.24 | (5.02 | ) | 5,430 | 1.70 | (d) | 1.70 | (d) | 2.53 | (d) | 56 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.94 | 0.14 | (0.20 | ) | (0.06 | ) | (0.17 | ) | - | (0.17 | ) | 7.71 | (0.81 | ) | 6,586 | 1.66 | 1.66 | 1.81 | 220 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.68 | 0.18 | (0.67 | ) | (0.49 | ) | (0.25 | ) | (0.00 | ) | (0.25 | ) | 7.94 | (5.35 | ) | 5,489 | 1.72 | 1.72 | 2.41 | 276 | ||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.50 | 0.29 | 0.22 | 0.51 | (0.33 | ) | - | (0.33 | ) | 8.68 | 6.09 | 9,556 | 1.75 | 1.75 | 3.33 | 97 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.65 | 0.20 | (e) | (0.13 | ) | 0.07 | (0.22 | ) | - | (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 | ) | - | (0.10 | ) | 8.65 | (0.97 | ) | 30,223 | 1.73 | 1.73 | 0.59 | 25 | |||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.72 | 0.11 | (0.49 | ) | (0.38 | ) | (0.10 | ) | - | (0.10 | ) | 7.24 | (4.90 | ) | 3,869 | 1.20 | (d) | 1.20 | (d) | 3.03 | (d) | 56 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.95 | 0.18 | (0.20 | ) | (0.02 | ) | (0.21 | ) | - | (0.21 | ) | 7.72 | (0.27 | ) | 4,043 | 1.16 | 1.16 | 2.31 | 220 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.69 | 0.22 | (0.67 | ) | (0.45 | ) | (0.28 | ) | (0.01 | ) | (0.29 | ) | 7.95 | (4.85 | ) | 3,832 | 1.22 | 1.22 | 2.91 | 276 | ||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.52 | 0.33 | 0.21 | 0.54 | (0.37 | ) | - | (0.37 | ) | 8.69 | 6.48 | 4,443 | 1.25 | 1.25 | 3.83 | 97 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.66 | 0.25 | (e) | (0.13 | ) | 0.12 | (0.26 | ) | - | (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 | ) | - | (0.14 | ) | 8.66 | (0.58 | ) | 5,427 | 1.23 | 1.23 | 1.09 | 25 | |||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.72 | 0.13 | (0.48 | ) | (0.35 | ) | (0.12 | ) | - | (0.12 | ) | 7.25 | (4.52 | ) | 6,748 | 0.70 | (d) | 0.70 | (d) | 3.53 | (d) | 56 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.95 | 0.23 | (0.21 | ) | 0.02 | (0.25 | ) | - | (0.25 | ) | 7.72 | 0.19 | 7,659 | 0.66 | 0.66 | 2.81 | 220 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.69 | 0.26 | (0.67 | ) | (0.41 | ) | (0.32 | ) | (0.01 | ) | (0.33 | ) | 7.95 | (4.37 | ) | 49,578 | 0.72 | 0.72 | 3.41 | 276 | ||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.52 | 0.38 | 0.21 | 0.59 | (0.42 | ) | - | (0.42 | ) | 8.69 | 7.02 | 10,540 | 0.75 | 0.75 | 4.33 | 97 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.67 | 0.29 | (e) | (0.14 | ) | 0.15 | (0.30 | ) | - | (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 | ) | - | (0.18 | ) | 8.67 | (0.08 | ) | 10,671 | 0.73 | 0.73 | 1.59 | 25 | |||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.72 | 0.13 | (0.48 | ) | (0.35 | ) | (0.12 | ) | - | (0.12 | ) | 7.25 | (4.60 | )(f) | 15,982 | 0.86 | (d)(f) | 0.86 | (d)(f) | 3.37 | (d)(f) | 56 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.95 | 0.21 | (0.21 | ) | 0.00 | (0.23 | ) | - | (0.23 | ) | 7.72 | 0.01 | (f) | 17,588 | 0.83 | (f) | 0.83 | (f) | 2.64 | (f) | 220 | |||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.69 | 0.24 | (0.67 | ) | (0.43 | ) | (0.30 | ) | (0.01 | ) | (0.31 | ) | 7.95 | (4.55 | )(f) | 19,552 | 0.89 | (f) | 0.89 | (f) | 3.24 | (f) | 276 | |||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.52 | 0.36 | 0.21 | 0.57 | (0.40 | ) | - | (0.40 | ) | 8.69 | 6.81 | (f) | 24,787 | 0.93 | (f) | 0.93 | (f) | 4.15 | (f) | 97 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.66 | 0.27 | (e) | (0.13 | ) | 0.14 | (0.28 | ) | - | (0.28 | ) | 8.52 | 1.71 | (f) | 25,692 | 0.95 | (f) | 1.02 | (f) | 3.18 | (e)(f) | 119 | (e) | |||||||||||||||||||||||||||||||||
Year ended 02/28/18 | 8.85 | 0.12 | (0.14 | ) | (0.02 | ) | (0.17 | ) | - | (0.17 | ) | 8.66 | (0.29 | )(f) | 30,085 | 0.96 | (f) | 0.96 | (f) | 1.36 | (f) | 25 | ||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.72 | 0.13 | (0.48 | ) | (0.35 | ) | (0.12 | ) | - | (0.12 | ) | 7.25 | (4.48 | ) | 388 | 0.61 | (d) | 0.61 | (d) | 3.62 | (d) | 56 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.94 | 0.23 | (0.19 | ) | 0.04 | (0.26 | ) | - | (0.26 | ) | 7.72 | 0.41 | 405 | 0.54 | 0.54 | 2.93 | 220 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.68 | 0.26 | (0.67 | ) | (0.41 | ) | (0.32 | ) | (0.01 | ) | (0.33 | ) | 7.94 | (4.26 | ) | 388 | 0.57 | 0.57 | 3.56 | 276 | ||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.51 | 0.38 | 0.22 | 0.60 | (0.43 | ) | - | (0.43 | ) | 8.68 | 7.11 | 508 | 0.64 | 0.64 | 4.44 | 97 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.66 | 0.30 | (e) | (0.14 | ) | 0.16 | (0.31 | ) | - | (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 | ) | - | (0.20 | ) | 8.66 | 0.04 | 615 | 0.58 | 0.58 | 1.74 | 25 | |||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 7.70 | 0.14 | (0.48 | ) | (0.34 | ) | (0.13 | ) | - | (0.13 | ) | 7.23 | (4.46 | ) | 106,931 | 0.54 | (d) | 0.54 | (d) | 3.69 | (d) | 56 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 7.93 | 0.24 | (0.21 | ) | 0.03 | (0.26 | ) | - | (0.26 | ) | 7.70 | 0.36 | 162,015 | 0.49 | 0.49 | 2.98 | 220 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.67 | 0.27 | (0.67 | ) | (0.40 | ) | (0.33 | ) | (0.01 | ) | (0.34 | ) | 7.93 | (4.23 | ) | 227,247 | 0.52 | 0.52 | 3.61 | 276 | ||||||||||||||||||||||||||||||||||||
Year ended 02/29/20 | 8.51 | 0.39 | 0.20 | 0.59 | (0.43 | ) | - | (0.43 | ) | 8.67 | 7.00 | 36 | 0.63 | 0.63 | 4.45 | 97 | ||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/19 | 8.66 | 0.30 | (e) | (0.14 | ) | 0.16 | (0.31 | ) | - | (0.31 | ) | 8.51 | 1.88 | 42 | 0.69 | 0.70 | 3.44 | (e) | 119 | (e) | ||||||||||||||||||||||||||||||||||||
Period ended 02/28/18(g) | 8.84 | 0.14 | (0.14 | ) | (0.00 | ) | (0.18 | ) | - | (0.18 | ) | 8.66 | (0.03 | ) | 6,663 | 0.57 | (d) | 0.57 | (d) | 1.75 | (d) | 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) | Annualized. |
(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 and portfolio turnover have increased significantly due to the realignment of the Fund’s portfolio of investments as a result of these changes. |
(f) | 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%,0.17%,0.17%, 0.19%, 0.19% and 0.23% for the six months ended August 31, 2022 and years ended February 28, 2022, February 28, 2021, February 29, 2020, February 28, 2019 and February 28, 2018, respectively. |
(g) | Commencement date of April 4, 2017. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 | Invesco Income Fund |
August 31, 2022
(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 eight 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 eighth anniversary after a purchase of Class C shares.
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. |
Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices 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, and their value may be adjusted accordingly. 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades 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 using prices provided by an independent pricing service they may be considered fair valued.
Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.
Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.
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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.
Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.
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 may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available and unreliable are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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, significant governmental actions 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.
The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund
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securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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 based on relative net assets of Class R5 and Class R6. 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. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | 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 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 unaffiliated investment securities and Change in net unrealized appreciation (depreciation)of unaffiliated investment securities, respectively.
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J. | 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, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “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. |
The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon (“BNYM”) also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the six months ended August 31, 2022, fees paid to the Adviser were less than $500 Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.
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 exchange of the two currencies on settlement date, 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).
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 for hedging 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 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 instrument or asset. 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 net asset value (“NAV”) per share over |
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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. 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. Additionally, an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) includes credit related contingent features which allow Counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the Counterparty. 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, 2022, if any, 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.
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.
P. | LIBOR Risk – The Fund may have investments in financial instruments that utilize the London Interbank Offered Rate (“LIBOR”) as the reference or benchmark rate for variable interest rate calculations. LIBOR is intended to measure the rate generally at which banks can lend and borrow from one another in the relevant currency on an unsecured basis. The UK Financial Conduct Authority (“FCA”), the regulator that oversees LIBOR, announced that the majority of LIBOR rates would cease to be published or would no longer be representative on January 1, 2022. Although the publication of most LIBOR rates ceased at the end of 2021, a selection of widely used USD LIBOR rates continues to be published until June 2023 to allow for an orderly transition away from these rates. |
There remains uncertainty and risks relating to the continuing LIBOR transition and its effects on the Fund and the instruments in which the Fund invests. There can be no assurance that the composition or characteristics of any alternative reference rates (“ARRs”) or financial instruments in which the Fund invests that utilize ARRs will be similar to or produce the same value or economic equivalence as LIBOR or that these instruments will have the same volume or liquidity.
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Additionally, there remains uncertainty and risks relating to certain “legacy” USD LIBOR instruments that were issued or entered into before December 31, 2021 and the process by which a replacement interest rate will be identified and implemented into these instruments when USD LIBOR is ultimately discontinued. The effects of such uncertainty and risks in “legacy” USD LIBOR instruments held by the Fund could result in losses to the Fund.
Q. | 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. This practice does not apply to securities pledged as collateral for securities lending transactions. |
R. | 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. |
During the period, the Fund experienced a low interest rate environment 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that holds securities of that entity will be adversely impacted.
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 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’ claims. Junk bonds are less liquid than investment grade debt securities and their prices tend to be more volatile.
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.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
S. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
18 | Invesco Income Fund |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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 | 0.500% | |||
| ||||
Next $300 million | 0.400% | |||
| ||||
Next $500 million | 0.350% | |||
| ||||
Next $19.5 billion | 0.300% | |||
| ||||
Over $20.5 billion | 0.240% | |||
|
For the six months ended August 31, 2022, 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).
The Adviser has contractually agreed, through at least June 30, 2023, 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 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, 2023. 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, 2024, 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, 2022, the Adviser waived advisory fees of $10,223.
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, 2022, 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, 2022, 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 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 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, 2022, 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, 2022, IDI advised the Fund that IDI retained $7,258 in front-end sales commissions from the sale of Class A shares and $679 and $671 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 Adviser’s 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. |
19 | Invesco Income Fund |
The following is a summary of the tiered valuation input levels, as of August 31, 2022. 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 | ||||||||||||||||
| ||||||||||||||||
Asset-Backed Securities | $ | – | $ | 294,250,458 | $– | $ | 294,250,458 | |||||||||
| ||||||||||||||||
Agency Credit Risk Transfer Notes | – | 44,762,170 | – | 44,762,170 | ||||||||||||
| ||||||||||||||||
Preferred Stocks | 26,369,971 | – | – | 26,369,971 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Securities | – | 2,966,418 | – | 2,966,418 | ||||||||||||
| ||||||||||||||||
U.S. Government Sponsored Agency Mortgage-Backed Securities | – | 2,066,408 | – | 2,066,408 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 57,724,662 | – | – | 57,724,662 | ||||||||||||
| ||||||||||||||||
Total Investments in Securities | 84,094,633 | 344,045,454 | – | 428,140,087 | ||||||||||||
| ||||||||||||||||
Other Investments - Assets* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | 1,147,047 | – | – | 1,147,047 | ||||||||||||
| ||||||||||||||||
Total Investments | $ | 85,241,680 | $ | 344,045,454 | $– | $ | 429,287,134 | |||||||||
|
* | Unrealized appreciation. |
NOTE 4–Derivative Investments
The Fund may enter into an 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, 2022:
Value | ||||
Derivative Assets | Interest Rate Risk | |||
| ||||
Unrealized appreciation on futures contracts -Exchange-Traded(a) | $ | 1,147,047 | ||
| ||||
Derivatives not subject to master netting agreements | (1,147,047 | ) | ||
| ||||
Total Derivative Assets 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, 2022
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 | Interest | |||||||||||||||
Risk | Rate Risk | Total | ||||||||||||||
| ||||||||||||||||
Realized Gain (Loss): | ||||||||||||||||
Futures contracts | $ | – | $ | 7,123,784 | $ | 7,123,784 | ||||||||||
| ||||||||||||||||
Swap agreements | (619,463 | ) | – | (619,463 | ) | |||||||||||
| ||||||||||||||||
Change in Net Unrealized Appreciation: | ||||||||||||||||
Futures contracts | – | 1,745,530 | 1,745,530 | |||||||||||||
| ||||||||||||||||
Swap agreements | 184,535 | – | 184,535 | |||||||||||||
| ||||||||||||||||
Total | $ | (434,928 | ) | $ | 8,869,314 | $ | 8,434,386 | |||||||||
|
The table below summarizes the average notional value of derivatives held during the period.
Futures Contracts | Swap Agreements | |||
| ||||
Average notional value | $154,182,255 | $42,500,000 | ||
|
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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,690.
20 | Invesco Income Fund |
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 carryforward 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 28, 2022, as follows:
Capital Loss Carryforward* | ||||||||||||||
| ||||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||||
| ||||||||||||||
Not subject to expiration | $19,230,342 | $30,568,053 | $49,798,395 | |||||||||||
|
* | 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended August 31, 2022 was $78,943,345 and $143,298,549, 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 | $ | 2,105,145 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (35,086,374 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (32,981,229 | ) | |
|
Cost of investments for tax purposes is $462,268,363.
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2022(a) | February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 983,655 | $ | 7,297,458 | 2,000,705 | $ | 15,883,291 | ||||||||||
| ||||||||||||||||
Class C | 90,263 | 674,182 | 460,079 | 3,662,748 | ||||||||||||
| ||||||||||||||||
Class R | 28,834 | 214,350 | 131,792 | 1,047,079 | ||||||||||||
| ||||||||||||||||
Class Y | 111,187 | 828,335 | 896,090 | 7,142,843 | ||||||||||||
| ||||||||||||||||
Investor Class | 35,335 | 258,465 | 159,687 | 1,271,948 | ||||||||||||
| ||||||||||||||||
Class R5 | 1,656 | 12,079 | 11,542 | 91,956 | ||||||||||||
| ||||||||||||||||
Class R6 | 256,102 | 1,896,017 | 1,360,830 | 10,809,981 | ||||||||||||
|
21 | Invesco Income Fund |
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2022(a) | February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 516,219 | $ | 3,789,037 | 1,026,350 | $ | 8,139,244 | ||||||||||
| ||||||||||||||||
Class C | 8,196 | 60,201 | 15,638 | 124,019 | ||||||||||||
| ||||||||||||||||
Class R | 7,424 | 54,491 | 13,892 | 110,198 | ||||||||||||
| ||||||||||||||||
Class Y | 11,403 | 83,822 | 93,717 | 745,863 | ||||||||||||
| ||||||||||||||||
Investor Class | 33,153 | 243,673 | 65,950 | 523,837 | ||||||||||||
| ||||||||||||||||
Class R5 | 845 | 6,207 | 1,676 | 13,301 | ||||||||||||
| ||||||||||||||||
Class R6 | 282,128 | 2,073,183 | 737,062 | 5,839,296 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 50,672 | 372,635 | 91,478 | 725,785 | ||||||||||||
| ||||||||||||||||
Class C | (50,641 | ) | (372,635 | ) | (91,436 | ) | (725,785 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (2,881,890 | ) | (21,220,572 | ) | (6,175,388 | ) | (49,012,470 | ) | ||||||||
| ||||||||||||||||
Class C | (151,927 | ) | (1,114,376 | ) | (221,508 | ) | (1,756,422 | ) | ||||||||
| ||||||||||||||||
Class R | (26,271 | ) | (192,542 | ) | (103,913 | ) | (821,924 | ) | ||||||||
| ||||||||||||||||
Class Y | (183,816 | ) | (1,373,181 | ) | (6,232,419 | ) | (49,179,312 | ) | ||||||||
| ||||||||||||||||
Investor Class | (141,959 | ) | (1,046,507 | ) | (406,988 | ) | (3,238,752 | ) | ||||||||
| ||||||||||||||||
Class R5 | (1,405 | ) | (10,468 | ) | (9,620 | ) | (76,300 | ) | ||||||||
| ||||||||||||||||
Class R6 | (6,786,853 | ) | (51,023,791 | ) | (9,709,952 | ) | (77,071,671 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (7,807,690 | ) | $ | (58,489,937 | ) | (15,884,736 | ) | $ | (125,751,247 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 10% 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. |
In addition, 20% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser.
22 | 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, 2022 through August 31, 2022.
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 (03/01/22) | ACTUAL | HYPOTHETICAL (5% annual return before expenses) | Annualized Expense Ratio | |||||||||
Ending Account Value (08/31/22)1 | Expenses Paid During Period2 | Ending Account Value (08/31/22) | Expenses Paid During Period2 | |||||||||
Class A | $1,000.00 | $953.50 | $4.68 | $1,020.42 | $4.84 | 0.95% | ||||||
Class C | 1,000.00 | 949.80 | 8.35 | 1,016.64 | 8.64 | 1.70 | ||||||
Class R | 1,000.00 | 952.30 | 5.91 | 1,019.16 | 6.11 | 1.20 | ||||||
Class Y | 1,000.00 | 954.80 | 3.45 | 1,021.68 | 3.57 | 0.70 | ||||||
Investor Class | 1,000.00 | 954.00 | 4.24 | 1,020.87 | 4.38 | 0.86 | ||||||
Class R5 | 1,000.00 | 956.40 | 3.01 | 1,022.13 | 3.11 | 0.61 | ||||||
Class R6 | 1,000.00 | 955.40 | 2.66 | 1,022.48 | 2.75 | 0.54 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2022 through August 31, 2022, 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. |
23 | Invesco Income Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance with certain negotiated regulatory requirements. In
addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed 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 and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board
reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe and against the Bloomberg U.S. Aggregate Bond Index (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 fifth 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. 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 noted that security selection within commercial mortgage-backed securities and asset-backed securities in 2020 detracted from Fund performance due to market trends related to the COVID-19 pandemic while performance improved in the 2021
24 | Invesco Income Fund |
calendar year. 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, which did not change its 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 is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board 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 also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination 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. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated
money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.
The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.
The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
25 | Invesco Income 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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/ corporate/about-us/esg. 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 number(s): 811-05686 and 033-39519 | Invesco Distributors, Inc. | INC-SAR-1 |
Semiannual Report to Shareholders | August 31, 2022 |
Invesco Intermediate Bond Factor Fund
Nasdaq:
A: OFIAX ∎ C: OFICX ∎ R: OFINX ∎ Y: OFIYX ∎ R5: IOTEX ∎ R6: OFIIX
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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 |
Performance summary
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Fund vs. Indexes |
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Cumulative total returns, 2/28/22 to 8/31/22, 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. |
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Class A Shares | -8.25 | % | ||
Class C Shares | -8.60 | |||
Class R Shares | -8.27 | |||
Class Y Shares | -8.14 | |||
Class R5 Shares | -8.13 | |||
Class R6 Shares | -8.14 | |||
Bloomberg U.S. Aggregate Bond Index▼ | -7.76 | |||
Source(s): ▼RIMES Technologies Corp. | ||||
The Bloomberg 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.
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2 | Invesco Intermediate Bond Factor Fund |
Average Annual Total Returns |
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As of 8/31/22, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (8/2/10) | 2.81 | % | ||
10 Years | 1.56 | |||
5 Years | -0.63 | |||
1 Year | -16.13 | |||
Class C Shares | ||||
Inception (8/2/10) | 2.63 | % | ||
10 Years | 1.39 | |||
5 Years | -0.55 | |||
1 Year | -13.93 | |||
Class R Shares | ||||
Inception (8/2/10) | 2.88 | % | ||
10 Years | 1.74 | |||
5 Years | -0.05 | |||
1 Year | -12.54 | |||
Class Y Shares | ||||
Inception (8/2/10) | 3.41 | % | ||
10 Years | 2.27 | |||
5 Years | 0.52 | |||
1 Year | -12.19 | |||
Class R5 Shares | ||||
10 Years | 2.08 | % | ||
5 Years | 0.38 | |||
1 Year | -12.19 | |||
Class R6 Shares | ||||
Inception (11/28/12) | 2.18 | % | ||
5 Years | 0.54 | |||
1 Year | -12.19 |
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 was subsequently renamed the Invesco Intermediate Bond Factor Fund (the Fund). Returns shown above, for periods ending on or 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. For periods prior to February 28, 2020, performance shown is that of the Fund using its previous past performance investment strategy. Therefore, the past performance shown for periods prior to February 28, 2020 may have differed had the Fund’s current investment strategy been in effect.
Class R5 shares incepted on May 24, 2019. Performance shown on and 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.
3 | Invesco Intermediate Bond Factor Fund |
Liquidity Risk Management Program
In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), 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 21-23, 2022, 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 January 1, 2021, through December 31, 2021 (the “Program Reporting Period”). The Report discussed notable events affecting liquidity over the Program Reporting Period, including the impact of the coronavirus pandemic on the Fund and the overall market. The Report noted that there were no material changes to the Program during 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. |
4 | Invesco Intermediate Bond Factor Fund |
August 31, 2022
(Unaudited)
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
U.S. Dollar Denominated Bonds & Notes–47.63% |
| |||||||
Advertising–0.10% |
| |||||||
Omnicom Group, Inc./Omnicom Capital, Inc., 3.65%, 11/01/2024 | $ | 200,000 | $ | 198,092 | ||||
| ||||||||
Aerospace & Defense–0.76% |
| |||||||
Boeing Co. (The), | ||||||||
3.25%, 02/01/2028 | 490,000 | 445,326 | ||||||
| ||||||||
3.20%, 03/01/2029 | 400,000 | 353,886 | ||||||
| ||||||||
Collins Aerospace, 3.20%, 03/15/2024 | 441,000 | 436,854 | ||||||
| ||||||||
Raytheon Technologies Corp., 3.50%, 03/15/2027 | 292,000 | 283,074 | ||||||
| ||||||||
1,519,140 | ||||||||
| ||||||||
Air Freight & Logistics–0.12% |
| |||||||
FedEx Corp., 5.25%, 05/15/2050 | 250,000 | 247,874 | ||||||
| ||||||||
Airlines–0.64% |
| |||||||
American Airlines Pass-Through Trust, Series 2021-1, Class A, 2.88%, 07/11/2034 | 475,000 | 398,874 | ||||||
| ||||||||
Southwest Airlines Co., | ||||||||
3.00%, 11/15/2026 | 500,000 | 472,638 | ||||||
| ||||||||
5.13%, 06/15/2027 | 125,000 | 127,571 | ||||||
| ||||||||
Spirit Airlines Pass-Through Trust, Series 2015-1A, 4.10%, 10/01/2029 | 90,900 | 82,765 | ||||||
| ||||||||
United Airlines Pass-Through Trust, Series 2020-1, Class A, 5.88%, 10/15/2027 | 204,653 | 205,103 | ||||||
| ||||||||
1,286,951 | ||||||||
| ||||||||
Apparel Retail–0.10% |
| |||||||
Ross Stores, Inc., 1.88%, 04/15/2031 | 250,000 | 198,708 | ||||||
| ||||||||
Application Software–0.11% |
| |||||||
Autodesk, Inc., 2.85%, 01/15/2030 | 250,000 | 222,179 | ||||||
| ||||||||
Asset Management & Custody Banks–0.35% |
| |||||||
Affiliated Managers Group, Inc., 4.25%, 02/15/2024 | 106,000 | 106,148 | ||||||
| ||||||||
Ameriprise Financial, Inc., 4.00%, 10/15/2023 | 241,000 | 241,291 | ||||||
| ||||||||
BlackRock, Inc., 2.10%, 02/25/2032 | 275,000 | 228,874 | ||||||
| ||||||||
FS KKR Capital Corp., 4.13%, 02/01/2025 | 119,000 | 114,787 | ||||||
| ||||||||
691,100 | ||||||||
| ||||||||
Automobile Manufacturers–1.01% |
| |||||||
American Honda Finance Corp., 3.50%, 02/15/2028 | 848,000 | 816,832 | ||||||
|
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Automobile Manufacturers–(continued) |
| |||||||
General Motors Co., | ||||||||
6.60%, 04/01/2036 | $ | 100,000 | $ | 101,061 | ||||
| ||||||||
5.15%, 04/01/2038 | 49,000 | 43,149 | ||||||
| ||||||||
6.25%, 10/02/2043 | 403,000 | 389,068 | ||||||
| ||||||||
6.75%, 04/01/2046 | 259,000 | 260,335 | ||||||
| ||||||||
5.95%, 04/01/2049 | 44,000 | 40,944 | ||||||
| ||||||||
Toyota Motor Corp. (Japan), | 400,000 | 366,256 | ||||||
| ||||||||
2,017,645 | ||||||||
| ||||||||
Biotechnology–0.59% |
| |||||||
Amgen, Inc., | ||||||||
3.63%, 05/22/2024 | 425,000 | 423,225 | ||||||
| ||||||||
2.60%, 08/19/2026 | 500,000 | 473,394 | ||||||
| ||||||||
2.20%, 02/21/2027 | 17,000 | 15,633 | ||||||
| ||||||||
Gilead Sciences, Inc., 1.20%, 10/01/2027 | 310,000 | 267,831 | ||||||
| ||||||||
1,180,083 | ||||||||
| ||||||||
Brewers–0.17% |
| |||||||
Anheuser-Busch InBev Worldwide, Inc. (Belgium), 8.20%, 01/15/2039 | 262,000 | 341,219 | ||||||
| ||||||||
Broadcasting–0.33% |
| |||||||
Discovery Communications LLC, | ||||||||
3.95%, 03/20/2028 | 200,000 | 183,846 | ||||||
| ||||||||
4.13%, 05/15/2029 | 289,000 | 263,756 | ||||||
| ||||||||
Paramount Global, 4.20%, 05/19/2032 | 250,000 | 220,228 | ||||||
| ||||||||
667,830 | ||||||||
| ||||||||
Building Products–0.03% |
| |||||||
Owens Corning, 7.00%, 12/01/2036 | 62,000 | 67,665 | ||||||
| ||||||||
Cable & Satellite–0.86% |
| |||||||
Charter Communications Operating LLC/ Charter Communications Operating Capital Corp., | ||||||||
4.20%, 03/15/2028 | 375,000 | 353,948 | ||||||
| ||||||||
5.05%, 03/30/2029 | 419,000 | 403,969 | ||||||
| ||||||||
5.13%, 07/01/2049 | 50,000 | 40,652 | ||||||
| ||||||||
Grupo Televisa S.A.B. (Mexico), 4.63%, 01/30/2026 | 450,000 | 448,641 | ||||||
| ||||||||
Time Warner Cable LLC, | ||||||||
7.30%, 07/01/2038 | 106,000 | 109,065 | ||||||
| ||||||||
4.50%, 09/15/2042 | 420,000 | 318,009 | ||||||
| ||||||||
Time Warner Entertainment Co. L.P., 8.38%, 07/15/2033 | 35,000 | 40,352 | ||||||
| ||||||||
1,714,636 | ||||||||
| ||||||||
Communications Equipment–0.01% |
| |||||||
Juniper Networks, Inc., 5.95%, 03/15/2041 | 14,000 | 13,499 | ||||||
| ||||||||
Motorola Solutions, Inc., 5.50%, 09/01/2044 | 14,000 | 13,160 | ||||||
| ||||||||
26,659 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco Intermediate Bond Factor Fund |
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Computer & Electronics Retail–0.11% |
| |||||||
Dell International LLC/EMC Corp., | ||||||||
8.10%, 07/15/2036 | $ | 29,000 | $ | 33,730 | ||||
| ||||||||
3.38%, 12/15/2041(b) | 200,000 | 140,320 | ||||||
| ||||||||
8.35%, 07/15/2046 | 35,000 | 42,434 | ||||||
| ||||||||
216,484 | ||||||||
| ||||||||
Construction & Engineering–0.11% |
| |||||||
Quanta Services, Inc., 2.90%, 10/01/2030 | 260,000 | 222,446 | ||||||
| ||||||||
Construction Machinery & Heavy Trucks–0.65% |
| |||||||
Caterpillar Financial Services Corp., 3.25%, 12/01/2024 | 437,000 | 431,606 | ||||||
| ||||||||
Cummins, Inc., 3.65%, 10/01/2023 | 479,000 | 480,229 | ||||||
| ||||||||
nVent Finance S.a.r.l. (United Kingdom), 4.55%, 04/15/2028 | 400,000 | 379,125 | ||||||
| ||||||||
1,290,960 | ||||||||
| ||||||||
Consumer Finance–0.57% |
| |||||||
Ally Financial, Inc., 8.00%, 11/01/2031 | 218,000 | 242,864 | ||||||
| ||||||||
American Express Co., | ||||||||
3.40%, 02/22/2024 | 350,000 | 347,081 | ||||||
| ||||||||
3.00%, 10/30/2024 | 75,000 | 73,625 | ||||||
| ||||||||
Capital One Financial Corp., 3.75%, 03/09/2027 | 400,000 | 384,712 | ||||||
| ||||||||
Synchrony Financial, 3.95%, 12/01/2027 | 100,000 | 90,974 | ||||||
| ||||||||
1,139,256 | ||||||||
| ||||||||
Data Processing & Outsourced Services–0.26% |
| |||||||
Visa, Inc., 4.15%, 12/14/2035 | 275,000 | 272,913 | ||||||
| ||||||||
Western Union Co. (The), 6.20%, 11/17/2036 | 250,000 | 247,780 | ||||||
| ||||||||
520,693 | ||||||||
| ||||||||
Distillers & Vintners–0.44% |
| |||||||
Diageo Capital PLC (United Kingdom), | ||||||||
2.13%, 10/24/2024 | 574,000 | 555,523 | ||||||
| ||||||||
3.88%, 05/18/2028 | 330,000 | 327,594 | ||||||
| ||||||||
883,117 | ||||||||
| ||||||||
Diversified Banks–8.51% |
| |||||||
Australia & New Zealand Banking Group Ltd. (Australia), 3.70%, 11/16/2025 | 400,000 | 396,853 | ||||||
| ||||||||
Banco Santander S.A. (Spain), | ||||||||
4.25%, 04/11/2027 | 400,000 | 384,654 | ||||||
| ||||||||
4.38%, 04/12/2028 | 200,000 | 188,421 | ||||||
| ||||||||
3.31%, 06/27/2029 | 400,000 | 360,770 | ||||||
| ||||||||
Bancolombia S.A. (Colombia), 3.00%, 01/29/2025 | 213,000 | 200,034 | ||||||
| ||||||||
Bank of America Corp., | ||||||||
4.45%, 03/03/2026 | 430,000 | 428,497 | ||||||
| ||||||||
1.32%, 06/19/2026(c) | 405,000 | 368,609 | ||||||
| ||||||||
2.48%, 09/21/2036(c) | 489,000 | 379,389 | ||||||
| ||||||||
6.11%, 01/29/2037 | 325,000 | 345,094 | ||||||
| ||||||||
7.75%, 05/14/2038 | 275,000 | 340,287 | ||||||
| ||||||||
Barclays Bank PLC (United Kingdom), 3.75%, 05/15/2024 | 240,000 | 238,229 | ||||||
| ||||||||
Barclays PLC (United Kingdom), | ||||||||
3.56%, 09/23/2035(c) | 800,000 | 641,916 | ||||||
| ||||||||
8.00%(c)(d) | 94,000 | 92,623 | ||||||
|
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Diversified Banks–(continued) |
| |||||||
BPCE S.A. (France), | $ | 195,000 | $ | 189,281 | ||||
| ||||||||
Citigroup, Inc., | ||||||||
4.04%, 06/01/2024(c) | 300,000 | 299,549 | ||||||
| ||||||||
3.67%, 07/24/2028(c) | 100,000 | 94,243 | ||||||
| ||||||||
4.41%, 03/31/2031(c) | 225,000 | 214,927 | ||||||
| ||||||||
8.13%, 07/15/2039 | 200,000 | 261,614 | ||||||
| ||||||||
5.32%, 03/26/2041(c) | 400,000 | 401,251 | ||||||
| ||||||||
Cooperatieve Rabobank U.A. (Netherlands), | ||||||||
3.75%, 07/21/2026 | 300,000 | 286,354 | ||||||
| ||||||||
5.25%, 05/24/2041 | 125,000 | 135,322 | ||||||
| ||||||||
HSBC Bank USA N.A., 5.88%, 11/01/2034 | 700,000 | 705,360 | ||||||
| ||||||||
HSBC Holdings PLC (United Kingdom), | ||||||||
4.25%, 03/14/2024 | 454,000 | 452,899 | ||||||
| ||||||||
3.95%, 05/18/2024(c) | 300,000 | 298,420 | ||||||
| ||||||||
4.29%, 09/12/2026(c) | 325,000 | 315,869 | ||||||
| ||||||||
4.38%, 11/23/2026 | 200,000 | 195,796 | ||||||
| ||||||||
2.25%, 11/22/2027(c) | 400,000 | 352,825 | ||||||
| ||||||||
4.58%, 06/19/2029(c) | 165,000 | 155,347 | ||||||
| ||||||||
6.80%, 06/01/2038 | 325,000 | 347,122 | ||||||
| ||||||||
ING Groep N.V. (Netherlands), 4.05%, 04/09/2029 | 250,000 | 234,004 | ||||||
| ||||||||
JPMorgan Chase & Co., | ||||||||
3.80%, 07/23/2024(c) | 258,000 | 256,632 | ||||||
| ||||||||
3.88%, 09/10/2024 | 502,000 | 499,968 | ||||||
| ||||||||
7.75%, 07/15/2025 | 250,000 | 273,105 | ||||||
| ||||||||
2.08%, 04/22/2026(c) | 325,000 | 304,049 | ||||||
| ||||||||
4.13%, 12/15/2026 | 125,000 | 123,510 | ||||||
| ||||||||
Lloyds Banking Group PLC (United Kingdom), | ||||||||
4.50%, 11/04/2024 | 350,000 | 348,238 | ||||||
| ||||||||
4.45%, 05/08/2025 | 755,000 | 748,172 | ||||||
| ||||||||
3.87%, 07/09/2025(c) | 201,000 | 196,976 | ||||||
| ||||||||
3.75%, 01/11/2027 | 375,000 | 357,857 | ||||||
| ||||||||
Mitsubishi UFJ Financial Group, Inc. (Japan), | ||||||||
3.96%, 03/02/2028 | 225,000 | 217,180 | ||||||
| ||||||||
4.05%, 09/11/2028 | 225,000 | 216,973 | ||||||
| ||||||||
National Australia Bank Ltd. (Australia), | ||||||||
3.38%, 01/14/2026 | 300,000 | 291,692 | ||||||
| ||||||||
2.50%, 07/12/2026 | 250,000 | 234,969 | ||||||
| ||||||||
NatWest Group PLC (United Kingdom), 4.80%, 04/05/2026 | 200,000 | 199,057 | ||||||
| ||||||||
Sumitomo Mitsui Financial Group, Inc. (Japan), | ||||||||
2.35%, 01/15/2025 | 200,000 | 190,635 | ||||||
| ||||||||
3.45%, 01/11/2027 | 475,000 | 452,955 | ||||||
| ||||||||
2.14%, 09/23/2030 | 450,000 | 358,141 | ||||||
| ||||||||
Svenska Handelsbanken AB (Sweden), 3.90%, 11/20/2023 | 474,000 | 474,560 | ||||||
| ||||||||
Toronto-Dominion Bank (The) (Canada), 1.25%, 09/10/2026 | 100,000 | 88,878 | ||||||
| ||||||||
U.S. Bancorp, Series W, 3.10%, 04/27/2026 | 160,000 | 154,129 | ||||||
| ||||||||
Wells Fargo & Co., 4.10%, 06/03/2026 | 450,000 | 442,028 | ||||||
| ||||||||
Wells Fargo Bank N.A., 6.60%, 01/15/2038 | 300,000 | 344,412 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Intermediate Bond Factor Fund |
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Diversified Banks–(continued) |
| |||||||
Westpac Banking Corp. (Australia), | ||||||||
2.85%, 05/13/2026 | $ | 451,000 | $ | 432,083 | ||||
| ||||||||
2.70%, 08/19/2026 | 400,000 | 377,991 | ||||||
| ||||||||
3.35%, 03/08/2027 | 150,000 | 144,827 | ||||||
| ||||||||
17,034,576 | ||||||||
| ||||||||
Diversified Capital Markets–0.75% |
| |||||||
Credit Suisse AG (Switzerland), 1.25%, 08/07/2026 | 350,000 | 301,667 | ||||||
| ||||||||
Credit Suisse Group AG (Switzerland), 4.55%, 04/17/2026 | 425,000 | 407,599 | ||||||
| ||||||||
Deutsche Bank AG (Germany), | ||||||||
4.16%, 05/13/2025 | 150,000 | 148,658 | ||||||
| ||||||||
6.12%, 07/14/2026(c) | 300,000 | 300,052 | ||||||
| ||||||||
3.04%, 05/28/2032(c) | 450,000 | 348,711 | ||||||
| ||||||||
1,506,687 | ||||||||
| ||||||||
Diversified Chemicals–0.02% |
| |||||||
Dow Chemical Co. (The), 9.40%, 05/15/2039 | 32,000 | 44,396 | ||||||
| ||||||||
Diversified Metals & Mining–0.13% |
| |||||||
Rio Tinto Finance (USA) Ltd. (Australia), 5.20%, 11/02/2040 | 250,000 | 261,554 | ||||||
| ||||||||
Diversified Support Services–0.12% |
| |||||||
Cintas Corp. No. 2, 3.70%, 04/01/2027 | 250,000 | 246,619 | ||||||
| ||||||||
Drug Retail–0.11% |
| |||||||
Walgreens Boots Alliance, Inc., 4.80%, 11/18/2044 | 245,000 | 215,109 | ||||||
| ||||||||
Education Services–0.01% |
| |||||||
California Institute of Technology, 4.70%, 11/01/2111 | 27,000 | 25,182 | ||||||
| ||||||||
Electric Utilities–3.02% |
| |||||||
AEP Texas, Inc., 3.95%, 06/01/2028(b) | 806,000 | 775,570 | ||||||
| ||||||||
Appalachian Power Co., 7.00%, 04/01/2038 | 250,000 | 293,098 | ||||||
| ||||||||
Consolidated Edison Co. of New York, Inc., 4.50%, 05/15/2058 | 200,000 | 181,009 | ||||||
| ||||||||
Edison International, | ||||||||
5.75%, 06/15/2027 | 150,000 | 152,154 | ||||||
| ||||||||
4.13%, 03/15/2028 | 228,000 | 215,452 | ||||||
| ||||||||
Eversource Energy, | ||||||||
Series L, 2.90%, 10/01/2024 | 230,000 | 224,135 | ||||||
| ||||||||
Series M, 3.30%, 01/15/2028 | 200,000 | 187,324 | ||||||
| ||||||||
NextEra Energy Capital Holdings, Inc., | ||||||||
3.50%, 04/01/2029 | 250,000 | 234,139 | ||||||
| ||||||||
5.65%, 05/01/2079(c) | 235,000 | 214,949 | ||||||
| ||||||||
Oglethorpe Power Corp., | 374,000 | 385,141 | ||||||
| ||||||||
Pacific Gas and Electric Co., | ||||||||
4.55%, 07/01/2030 | 450,000 | 400,775 | ||||||
| ||||||||
4.20%, 06/01/2041 | 400,000 | 298,206 | ||||||
| ||||||||
PacifiCorp, 6.00%, 01/15/2039 | 200,000 | 217,140 | ||||||
| ||||||||
Pinnacle West Capital Corp., 1.30%, 06/15/2025 | 200,000 | 182,571 | ||||||
| ||||||||
Progress Energy, Inc., 7.75%, 03/01/2031 | 150,000 | 174,094 | ||||||
|
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Electric Utilities–(continued) |
| |||||||
Southern California Edison Co., | ||||||||
6.65%, 04/01/2029 | $ | 500,000 | $ | 532,067 | ||||
| ||||||||
6.00%, 01/15/2034 | 168,000 | 178,404 | ||||||
| ||||||||
Southwestern Electric Power Co., Series N, 1.65%, 03/15/2026 | 250,000 | 226,847 | ||||||
| ||||||||
Union Electric Co., 8.45%, 03/15/2039 | 400,000 | 531,241 | ||||||
| ||||||||
Virginia Electric & Power Co., 8.88%, 11/15/2038 | 316,000 | 443,879 | ||||||
| ||||||||
6,048,195 | ||||||||
| ||||||||
Electronic Components–0.11% |
| |||||||
Amphenol Corp., 3.20%, 04/01/2024 | 111,000 | 109,953 | ||||||
| ||||||||
Corning, Inc., 5.85%, 11/15/2068 | 110,000 | 106,061 | ||||||
| ||||||||
216,014 | ||||||||
| ||||||||
Gas Utilities–0.34% |
| |||||||
Southern California Gas Co., 3.20%, 06/15/2025 | 250,000 | 243,430 | ||||||
| ||||||||
Southwest Gas Corp., 4.05%, 03/15/2032 | 475,000 | 429,438 | ||||||
| ||||||||
672,868 | ||||||||
| ||||||||
Health Care Distributors–0.11% |
| |||||||
McKesson Corp., 1.30%, 08/15/2026 | 250,000 | 223,079 | ||||||
| ||||||||
Health Care Facilities–0.83% |
| |||||||
Ascension Health, Series B, 2.53%, 11/15/2029 | 225,000 | 201,265 | ||||||
| ||||||||
CommonSpirit Health, 1.55%, 10/01/2025 | 314,000 | 286,149 | ||||||
| ||||||||
HCA, Inc., | ||||||||
5.25%, 04/15/2025 | 197,000 | 199,314 | ||||||
| ||||||||
5.25%, 06/15/2049 | 300,000 | 269,008 | ||||||
| ||||||||
SSM Health Care Corp., Series 2018, 3.69%, 06/01/2023 | 715,000 | 713,823 | ||||||
| ||||||||
1,669,559 | ||||||||
| ||||||||
Health Care REITs–0.39% |
| |||||||
Healthpeak Properties, Inc., 2.13%, 12/01/2028 | 300,000 | 258,255 | ||||||
| ||||||||
Omega Healthcare Investors, Inc., 3.38%, 02/01/2031 | 615,000 | 501,808 | ||||||
| ||||||||
Sabra Health Care L.P., 5.13%, 08/15/2026 | 28,000 | 27,072 | ||||||
| ||||||||
787,135 | ||||||||
| ||||||||
Health Care Services–0.48% | ||||||||
CHRISTUS Health, Series C, 4.34%, 07/01/2028 | 430,000 | 427,773 | ||||||
| ||||||||
Cigna Corp., 4.50%, 02/25/2026 | 200,000 | 200,577 | ||||||
| ||||||||
Dignity Health, 5.27%, 11/01/2064 | 248,000 | 234,400 | ||||||
| ||||||||
Toledo Hospital (The), 6.02%, 11/15/2048 | 154,000 | 100,065 | ||||||
| ||||||||
962,815 | ||||||||
| ||||||||
Home Improvement Retail–0.10% |
| |||||||
Lowe’s Cos., Inc., 3.13%, 09/15/2024 | 200,000 | 196,029 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Intermediate Bond Factor Fund |
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Hotel & Resort REITs–0.10% |
| |||||||
Host Hotels & Resorts L.P., Series H, 3.38%, 12/15/2029 | $ | 125,000 | $ | 107,134 | ||||
| ||||||||
Service Properties Trust, | ||||||||
4.35%, 10/01/2024 | 61,000 | 54,675 | ||||||
| ||||||||
4.95%, 10/01/2029 | 50,000 | 37,856 | ||||||
| ||||||||
199,665 | ||||||||
| ||||||||
Hotels, Resorts & Cruise Lines–0.19% |
| |||||||
Booking Holdings, Inc., 3.55%, 03/15/2028 | 399,000 | 384,022 | ||||||
| ||||||||
Hypermarkets & Super Centers–0.21% |
| |||||||
Walmart, Inc., 3.95%, 06/28/2038 | 450,000 | 428,381 | ||||||
| ||||||||
Independent Power Producers & Energy Traders–0.11% |
| |||||||
Enel Generacion Chile S.A. (Chile), 4.25%, 04/15/2024 | 226,000 | 222,893 | ||||||
| ||||||||
Industrial Conglomerates–0.20% |
| |||||||
General Electric Co., 5.88%, 01/14/2038 | 375,000 | 395,123 | ||||||
| ||||||||
Industrial Machinery–0.31% |
| |||||||
Parker-Hannifin Corp., 3.25%, 03/01/2027 | 300,000 | 287,991 | ||||||
| ||||||||
Stanley Black & Decker, Inc., 4.25%, 11/15/2028 | 331,000 | 329,832 | ||||||
| ||||||||
617,823 | ||||||||
| ||||||||
Insurance Brokers–0.28% |
| |||||||
Aon Corp., 8.21%, 01/01/2027 | 100,000 | 107,343 | ||||||
| ||||||||
Marsh & McLennan Cos., Inc., 3.88%, 03/15/2024 | 456,000 | 455,823 | ||||||
| ||||||||
563,166 | ||||||||
| ||||||||
Integrated Oil & Gas–1.33% |
| |||||||
BP Capital Markets PLC (United Kingdom), 3.72%, 11/28/2028 | 325,000 | 315,074 | ||||||
| ||||||||
Chevron Corp., 2.90%, 03/03/2024 | 324,000 | 320,758 | ||||||
| ||||||||
Chevron USA, Inc., | 225,000 | 222,540 | ||||||
| ||||||||
Exxon Mobil Corp., | ||||||||
2.99%, 03/19/2025 | 450,000 | 440,413 | ||||||
| ||||||||
3.48%, 03/19/2030 | 450,000 | 431,398 | ||||||
| ||||||||
Shell International Finance B.V. (Netherlands), | ||||||||
3.25%, 05/11/2025 | 90,000 | 88,543 | ||||||
| ||||||||
2.38%, 11/07/2029 | 350,000 | 309,109 | ||||||
| ||||||||
6.38%, 12/15/2038 | 450,000 | 524,325 | ||||||
| ||||||||
2,652,160 | ||||||||
| ||||||||
Integrated Telecommunication Services–0.99% |
| |||||||
British Telecommunications PLC (United Kingdom), | ||||||||
5.13%, 12/04/2028 | 225,000 | 221,425 | ||||||
| ||||||||
9.63%, 12/15/2030 | 250,000 | 308,424 | ||||||
| ||||||||
Koninklijke KPN N.V. (Netherlands), 8.38%, 10/01/2030 | 175,000 | 203,868 | ||||||
| ||||||||
TCI Communications, Inc., 7.13%, 02/15/2028 | 700,000 | 791,954 | ||||||
| ||||||||
Verizon Communications, Inc., 0.85%, 11/20/2025 | 500,000 | 450,242 | ||||||
| ||||||||
1,975,913 | ||||||||
|
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Interactive Media & Services–0.73% |
| |||||||
Baidu, Inc. (China), | ||||||||
4.38%, 05/14/2024 | $ | 400,000 | $ | 399,937 | ||||
| ||||||||
1.63%, 02/23/2027 | 250,000 | 220,115 | ||||||
| ||||||||
4.38%, 03/29/2028 | 300,000 | 292,349 | ||||||
| ||||||||
4.88%, 11/14/2028 | 200,000 | 199,626 | ||||||
| ||||||||
2.38%, 08/23/2031 | 200,000 | 164,676 | ||||||
| ||||||||
Weibo Corp. (China), 3.50%, 07/05/2024 | 200,000 | 193,459 | ||||||
| ||||||||
1,470,162 | ||||||||
| ||||||||
Internet & Direct Marketing Retail–1.43% |
| |||||||
Alibaba Group Holding Ltd. (China), | ||||||||
3.40%, 12/06/2027 | 330,000 | 311,835 | ||||||
| ||||||||
2.13%, 02/09/2031 | 525,000 | 436,158 | ||||||
| ||||||||
4.50%, 11/28/2034 | 570,000 | 521,305 | ||||||
| ||||||||
4.00%, 12/06/2037 | 400,000 | 335,382 | ||||||
| ||||||||
4.20%, 12/06/2047 | 250,000 | 200,627 | ||||||
| ||||||||
Amazon.com, Inc., | ||||||||
4.25%, 08/22/2057 | 275,000 | 258,751 | ||||||
| ||||||||
3.25%, 05/12/2061 | 475,000 | 361,621 | ||||||
| ||||||||
4.10%, 04/13/2062 | 475,000 | 428,665 | ||||||
| ||||||||
2,854,344 | ||||||||
| ||||||||
Investment Banking & Brokerage–2.37% |
| |||||||
Brookfield Finance, Inc. (Canada), | ||||||||
4.00%, 04/01/2024 | 240,000 | 239,240 | ||||||
| ||||||||
3.90%, 01/25/2028 | 240,000 | 227,057 | ||||||
| ||||||||
4.70%, 09/20/2047 | 101,000 | 87,683 | ||||||
| ||||||||
Goldman Sachs Group, Inc. (The), | ||||||||
4.00%, 03/03/2024 | 1,077,000 | 1,077,231 | ||||||
| ||||||||
3.50%, 11/16/2026 | 301,000 | 289,333 | ||||||
| ||||||||
6.25%, 02/01/2041 | 275,000 | 308,485 | ||||||
| ||||||||
Morgan Stanley, | ||||||||
3.74%, 04/24/2024(c) | 726,000 | 722,981 | ||||||
| ||||||||
3.88%, 01/27/2026 | 415,000 | 410,549 | ||||||
| ||||||||
Series F, 3.88%, 04/29/2024 | 538,000 | 536,953 | ||||||
| ||||||||
Nomura Holdings, Inc. (Japan), | ||||||||
2.65%, 01/16/2025 | 200,000 | 190,538 | ||||||
| ||||||||
1.65%, 07/14/2026 | 290,000 | 255,407 | ||||||
| ||||||||
2.33%, 01/22/2027 | 200,000 | 178,177 | ||||||
| ||||||||
2.71%, 01/22/2029 | 260,000 | 222,482 | ||||||
| ||||||||
4,746,116 | ||||||||
| ||||||||
IT Consulting & Other Services–0.73% |
| |||||||
International Business Machines Corp., | ||||||||
4.15%, 05/15/2039 | 350,000 | 316,723 | ||||||
| ||||||||
5.60%, 11/30/2039 | 425,000 | 447,441 | ||||||
| ||||||||
7.13%, 12/01/2096 | 383,000 | 492,863 | ||||||
| ||||||||
Kyndryl Holdings, Inc., 2.70%, 10/15/2028(b) | 250,000 | 193,545 | ||||||
| ||||||||
1,450,572 | ||||||||
| ||||||||
Leisure Products–0.31% |
| |||||||
Brunswick Corp., 5.10%, 04/01/2052 | 250,000 | 184,687 | ||||||
| ||||||||
Hasbro, Inc., | ||||||||
6.35%, 03/15/2040 | 300,000 | 311,788 | ||||||
| ||||||||
5.10%, 05/15/2044 | 147,000 | 131,225 | ||||||
| ||||||||
627,700 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Intermediate Bond Factor Fund |
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Life & Health Insurance–1.23% |
| |||||||
Brighthouse Financial, Inc., | ||||||||
3.70%, 06/22/2027 | $ | 257,000 | $ | 244,148 | ||||
| ||||||||
4.70%, 06/22/2047 | 236,000 | 186,760 | ||||||
| ||||||||
Manulife Financial Corp. (Canada), 4.15%, 03/04/2026 | 135,000 | 133,821 | ||||||
| ||||||||
MetLife, Inc., | ||||||||
3.60%, 04/10/2024 | 692,000 | 692,736 | ||||||
| ||||||||
Series D, 5.88%(c)(d) | 100,000 | 98,119 | ||||||
| ||||||||
Prudential Financial, Inc., | ||||||||
5.63%, 06/15/2043(c) | 342,000 | 341,172 | ||||||
| ||||||||
5.20%, 03/15/2044(c) | 225,000 | 218,986 | ||||||
| ||||||||
5.38%, 05/15/2045(c) | 135,000 | 132,848 | ||||||
| ||||||||
Reliance Standard Life Global Funding II, 2.75%, 01/21/2027(b) | 441,000 | 407,415 | ||||||
| ||||||||
Unum Group, 5.75%, 08/15/2042 | 13,000 | 12,059 | ||||||
| ||||||||
2,468,064 | ||||||||
| ||||||||
Managed Health Care–0.11% |
| |||||||
Kaiser Foundation Hospitals, 3.15%, 05/01/2027 | 225,000 | 217,328 | ||||||
| ||||||||
Motorcycle Manufacturers–0.11% |
| |||||||
Harley-Davidson, Inc., 4.63%, 07/28/2045 | 279,000 | 218,047 | ||||||
| ||||||||
Movies & Entertainment–0.46% | ||||||||
Magallanes, Inc., 4.05%, 03/15/2029(b) | 525,000 | 478,471 | ||||||
| ||||||||
TWDC Enterprises 18 Corp., 3.15%, 09/17/2025 | 450,000 | 440,224 | ||||||
| ||||||||
918,695 | ||||||||
| ||||||||
Multi-line Insurance–0.18% |
| |||||||
American International Group, Inc., | ||||||||
3.90%, 04/01/2026 | 150,000 | 147,662 | ||||||
| ||||||||
Series A-9, 5.75%, 04/01/2048(c) | 20,000 | 18,999 | ||||||
| ||||||||
AXA S.A. (France), 8.60%, 12/15/2030 | 150,000 | 186,939 | ||||||
| ||||||||
353,600 | ||||||||
| ||||||||
Multi-Sector Holdings–0.09% |
| |||||||
MidAmerican Energy Co., 3.65%, 04/15/2029 | 180,000 | 174,705 | ||||||
| ||||||||
Multi-Utilities–0.24% |
| |||||||
Black Hills Corp., | ||||||||
4.25%, 11/30/2023 | 216,000 | 215,966 | ||||||
| ||||||||
3.95%, 01/15/2026 | 277,000 | 272,474 | ||||||
| ||||||||
488,440 | ||||||||
| ||||||||
Office REITs–0.32% |
| |||||||
Boston Properties L.P., | ||||||||
2.75%, 10/01/2026 | 190,000 | 177,059 | ||||||
| ||||||||
3.40%, 06/21/2029 | 400,000 | 358,784 | ||||||
| ||||||||
Office Properties Income Trust, 2.40%, 02/01/2027 | 150,000 | 113,537 | ||||||
| ||||||||
649,380 | ||||||||
| ||||||||
Oil & Gas Equipment & Services–0.14% |
| |||||||
Baker Hughes Holdings LLC, 5.13%, 09/15/2040 | 152,000 | 147,238 | ||||||
|
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Oil & Gas Equipment & Services–(continued) |
| |||||||
Halliburton Co., 7.45%, 09/15/2039 | $ | 113,000 | $ | 131,054 | ||||
| ||||||||
278,292 | ||||||||
| ||||||||
Oil & Gas Exploration & Production–0.31% |
| |||||||
ConocoPhillips Co., 6.95%, 04/15/2029 | 200,000 | 228,456 | ||||||
| ||||||||
Hess Corp., | 140,000 | 135,339 | ||||||
| ||||||||
Marathon Oil Corp., 6.60%, 10/01/2037 | 250,000 | 262,962 | ||||||
| ||||||||
626,757 | ||||||||
| ||||||||
Oil & Gas Storage & Transportation–1.21% |
| |||||||
Cheniere Corpus Christi Holdings LLC, 7.00%, 06/30/2024 | 370,000 | 380,535 | ||||||
| ||||||||
Columbia Pipeline Group, Inc., 5.80%, 06/01/2045 | 143,000 | 148,876 | ||||||
| ||||||||
Energy Transfer L.P., | ||||||||
3.90%, 05/15/2024 | 250,000 | 246,699 | ||||||
| ||||||||
4.95%, 05/15/2028 | 51,000 | 49,922 | ||||||
| ||||||||
5.30%, 04/15/2047 | 389,000 | 341,608 | ||||||
| ||||||||
5.40%, 10/01/2047 | 167,000 | 149,102 | ||||||
| ||||||||
Enterprise Products Operating LLC, | ||||||||
3.75%, 02/15/2025 | 165,000 | 163,930 | ||||||
| ||||||||
4.15%, 10/16/2028 | 250,000 | 245,358 | ||||||
| ||||||||
Kinder Morgan Energy Partners L.P., 6.95%, 01/15/2038 | 131,000 | 142,130 | ||||||
| ||||||||
ONEOK, Inc., 5.20%, 07/15/2048 | 150,000 | 134,247 | ||||||
| ||||||||
Plains All American Pipeline L.P./PAA Finance Corp., | 100,000 | 100,417 | ||||||
| ||||||||
Spectra Energy Partners L.P., | 175,000 | 171,240 | ||||||
| ||||||||
Williams Cos., Inc. (The), 6.30%, 04/15/2040 | 136,000 | 145,233 | ||||||
| ||||||||
2,419,297 | ||||||||
| ||||||||
Other Diversified Financial Services–0.33% |
| |||||||
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland), 3.30%, 01/30/2032 | 150,000 | 121,137 | ||||||
| ||||||||
Blackstone Holdings Finance Co. LLC, 3.15%, 10/02/2027(b) | �� | 125,000 | 116,968 | |||||
| ||||||||
Jefferies Group LLC, 6.25%, 01/15/2036 | 182,000 | 183,398 | ||||||
| ||||||||
ORIX Corp. (Japan), | ||||||||
4.05%, 01/16/2024 | 150,000 | 149,884 | ||||||
| ||||||||
3.70%, 07/18/2027 | 72,000 | 68,990 | ||||||
| ||||||||
Voya Financial, Inc., 5.65%, 05/15/2053(c) | 20,000 | 19,611 | ||||||
| ||||||||
659,988 | ||||||||
| ||||||||
Paper Products–0.11% |
| |||||||
Fibria Overseas Finance Ltd. (Brazil), 5.50%, 01/17/2027 | 27,000 | 27,286 | ||||||
| ||||||||
Suzano Austria GmbH (Brazil), 6.00%, 01/15/2029 | 200,000 | 200,658 | ||||||
| ||||||||
227,944 | ||||||||
| ||||||||
Pharmaceuticals–1.01% |
| |||||||
Bristol-Myers Squibb Co., 3.40%, 07/26/2029 | 250,000 | 238,769 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Intermediate Bond Factor Fund |
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Pharmaceuticals–(continued) |
| |||||||
Johnson & Johnson, | ||||||||
1.30%, 09/01/2030 | $ | 125,000 | $ | 104,942 | ||||
| ||||||||
3.55%, 03/01/2036 | 300,000 | 278,826 | ||||||
| ||||||||
2.45%, 09/01/2060 | 350,000 | 233,735 | ||||||
| ||||||||
Mylan, Inc., 4.55%, 04/15/2028 | 225,000 | 211,467 | ||||||
| ||||||||
Novartis Capital Corp. (Switzerland), 3.10%, 05/17/2027 | 450,000 | 437,008 | ||||||
| ||||||||
Pharmacia LLC, 6.60%, 12/01/2028 | 175,000 | 194,699 | ||||||
| ||||||||
Viatris, Inc., 2.70%, 06/22/2030 | 400,000 | 315,582 | ||||||
| ||||||||
2,015,028 | ||||||||
| ||||||||
Property & Casualty Insurance–0.42% |
| |||||||
Allstate Corp. (The), 3.28%, 12/15/2026 | 190,000 | 185,228 | ||||||
| ||||||||
Assured Guaranty US Holdings, Inc., 5.00%, 07/01/2024 | 176,000 | 179,048 | ||||||
| ||||||||
CNA Financial Corp., 3.45%, 08/15/2027 | 300,000 | 283,316 | ||||||
| ||||||||
Stewart Information Services Corp., 3.60%, 11/15/2031 | 225,000 | 185,686 | ||||||
| ||||||||
833,278 | ||||||||
| ||||||||
Railroads–0.38% |
| |||||||
Canadian Pacific Railway Co. (Canada), 6.13%, 09/15/2115 | 200,000 | 214,483 | ||||||
| ||||||||
Norfolk Southern Corp., 4.10%, 05/15/2121 | 450,000 | 338,365 | ||||||
| ||||||||
Union Pacific Corp., 3.85%, 02/14/2072 | 250,000 | 203,957 | ||||||
| ||||||||
756,805 | ||||||||
| ||||||||
Regional Banks–0.73% |
| |||||||
Fifth Third Bancorp, 2.38%, 01/28/2025 | 235,000 | 225,082 | ||||||
| ||||||||
Huntington Bancshares, Inc., 2.63%, 08/06/2024 | 230,000 | 223,267 | ||||||
| ||||||||
KeyBank N.A., 3.40%, 05/20/2026 | 230,000 | 220,026 | ||||||
| ||||||||
PNC Financial Services Group, Inc. (The), 3.90%, 04/29/2024 | 270,000 | 269,922 | ||||||
| ||||||||
Santander Holdings USA, Inc., 4.26%, 06/09/2025(c) | 400,000 | 392,524 | ||||||
| ||||||||
Truist Bank, | ||||||||
4.05%, 11/03/2025 | 10,000 | 9,997 | ||||||
| ||||||||
3.30%, 05/15/2026 | 115,000 | 110,500 | ||||||
| ||||||||
1,451,318 | ||||||||
| ||||||||
Reinsurance–0.17% |
| |||||||
Berkshire Hathaway Finance Corp., 5.75%, 01/15/2040 | 200,000 | 224,309 | ||||||
| ||||||||
Enstar Group Ltd., 3.10%, 09/01/2031 | 110,000 | 82,886 | ||||||
| ||||||||
RenaissanceRe Finance, Inc. (Bermuda), 3.70%, 04/01/2025 | 34,000 | 33,282 | ||||||
| ||||||||
340,477 | ||||||||
| ||||||||
Residential REITs–0.28% |
| |||||||
AvalonBay Communities, Inc., 4.20%, 12/15/2023 | 325,000 | 326,193 | ||||||
| ||||||||
Mid-America Apartments L.P., 3.60%, 06/01/2027 | 100,000 | 96,066 | ||||||
| ||||||||
Spirit Realty L.P., 3.20%, 02/15/2031 | 175,000 | 145,244 | ||||||
| ||||||||
567,503 | ||||||||
|
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Restaurants–0.23% |
| |||||||
Starbucks Corp., 3.85%, 10/01/2023 | $ | 467,000 | $ | 467,657 | ||||
| ||||||||
Retail REITs–0.55% |
| |||||||
Realty Income Corp., | ||||||||
3.95%, 08/15/2027 | 250,000 | 244,604 | ||||||
| ||||||||
2.20%, 06/15/2028 | 200,000 | 175,753 | ||||||
| ||||||||
Simon Property Group L.P., | ||||||||
2.25%, 01/15/2032 | 290,000 | 233,649 | ||||||
| ||||||||
6.75%, 02/01/2040 | 244,000 | 275,426 | ||||||
| ||||||||
4.25%, 10/01/2044 | 200,000 | 171,265 | ||||||
| ||||||||
1,100,697 | ||||||||
| ||||||||
Semiconductors–0.75% |
| |||||||
Broadcom, Inc., 4.93%, 05/15/2037(b) | 265,000 | 236,458 | ||||||
| ||||||||
Intel Corp., 4.95%, 03/25/2060 | 230,000 | 221,763 | ||||||
| ||||||||
QUALCOMM, Inc., 2.90%, 05/20/2024 | 681,000 | 672,076 | ||||||
| ||||||||
TSMC Arizona Corp. (Taiwan), 2.50%, 10/25/2031 | 250,000 | 211,773 | ||||||
| ||||||||
Xilinx, Inc., 2.95%, 06/01/2024 | 150,000 | 148,572 | ||||||
| ||||||||
1,490,642 | ||||||||
| ||||||||
Specialized Finance–0.25% |
| |||||||
National Rural Utilities Cooperative Finance Corp., | ||||||||
3.40%, 11/15/2023 | 305,000 | 304,102 | ||||||
| ||||||||
8.00%, 03/01/2032 | 148,000 | 183,411 | ||||||
| ||||||||
5.25%, 04/20/2046(c) | 12,000 | 11,176 | ||||||
| ||||||||
498,689 | ||||||||
| ||||||||
Specialized REITs–0.21% |
| |||||||
American Tower Corp., 3.95%, 03/15/2029 | 240,000 | 225,176 | ||||||
| ||||||||
GLP Capital L.P./GLP Financing II, Inc., 5.30%, 01/15/2029 | 200,000 | 193,446 | ||||||
| ||||||||
418,622 | ||||||||
| ||||||||
Specialty Chemicals–0.48% |
| |||||||
Celanese US Holdings LLC, 6.38%, 07/15/2032 | 100,000 | 99,379 | ||||||
| ||||||||
DuPont de Nemours, Inc., 4.49%, 11/15/2025 | 610,000 | 614,714 | ||||||
| ||||||||
PPG Industries, Inc., 2.40%, 08/15/2024 | 261,000 | 253,832 | ||||||
| ||||||||
967,925 | ||||||||
| ||||||||
Steel–0.01% |
| |||||||
ArcelorMittal S.A. (Luxembourg), 7.00%, 10/15/2039 | 27,000 | 27,278 | ||||||
| ||||||||
Systems Software–0.78% | ||||||||
Microsoft Corp., | ||||||||
3.13%, 11/03/2025 | 425,000 | 418,313 | ||||||
| ||||||||
3.04%, 03/17/2062 | 450,000 | 344,131 | ||||||
| ||||||||
Oracle Corp., | ||||||||
3.90%, 05/15/2035 | 400,000 | 327,512 | ||||||
| ||||||||
3.85%, 04/01/2060 | 300,000 | 199,225 | ||||||
| ||||||||
4.10%, 03/25/2061 | 375,000 | 262,152 | ||||||
| ||||||||
1,551,333 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Intermediate Bond Factor Fund |
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Technology Distributors–0.12% |
| |||||||
CDW LLC/CDW Finance Corp., 4.13%, 05/01/2025 | $ | 250,000 | $ | 246,019 | ||||
| ||||||||
Technology Hardware, Storage & Peripherals–1.44% |
| |||||||
Apple, Inc., | ||||||||
1.13%, 05/11/2025 | 500,000 | 467,432 | ||||||
| ||||||||
3.25%, 02/23/2026 | 355,000 | 349,003 | ||||||
| ||||||||
3.35%, 02/09/2027 | 500,000 | 492,007 | ||||||
| ||||||||
1.20%, 02/08/2028 | 150,000 | 130,484 | ||||||
| ||||||||
4.45%, 05/06/2044 | 476,000 | 470,964 | ||||||
| ||||||||
2.80%, 02/08/2061 | 190,000 | 134,537 | ||||||
| ||||||||
2.85%, 08/05/2061 | 225,000 | 160,167 | ||||||
| ||||||||
Hewlett Packard Enterprise Co., 6.35%, 10/15/2045 | 220,000 | 222,146 | ||||||
| ||||||||
HP, Inc., 6.00%, 09/15/2041 | 245,000 | 237,528 | ||||||
| ||||||||
Western Digital Corp., 2.85%, 02/01/2029 | 275,000 | 224,711 | ||||||
| ||||||||
2,888,979 | ||||||||
| ||||||||
Tobacco–2.73% |
| |||||||
Altria Group, Inc., | ||||||||
2.63%, 09/16/2026 | 225,000 | 210,481 | ||||||
| ||||||||
4.80%, 02/14/2029 | 353,000 | 342,136 | ||||||
| ||||||||
3.40%, 05/06/2030 | 460,000 | 399,532 | ||||||
| ||||||||
2.45%, 02/04/2032 | 800,000 | 605,210 | ||||||
| ||||||||
5.80%, 02/14/2039 | 200,000 | 185,299 | ||||||
| ||||||||
4.50%, 05/02/2043 | 557,000 | 424,523 | ||||||
| ||||||||
3.88%, 09/16/2046 | 225,000 | 156,306 | ||||||
| ||||||||
5.95%, 02/14/2049 | 41,000 | 36,875 | ||||||
| ||||||||
B.A.T Capital Corp. (United Kingdom), | ||||||||
2.26%, 03/25/2028 | 350,000 | 295,717 | ||||||
| ||||||||
4.74%, 03/16/2032 | 415,000 | 373,241 | ||||||
| ||||||||
BAT Capital Corp. (United Kingdom), | ||||||||
3.22%, 08/15/2024 | 200,000 | 195,423 | ||||||
| ||||||||
3.56%, 08/15/2027 | 407,000 | 374,102 | ||||||
| ||||||||
4.54%, 08/15/2047 | 87,000 | 63,615 | ||||||
| ||||||||
4.76%, 09/06/2049 | 35,000 | 26,335 | ||||||
| ||||||||
Philip Morris International, Inc., | ||||||||
2.10%, 05/01/2030 | 250,000 | 201,525 | ||||||
| ||||||||
1.75%, 11/01/2030 | 300,000 | 232,240 | ||||||
| ||||||||
6.38%, 05/16/2038 | 280,000 | 290,208 | ||||||
| ||||||||
4.50%, 03/20/2042 | 418,000 | 345,609 | ||||||
| ||||||||
Reynolds American, Inc. (United Kingdom), | ||||||||
5.70%, 08/15/2035 | 256,000 | 236,414 | ||||||
| ||||||||
5.85%, 08/15/2045 | 545,000 | 461,381 | ||||||
| ||||||||
5,456,172 | ||||||||
| ||||||||
Trading Companies & Distributors–0.24% |
| |||||||
Air Lease Corp., 3.00%, 02/01/2030 | 560,000 | 471,347 | ||||||
| ||||||||
Water Utilities–0.14% |
| |||||||
American Water Capital Corp., | ||||||||
3.85%, 03/01/2024 | 174,000 | 173,540 | ||||||
| ||||||||
6.59%, 10/15/2037 | 84,000 | 96,361 | ||||||
| ||||||||
269,901 | ||||||||
| ||||||||
Wireless Telecommunication Services–0.23% |
| |||||||
America Movil S.A.B. de C.V. (Mexico), 6.38%, 03/01/2035 | 400,000 | 451,786 | ||||||
| ||||||||
Total U.S. Dollar Denominated Bonds & Notes |
| 95,322,587 | ||||||
|
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
U.S. Treasury Securities–31.38% |
| |||||||
U.S. Treasury Bills–0.39% |
| |||||||
1.11%, 09/15/2022(e)(f) | $ | 7,000 | $ | 6,997 | ||||
| ||||||||
1.46% - 2.54%, 11/17/2022(e)(f) | 768,000 | 763,606 | ||||||
| ||||||||
770,603 | ||||||||
| ||||||||
U.S. Treasury Bonds–1.85% |
| |||||||
2.00%, 11/15/2041 | 900,000 | 699,451 | ||||||
| ||||||||
2.38%, 11/15/2049 | 1,037,600 | 855,736 | ||||||
| ||||||||
2.00%, 02/15/2050 | 2,850,000 | 2,157,317 | ||||||
| ||||||||
3,712,504 | ||||||||
| ||||||||
U.S. Treasury Notes–29.14% |
| |||||||
1.38%, 02/15/2023 | 563,000 | 558,284 | ||||||
| ||||||||
0.50%, 11/30/2023 | 5,000,000 | 4,820,703 | ||||||
| ||||||||
0.88%, 01/31/2024 | 9,300,000 | 8,965,418 | ||||||
| ||||||||
1.50%, 02/29/2024 | 12,975,000 | 12,605,010 | ||||||
| ||||||||
1.38%, 01/31/2025 | 8,521,000 | 8,108,763 | ||||||
| ||||||||
1.13%, 02/28/2025 | 3,577,000 | 3,377,331 | ||||||
| ||||||||
0.75%, 03/31/2026 | 3,900,000 | 3,544,125 | ||||||
| ||||||||
1.50%, 08/15/2026 | 5,980,000 | 5,552,523 | ||||||
| ||||||||
1.50%, 01/31/2027 | 8,215,500 | 7,582,008 | ||||||
| ||||||||
1.38%, 10/31/2028 | 2,650,000 | 2,359,535 | ||||||
| ||||||||
1.38%, 11/15/2031 | 1,000,000 | 856,797 | ||||||
| ||||||||
58,330,497 | ||||||||
| ||||||||
Total U.S. Treasury Securities |
| 62,813,604 | ||||||
| ||||||||
U.S. Government Sponsored Agency Mortgage-Backed Securities–27.37% |
| |||||||
Collateralized Mortgage Obligations–0.22% |
| |||||||
Fannie Mae ACES, IO, | 4,649,385 | 454 | ||||||
| ||||||||
Fannie Mae REMICs, IO, | ||||||||
3.50%, 08/25/2035(h) | 248,798 | 31,835 | ||||||
| ||||||||
5.50%, 07/25/2046(h) | 68,121 | 10,192 | ||||||
| ||||||||
4.00%, 08/25/2047(h) | 44,886 | 7,874 | ||||||
| ||||||||
3.46% (5.90% - (1.00 x 1 mo. USD LIBOR)), 09/25/2047(h)(i) | 586,634 | 53,107 | ||||||
| ||||||||
Freddie Mac Multifamily Structured Pass-Through Ctfs., Series KC03, Class X1, IO, 0.63%, 11/25/2024(g) | 3,968,601 | 42,835 | ||||||
| ||||||||
Series K734, Class X1, IO, 0.78%, 02/25/2026(g) | 3,028,133 | 54,796 | ||||||
| ||||||||
Series K735, Class X1, IO, 1.10%, 05/25/2026(g) | 3,040,413 | 88,575 | ||||||
| ||||||||
Series K093, Class X1, IO, 1.09%, 05/25/2029(g) | 2,542,590 | 130,405 | ||||||
| ||||||||
Freddie Mac REMICs, IO, 3.71%(6.10% - (1.00 x 1 mo. USD LIBOR)), 01/15/2044(h)(i) | 137,394 | 17,121 | ||||||
| ||||||||
Freddie Mac STRIPS, IO, 3.00%, 12/15/2027(h) | 58,594 | 2,878 | ||||||
| ||||||||
440,072 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco Intermediate Bond Factor Fund |
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Federal Home Loan Mortgage Corp. (FHLMC)–2.62% |
| |||||||
4.50%, 09/01/2049 to 01/01/2050 | $ | 244,428 | $ | 245,201 | ||||
| ||||||||
3.00%, 01/01/2050 to 05/01/2050 | 2,645,080 | 2,478,135 | ||||||
| ||||||||
2.50%, 07/01/2050 to 08/01/2050 | 2,802,614 | 2,530,612 | ||||||
| ||||||||
5,253,948 | ||||||||
| ||||||||
Federal National Mortgage Association (FNMA)–2.98% |
| |||||||
4.50%, 06/01/2049 | 114,247 | 114,904 | ||||||
| ||||||||
3.00%, 10/01/2049 to 11/01/2051 | 2,162,828 | 2,009,473 | ||||||
| ||||||||
2.50%, 03/01/2050 to 08/01/2051 | 1,862,631 | 1,672,090 | ||||||
| ||||||||
2.00%, 03/01/2051 to 08/01/2051 | 2,511,581 | 2,166,970 | ||||||
| ||||||||
5,963,437 | ||||||||
| ||||||||
Government National Mortgage Association (GNMA)–0.02% |
| |||||||
IO, | ||||||||
3.81% (6.20% - (1.00 x 1 mo. USD LIBOR)), 10/16/2047(h)(i) | 304,050 | 33,537 | ||||||
| ||||||||
Uniform Mortgage-Backed Securities–21.53% |
| |||||||
TBA, | ||||||||
2.00%, 09/01/2037 to 09/01/2052(j) | 7,682,000 | 6,675,243 | ||||||
| ||||||||
2.50%, 09/01/2037 to 09/01/2052(j) | 4,450,000 | 4,014,828 | ||||||
| ||||||||
3.00%, 09/01/2037 to 09/01/2052(j) | 12,492,000 | 11,727,895 | ||||||
| ||||||||
3.50%, 09/01/2037 to 09/01/2052(j) | 12,375,000 | 11,808,508 | ||||||
| ||||||||
4.00%, 09/01/2052(j) | 4,375,000 | 4,271,435 | ||||||
| ||||||||
4.50%, 09/01/2052(j) | 3,250,000 | 3,231,211 | ||||||
| ||||||||
5.00%, 09/01/2052(j) | 1,350,000 | 1,362,762 | ||||||
| ||||||||
43,091,882 | ||||||||
| ||||||||
Total U.S. Government Sponsored Agency Mortgage-Backed Securities |
| 54,782,876 | ||||||
| ||||||||
Non-U.S. Dollar Denominated Bonds & Notes–13.01%(k) |
| |||||||
Sovereign Debt–13.01% |
| |||||||
Australia Government Bond (Australia), | ||||||||
Series 142, 4.25%, 04/21/2026(b) | AUD | 5,093,000 | 3,599,846 | |||||
| ||||||||
Series 155, 2.50%, 05/21/2030(b) | AUD | 3,099,000 | 1,975,766 | |||||
| ||||||||
Bundesobligation (Germany), Series 183, 0.01%, 04/10/2026(b) | EUR | 4,044,000 | 3,891,624 | |||||
| ||||||||
Bundesrepublik Deutschland Bundesanleihe (Germany), 0.01%, 02/15/2031(b) | EUR | 1,500,000 | 1,338,942 | |||||
|
Principal | ||||||||
Amount | Value | |||||||
| ||||||||
Sovereign Debt–(continued) |
| |||||||
Canadian Government Bond (Canada), | ||||||||
0.50%, 09/01/2025 | CAD | 2,544,000 | $ | 1,772,996 | ||||
| ||||||||
0.50%, 12/01/2030 | CAD | 1,357,000 | 839,020 | |||||
| ||||||||
Norway Government Bond (Norway), | ||||||||
Series 477, 1.75%, 03/13/2025(b) | NOK | 47,985,000 | 4,628,609 | |||||
| ||||||||
Series 482, 1.38%, 08/19/2030(b) | NOK | 21,807,000 | 1,894,723 | |||||
| ||||||||
Sweden Government Bond (Sweden), Series 1058, 2.50%, 05/12/2025 | SEK | 370,000 | 34,846 | |||||
| ||||||||
Series 1061, 0.75%, 11/12/2029(b) | SEK | 195,000 | 16,774 | |||||
| ||||||||
Swiss Confederation Government Bond (Switzerland), | ||||||||
1.25%, 06/11/2024(b) | CHF | 2,572,000 | 2,662,316 | |||||
| ||||||||
0.50%, 05/27/2030(b) | CHF | 1,174,000 | 1,184,365 | |||||
| ||||||||
United Kingdom Gilt (United Kingdom), | ||||||||
0.13%, 01/30/2026(b) | GBP | 1,472,637 | 1,563,210 | |||||
| ||||||||
0.25%, 07/31/2031(b) | GBP | 687,441 | 638,601 | |||||
| ||||||||
Total Non-U.S. Dollar Denominated Bonds & Notes |
| 26,041,638 | ||||||
| ||||||||
Asset-Backed Securities–0.17% |
| |||||||
Banc of America Mortgage Trust, Series 2007-1, Class 1A24, 6.00%, 03/25/2037 | $ | 12,334 | 10,466 | |||||
| ||||||||
Bank, Series 2019-BNK16, Class XA, IO, | 2,309,249 | 105,504 | ||||||
| ||||||||
Citigroup Commercial Mortgage Trust, Series 2017-C4, Class XA, IO, 1.22%, 10/12/2050(g) | 6,011,649 | 210,524 | ||||||
| ||||||||
WaMu Mortgage Pass-Through Ctfs. Trust, Series 2005-AR14, Class 1A4, 2.87%, 12/25/2035(l) | 20,514 | 19,856 | ||||||
| ||||||||
Total Asset-Backed Securities |
| 346,350 | ||||||
| ||||||||
Shares | ||||||||
Money Market Funds–1.09% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 2.22%(m)(n) | 763,253 | 763,254 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 2.26%(m)(n) | 545,188 | 545,297 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, | 872,290 | 872,290 | ||||||
| ||||||||
Total Money Market Funds |
| 2,180,841 | ||||||
| ||||||||
TOTAL INVESTMENTS IN |
| 241,487,896 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–(20.65)% |
| (41,328,577 | ) | |||||
| ||||||||
NET ASSETS–100.00% |
| $ | 200,159,319 | |||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco Intermediate Bond Factor Fund |
Investment Abbreviations: | ||
ACES | - Automatically Convertible Extendable Security | |
AUD | - Australian Dollar | |
CAD | - Canadian Dollar | |
CHF | - Swiss Franc | |
Ctfs. | - Certificates | |
EUR | - Euro | |
GBP | - British Pound Sterling | |
IO | - Interest Only | |
LIBOR | - London Interbank Offered Rate | |
NOK | - Norwegian Krone | |
REIT | - Real Estate Investment Trust | |
REMICs | - Real Estate Mortgage Investment Conduits | |
SEK | - Swedish Krona | |
STRIPS | - Separately Traded Registered Interest and Principal Security | |
TBA | - To Be Announced | |
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, 2022 was $25,932,804, which represented 12.96% 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) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1L. |
(f) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(g) | 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, 2022. |
(h) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
(i) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2022. |
(j) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1M. |
(k) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
(l) | 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, 2022. |
(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, 2022. |
Value February 28, 2022 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain (Loss) | Value August 31, 2022 | Dividend Income | |||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: | |||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | 4,218,297 | $ | 10,613,927 | $ | (14,068,970 | ) | $ | - | $ | - | $ | 763,254 | $ | 1,815 | ||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 3,100,868 | 7,581,377 | (10,136,972 | ) | 135 | (111 | ) | 545,297 | 2,867 | ||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 4,820,910 | 12,130,203 | (16,078,823 | ) | - | - | 872,290 | 4,245 | |||||||||||||||||||||||||||
Investments Purchased with Cash Collateral from Securities on Loan: | |||||||||||||||||||||||||||||||||||
Invesco Private Government Fund | 600,824 | 381,770 | (982,594 | ) | - | - | - | 645 | * | ||||||||||||||||||||||||||
Invesco Private Prime Fund | 1,401,923 | 870,525 | (2,272,335 | ) | 200 | (313 | ) | - | 1,696 | * | |||||||||||||||||||||||||
Total | $ | 14,142,822 | $ | 31,577,802 | $ | (43,539,694 | ) | $ | 335 | $ | (424 | ) | $ | 2,180,841 | $ | 11,268 |
* | 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, 2022. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 | Invesco Intermediate Bond Factor Fund |
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 | 24 | December-2022 | $ | 3,260,250 | $ | (4,500 | ) | $ (4,500) | ||||||||||||
| ||||||||||||||||||||
U.S. Treasury Ultra Bonds | 51 | December-2022 | 7,624,500 | 80,875 | 80,875 | |||||||||||||||
| ||||||||||||||||||||
Subtotal–Long Futures Contracts | 76,375 | 76,375 | ||||||||||||||||||
| ||||||||||||||||||||
Short Futures Contracts | ||||||||||||||||||||
| ||||||||||||||||||||
Interest Rate Risk | ||||||||||||||||||||
| ||||||||||||||||||||
U.S. Treasury 2 Year Notes | 93 | December-2022 | (19,374,516 | ) | 32,539 | 32,539 | ||||||||||||||
| ||||||||||||||||||||
U.S. Treasury 5 Year Notes | 150 | December-2022 | (16,623,047 | ) | 80,859 | 80,859 | ||||||||||||||
| ||||||||||||||||||||
U.S. Treasury 10 Year Notes | 23 | December-2022 | �� | (2,688,844 | ) | 21,678 | 21,678 | |||||||||||||
| ||||||||||||||||||||
U.S. Treasury 10 Year Ultra Notes | 9 | December-2022 | (1,126,687 | ) | 10,477 | 10,477 | ||||||||||||||
| ||||||||||||||||||||
Subtotal–Short Futures Contracts | 145,553 | 145,553 | ||||||||||||||||||
| ||||||||||||||||||||
Total Futures Contracts | $ | 221,928 | $ 221,928 | |||||||||||||||||
|
Open Forward Foreign Currency Contracts | ||||||||||||||
| ||||||||||||||
Settlement Date |
Contract to | Unrealized Appreciation (Depreciation) | ||||||||||||
Counterparty | Deliver | Receive | ||||||||||||
| ||||||||||||||
Currency Risk | ||||||||||||||
| ||||||||||||||
09/21/2022 | Bank Of America | CHF | 189,000 | USD | 194,541 | $ | 903 | |||||||
| ||||||||||||||
09/21/2022 | Bank Of America | EUR | 4,856,637 | USD | 5,221,364 | 334,607 | ||||||||
| ||||||||||||||
09/21/2022 | Bank Of America | GBP | 2,025,118 | USD | 2,541,238 | 187,820 | ||||||||
| ||||||||||||||
09/21/2022 | Deutsche Bank AG | USD | 45,286 | AUD | 66,640 | 326 | ||||||||
| ||||||||||||||
09/21/2022 | Deutsche Bank AG | USD | 125,375 | EUR | 126,000 | 1,407 | ||||||||
| ||||||||||||||
09/21/2022 | JP Morgan Chase Bank | AUD | 4,669,000 | USD | 3,237,111 | 41,421 | ||||||||
| ||||||||||||||
09/21/2022 | JP Morgan Chase Bank | CAD | 3,785,411 | USD | 3,012,516 | 130,660 | ||||||||
| ||||||||||||||
09/21/2022 | JP Morgan Chase Bank | GBP | 47,000 | USD | 56,119 | 1,499 | ||||||||
| ||||||||||||||
09/21/2022 | JP Morgan Chase Bank | NOK | 76,691,063 | USD | 8,108,824 | 389,104 | ||||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | AUD | 4,021,358 | USD | 2,894,701 | 142,289 | ||||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | CAD | 75,000 | USD | 57,770 | 672 | ||||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | CHF | 10,212,827 | USD | 10,504,205 | 40,730 | ||||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | EUR | 737,251 | USD | 771,415 | 29,592 | ||||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | SEK | 19,883,220 | USD | 2,029,321 | 162,394 | ||||||||
| ||||||||||||||
09/21/2022 | UBS | EUR | 76,000 | USD | 77,814 | 1,343 | ||||||||
| ||||||||||||||
09/21/2022 | UBS | USD | 123,858 | CHF | 123,000 | 2,161 | ||||||||
| ||||||||||||||
Subtotal–Appreciation |
| 1,466,928 | ||||||||||||
| ||||||||||||||
Currency Risk | ||||||||||||||
| ||||||||||||||
09/21/2022 | Bank Of America | USD | 156,259 | EUR | 145,000 | (10,360 | ) | |||||||
| ||||||||||||||
09/21/2022 | Bank Of America | USD | 76,547 | GBP | 61,000 | (5,657 | ) | |||||||
| ||||||||||||||
09/21/2022 | Bank Of America | USD | 86,366 | NOK | 858,000 | (0 | ) | |||||||
| ||||||||||||||
09/21/2022 | Barclays Capital | NOK | 1,296,000 | USD | 127,511 | (2,944 | ) | |||||||
| ||||||||||||||
09/21/2022 | Citibank N.A. | USD | 43,807 | AUD | 63,000 | (687 | ) | |||||||
| ||||||||||||||
09/21/2022 | Deutsche Bank AG | USD | 31,316 | NOK | 311,000 | (10 | ) | |||||||
| ||||||||||||||
09/21/2022 | JP Morgan Chase Bank | AUD | 107,000 | USD | 72,770 | (466 | ) | |||||||
| ||||||||||||||
09/21/2022 | JP Morgan Chase Bank | NOK | 10,031,354 | USD | 1,009,194 | (562 | ) | |||||||
| ||||||||||||||
09/21/2022 | JP Morgan Chase Bank | USD | 297,916 | CAD | 378,000 | (10,144 | ) | |||||||
| ||||||||||||||
09/21/2022 | JP Morgan Chase Bank | USD | 3,392,231 | CHF | 3,230,448 | (82,501 | ) | |||||||
| ||||||||||||||
09/21/2022 | JP Morgan Chase Bank | USD | 2,057,500 | NOK | 19,457,958 | (98,862 | ) | |||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | USD | 158,363 | AUD | 220,000 | (7,783 | ) | |||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | USD | 3,309,613 | CHF | 3,217,807 | (12,833 | ) | |||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | USD | 111,274 | EUR | 106,000 | (4,616 | ) | |||||||
|
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 (Depreciation) | ||||||||||||
Counterparty | Deliver | Receive | ||||||||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | USD | 27,828 | GBP | 23,000 | $ | (1,100 | ) | ||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | USD | 130,223 | NOK | 1,282,000 | (1,177 | ) | |||||||
| ||||||||||||||
09/21/2022 | Morgan Stanley & Co. | USD | 1,969,389 | SEK | 19,295,997 | (157,599 | ) | |||||||
| ||||||||||||||
09/21/2022 | UBS | USD | 91,361 | AUD | 133,000 | (330 | ) | |||||||
| ||||||||||||||
09/21/2022 | UBS | USD | 35,322 | CHF | 34,000 | (488 | ) | |||||||
| ||||||||||||||
09/21/2022 | UBS | USD | 54,117 | GBP | 46,000 | (660 | ) | |||||||
| ||||||||||||||
Subtotal–Depreciation |
| (398,779 | ) | |||||||||||
| ||||||||||||||
Total Forward Foreign Currency Contracts |
| $ | 1,068,149 | |||||||||||
|
Abbreviations: | ||
AUD | - Australian Dollar | |
CAD | - Canadian Dollar | |
CHF | - Swiss Franc | |
EUR | - Euro | |
GBP | - British Pound Sterling | |
NOK | - Norwegian Krone | |
SEK | - Swedish Krona | |
USD | - U.S. Dollar |
Portfolio Composition
By security type, based on Total Investments
as of August 31, 2022
U.S. Dollar Denominated Bonds & Notes | 39.47 | % | ||
U.S. Treasury Securities | 26.01 | |||
U.S. Government Sponsored Agency Mortgage-Backed Securities | 22.69 | |||
Non-U.S. Dollar Denominated Bonds & Notes | 10.79 | |||
Security types each less than 1% of portfolio | 0.14 | |||
Money Market Funds | 0.90 |
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, 2022
(Unaudited)
Assets: | ||
Investments in unaffiliated securities, at value | $239,307,055 | |
Investments in affiliated money market funds, at value (Cost $2,180,735) | 2,180,841 | |
Other investments: | ||
Unrealized appreciation on forward foreign currency contracts outstanding | 1,466,928 | |
Cash | 544,850 | |
Foreign currencies, at value (Cost $41,719) | 40,836 | |
Receivable for: | ||
Fund shares sold | 240,302 | |
Dividends | 3,994 | |
Interest | 1,478,508 | |
Principal paydowns | 5 | |
Investment for trustee deferred compensation and retirement plans | 34,486 | |
Other assets | 64,178 | |
Total assets | 245,361,983 | |
Liabilities: | ||
Other investments: | ||
Variation margin payable - futures contracts | 49,960 | |
Unrealized depreciation on forward foreign currency contracts outstanding | 398,779 | |
Payable for: | ||
Investments purchased | 44,368,800 | |
Dividends | 20,067 | |
Fund shares reacquired | 173,037 | |
Accrued fees to affiliates | 94,375 | |
Accrued trustees’ and officers’ fees and benefits | 1,144 | |
Accrued other operating expenses | 62,016 | |
Trustee deferred compensation and retirement plans | 34,486 | |
Total liabilities | 45,202,664 | |
Net assets applicable to shares outstanding | $200,159,319 |
Net assets consist of: | ||||
Shares of beneficial interest | $ | 226,198,543 | ||
| ||||
Distributable earnings (loss) | (26,039,224 | ) | ||
| ||||
$ | 200,159,319 | |||
| ||||
Net Assets: | ||||
Class A | $ | 101,927,783 | ||
| ||||
Class C | $ | 10,957,292 | ||
| ||||
Class R | $ | 17,216,884 | ||
| ||||
Class Y | $ | 52,513,230 | ||
| ||||
Class R5 | $ | 8,896 | ||
| ||||
Class R6 | $ | 17,535,234 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 10,730,565 | |||
| ||||
Class C | 1,153,370 | |||
| ||||
Class R | 1,811,180 | |||
| ||||
Class Y | 5,532,980 | |||
| ||||
Class R5 | 937 | |||
| ||||
Class R6 | 1,846,980 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 9.50 | ||
| ||||
Maximum offering price per share | $ | 9.92 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 9.50 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 9.51 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 9.49 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 9.49 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 9.49 | ||
|
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, 2022
(Unaudited)
Investment income: | ||||
Interest (net of foreign withholding taxes of $4,417) | $ | 2,051,932 | ||
| ||||
Dividends from affiliated money market funds (includes securities lending income of $1,000) | 9,927 | |||
| ||||
Total investment income | 2,061,859 | |||
| ||||
Expenses: | ||||
Advisory fees | 247,624 | |||
| ||||
Administrative services fees | 14,360 | |||
| ||||
Custodian fees | 14,617 | |||
| ||||
Distribution fees: | ||||
Class A | 131,896 | |||
| ||||
Class C | 63,026 | |||
| ||||
Class R | 44,907 | |||
| ||||
Transfer agent fees – A, C, R and Y | 169,926 | |||
| ||||
Transfer agent fees – R5 | 2 | |||
| ||||
Transfer agent fees – R6 | 2,740 | |||
| ||||
Trustees’ and officers’ fees and benefits | 8,316 | |||
| ||||
Registration and filing fees | 39,618 | |||
| ||||
Reports to shareholders | 12,516 | |||
| ||||
Professional services fees | 26,597 | |||
| ||||
Other | 7,721 | |||
| ||||
Total expenses | 783,866 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (273,602 | ) | ||
| ||||
Net expenses | 510,264 | |||
| ||||
Net investment income | 1,551,595 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Unaffiliated investment securities | (5,375,856 | ) | ||
| ||||
Affiliated investment securities | (424 | ) | ||
| ||||
Foreign currencies | 66,867 | |||
| ||||
Forward foreign currency contracts | 1,749,319 | |||
| ||||
Futures contracts | (862,784 | ) | ||
| ||||
(4,422,878 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Unaffiliated investment securities | (14,762,092 | ) | ||
| ||||
Affiliated investment securities | 335 | |||
| ||||
Foreign currencies | (2,818 | ) | ||
| ||||
Forward foreign currency contracts | 419,322 | |||
| ||||
Futures contracts | 236,239 | |||
| ||||
(14,109,014 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (18,531,892 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (16,980,297 | ) | |
|
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, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, 2022 | February 28, 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 1,551,595 | $ | 2,241,634 | ||||
| ||||||||
Net realized gain (loss) | (4,422,878 | ) | 240,177 | |||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (14,109,014 | ) | (8,374,431 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (16,980,297 | ) | (5,892,620 | ) | ||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (990,422 | ) | (2,087,511 | ) | ||||
| ||||||||
Class C | (66,629 | ) | (151,868 | ) | ||||
| ||||||||
Class R | (141,266 | ) | (274,295 | ) | ||||
| ||||||||
Class Y | (442,449 | ) | (388,273 | ) | ||||
| ||||||||
Class R5 | (96 | ) | (193 | ) | ||||
| ||||||||
Class R6 | (176,891 | ) | (266,034 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (1,817,753 | ) | (3,168,174 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (5,651,624 | ) | (9,215,388 | ) | ||||
| ||||||||
Class C | (2,506,538 | ) | (3,582,815 | ) | ||||
| ||||||||
Class R | (44,776 | ) | 27,745 | |||||
| ||||||||
Class Y | 26,949,071 | 12,656,401 | ||||||
| ||||||||
Class R6 | 2,128,122 | 9,362,612 | ||||||
| ||||||||
Net increase in net assets resulting from share transactions | 20,874,255 | 9,248,555 | ||||||
| ||||||||
Net increase in net assets | 2,076,205 | 187,761 | ||||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 198,083,114 | 197,895,353 | ||||||
| ||||||||
End of period | $ | 200,159,319 | $ | 198,083,114 | ||||
|
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 (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 of period | Total return(b) | Net assets, (000’s omitted) | Ratio of net assets | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed(c) | Ratio of net investment | Portfolio turnover (d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | $10.45 | $0.08 | $(0.94 | ) | $(0.86 | ) | $(0.09 | ) | $ – | $(0.09 | ) | $ 9.50 | (8.25 | )% | $101,928 | 0.52 | %(e) | 0.81 | %(e) | 1.56 | %(e) | 146 | % | |||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.93 | 0.13 | (0.43 | ) | (0.30 | ) | (0.18 | ) | – | (0.18 | ) | 10.45 | (2.80 | )(f) | 118,156 | 0.52 | (f) | 0.71 | (f) | 1.18 | (f) | 207 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.27 | 0.16 | 0.10 | 0.26 | (0.21 | ) | (0.39 | ) | (0.60 | ) | 10.93 | 2.30 | (f) | 132,856 | 0.52 | (f) | 0.96 | (f) | 1.42 | (f) | 292 | |||||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.88 | 0.18 | 0.40 | 0.58 | (0.19 | ) | – | (0.19 | ) | 11.27 | 5.39 | 122,371 | 1.05 | (e) | 1.05 | (e) | 2.80 | (e) | 64 | |||||||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 10.43 | 0.32 | 0.45 | 0.77 | (0.32 | ) | – | (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 | ) | – | (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 | ) | – | (0.30 | ) | 10.92 | 1.82 | 129,985 | 1.00 | 1.00 | 2.68 | 80 | |||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 10.45 | 0.04 | (0.94 | ) | (0.90 | ) | (0.05 | ) | – | (0.05 | ) | 9.50 | (8.60 | ) | 10,957 | 1.27 | (e) | 1.56 | (e) | 0.81 | (e) | 146 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.93 | 0.05 | (0.43 | ) | (0.38 | ) | (0.10 | ) | – | (0.10 | ) | 10.45 | (3.53 | ) | 14,724 | 1.27 | 1.47 | 0.43 | 207 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.26 | 0.08 | 0.10 | 0.18 | (0.12 | ) | (0.39 | ) | (0.51 | ) | 10.93 | 1.56 | 19,013 | 1.27 | 1.72 | 0.67 | 292 | |||||||||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.87 | 0.12 | 0.40 | 0.52 | (0.13 | ) | – | (0.13 | ) | 11.26 | 4.80 | 23,114 | 1.81 | (e) | 1.81 | (e) | 1.90 | (e) | 64 | |||||||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 10.43 | 0.23 | 0.44 | 0.67 | (0.23 | ) | – | (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 | ) | – | (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 | ) | – | (0.22 | ) | 10.91 | 0.97 | 33,420 | 1.75 | 1.75 | 1.92 | 80 | |||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 10.45 | 0.06 | (0.92 | ) | (0.86 | ) | (0.08 | ) | – | (0.08 | ) | 9.51 | (8.27 | ) | 17,217 | 0.77 | (e) | 1.06 | (e) | 1.31 | (e) | 146 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.93 | 0.10 | (0.43 | ) | (0.33 | ) | (0.15 | ) | – | (0.15 | ) | 10.45 | (3.04 | ) | 18,987 | 0.77 | 0.97 | 0.93 | 207 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.27 | 0.13 | 0.10 | 0.23 | (0.18 | ) | (0.39 | ) | (0.57 | ) | 10.93 | 2.02 | 19,876 | 0.77 | 1.22 | 1.17 | 292 | |||||||||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.88 | 0.15 | 0.40 | 0.55 | (0.16 | ) | – | (0.16 | ) | 11.27 | 5.09 | 20,366 | 1.31 | (e) | 1.31 | (e) | 2.40 | (e) | 64 | |||||||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 10.44 | 0.28 | 0.44 | 0.72 | (0.28 | ) | – | (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 | ) | – | (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 | ) | – | (0.28 | ) | 10.93 | 1.58 | 15,318 | 1.25 | 1.25 | 2.45 | 80 | |||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 10.44 | 0.09 | (0.94 | ) | (0.85 | ) | (0.10 | ) | – | (0.10 | ) | 9.49 | (8.14 | ) | 52,513 | 0.27 | (e) | 0.56 | (e) | 1.81 | (e) | 146 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.92 | 0.15 | (0.42 | ) | (0.27 | ) | (0.21 | ) | – | (0.21 | ) | 10.44 | (2.56 | ) | 29,184 | 0.27 | 0.47 | 1.43 | 207 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.26 | 0.19 | 0.10 | 0.29 | (0.24 | ) | (0.39 | ) | (0.63 | ) | 10.92 | 2.58 | 17,750 | 0.27 | 0.72 | 1.67 | 292 | |||||||||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.88 | 0.20 | 0.40 | 0.60 | (0.22 | ) | – | (0.22 | ) | 11.26 | 5.55 | 19,032 | 0.81 | (e) | 0.81 | (e) | 3.09 | (e) | 64 | |||||||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 10.43 | 0.35 | 0.45 | 0.80 | (0.35 | ) | – | (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 | ) | – | (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 | ) | – | (0.33 | ) | 10.91 | 1.98 | 17,748 | 0.75 | 0.75 | 2.95 | 80 | |||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 10.44 | 0.09 | (0.94 | ) | (0.85 | ) | (0.10 | ) | – | (0.10 | ) | 9.49 | (8.13 | ) | 9 | 0.27 | (e) | 0.40 | (e) | 1.81 | (e) | 146 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.92 | 0.16 | (0.43 | ) | (0.27 | ) | (0.21 | ) | – | (0.21 | ) | 10.44 | (2.56 | ) | 10 | 0.27 | 0.37 | 1.43 | 207 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.27 | 0.19 | 0.09 | 0.28 | (0.24 | ) | (0.39 | ) | (0.63 | ) | 10.92 | 2.49 | 10 | 0.27 | 0.47 | 1.67 | 292 | |||||||||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.87 | 0.20 | 0.40 | 0.60 | (0.20 | ) | – | (0.20 | ) | 11.27 | 5.59 | 11 | 0.60 | (e) | 0.60 | (e) | 3.09 | (e) | 64 | |||||||||||||||||||||||||||||||||||||
Period ended 07/31/19(g) | 10.67 | 0.07 | 0.19 | 0.26 | (0.06 | ) | – | (0.06 | ) | 10.87 | 2.44 | 10 | 0.62 | (e) | 0.62 | (e) | 3.39 | (e) | 108 | |||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 10.44 | 0.09 | (0.94 | ) | (0.85 | ) | (0.10 | ) | – | (0.10 | ) | 9.49 | (8.14 | ) | 17,535 | 0.27 | (e) | 0.40 | (e) | 1.81 | (e) | 146 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.92 | 0.16 | (0.43 | ) | (0.27 | ) | (0.21 | ) | – | (0.21 | ) | 10.44 | (2.56 | ) | 17,022 | 0.27 | 0.37 | 1.43 | 207 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 11.27 | 0.19 | 0.09 | 0.28 | (0.24 | ) | (0.39 | ) | (0.63 | ) | 10.92 | 2.49 | 8,392 | 0.27 | 0.47 | 1.67 | 292 | |||||||||||||||||||||||||||||||||||||||
Seven months ended 02/29/20 | 10.88 | 0.20 | 0.40 | 0.60 | (0.21 | ) | – | (0.21 | ) | 11.27 | 5.60 | 5,795 | 0.58 | (e) | 0.58 | (e) | 3.14 | (e) | 64 | |||||||||||||||||||||||||||||||||||||
Year ended 07/31/19 | 10.44 | 0.36 | 0.43 | 0.79 | (0.35 | ) | – | (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 | ) | – | (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 | ) | – | (0.35 | ) | 10.92 | 2.27 | 2,189 | 0.56 | 0.56 | 3.23 | 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) | Does not include indirect expenses from affiliated fund fees and expenses of 0.02% for the seven months ended February 29, 2020 and the years ended July 31, 2019, 2018 and 2017. |
(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) | Annualized. |
(f) | 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 years ended February 28, 2022 and 2021. |
(g) | 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.
19 | Invesco Intermediate Bond Factor Fund |
August 31, 2022
(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.
Prior to February 28, 2020, the Fund sought to gain exposure to Regulation S securities primarily through investments in a wholly-owned and controlled subsidiary of the Fund organized under the laws of the Cayman Islands (the “Subsidiary”). The Subsidiary was organized by the Fund to invest in Regulation S securities. The Fund could invest up to 25% of its total assets in the Subsidiary under its previous strategy. Effective February 28, 2020, the Fund no longer invests in Regulation S securities or the Subsidiary, and the Subsidiary was liquidated. For periods prior to February 28, 2020, the Financial Highlights report the operations of the Fund and the Subsidiary on a consolidated basis.
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 eight 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 eighth anniversary after a purchase of Class C shares.
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. |
Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices 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, and their value may be adjusted accordingly. 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades 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 using prices provided by an independent pricing service they may be considered fair valued.
Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.
Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.
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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.
Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.
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 may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available and unreliable are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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.
20 | Invesco Intermediate Bond Factor Fund |
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, significant governmental actions 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.
The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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 based on relative net assets of Class R5 and Class R6. 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. 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, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “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 |
21 | Invesco Intermediate Bond Factor Fund |
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.
The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon (“BNYM”) also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the six months ended August 31, 2022, there were no securities lending transactions with the Adviser. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.
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.
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 exchange of the two currencies on settlement date, 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).
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 for hedging 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 instrument or asset. 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. | 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.
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.
N. | LIBOR Risk – The Fund may have investments in financial instruments that utilize the London Interbank Offered Rate (“LIBOR”) as the reference or benchmark rate for variable interest rate calculations. LIBOR is intended to measure the rate generally at which banks can lend and borrow from one another in the relevant currency on an unsecured basis. The UK Financial Conduct Authority (“FCA”), the regulator that oversees LIBOR, announced that the majority of LIBOR rates would |
22 | Invesco Intermediate Bond Factor Fund |
cease to be published or would no longer be representative on January 1, 2022. Although the publication of most LIBOR rates ceased at the end of 2021, a selection of widely used USD LIBOR rates continues to be published until June 2023 to allow for an orderly transition away from these rates.
There remains uncertainty and risks relating to the continuing LIBOR transition and its effects on the Fund and the instruments in which the Fund invests. There can be no assurance that the composition or characteristics of any alternative reference rates (“ARRs”) or financial instruments in which the Fund invests that utilize ARRs will be similar to or produce the same value or economic equivalence as LIBOR or that these instruments will have the same volume or liquidity. Additionally, there remains uncertainty and risks relating to certain “legacy” USD LIBOR instruments that were issued or entered into before December 31, 2021 and the process by which a replacement interest rate will be identified and implemented into these instruments when USD LIBOR is ultimately discontinued. The effects of such uncertainty and risks in “legacy” USD LIBOR instruments held by the Fund could result in losses to the Fund.
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. |
Q. | Other Risks – During the period, the Fund experienced a low interest rate environment 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that holds securities of that entity will be adversely impacted. |
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
R. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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 | 0.250% | |||||
| ||||||
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, 2022, 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. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Fund.
The Adviser has contractually agreed, through at least June 30, 2023, 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, 2023. 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. To the extent that the annualized expense ratio does not exceed the expense limits, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
The Adviser has contractually agreed, through at least June 30, 2024, 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, 2022, the Adviser waived advisory fees of $99,926 and reimbursed class level expenses of $101,622, $11,789, $16,836, $39,678, $2 and $2,740 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, 2022, 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
23 | 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, 2022, 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 Plans, 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, 2022, 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, 2022, IDI advised the Fund that IDI retained $8,947 in front-end sales commissions from the sale of Class A shares and $42 and $209 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 Adviser’s 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, 2022. 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 | $ | – | $ | 95,322,587 | $– | $ | 95,322,587 | |||||||||
| ||||||||||||||||
U.S. Treasury Securities | – | 62,813,604 | – | 62,813,604 | ||||||||||||
| ||||||||||||||||
U.S. Government Sponsored Agency Mortgage-Backed Securities | – | 54,782,876 | – | 54,782,876 | ||||||||||||
| ||||||||||||||||
Non-U.S. Dollar Denominated Bonds & Notes | – | 26,041,638 | – | 26,041,638 | ||||||||||||
| ||||||||||||||||
Asset-Backed Securities | – | 346,350 | – | 346,350 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 2,180,841 | – | – | 2,180,841 | ||||||||||||
| ||||||||||||||||
Total Investments in Securities | 2,180,841 | 239,307,055 | – | 241,487,896 | ||||||||||||
| ||||||||||||||||
Other Investments - Assets* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | 226,428 | – | – | 226,428 | ||||||||||||
| ||||||||||||||||
Forward Foreign Currency Contracts | – | 1,466,928 | – | 1,466,928 | ||||||||||||
| ||||||||||||||||
226,428 | 1,466,928 | – | 1,693,356 | |||||||||||||
| ||||||||||||||||
Other Investments - Liabilities* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | (4,500 | ) | – | – | (4,500 | ) | ||||||||||
| ||||||||||||||||
Forward Foreign Currency Contracts | – | (398,779 | ) | – | (398,779 | ) | ||||||||||
| ||||||||||||||||
(4,500 | ) | (398,779 | ) | – | (403,279 | ) | ||||||||||
| ||||||||||||||||
Total Other Investments | 221,928 | 1,068,149 | – | 1,290,077 | ||||||||||||
| ||||||||||||||||
Total Investments | $ | 2,402,769 | $ | 240,375,204 | $– | $ | 242,777,973 | |||||||||
|
* | Forward foreign currency contracts and futures contracts are valued at 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.
24 | 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, 2022:
Value | ||||||||||||
Derivative Assets | Currency Risk | Interest Rate Risk | Total | |||||||||
| ||||||||||||
Unrealized appreciation on futures contracts – Exchange-Traded(a) | $ | – | $ | 226,428 | $ | 226,428 | ||||||
| ||||||||||||
Unrealized appreciation on forward foreign currency contracts outstanding | 1,466,928 | – | 1,466,928 | |||||||||
| ||||||||||||
Total Derivative Assets | 1,466,928 | 226,428 | 1,693,356 | |||||||||
| ||||||||||||
Derivatives not subject to master netting agreements | – | (226,428 | ) | (226,428 | ) | |||||||
| ||||||||||||
Total Derivative Assets subject to master netting agreements | $ | 1,466,928 | $ | – | $ | 1,466,928 | ||||||
| ||||||||||||
Value | ||||||||||||
Derivative Liabilities | Currency Risk | Interest Rate Risk | Total | |||||||||
| ||||||||||||
Unrealized depreciation on futures contracts – Exchange-Traded(a) | $ | – | $ | (4,500 | ) | $ | (4,500 | ) | ||||
| ||||||||||||
Unrealized depreciation on forward foreign currency contracts outstanding | (398,779 | ) | – | (398,779 | ) | |||||||
| ||||||||||||
Total Derivative Liabilities | (398,779 | ) | (4,500 | ) | (403,279 | ) | ||||||
| ||||||||||||
Derivatives not subject to master netting agreements | – | 4,500 | 4,500 | |||||||||
| ||||||||||||
Total Derivative Liabilities subject to master netting agreements | $ | (398,779 | ) | $ | – | $ | (398,779 | ) | ||||
|
(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, 2022.
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 | ||||||||||||||
| ||||||||||||||||||||
Bank Of America | $ 523,330 | $ (16,017 | ) | $ | 507,313 | $– | $– | $ | 507,313 | |||||||||||
| ||||||||||||||||||||
Barclays Capital | – | (2,944 | ) | (2,944 | ) | – | – | (2,944 | ) | |||||||||||
| ||||||||||||||||||||
Citibank N.A. | – | (687 | ) | (687 | ) | – | – | (687 | ) | |||||||||||
| ||||||||||||||||||||
Deutsche Bank AG | 1,733 | (10 | ) | 1,723 | – | – | 1,723 | |||||||||||||
| ||||||||||||||||||||
JP Morgan Chase Bank | 562,684 | (192,535 | ) | 370,149 | – | – | 370,149 | |||||||||||||
| ||||||||||||||||||||
Morgan Stanley & Co. | 375,677 | (185,108 | ) | 190,569 | – | – | 190,569 | |||||||||||||
| ||||||||||||||||||||
UBS | 3,504 | (1,478 | ) | 2,026 | – | – | 2,026 | |||||||||||||
| ||||||||||||||||||||
Total | $1,466,928 | $(398,779 | ) | $ | 1,068,149 | $– | $– | $ | 1,068,149 | |||||||||||
|
Effect of Derivative Investments for the six months ended August 31, 2022
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 Risk | Interest Rate Risk | Total | ||||||||||
| ||||||||||||
Realized Gain (Loss): | ||||||||||||
Forward foreign currency contracts | $ | 1,749,319 | $ | - | $ | 1,749,319 | ||||||
| ||||||||||||
Futures contracts | - | (862,784 | ) | (862,784 | ) | |||||||
| ||||||||||||
Change in Net Unrealized Appreciation: | ||||||||||||
Forward foreign currency contracts | 419,322 | - | 419,322 | |||||||||
| ||||||||||||
Futures contracts | - | 236,239 | 236,239 | |||||||||
| ||||||||||||
Total | $ | 2,168,641 | $ | (626,545 | ) | $ | 1,542,096 | |||||
|
The table below summarizes the average notional value of derivatives held during the period.
Forward Foreign Currency Contracts | Futures Contracts | |||
| ||||
Average notional value | $38,770,332 | $43,288,163 | ||
|
25 | Invesco Intermediate Bond Factor Fund |
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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,009.
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 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 carryforward 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 28, 2022, as follows:
Capital Loss Carryforward* | ||||||||||||||||
| ||||||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||||||
| ||||||||||||||||
Not subject to expiration | $ | 2,346,992 | $– | $ | 2,346,992 | |||||||||||
|
* | 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended August 31, 2022 was $61,010,478 and $37,525,329, 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 | $ | 1,772,500 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (21,253,090 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (19,480,590 | ) | |
|
Cost of investments for tax purposes is $262,258,563.
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2022(a) | Year ended February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 633,403 | $ | 6,214,265 | 1,988,918 | $ | 21,596,160 | ||||||||||
| ||||||||||||||||
Class C | 81,957 | 802,473 | 292,538 | 3,179,090 | ||||||||||||
| ||||||||||||||||
Class R | 290,296 | 2,852,648 | 667,931 | 7,274,119 | ||||||||||||
| ||||||||||||||||
Class Y | 3,360,485 | 33,020,489 | 1,935,566 | 20,924,099 | ||||||||||||
| ||||||||||||||||
Class R6 | 481,382 | 4,707,548 | 1,217,759 | 13,202,683 | ||||||||||||
|
26 | Invesco Intermediate Bond Factor Fund |
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2022(a) | Year ended February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 93,501 | $ | 910,827 | 176,075 | $ | 1,910,695 | ||||||||||
| ||||||||||||||||
Class C | 6,512 | 63,454 | 13,167 | 142,961 | ||||||||||||
| ||||||||||||||||
Class R | 14,343 | 139,788 | 24,974 | 271,081 | ||||||||||||
| ||||||||||||||||
Class Y | 42,608 | 413,485 | 30,166 | 326,072 | ||||||||||||
| ||||||||||||||||
Class R6 | 17,609 | 171,345 | 24,161 | 261,697 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 101,952 | 996,090 | 168,348 | 1,823,223 | ||||||||||||
| ||||||||||||||||
Class C | (101,944 | ) | (996,090 | ) | (168,348 | ) | (1,823,223 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (1,408,312 | ) | (13,772,806 | ) | (3,183,885 | ) | (34,545,466 | ) | ||||||||
| ||||||||||||||||
Class C | (242,433 | ) | (2,376,375 | ) | (468,259 | ) | (5,081,643 | ) | ||||||||
| ||||||||||||||||
Class R | (309,541 | ) | (3,037,212 | ) | (694,794 | ) | (7,517,455 | ) | ||||||||
| ||||||||||||||||
Class Y | (666,056 | ) | (6,484,903 | ) | (795,681 | ) | (8,593,770 | ) | ||||||||
| ||||||||||||||||
Class R6 | (282,125 | ) | (2,750,771 | ) | (380,212 | ) | (4,101,768 | ) | ||||||||
| ||||||||||||||||
Net increase in share activity | 2,113,637 | $ | 20,874,255 | 848,424 | $ | 9,248,555 | ||||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 34% 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. |
27 | 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, 2022 through August 31, 2022.
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) | |||||||||||||||||||||||||||||
Beginning Account Value (03/01/22) | Ending Account Value (08/31/22)1 | Expenses Paid During Period2 | Ending Account Value (08/31/22) | Expenses Paid During Period2 | Annualized Expense Ratio | |||||||||||||||||||||||||
Class A | $1,000.00 | $917.50 | $2.51 | $1,022.58 | $2.65 | 0.52% | ||||||||||||||||||||||||
Class C | 1,000.00 | 914.00 | 6.13 | 1,018.80 | 6.46 | 1.27 | ||||||||||||||||||||||||
Class R | 1,000.00 | 917.30 | 3.72 | 1,021.32 | 3.92 | 0.77 | ||||||||||||||||||||||||
Class Y | 1,000.00 | 918.60 | 1.31 | 1,023.84 | 1.38 | 0.27 | ||||||||||||||||||||||||
Class R5 | 1,000.00 | 918.70 | 1.31 | 1,023.84 | 1.38 | 0.27 | ||||||||||||||||||||||||
Class R6 | 1,000.00 | 918.60 | 1.31 | 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, 2022 through August 31, 2022, 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 Intermediate Bond Factor Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed 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 and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled
Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe and against the Bloomberg U.S. Aggregate Bond Index (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 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, three and five year period. The Board considered that the Fund was created in connection with Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the “Transaction”) and that the Fund’s performance prior to the closing of the Transaction on May 24, 2019 is that of its predecessor fund. The Board further considered that the Fund had changed its name, investment strategy and portfolio management team in 2020 in connection with its repositioning as a factor-based fund, and that performance results prior to such date reflected that
29 | Invesco Intermediate Bond Factor Fund |
of the Fund’s former strategy. As a result, the Board did not consider performance of the Fund prior to such date to be particularly relevant. 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 metrics, which did not change its 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 was reduced at certain breakpoint levels effective in 2020 in connection with its repositioning as a factor-based fund. 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 is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board 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 also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination 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. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.
The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.
The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
30 | Invesco Intermediate Bond Factor Fund |
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Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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Fund holdings and proxy voting information
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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 number(s): 811-05686 and 033-39519 | Invesco Distributors, Inc. | O-INTI-SAR-1 |
Semiannual Report to Shareholders | August 31, 2022 |
Invesco Real Estate Fund
Nasdaq:
A: IARAX ∎ C: IARCX ∎ R: IARRX ∎ Y: IARYX ∎ Investor: REINX ∎ R5: IARIX ∎ R6: IARFX
2 | ||
4 | ||
5 | ||
7 | ||
10 | ||
11 | ||
17 | ||
18 |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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 |
Performance summary
|
| |||
Fund vs. Indexes |
| |||
Cumulative total returns, 2/28/22 to 8/31/22, 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 | -5.15 | % | ||
Class C Shares | -5.51 | |||
Class R Shares | -5.26 | |||
Class Y Shares | -5.03 | |||
Investor Class Shares | -5.14 | |||
Class R5 Shares | -4.98 | |||
Class R6 Shares | -4.95 | |||
S&P 500 Index▼ (Broad Market Index) | -8.84 | |||
FTSE NAREIT All Equity REITs Index▼ (Style-Specific Index) | -6.68 | |||
Lipper Real Estate Funds Index∎ (Peer Group Index) | -8.95 | |||
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. |
| |||
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.
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2 | Invesco Real Estate Fund |
Average Annual Total Returns | ||
As of 8/31/22, including maximum applicable sales charges | ||
Class A Shares | ||
Inception (12/31/96) | 8.48% | |
10 Years | 6.25 | |
5 Years | 4.04 | |
1 Year | -13.88 | |
Class C Shares | ||
Inception (5/1/95) | 9.57% | |
10 Years | 6.21 | |
5 Years | 4.44 | |
1 Year | -10.38 | |
Class R Shares | ||
Inception (4/30/04) | 8.30% | |
10 Years | 6.59 | |
5 Years | 4.97 | |
1 Year | -9.05 | |
Class Y Shares | ||
Inception (10/3/08) | 7.91% | |
10 Years | 7.12 | |
5 Years | 5.49 | |
1 Year | -8.64 | |
Investor Class Shares | ||
Inception (9/30/03) | 8.74% | |
10 Years | 6.88 | |
5 Years | 5.27 | |
1 Year | -8.82 | |
Class R5 Shares | ||
Inception (4/30/04) | 9.02% | |
10 Years | 7.26 | |
5 Years | 5.62 | |
1 Year | -8.58 | |
Class R6 Shares | ||
10 Years | 7.34% | |
5 Years | 5.71 | |
1 Year | -8.48 |
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 Funds 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.
3 | Invesco Real Estate Fund |
|
In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (“the Liquidity Rule”), 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 21-23, 2022, the Committee presented a report to the Board that addressed the operation of the Program and assessed the Programs adequacy and effectiveness of implementation (“the Report”). The Report covered the period from January 1, 2021, through December 31, 2021 (“the Program Reporting Period”). The Report discussed notable events affecting liquidity over the Program Reporting Period, including the impact of the coronavirus pandemic on the Fund and the overall market. The Report noted that there were no material changes to the Program during 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 investor’s 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. |
4 | Invesco Real Estate Fund |
August 31, 2022
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–99.22% |
| |||||||
Apartments–10.41% | ||||||||
AvalonBay Communities, Inc. | 343,727 | $ | 69,058,192 | |||||
Equity Residential | 455,354 | 33,322,806 | ||||||
UDR, Inc. | 1,611,844 | 72,323,440 | ||||||
174,704,438 | ||||||||
Data Centers–7.06% |
| |||||||
Digital Realty Trust, Inc. | 317,986 | 39,312,609 | ||||||
Equinix, Inc. | 120,292 | 79,076,352 | ||||||
118,388,961 | ||||||||
Diversified–0.00% |
| |||||||
BGP Holdings PLC(b) | 3,547,941 | 15,710 | ||||||
Free Standing–5.77% |
| |||||||
Agree Realty Corp. | 335,640 | 25,280,405 | ||||||
Essential Properties Realty Trust, Inc. | 718,465 | 16,266,048 | ||||||
Realty Income Corp. | 808,720 | 55,219,401 | ||||||
96,765,854 | ||||||||
Health Care–8.54% |
| |||||||
Healthcare Realty Trust, Inc.(c) | 1,638,018 | 39,836,598 | ||||||
Healthpeak Properties, Inc. | 734,278 | 19,274,798 | ||||||
Ventas, Inc. | 866,447 | 41,468,153 | ||||||
Welltower, Inc. | 556,837 | 42,681,556 | ||||||
143,261,105 | ||||||||
Industrial–12.87% |
| |||||||
Duke Realty Corp. | 561,674 | 33,054,515 | ||||||
Exeter Industrial Value Fund | 4,185,000 | 237,549 | ||||||
Prologis, Inc. | 820,965 | 102,218,352 | ||||||
Rexford Industrial Realty, Inc.(c) | 955,962 | 59,470,396 | ||||||
Terreno Realty Corp. | 341,488 | 20,827,353 | ||||||
215,808,165 | ||||||||
Infrastructure REITs–18.54% |
| |||||||
American Tower Corp. | 628,752 | 159,734,446 | ||||||
Crown Castle, Inc. | 405,389 | 69,252,603 | ||||||
SBA Communications Corp., Class A | 251,920 | 81,936,980 | ||||||
310,924,029 | ||||||||
Lodging Resorts–0.77% |
| |||||||
Hilton Worldwide Holdings, Inc. | 25,813 | 3,287,543 | ||||||
Ryman Hospitality Properties, | 117,367 | 9,649,915 | ||||||
12,937,458 | ||||||||
Manufactured Homes–5.68% |
| |||||||
Equity LifeStyle Properties, Inc. | 490,373 | 34,375,147 | ||||||
Sun Communities, Inc. | 396,580 | 60,958,312 | ||||||
95,333,459 | ||||||||
| ||||||||
Office–3.24% |
| |||||||
Alexandria Real Estate Equities, Inc. | 354,377 | 54,361,432 |
Shares | Value | |||||||
Self Storage–5.45% |
| |||||||
CubeSmart | 1,003,562 | $ | 46,214,030 | |||||
Life Storage, Inc. | 354,991 | 45,172,605 | ||||||
91,386,635 | ||||||||
Shopping Centers–6.08% |
| |||||||
Brixmor Property Group, Inc. | 1,589,894 | 34,150,923 | ||||||
Federal Realty Investment Trust | 150,256 | 15,216,425 | ||||||
Kimco Realty Corp. | 2,187,129 | 46,104,679 | ||||||
SITE Centers Corp. | 506,980 | 6,570,461 | ||||||
102,042,488 | ||||||||
Single Family Homes–6.00% |
| |||||||
American Homes 4 Rent, Class A(c) | 649,438 | 23,094,015 | ||||||
Invitation Homes, Inc. | 2,136,189 | 77,500,937 | ||||||
100,594,952 | ||||||||
Specialty–6.80% |
| |||||||
Gaming and Leisure Properties, Inc. | 565,501 | 27,296,733 | ||||||
Lamar Advertising Co., Class A | 123,902 | 11,633,159 | ||||||
Outfront Media, Inc. | 667,850 | 11,820,945 | ||||||
VICI Properties, Inc. | 1,918,170 | 63,280,428 | ||||||
114,031,265 | ||||||||
Timber REITs–2.01% |
| |||||||
Weyerhaeuser Co. | 988,255 | 33,758,791 | ||||||
Total Common Stocks & Other Equity Interests |
| 1,664,314,742 | ||||||
Money Market Funds–0.03% |
| |||||||
Invesco Liquid Assets Portfolio, Institutional Class, 2.26%(f)(g) | 436,069 | 436,156 | ||||||
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.25% |
| 1,664,750,898 | ||||||
Investments Purchased with Cash Collateral from Securities on Loan |
| |||||||
Money Market Funds–3.42% |
| |||||||
Invesco Private Government Fund, | 16,078,965 | 16,078,965 | ||||||
Invesco Private Prime Fund, | 41,341,776 | 41,345,911 | ||||||
Total Investments Purchased with Cash Collateral from Securities on Loan |
| 57,424,876 | ||||||
TOTAL INVESTMENTS IN |
| 1,722,175,774 | ||||||
OTHER ASSETS LESS |
| (44,775,917 | ) | |||||
NET ASSETS–100.00% | $1,677,399,857 |
Investment Abbreviations:
REIT – Real Estate Investment Trust
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco Real Estate Fund |
Notes to Schedule of Investments:
(a) | Property type classifications used in this report are generally according to FTSE National Association of Real Estate Investment Trusts (“NAREIT”) Equity REITs Index, which is exclusively owned by NAREIT. |
(b) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(c) | All or a portion of this security was out on loan at August 31, 2022. |
(d) | 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% |
(e) | Non-income producing security. |
(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, 2022. |
Value February 28, 2022 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation (Depreciation) | Realized Gain (Loss) | Value August 31, 2022 | Dividend Income | |||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: | |||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | 5,425,636 | $ | 58,168,914 | $(63,594,550 | ) | $ | - | $ | - | $ | - | $ | 24,655 | |||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 4,623,479 | 41,549,224 | (45,737,629 | ) | (163) | 1,245 | 436,156 | 26,085 | |||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 6,200,726 | 66,478,758 | (72,679,484 | ) | - | - | - | 34,947 | |||||||||||||||||||||||||||
Investments Purchased with Cash Collateral from Securities on Loan: | |||||||||||||||||||||||||||||||||||
Invesco Private Government Fund | 12,633,272 | 237,449,893 | (234,004,200 | ) | - | - | 16,078,965 | 142,945* | |||||||||||||||||||||||||||
Invesco Private Prime Fund | 29,477,637 | 506,048,115 | (494,175,087 | ) | 3,055 | (7,809 | ) | 41,345,911 | 405,976* | ||||||||||||||||||||||||||
Total | $ | 58,360,750 | $ | 909,694,904 | $ | (910,190,950 | ) | $ | 2,892 | $ | (6,564 | ) | $ | 57,861,032 | $ | 634,608 |
* | 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. |
(g) | The rate shown is the 7-day SEC standardized yield as of August 31, 2022. |
(h) | 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. |
Portfolio Composition
By property type, based on total net assets
as of August 31, 2022
Infrastructure REITs | 18.54 | % | ||
Industrial | 12.87 | |||
Apartments | 10.41 | |||
Health Care | 8.54 | |||
Data Centers | 7.06 | |||
Specialty | 6.80 | |||
Shopping Centers | 6.08 | |||
Single Family Homes | 6.00 | |||
Free Standing | 5.77 | |||
Manufactured Homes | 5.68 | |||
Self Storage | 5.45 | |||
Office | 3.24 | |||
Timber REITs | 2.01 | |||
Lodging Resorts | 0.77 | |||
Diversified | 0.00 | |||
Money Market Funds Plus Other Assets Less Liabilities | 0.78 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Real Estate Fund |
Statement of Assets and Liabilities
August 31, 2022
(Unaudited)
Assets: | ||||
Investments in unaffiliated securities, at value | $ | 1,664,314,742 | ||
| ||||
Investments in affiliated money market funds, at value | 57,861,032 | |||
| ||||
Foreign currencies, at value (Cost $223) | 196 | |||
| ||||
Receivable for: | ||||
Investments sold | 20,588,734 | |||
| ||||
Fund shares sold | 1,364,566 | |||
| ||||
Dividends | 867,954 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 299,880 | |||
| ||||
Other assets | 68,870 | |||
| ||||
Total assets | 1,745,365,974 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 6,764,286 | |||
| ||||
Fund shares reacquired | 1,775,124 | |||
| ||||
Amount due custodian | 377,739 | |||
| ||||
Collateral upon return of securities loaned | 57,424,876 | |||
| ||||
Accrued fees to affiliates | 1,105,591 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 14,946 | |||
| ||||
Accrued other operating expenses | 176,605 | |||
| ||||
Trustee deferred compensation and retirement plans | 326,950 | |||
| ||||
Total liabilities | 67,966,117 | |||
| ||||
Net assets applicable to shares outstanding | $ | 1,677,399,857 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 1,238,867,475 | ||
| ||||
Distributable earnings | 438,532,382 | |||
| ||||
$ | 1,677,399,857 | |||
|
Net Assets: | ||||
Class A | $ | 743,187,711 | ||
| ||||
Class C | $ | 30,738,282 | ||
| ||||
Class R | $ | 103,642,755 | ||
| ||||
Class Y | $ | 234,686,088 | ||
| ||||
Investor Class | $ | 30,522,160 | ||
| ||||
Class R5 | $ | 241,526,227 | ||
| ||||
Class R6 | $ | 293,096,634 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 37,187,566 | |||
| ||||
Class C | 1,549,887 | |||
| ||||
Class R | 5,177,622 | |||
| ||||
Class Y | 11,750,416 | |||
| ||||
Investor Class | 1,532,396 | |||
| ||||
Class R5 | 12,090,656 | |||
| ||||
Class R6 | 14,675,922 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 19.98 | ||
| ||||
Maximum offering price per share | $ | 21.14 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 19.83 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 20.02 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 19.97 | ||
| ||||
Investor Class: | ||||
Net asset value and offering price per share | $ | 19.92 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 19.98 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 19.97 | ||
|
* | At August 31, 2022, securities with an aggregate value of $55,907,172 were on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Real Estate Fund |
Statement of Operations
For the six months ended August 31, 2022
(Unaudited)
Investment income: | ||||
Dividends | $ | 26,293,069 | ||
| ||||
Dividends from affiliated money market funds (includes securities lending income of $41,089) | 126,776 | |||
| ||||
Total investment income | 26,419,845 | |||
| ||||
Expenses: | ||||
Advisory fees | 6,834,952 | |||
| ||||
Administrative services fees | 150,002 | |||
| ||||
Custodian fees | 10,578 | |||
| ||||
Distribution fees: | ||||
Class A | 1,005,636 | |||
| ||||
Class C | 174,243 | |||
| ||||
Class R | 282,624 | |||
| ||||
Investor Class | 38,909 | |||
| ||||
Transfer agent fees – A, C, R, Y and Investor | 1,339,052 | |||
| ||||
Transfer agent fees – R5 | 140,595 | |||
| ||||
Transfer agent fees – R6 | 58,426 | |||
| ||||
Trustees’ and officers’ fees and benefits | 14,074 | |||
| ||||
Registration and filing fees | 63,910 | |||
| ||||
Reports to shareholders | 75,301 | |||
| ||||
Professional services fees | 31,640 | |||
| ||||
Other | 16,451 | |||
| ||||
Total expenses | 10,236,393 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (13,002 | ) | ||
| ||||
Net expenses | 10,223,391 | |||
| ||||
Net investment income | 16,196,454 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Unaffiliated investment securities | 71,513,236 | |||
| ||||
Affiliated investment securities | (6,564 | ) | ||
| ||||
71,506,672 | ||||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Unaffiliated investment securities | (175,906,484 | ) | ||
| ||||
Affiliated investment securities | 2,892 | |||
| ||||
Foreign currencies | (18 | ) | ||
| ||||
(175,903,610 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (104,396,938 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (88,200,484 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Real Estate Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, 2022 | February 28, 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 16,196,454 | $ | 12,089,137 | ||||
| ||||||||
Net realized gain | 71,506,672 | 239,255,576 | ||||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (175,903,610 | ) | 113,833,169 | |||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (88,200,484 | ) | 365,177,882 | |||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (3,188,552 | ) | (50,935,385 | ) | ||||
| ||||||||
Class C | (5,368 | ) | (2,081,738 | ) | ||||
| ||||||||
Class R | (301,710 | ) | (6,621,764 | ) | ||||
| ||||||||
Class Y | (1,411,660 | ) | (19,059,695 | ) | ||||
| ||||||||
Investor Class | (136,331 | ) | (1,848,651 | ) | ||||
| ||||||||
Class R5 | (1,602,205 | ) | (18,230,861 | ) | ||||
| ||||||||
Class R6 | (1,992,110 | ) | (23,020,346 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (8,637,936 | ) | (121,798,440 | ) | ||||
| ||||||||
Return of capital: | ||||||||
Class A | – | (1,296,414 | ) | |||||
| ||||||||
Class C | – | (52,984 | ) | |||||
| ||||||||
Class R | – | (168,535 | ) | |||||
| ||||||||
Class Y | – | (485,102 | ) | |||||
| ||||||||
Investor Class | – | (47,051 | ) | |||||
| ||||||||
Class R5 | – | (464,007 | ) | |||||
| ||||||||
Class R6 | – | (585,907 | ) | |||||
| ||||||||
Total return of capital | – | (3,100,000 | ) | |||||
| ||||||||
Total distributions | (8,637,936 | ) | (124,898,440 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (47,254,311 | ) | (76,686,465 | ) | ||||
| ||||||||
Class C | (4,906,786 | ) | (6,390,505 | ) | ||||
| ||||||||
Class R | (5,282,524 | ) | (2,326,304 | ) | ||||
| ||||||||
Class Y | (50,510,193 | ) | 4,676,831 | |||||
| ||||||||
Investor Class | (790,979 | ) | 2,011,607 | |||||
| ||||||||
Class R5 | (27,279,177 | ) | 5,285,773 | |||||
| ||||||||
Class R6 | (31,457,813 | ) | (21,903,084 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (167,481,783 | ) | (95,332,147 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (264,320,203 | ) | 144,947,295 | |||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 1,941,720,060 | 1,796,772,765 | ||||||
| ||||||||
End of period | $ | 1,677,399,857 | $ | 1,941,720,060 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | 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 | 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 (loss) to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | $ | 21.15 | $ | 0.17 | $ | (1.26 | ) | $ | (1.09 | ) | $ | (0.08 | ) | $ | – | $ | – | $ | (0.08 | ) | $ | 19.98 | (5.15 | )% | $ | 743,188 | 1.23 | %(d) | 1.23 | %(d) | 1.59 | %(d) | 23 | % | |||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 18.67 | 0.10 | 3.73 | 3.83 | (0.21 | ) | (1.11 | ) | (0.03 | ) | (1.35 | ) | 21.15 | 20.12 | 834,552 | 1.23 | 1.23 | 0.45 | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 20.72 | 0.17 | (0.89 | ) | (0.72 | ) | (0.28 | ) | (1.05 | ) | – | (1.33 | ) | 18.67 | (2.59 | ) | 804,058 | 1.28 | 1.28 | 0.98 | 156 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 20.99 | 0.09 | (1.25 | ) | (1.16 | ) | (0.00 | ) | – | – | – | 19.83 | (5.51 | ) | 30,738 | 1.98 | (d) | 1.98 | (d) | 0.84 | (d) | 23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 18.53 | (0.07 | ) | 3.71 | 3.64 | (0.04 | ) | (1.11 | ) | (0.03 | ) | (1.18 | ) | 20.99 | 19.25 | 37,459 | 1.98 | 1.98 | (0.30 | ) | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 20.56 | 0.04 | (0.88 | ) | (0.84 | ) | (0.14 | ) | (1.05 | ) | – | (1.19 | ) | 18.53 | (3.33 | ) | 38,752 | 2.03 | 2.03 | 0.23 | 156 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 21.18 | 0.14 | (1.24 | ) | (1.10 | ) | (0.06 | ) | – | – | (0.06 | ) | 20.02 | (5.22 | ) | 103,643 | 1.48 | (d) | 1.48 | (d) | 1.34 | (d) | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 18.70 | 0.04 | 3.73 | 3.77 | (0.15 | ) | (1.11 | ) | (0.03 | ) | (1.29 | ) | 21.18 | 19.79 | 114,999 | 1.48 | 1.48 | 0.20 | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 20.74 | 0.13 | (0.89 | ) | (0.76 | ) | (0.23 | ) | (1.05 | ) | – | (1.28 | ) | 18.70 | (2.81 | ) | 103,667 | 1.53 | 1.53 | 0.73 | 156 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 21.14 | 0.20 | (1.26 | ) | (1.06 | ) | (0.11 | ) | – | – | (0.11 | ) | 19.97 | (5.03 | ) | 234,686 | 0.98 | (d) | 0.98 | (d) | 1.84 | (d) | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 18.66 | 0.15 | 3.73 | 3.88 | (0.26 | ) | (1.11 | ) | (0.03 | ) | (1.40 | ) | 21.14 | 20.43 | 296,638 | 0.98 | 0.98 | 0.70 | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 20.71 | 0.22 | (0.90 | ) | (0.68 | ) | (0.32 | ) | (1.05 | ) | – | (1.37 | ) | 18.66 | (2.33 | ) | 256,699 | 1.03 | 1.03 | 1.23 | 156 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 21.08 | 0.17 | (1.24 | ) | (1.07 | ) | (0.09 | ) | – | – | (0.09 | ) | 19.92 | (5.10 | )(e) | 30,522 | 1.22 | (d)(e) | 1.22 | (d)(e) | 1.60 | (d)(e) | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 18.61 | 0.11 | 3.71 | 3.82 | (0.21 | ) | (1.11 | ) | (0.03 | ) | (1.35 | ) | 21.08 | 20.17 | (e) | 33,026 | 1.16 | (e) | 1.16 | (e) | 0.52 | (e) | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 20.65 | 0.18 | (0.89 | ) | (0.71 | ) | (0.28 | ) | (1.05 | ) | – | (1.33 | ) | 18.61 | (2.53 | )(e) | 27,546 | 1.23 | (e) | 1.23 | (e) | 1.03 | (e) | 156 | |||||||||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 21.14 | 0.21 | (1.25 | ) | (1.04 | ) | (0.12 | ) | – | – | (0.12 | ) | 19.98 | (4.93 | ) | 241,526 | 0.87 | (d) | 0.87 | (d) | 1.95 | (d) | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 18.66 | 0.18 | 3.73 | 3.91 | (0.29 | ) | (1.11 | ) | (0.03 | ) | (1.43 | ) | 21.14 | 20.58 | 283,546 | 0.86 | 0.86 | 0.82 | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 20.71 | 0.25 | (0.91 | ) | (0.66 | ) | (0.34 | ) | (1.05 | ) | – | (1.39 | ) | 18.66 | (2.22 | ) | 247,114 | 0.87 | 0.87 | 1.39 | 156 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 21.14 | 0.21 | (1.25 | ) | (1.04 | ) | (0.13 | ) | – | – | (0.13 | ) | 19.97 | (4.95 | ) | 293,097 | 0.81 | (d) | 0.81 | (d) | 2.01 | (d) | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 18.66 | 0.20 | 3.72 | 3.92 | (0.30 | ) | (1.11 | ) | (0.03 | ) | (1.44 | ) | 21.14 | 20.67 | 341,500 | 0.78 | 0.78 | 0.90 | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 20.71 | 0.26 | (0.90 | ) | (0.64 | ) | (0.36 | ) | (1.05 | ) | – | (1.41 | ) | 18.66 | (2.13 | ) | 318,936 | 0.79 | 0.79 | 1.47 | 156 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |
(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 year ended February 28, 2021, 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) | Annualized. |
(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%, 0.18%, 0.20%, 0.24%, 0.21% and 0.21% for the six months ended August 31, 2022 and the years ended February 28, 2022, February 28, 2021, February 29, 2020, February 28, 2019 and February 28, 2018, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Real Estate Fund |
August 31, 2022
(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 eight 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 eighth anniversary after a purchase of Class C shares.
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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades 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 using prices provided by an independent pricing service they may be considered fair valued. Futures contracts are valued at the daily settlement price set by an exchange on which they are principally traded. U.S. exchange-traded options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Non-U.S. exchange-traded options are valued at the final settlement price set by the exchange on which they trade. Options not listed on an exchange and swaps generally are valued using pricing provided from independent pricing services.
Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.
Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.
Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices 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, and their value may be adjusted accordingly. 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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.
Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.
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 may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available and unreliable are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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, significant governmental actions 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.
The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund
11 | Invesco Real Estate Fund |
securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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 based on relative net assets of Class R5 and Class R6. 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. 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, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “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 |
12 | Invesco Real Estate Fund |
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.
The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon (“BNYM”) also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the six months ended August 31, 2022, the Fund paid the Adviser $2,970 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.
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.
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 exchange of the two currencies on settlement date, 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).
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 for hedging 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. | 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.
M. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2022, the effective advisory fee rate incurred by the Fund was 0.73%.
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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, 2023, to waive advisory fees and/or reimburse expenses 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 to 2.00%, 2.75%, 2.25%, 1.75%, 2.00%, 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, 2023. 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, 2024, 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, 2022, the Adviser waived advisory fees of $9,036.
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, 2022, 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, 2022, 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 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, 2022, 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, 2022, IDI advised the Fund that IDI retained $35,552 in front-end sales commissions from the sale of Class A shares and $919 and $1,716 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 Adviser’s 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, 2022. 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 | $ | 1,664,061,483 | $ | – |
| $ | 253,259 | $ | 1,664,314,742 | |||||||
Money Market Funds | 436,156 | 57,424,876 | – | 57,861,032 | ||||||||||||
Total Investments | $ | 1,664,497,639 | $ | 57,424,876 | $ | 253,259 | $ | 1,722,175,774 |
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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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $3,966.
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 carryforward 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 28, 2022.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended August 31, 2022 was $421,751,452 and $581,410,882, 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 | $ | 357,884,992 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (46,558,834 | ) | ||
| ||||
Net unrealized appreciation of investments | $ | 311,326,158 | ||
|
Cost of investments for tax purposes is $1,410,849,616.
NOTE 9–Share Information
Summary of Share Activity | ||||||||||||||||
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Six months ended August 31, 2022(a) | Year ended February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 1,614,053 | $ | 34,403,530 | 4,599,639 | $ | 101,285,343 | ||||||||||
| ||||||||||||||||
Class C | 147,571 | 3,148,692 | 370,164 | 8,176,178 | ||||||||||||
| ||||||||||||||||
Class R | 424,829 | 9,007,503 | 1,139,728 | 25,110,708 | ||||||||||||
| ||||||||||||||||
Class Y | 1,130,841 | 24,068,345 | 4,501,276 | 96,972,828 | ||||||||||||
| ||||||||||||||||
Investor Class | 124,769 | 2,622,377 | 286,467 | 6,272,646 | ||||||||||||
| ||||||||||||||||
Class R5 | 1,487,254 | 31,752,720 | 4,256,177 | 94,533,039 | ||||||||||||
| ||||||||||||||||
Class R6 | 1,427,354 | 30,312,982 | 4,575,867 | 100,428,834 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 145,443 | 3,007,134 | 2,220,547 | 49,862,674 | ||||||||||||
| ||||||||||||||||
Class C | 246 | 5,045 | 91,442 | 2,050,259 | ||||||||||||
| ||||||||||||||||
Class R | 14,556 | 301,445 | 301,053 | 6,783,408 | ||||||||||||
| ||||||||||||||||
Class Y | 41,008 | 850,831 | 589,585 | 13,217,508 | ||||||||||||
| ||||||||||||||||
Investor Class | 6,398 | 131,840 | 81,551 | 1,825,391 | ||||||||||||
| ||||||||||||||||
Class R5 | 77,611 | 1,601,843 | 834,764 | 18,689,560 | ||||||||||||
| ||||||||||||||||
Class R6 | 95,040 | 1,964,171 | 1,045,576 | 23,381,188 | ||||||||||||
|
15 | Invesco Real Estate Fund |
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2022(a) | Year ended February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 114,923 | $ | 2,448,710 | 297,883 | $ | 6,499,848 | ||||||||||
| ||||||||||||||||
Class C | (115,727 | ) | (2,448,710 | ) | (299,945 | ) | (6,499,848 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (4,145,982 | ) | (87,113,685 | ) | (10,733,231 | ) | (234,334,330 | ) | ||||||||
| ||||||||||||||||
Class C | (267,147 | ) | (5,611,813 | ) | (468,088 | ) | (10,117,094 | ) | ||||||||
| ||||||||||||||||
Class R | (690,320 | ) | (14,591,472 | ) | (1,556,998 | ) | (34,220,420 | ) | ||||||||
| ||||||||||||||||
Class Y | (3,455,039 | ) | (75,429,369 | ) | (4,816,165 | ) | (105,513,505 | ) | ||||||||
| ||||||||||||||||
Investor Class | (165,167 | ) | (3,545,196 | ) | (281,795 | ) | (6,086,430 | ) | ||||||||
| ||||||||||||||||
Class R5 | (2,885,836 | ) | (60,633,740 | ) | (4,920,442 | ) | (107,936,826 | ) | ||||||||
| ||||||||||||||||
Class R6 | (3,004,065 | ) | (63,734,966 | ) | (6,559,846 | ) | (145,713,106 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (7,877,387 | ) | $ | (167,481,783 | ) | (4,444,791 | ) | $ | (95,332,147 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 23% 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. |
16 | 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, 2022 through August 31, 2022.
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 | |||||||
(03/01/22) | (08/31/22)1 | Period2 | (08/31/22) | Period2 | Ratio | |||||||
Class A | $1,000.00 | $948.50 | $6.04 | $1,019.00 | $6.26 | 1.23% | ||||||
Class C | 1,000.00 | 944.90 | 9.71 | 1,015.22 | 10.06 | 1.98 | ||||||
Class R | 1,000.00 | 947.40 | 7.26 | 1,017.74 | 7.53 | 1.48 | ||||||
Class Y | 1,000.00 | 949.70 | 4.82 | 1,020.27 | 4.99 | 0.98 | ||||||
Investor Class | 1,000.00 | 948.60 | 5.99 | 1,019.06 | 6.21 | 1.22 | ||||||
Class R5 | 1,000.00 | 950.20 | 4.28 | 1,020.82 | 4.43 | 0.87 | ||||||
Class R6 | 1,000.00 | 950.50 | 3.98 | 1,021.12 | 4.13 | 0.81 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2022 through August 31, 2022, 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. |
17 | Invesco Real Estate Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance with certain negotiated regulatory requirements. In
addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed 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 and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board
reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe and against the FTSE NAREIT All Equity REITs Index (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 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, which did not change its 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
18 | Invesco Real Estate Fund |
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 is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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.
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 its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates 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. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.
The Board also compared the Fund’s effective advisory fee rate (defined for this purpose as 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, 2021.
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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board 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 also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination 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 from Invesco Advisers periodic reports that include a representation to the effect 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. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.
The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.
The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
19 | Invesco Real Estate 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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/ corporate/about-us/esg. 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 number(s): 811-05686 and 033-39519 Invesco Distributors, Inc. REA-SAR-1
Semiannual Report to Shareholders | August 31, 2022 |
Invesco Short Duration Inflation Protected Fund
Nasdaq:
A: LMTAX ∎ A2: SHTIX ∎ Y: LMTYX ∎ R5: ALMIX ∎ R6: SDPSX
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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
Performance summary | ||||
Fund vs. Indexes | ||||
Cumulative total returns, 2/28/22 to 8/31/22, 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 | -2.45 | % | ||
Class A2 Shares | -2.39 | |||
Class Y Shares | -2.31 | |||
Class R5 Shares | -2.32 | |||
Class R6 Shares | -2.32 | |||
ICE BofA 1-5 Year US Inflation-Linked Treasury Index▼ (Broad Market/Style- Specific Index) | -1.83 | |||
Lipper Inflation Protected Bond Funds Index∎ (Peer Group Index) | -5.74 | |||
Source(s):▼RIMES Technologies Corp.; ∎Lipper Inc. | ||||
The ICE BofA 1-5 Year US Inflation-Linked Treasury Index is composed of US Treasury Inflation-Protected Securities with maturities between one and five years. |
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The Lipper Inflation Protected Bond Funds Index is an unmanaged index considered representative of inflation protected 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.
2 | Invesco Short Duration Inflation Protected Fund |
Average Annual Total Returns |
| |||
As of 8/31/22, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (10/31/02) | 1.54 | % | ||
10 Years | 1.16 | |||
5 Years | 1.85 | |||
1 Year | -3.82 | |||
Class A2 Shares | ||||
Inception (12/15/87) | 3.65 | % | ||
10 Years | 1.39 | |||
5 Years | 2.25 | |||
1 Year | -2.27 | |||
Class Y Shares | ||||
Inception (10/3/08) | 1.44 | % | ||
10 Years | 1.61 | |||
5 Years | 2.62 | |||
1 Year | -1.05 | |||
Class R5 Shares | ||||
Inception (7/13/87) | 3.89 | % | ||
10 Years | 1.61 | |||
5 Years | 2.62 | |||
1 Year | -1.15 | |||
Class R6 Shares | ||||
10 Years | 1.61 | % | ||
5 Years | 2.63 | |||
1 Year | -1.14 |
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 restated to reflect 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.
3 | Invesco Short Duration Inflation Protected Fund |
Liquidity Risk Management Program
In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), 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 21-23, 2022, 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 January 1, 2021, through December 31, 2021 (the “Program Reporting Period”). The Report discussed notable events affecting liquidity over the Program Reporting Period, including the impact of the coronavirus pandemic on the Fund and the overall market. The Report noted that there were no material changes to the Program during 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. |
4 | Invesco Short Duration Inflation Protected Fund |
August 31, 2022
(Unaudited)
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||||
| ||||||||||||||||
U.S. Treasury Securities–99.53% | ||||||||||||||||
U.S. Treasury Inflation – Indexed Notes-99.53%(a) | ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.62 | % | 01/15/2024 | $ | 47,419 | $ | 46,975,490 | |||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.50 | % | 04/15/2024 | 34,806 | 34,438,060 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13 | % | 07/15/2024 | 47,006 | 46,295,209 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13 | % | 10/15/2024 | 37,303 | 36,712,610 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.25 - 2.37 | % | 01/15/2025 | 87,649 | 88,249,803 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13 | % | 04/15/2025 | 37,502 | 36,697,672 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.37 | % | 07/15/2025 | 46,572 | 45,994,788 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13 | % | 10/15/2025 | 36,008 | 35,305,769 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.62 - 2.00 | % | 01/15/2026 | 75,577 | 76,332,089 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13 | % | 04/15/2026 | 41,372 | 40,362,472 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13 | % | 07/15/2026 | 41,891 | 41,030,312 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13 | % | 10/15/2026 | 38,152 | 37,269,627 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.37 - 2.37 | % | 01/15/2027 | 65,184 | 65,998,914 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.13 | % | 04/15/2027 | 38,858 | 37,726,629 | |||||||||||
| ||||||||||||||||
U.S. Treasury Inflation - Indexed Notes | 0.37 | % | 07/15/2027 | 41,134 | 40,530,177 | |||||||||||
| ||||||||||||||||
Total U.S. Treasury Securities (Cost $742,808,053) | 709,919,621 | |||||||||||||||
|
Shares | ||||||||
Money Market Funds–0.26% | ||||||||
Invesco Government & Agency Portfolio, Institutional Class, 2.22%(b)(c) | 654,466 | 654,466 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 2.26%(b)(c) | 467,378 | 467,472 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, 2.14%(b)(c) | 747,961 | 747,961 | ||||||
| ||||||||
Total Money Market Funds (Cost $1,869,899) | 1,869,899 | |||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES-99.79% (Cost $744,677,952) | 711,789,520 | |||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES-0.21% | 1,518,641 | |||||||
| ||||||||
NET ASSETS-100.00% | $ | 713,308,161 | ||||||
|
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, 2022. |
Value February 28, 2022 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain | Value August 31, 2022 | Dividend Income | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: | ||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ 516,175 | $33,642,081 | $(33,503,790) | $- | $ - | $ 654,466 | $1,536 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 368,666 | 24,030,058 | (23,931,332) | - | 80 | 467,472 | 1,638 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 589,914 | 38,448,093 | (38,290,046) | - | - | 747,961 | 2,390 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Total | $1,474,755 | $96,120,232 | $(95,725,168) | $- | $80 | $1,869,899 | $5,564 | |||||||||||||||||||||
|
(c) | The rate shown is the 7-day SEC standardized yield as of August 31, 2022. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco Short Duration Inflation Protected Fund |
Portfolio Composition
By U.S. Treasury Securities
as of August 31, 2022
Maturity Date | Coupon Rate | % of Total Net Assets | ||
| ||||
1/15/2024 | 0.62% | 6.59% | ||
| ||||
4/15/2024 | 0.50 | 4.83 | ||
| ||||
7/15/2024 | 0.13 | 6.49 | ||
| ||||
10/15/2024 | 0.13 | 5.15 | ||
| ||||
1/15/2025 | 2.37 | 5.86 | ||
| ||||
1/15/2025 | 0.25 | 6.51 | ||
| ||||
4/15/2025 | 0.13 | 5.14 | ||
| ||||
7/15/2025 | 0.37 | 6.45 | ||
| ||||
10/15/2025 | 0.13 | 4.95 | ||
| ||||
1/15/2026 | 0.62 | 6.70 | ||
| ||||
1/15/2026 | 2.00 | 4.00 | ||
| ||||
4/15/2026 | 0.13 | 5.66 | ||
| ||||
7/15/2026 | 0.13 | 5.75 | ||
| ||||
10/15/2026 | 0.13 | 5.22 | ||
| ||||
1/15/2027 | 0.37 | 5.92 | ||
| ||||
1/15/2027 | 2.37 | 3.34 | ||
| ||||
4/15/2027 | 0.13 | 5.29 | ||
| ||||
7/15/2027 | 0.37 | 5.68 | ||
| ||||
Money Market Funds Plus Other Assets Less Liabilities | 0.47 | |||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Short Duration Inflation Protected Fund |
Statement of Assets and Liabilities
August 31, 2022
(Unaudited)
Assets: | ||||||||
Investments in unaffiliated securities, at value |
| $ | 709,919,621 | |||||
| ||||||||
Investments in affiliated money market funds, at value |
| 1,869,899 | ||||||
| ||||||||
Receivable for: |
| |||||||
Fund shares sold |
| 1,574,216 | ||||||
| ||||||||
Dividends |
| 1,398 | ||||||
| ||||||||
Interest |
| 612,689 | ||||||
| ||||||||
Investment for trustee deferred compensation and retirement plans |
| 71,615 | ||||||
| ||||||||
Other assets |
| 99,601 | ||||||
| ||||||||
Total assets |
| 714,149,039 | ||||||
| ||||||||
Liabilities: |
| |||||||
Payable for: |
| |||||||
Fund shares reacquired |
| 500,776 | ||||||
| ||||||||
Accrued fees to affiliates |
| 135,314 | ||||||
| ||||||||
Accrued trustees’ and officers’ fees and benefits |
| 1,228 | ||||||
| ||||||||
Accrued other operating expenses |
| 123,376 | ||||||
| ||||||||
Trustee deferred compensation and retirement plans |
| 80,184 | ||||||
| ||||||||
Total liabilities |
| 840,878 | ||||||
| ||||||||
Net assets applicable to shares outstanding |
| $ | 713,308,161 | |||||
| ||||||||
Net assets consist of: |
| |||||||
Shares of beneficial interest |
| $ | 744,923,759 | |||||
| ||||||||
Distributable earnings (loss) |
| (31,615,598 | ) | |||||
| ||||||||
$ | 713,308,161 | |||||||
|
Net Assets: | ||||
Class A | $ | 203,728,150 | ||
| ||||
Class A2 | $ | 12,667,615 | ||
| ||||
Class Y | $ | 159,479,245 | ||
| ||||
Class R5 | $ | 31,740,043 | ||
| ||||
Class R6 | $ | 305,693,108 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 19,870,487 | |||
| ||||
Class A2 | 1,234,161 | |||
| ||||
Class Y | 15,531,925 | |||
| ||||
Class R5 | 3,092,410 | |||
| ||||
Class R6 | 29,785,393 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 10.25 | ||
| ||||
Maximum offering price per share | $ | 10.51 | ||
| ||||
Class A2: | ||||
Net asset value per share | $ | 10.26 | ||
| ||||
Maximum offering price per share | $ | 10.36 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 10.27 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 10.26 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 10.26 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Short Duration Inflation Protected Fund |
Statement of Operations
For the six months ended August 31, 2022
(Unaudited)
Investment income: | ||||
Treasury Inflation-Protected Securities inflation adjustments | $ | 36,936,455 | ||
| ||||
Dividends from affiliated money market funds | 5,564 | |||
| ||||
Total investment income | 36,942,019 | |||
| ||||
Expenses: | ||||
Advisory fees | 654,044 | |||
| ||||
Administrative services fees | 43,377 | |||
| ||||
Custodian fees | 4,852 | |||
| ||||
Distribution fees: | ||||
Class A | 217,475 | |||
| ||||
Class A2 | 9,952 | |||
| ||||
Transfer agent fees – A, A2, and Y | 192,568 | |||
| ||||
Transfer agent fees – R5 | 5,069 | |||
| ||||
Transfer agent fees – R6 | 54,897 | |||
| ||||
Trustees’ and officers’ fees and benefits | 9,467 | |||
| ||||
Registration and filing fees | 62,398 | |||
| ||||
Licensing fees | 58,334 | |||
| ||||
Reports to shareholders | 6,290 | |||
| ||||
Professional services fees | 20,299 | |||
| ||||
Other | 7,589 | |||
| ||||
Total expenses | 1,346,611 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (123,721 | ) | ||
| ||||
Net expenses | 1,222,890 | |||
| ||||
Net investment income | 35,719,129 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Unaffiliated investment securities | (1,142,917 | ) | ||
| ||||
Affiliated investment securities | 80 | |||
| ||||
(1,142,837 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of unaffiliated investment securities | (50,349,342 | ) | ||
| ||||
Net realized and unrealized gain (loss) | (51,492,179 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (15,773,050 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Short Duration Inflation Protected Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, 2022 | February 28, 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 35,719,129 | $ | 31,008,510 | ||||
| ||||||||
Net realized gain (loss) | (1,142,837 | ) | 3,855,794 | |||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (50,349,342 | ) | (7,537,836 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (15,773,050 | ) | 27,326,468 | |||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (5,784,327 | ) | (4,781,414 | ) | ||||
| ||||||||
Class A2 | (451,500 | ) | (605,908 | ) | ||||
| ||||||||
Class Y | (4,761,108 | ) | (2,935,679 | ) | ||||
| ||||||||
Class R5 | (1,030,754 | ) | (813,165 | ) | ||||
| ||||||||
Class R6 | (11,305,071 | ) | (15,207,317 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (23,332,760 | ) | (24,343,483 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | 86,849,799 | 51,098,411 | ||||||
| ||||||||
Class A2 | (335,350 | ) | (1,938,647 | ) | ||||
| ||||||||
Class Y | 67,024,816 | 67,294,355 | ||||||
| ||||||||
Class R5 | 5,179,617 | 23,874,708 | ||||||
| ||||||||
Class R6 | 2,169,639 | (72,679,696 | ) | |||||
| ||||||||
Net increase in net assets resulting from share transactions | 160,888,521 | 67,649,131 | ||||||
| ||||||||
Net increase in net assets | 121,782,711 | 70,632,116 | ||||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 591,525,450 | 520,893,334 | ||||||
| ||||||||
End of period | $ | 713,308,161 | $ | 591,525,450 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | 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(a) | Net gains on securities | 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 fee waivers | Ratio of net to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | $10.87 | $0.55 | $(0.81 | ) | $(0.26 | ) | $(0.36 | ) | $ | – | $(0.36 | ) | $10.25 | (2.45 | )% | $203,728 | 0.55 | %(d) | 0.63 | %(d) | 10.39 | %(d) | 22 | % | ||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.82 | 0.57 | (0.07 | ) | 0.50 | (0.45 | ) | – | (0.45 | ) | 10.87 | 4.65 | 126,718 | 0.55 | 0.61 | 5.23 | 53 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 10.43 | 0.09 | 0.40 | 0.49 | (0.09 | ) | (0.01 | ) | (0.10 | ) | 10.82 | 4.76 | 76,073 | 0.55 | 0.67 | 0.87 | 49 | |||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class A2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 10.88 | 0.56 | (0.82 | ) | (0.26 | ) | (0.36 | ) | – | (0.36 | ) | 10.26 | (2.39 | ) | 12,668 | 0.45 | (d) | 0.53 | (d) | 10.49 | (d) | 22 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.84 | 0.59 | (0.09 | ) | 0.50 | (0.46 | ) | – | (0.46 | ) | 10.88 | 4.66 | 13,778 | 0.45 | 0.51 | 5.33 | 53 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 10.45 | 0.10 | 0.40 | 0.50 | (0.09 | ) | (0.02 | ) | (0.11 | ) | 10.84 | 4.86 | 15,618 | 0.45 | 0.57 | 0.97 | 49 | |||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 10.89 | 0.56 | (0.81 | ) | (0.25 | ) | (0.37 | ) | – | (0.37 | ) | 10.27 | (2.31 | ) | 159,479 | 0.30 | (d) | 0.38 | (d) | 10.64 | (d) | 22 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.84 | 0.60 | (0.07 | ) | 0.53 | (0.48 | ) | – | (0.48 | ) | 10.89 | 4.91 | 100,465 | 0.30 | 0.36 | 5.48 | 53 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 10.45 | 0.12 | 0.40 | 0.52 | (0.11 | ) | (0.02 | ) | (0.13 | ) | 10.84 | 5.02 | 33,512 | 0.30 | 0.42 | 1.12 | 49 | |||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 10.88 | 0.56 | (0.81 | ) | (0.25 | ) | (0.37 | ) | – | (0.37 | ) | 10.26 | (2.32 | ) | 31,740 | 0.29 | (d) | 0.29 | (d) | 10.65 | (d) | 22 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.83 | 0.60 | (0.07 | ) | 0.53 | (0.48 | ) | – | (0.48 | ) | 10.88 | 4.91 | 28,283 | 0.30 | 0.34 | 5.48 | 53 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 10.44 | 0.12 | 0.40 | 0.52 | (0.11 | ) | (0.02 | ) | (0.13 | ) | 10.83 | 5.02 | 4,640 | 0.30 | 0.34 | 1.12 | 49 | |||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 10.88 | 0.57 | (0.82 | ) | (0.25 | ) | (0.37 | ) | – | (0.37 | ) | 10.26 | (2.32 | ) | 305,693 | 0.29 | (d) | 0.29 | (d) | 10.65 | (d) | 22 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 10.84 | 0.61 | (0.09 | ) | 0.52 | (0.48 | ) | – | (0.48 | ) | 10.88 | 4.84 | 322,282 | 0.28 | 0.28 | 5.50 | 53 | |||||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 10.45 | 0.12 | 0.40 | 0.52 | (0.11 | ) | (0.02 | ) | (0.13 | ) | 10.84 | 5.05 | 391,051 | 0.27 | 0.27 | 1.15 | 49 | |||||||||||||||||||||||||||||||||||||||
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 |
(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) | Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Short Duration Inflation Protected Fund |
August 31, 2022
(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 normally are valued on the basis of prices provided by independent pricing services. Prices 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, and their value may be adjusted accordingly. 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 are not readily available and not reliable are fair valued by Invesco Advisers, Inc. (the “Adviser” or “Invesco”) in accordance with Board-approved policies and related Adviser procedures (“Valuation Procedures”). If a fair value price provided by a pricing service is unreliable in the Adviser’s judgment, the Adviser will fair value the security using the Valuation Procedures. 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, significant governmental actions 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.
The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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.
11 | Invesco Short Duration Inflation Protected Fund |
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 based on relative net assets of Class R5 and Class R6. 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 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. 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. |
I. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2022, the effective advisory fee rate incurred by the Fund was 0.19%.
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, 2023, 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 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 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, 2023. 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. To the extent that the annualized ratio does not exceed the expense limits, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
The Adviser has contractually agreed, through at least June 30, 2024, 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, 2022, the Adviser waived advisory fees of $757 and reimbursed class level expenses of $65,750, $5,057, $51,824, $0 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, 2022, 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, 2022, 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.
12 | Invesco Short Duration Inflation Protected Fund |
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, 2022, 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, 2022, IDI advised the Fund that IDI retained $26,432 and $56 in front-end sales commissions from the sale of Class A and Class A2 shares, respectively, and $35,322 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. | |
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 Adviser’s 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, 2022. 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 | $ | – | $ | 709,919,621 | $– | $ | 709,919,621 | |||||||||
| ||||||||||||||||
Money Market Funds | 1,869,899 | – | – | 1,869,899 | ||||||||||||
| ||||||||||||||||
Total Investments | $ | 1,869,899 | $ | 709,919,621 | $– | $ | 711,789,520 | |||||||||
|
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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $333.
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 carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
13 | Invesco Short Duration Inflation Protected Fund |
The Fund had a capital loss carryforward as of February 28, 2022, as follows:
Capital Loss Carryforward* | ||||||||||
| ||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||
| ||||||||||
Not subject to expiration | $225,750 | $15,847,149 | $16,072,899 | |||||||
|
* | 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, 2022 was $282,454,509 and $147,072,299, 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 | $ | – | ||
| ||||
Aggregate unrealized (depreciation) of investments | (33,235,540 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (33,235,540 | ) | |
|
Cost of investments for tax purposes is $745,025,060.
NOTE 9–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2022(a) | Year ended February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 10,745,789 | $ | 113,415,651 | 7,903,870 | $ | 86,807,110 | ||||||||||
| ||||||||||||||||
Class A2 | 11,846 | 128,042 | 11,088 | 121,581 | ||||||||||||
| ||||||||||||||||
Class Y | 10,742,335 | 113,328,730 | 9,681,062 | 106,438,352 | ||||||||||||
| ||||||||||||||||
Class R5 | 695,451 | 7,318,425 | 2,344,506 | 25,790,989 | ||||||||||||
| ||||||||||||||||
Class R6 | 3,982,366 | 42,088,070 | 6,007,248 | 66,233,446 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 497,643 | 5,180,578 | 395,658 | 4,281,458 | ||||||||||||
| ||||||||||||||||
Class A2 | 37,880 | 396,190 | 48,672 | 527,752 | ||||||||||||
| ||||||||||||||||
Class Y | 375,150 | 3,911,854 | 226,566 | 2,452,625 | ||||||||||||
| ||||||||||||||||
Class R5 | 23,768 | 248,416 | 20,290 | 219,723 | ||||||||||||
| ||||||||||||||||
Class R6 | 1,068,278 | 11,165,750 | 1,398,568 | 15,171,414 | ||||||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (3,027,669 | ) | (31,746,430 | ) | (3,672,740 | ) | (39,990,157 | ) | ||||||||
| ||||||||||||||||
Class A2 | (81,366 | ) | (859,582 | ) | (235,202 | ) | (2,587,980 | ) | ||||||||
| ||||||||||||||||
Class Y | (4,812,349 | ) | (50,215,768 | ) | (3,772,445 | ) | (41,596,622 | ) | ||||||||
| ||||||||||||||||
Class R5 | (225,284 | ) | (2,387,224 | ) | (194,536 | ) | (2,136,004 | ) | ||||||||
| ||||||||||||||||
Class R6 | (4,876,017 | ) | (51,084,181 | ) | (13,881,330 | ) | (154,084,556 | ) | ||||||||
| ||||||||||||||||
Net increase in share activity | 15,157,821 | $ | 160,888,521 | 6,281,275 | $ | 67,649,131 | ||||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 65% 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. |
14 | 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, 2022 through August 31, 2022.
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 (03/01/22) | ACTUAL | HYPOTHETICAL (5% annual return before expenses) | Annualized Expense Ratio | |||||||||
Ending Account Value (08/31/22)1 | Expenses Paid During Period2 | Ending Account Value (08/31/22) | Expenses Paid During Period2 | |||||||||
Class A | $1,000.00 | $975.50 | $2.74 | $1,022.43 | $2.80 | 0.55% | ||||||
Class A2 | 1,000.00 | 976.10 | 2.24 | 1,022.94 | 2.29 | 0.45 | ||||||
Class Y | 1,000.00 | 976.90 | 1.49 | 1,023.69 | 1.53 | 0.30 | ||||||
Class R5 | 1,000.00 | 976.80 | 1.44 | 1,023.74 | 1.48 | 0.29 | ||||||
Class R6 | 1,000.00 | 976.80 | 1.44 | 1,023.74 | 1.48 | 0.29 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2022 through August 31, 2022, 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 Short Duration Inflation Protected Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance
with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel. Also, as part of the contract renewal process, the independent Trustees reviewed and considered information provided in response to detailed follow-up requests for information submitted by the independent Trustees to management. The independent Trustees met and discussed those follow-up responses with legal counsel to the independent Trustees and the Senior Officer.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe and against the Ice BofA 1-5 Year US Inflation-Linked Treasury Index (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 year period and the fifth 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 noted that the Fund primarily seeks to track the investment results of the Index, and that the Fund’s performance will typically lag the Index due to the fees associated with the Fund. The Board acknowledged limitations
16 | Invesco Short Duration Inflation Protected Fund |
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 primarily passively managed using an indexing approach, it may lag its actively managed peers. The Board considered that Fund’s shorter duration than its from relative 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, which did not change its 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 is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board 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 considered information from Invesco Advisers regarding the levels of the Fund’s breakpoints in light of current assets. The Board noted that the Fund also shares in economies of scale through Invesco Advisers’ ability to negotiate lower
fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination 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. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the
Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.
The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.
The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
17 | 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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/ corporate/about-us/esg. 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 number(s): 811-05686 and 003-39519 | Invesco Distributors, Inc. | SDIP-SAR-1 |
Semiannual Report to Shareholders | August 31, 2022 |
Nasdaq:
A: STBAX ∎ C: STBCX ∎ R: STBRX ∎ Y: STBYX ∎ R5: ISTBX ∎ R6: ISTFX
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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
Performance summary
|
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Fund vs. Indexes |
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Cumulative total returns, 2/28/22 to 8/31/22, 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 | -2.89 | % | ||
Class C Shares | -3.06 | |||
Class R Shares | -3.05 | |||
Class Y Shares | -2.93 | |||
Class R5 Shares | -2.80 | |||
Class R6 Shares | -2.76 | |||
Bloomberg U.S. Aggregate Bond Index▼ (Broad Market Index) | -7.76 | |||
Bloomberg 1-3 Year Government/Credit Index▼ (Style-Specific Index) | -2.23 | |||
Lipper Short Investment Grade Debt Funds Index∎ (Peer Group Index) | -2.39 | |||
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. |
| |||
The Bloomberg U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market. The Bloomberg 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. |
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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. |
2 | Invesco Short Term Bond Fund |
Average Annual Total Returns |
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As of 8/31/22, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (4/30/04) | 1.54 | % | ||
10 Years | 0.95 | |||
5 Years | 0.27 | |||
1 Year | -7.67 | |||
Class C Shares | ||||
Inception (8/30/02) | 1.68 | % | ||
10 Years | 0.91 | |||
5 Years | 0.41 | |||
1 Year | -6.10 | |||
Class R Shares | ||||
Inception (4/30/04) | 1.38 | % | ||
10 Years | 0.86 | |||
5 Years | 0.42 | |||
1 Year | -5.64 | |||
Class Y Shares | ||||
Inception (10/3/08) | 1.85 | % | ||
10 Years | 1.35 | |||
5 Years | 0.90 | |||
1 Year | -5.17 | |||
Class R5 Shares | ||||
Inception (4/30/04) | 1.93 | % | ||
10 Years | 1.43 | |||
5 Years | 0.98 | |||
1 Year | -5.04 | |||
Class R6 Shares | ||||
10 Years | 1.45 | % | ||
5 Years | 1.02 | |||
1 Year | -5.08 |
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 and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 0.50% 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.
3 | Invesco Short Term Bond Fund |
Liquidity Risk Management Program
In compliance with Rule 22e-4 under the Investment Company Act of 1940, as amended (the “Liquidity Rule”), 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 21-23, 2022, 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 January 1, 2021, through December 31, 2021 (the “Program Reporting Period”). The Report discussed notable events affecting liquidity over the Program Reporting Period, including the impact of the coronavirus pandemic on the Fund and the overall market. The Report noted that there were no material changes to the Program during 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. |
4 | Invesco Short Term Bond Fund |
August 31, 2022
(Unaudited)
Principal Amount | Value | |||||||
| ||||||||
U.S. Dollar Denominated Bonds & Notes–66.85% |
| |||||||
Advertising–0.22% |
| |||||||
Interpublic Group of Cos., Inc. (The), 4.20%, 04/15/2024 | $ | 2,107,000 | $ | 2,094,295 | ||||
| ||||||||
WPP Finance 2010 (United Kingdom), 3.75%, 09/19/2024 | 3,600,000 | 3,547,584 | ||||||
| ||||||||
5,641,879 | ||||||||
| ||||||||
Aerospace & Defense–0.77% |
| |||||||
Boeing Co. (The), | ||||||||
2.75%, 02/01/2026(b) | 9,969,000 | 9,331,631 | ||||||
| ||||||||
2.20%, 02/04/2026 | 6,614,000 | 6,054,961 | ||||||
| ||||||||
Textron, Inc., 4.30%, 03/01/2024 | 3,906,000 | 3,921,405 | ||||||
| ||||||||
19,307,997 | ||||||||
| ||||||||
Agricultural & Farm Machinery–0.35% |
| |||||||
Cargill, Inc., 3.63%, | 2,589,000 | 2,533,518 | ||||||
| ||||||||
CNH Industrial Capital LLC, 3.95%, 05/23/2025 | 6,474,000 | 6,375,885 | ||||||
| ||||||||
8,909,403 | ||||||||
| ||||||||
Airlines–1.61% |
| |||||||
American Airlines Pass-Through Trust, Series 2021-1, Class B, 3.95%, 07/11/2030 | 3,254,000 | 2,717,426 | ||||||
| ||||||||
British Airways Pass-Through Trust (United Kingdom), Series 2019-1, Class A, 3.35%, 06/15/2029(c) | 842,469 | 731,326 | ||||||
| ||||||||
Delta Air Lines Pass-Through Trust, Series 2019-1, Class A, 3.40%, 04/25/2024 | 1,759,000 | 1,674,146 | ||||||
| ||||||||
Delta Air Lines, Inc./SkyMiles IP Ltd., 4.50%, 10/20/2025(c) | 26,177,000 | 25,656,666 | ||||||
| ||||||||
United Airlines Pass-Through Trust, Series 2016-2, Class B, 3.65%, 10/07/2025 | 2,139,979 | 1,945,780 | ||||||
| ||||||||
Series 2020-1, Class A, 5.88%, 10/15/2027 | 6,476,862 | 6,491,085 | ||||||
| ||||||||
United Airlines, Inc., 4.38%, 04/15/2026(c) | 1,404,000 | 1,281,978 | ||||||
| ||||||||
40,498,407 | ||||||||
| ||||||||
Apparel Retail–0.42% |
| |||||||
Ross Stores, Inc., | ||||||||
3.38%, 09/15/2024 | 2,438,000 | 2,398,612 | ||||||
| ||||||||
4.60%, 04/15/2025 | 8,029,000 | 8,101,760 | ||||||
| ||||||||
10,500,372 | ||||||||
| ||||||||
Apparel, Accessories & Luxury Goods–0.12% |
| |||||||
Hanesbrands, Inc., 4.63%, 05/15/2024(b)(c) | 3,232,000 | 3,117,266 | ||||||
| ||||||||
Application Software–0.17% |
| |||||||
Workday, Inc., 3.50%, 04/01/2027(b) | 4,448,000 | 4,246,014 | ||||||
| ||||||||
Asset Management & Custody Banks–1.18% |
| |||||||
Ameriprise Financial, Inc., 3.00%, 04/02/2025 | 1,421,000 | 1,384,619 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Asset Management & Custody Banks–(continued) |
| |||||||
Apollo Management Holdings L.P., 4.95%, 01/14/2050(c)(d) | $ | 2,350,000 | $ | 2,072,822 | ||||
| ||||||||
Bank of New York Mellon Corp. (The), 4.41%, 07/24/2026(d) | 5,580,000 | 5,607,507 | ||||||
| ||||||||
Blackstone Secured Lending Fund, 2.75%, 09/16/2026(b) | 9,099,000 | 8,074,794 | ||||||
| ||||||||
Hercules Capital, Inc., | ||||||||
2.63%, 09/16/2026 | 2,036,000 | 1,714,723 | ||||||
| ||||||||
3.38%, 01/20/2027 | 4,294,000 | 3,698,225 | ||||||
| ||||||||
Northern Trust Corp., 4.00%, 05/10/2027 | 7,027,000 | 7,005,533 | ||||||
| ||||||||
29,558,223 | ||||||||
| ||||||||
Automobile Manufacturers–4.98% |
| |||||||
BMW US Capital LLC (Germany), 3.25%, 04/01/2025(c) | 4,070,000 | 3,980,687 | ||||||
| ||||||||
Daimler Trucks Finance North America LLC (Germany), 3.65%, 04/07/2027(c) | 1,693,000 | 1,608,633 | ||||||
| ||||||||
Ford Motor Credit Co. LLC, | ||||||||
3.35%, 11/01/2022 | 7,350,000 | 7,340,831 | ||||||
| ||||||||
2.30%, 02/10/2025(b) | 29,538,000 | 26,956,379 | ||||||
| ||||||||
2.70%, 08/10/2026 | 10,647,000 | 9,234,491 | ||||||
| ||||||||
General Motors Financial Co., Inc., | ||||||||
3.40% (SOFR + 1.30%), 04/07/2025(e) | 14,243,000 | 14,063,515 | ||||||
| ||||||||
5.00%, 04/09/2027 | 3,511,000 | 3,465,975 | ||||||
| ||||||||
Harley-Davidson Financial Services, Inc., 3.35%, 06/08/2025(c) | 4,545,000 | 4,360,151 | ||||||
| ||||||||
Hyundai Capital America, | ||||||||
5.75%, 04/06/2023(c) | 7,029,000 | 7,087,060 | ||||||
| ||||||||
5.88%, 04/07/2025(b)(c) | 5,895,000 | 6,005,179 | ||||||
| ||||||||
Kia Corp. (South Korea), 2.75%, 02/14/2027(c) | 3,555,000 | 3,267,729 | ||||||
| ||||||||
Nissan Motor Acceptance Co. LLC, 1.13%, 09/16/2024(c) | 7,162,000 | 6,624,217 | ||||||
| ||||||||
Nissan Motor Co. Ltd. (Japan), 3.04%, 09/15/2023(c) | 6,990,000 | 6,867,169 | ||||||
| ||||||||
Toyota Motor Credit Corp., 3.65%, 08/18/2025 | 10,000,000 | 9,908,887 | ||||||
| ||||||||
Volkswagen Group of America Finance LLC (Germany), | ||||||||
3.25% (SOFR + 0.95%), 06/07/2024(c)(e) | 12,660,000 | 12,608,413 | ||||||
| ||||||||
4.35%, 06/08/2027(c) | 1,540,000 | 1,500,114 | ||||||
| ||||||||
124,879,430 | ||||||||
| ||||||||
Automotive Retail–0.39% |
| |||||||
AutoZone, Inc., 3.63%, 04/15/2025(b) | 4,327,000 | 4,263,311 | ||||||
| ||||||||
Lithia Motors, Inc., 4.63%, 12/15/2027(c) | 6,000,000 | 5,564,880 | ||||||
| ||||||||
9,828,191 | ||||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
Broadcasting–0.06% |
| |||||||
Fox Corp., | ||||||||
4.03%, 01/25/2024 | $ | 1,120,000 | $ | 1,117,697 | ||||
| ||||||||
3.05%, 04/07/2025 | 342,000 | 330,653 | ||||||
| ||||||||
1,448,350 | ||||||||
| ||||||||
Cable & Satellite–0.39% |
| |||||||
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 4.50%, 02/01/2024 | 3,510,000 | 3,511,840 | ||||||
| ||||||||
Comcast Corp., 3.30%, 04/01/2027 | 5,052,000 | 4,885,633 | ||||||
| ||||||||
Sirius XM Radio, Inc., 3.13%, 09/01/2026(c) | 1,595,000 | 1,422,549 | ||||||
| ||||||||
9,820,022 | ||||||||
| ||||||||
Computer & Electronics Retail–0.44% |
| |||||||
Dell International LLC/EMC Corp., | ||||||||
4.00%, 07/15/2024 | 8,088,000 | 8,057,436 | ||||||
| ||||||||
5.85%, 07/15/2025 | 1,899,000 | 1,967,276 | ||||||
| ||||||||
Leidos, Inc., 3.63%, 05/15/2025 | 1,165,000 | 1,139,004 | ||||||
| ||||||||
11,163,716 | ||||||||
| ||||||||
Construction Machinery & Heavy Trucks–0.14% |
| |||||||
Wabtec Corp., 4.40%, 03/15/2024 | 3,511,000 | 3,501,329 | ||||||
| ||||||||
Consumer Finance–1.90% |
| |||||||
American Express Co., | ||||||||
3.38%, 05/03/2024 | 6,647,000 | 6,574,926 | ||||||
| ||||||||
3.95%, 08/01/2025(b) | 14,243,000 | 14,119,475 | ||||||
| ||||||||
Capital One Financial Corp., | ||||||||
3.20%, 01/30/2023 | 3,686,000 | 3,679,987 | ||||||
| ||||||||
4.17%, 05/09/2025(d) | 10,038,000 | 9,952,616 | ||||||
| ||||||||
4.93%, 05/10/2028(b)(d) | 10,528,000 | 10,418,710 | ||||||
| ||||||||
Synchrony Financial, 4.25%, 08/15/2024 | 3,019,000 | 2,985,700 | ||||||
| ||||||||
47,731,414 | ||||||||
| ||||||||
Copper–0.76% |
| |||||||
Freeport-McMoRan, Inc., | ||||||||
4.55%, 11/14/2024 | 5,496,000 | 5,520,042 | ||||||
| ||||||||
4.38%, 08/01/2028 | 14,243,000 | 13,432,927 | ||||||
| ||||||||
18,952,969 | ||||||||
| ||||||||
Data Processing & Outsourced Services–0.89% |
| |||||||
Block, Inc., 2.75%, 06/01/2026(b) | 6,014,000 | 5,355,978 | ||||||
| ||||||||
Fidelity National Information Services, Inc., 4.50%, 07/15/2025 | 9,077,000 | 9,093,852 | ||||||
| ||||||||
Fiserv, Inc., 3.80%, 10/01/2023 | 3,512,000 | 3,505,358 | ||||||
| ||||||||
Global Payments, Inc., 4.00%, 06/01/2023 | 4,386,000 | 4,386,562 | ||||||
| ||||||||
22,341,750 | ||||||||
| ||||||||
Distillers & Vintners–0.56% |
| |||||||
Constellation Brands, Inc., | ||||||||
3.60%, 05/09/2024 | 7,499,000 | 7,436,556 | ||||||
| ||||||||
4.35%, 05/09/2027(b) | 6,647,000 | 6,628,812 | ||||||
| ||||||||
14,065,368 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Diversified Banks–11.53% |
| |||||||
Banco del Estado de Chile (Chile), 2.70%, 01/09/2025(c) | $ | 6,415,000 | $ | 6,110,826 | ||||
| ||||||||
Banco Santander S.A. (Spain), 5.15%, 08/18/2025 | 7,000,000 | 6,969,687 | ||||||
| ||||||||
Bank of America Corp., | ||||||||
3.00%, 12/20/2023(d) | 2,439,000 | 2,430,249 | ||||||
| ||||||||
3.86%, 07/23/2024(d) | 4,300,000 | 4,278,317 | ||||||
| ||||||||
2.55%, 02/04/2028(d) | 5,669,000 | 5,142,796 | ||||||
| ||||||||
Bank of Montreal (Canada), | ||||||||
Series E, 3.30%, 02/05/2024 | 2,948,000 | 2,921,362 | ||||||
| ||||||||
3.70%, 06/07/2025 | 6,105,000 | 6,021,150 | ||||||
| ||||||||
Barclays PLC (United Kingdom), 5.30%, 08/09/2026(d) | 14,243,000 | 14,145,166 | ||||||
| ||||||||
BBVA Bancomer S.A. (Mexico), 1.88%, 09/18/2025(c) | 2,970,000 | 2,733,410 | ||||||
| ||||||||
Citigroup, Inc., | ||||||||
4.14%, 05/24/2025(b)(d) | 14,243,000 | 14,155,323 | ||||||
| ||||||||
3.53% (3 mo. USD LIBOR + 1.25%), 07/01/2026(e) | 14,536,000 | 14,420,810 | ||||||
| ||||||||
Series V, 4.70%(b)(d)(f) | 3,790,000 | 3,223,869 | ||||||
| ||||||||
Citizens Bank N.A., 4.12%, 05/23/2025(d) | 14,243,000 | 14,123,999 | ||||||
| ||||||||
Danske Bank A/S (Denmark), | ||||||||
2.78% (3 mo. USD LIBOR + 1.06%), 09/12/2023(c)(e) | 5,898,000 | 5,894,424 | ||||||
| ||||||||
3.24%, 12/20/2025(c)(d) | 1,779,000 | 1,697,840 | ||||||
| ||||||||
Development Bank of Kazakhstan JSC (Kazakhstan), 5.75%, 05/12/2025(c) | 5,083,000 | 5,071,650 | ||||||
| ||||||||
Federation des Caisses Desjardins du Quebec (Canada), 4.40%, 08/23/2025(c) | 14,000,000 | 13,889,347 | ||||||
| ||||||||
HSBC Holdings PLC (United Kingdom), | ||||||||
3.95%, 05/18/2024(d) | 2,756,000 | 2,741,484 | ||||||
| ||||||||
2.88% (SOFR + 0.58%), 11/22/2024(e) | 2,496,000 | 2,441,071 | ||||||
| ||||||||
4.18%, 12/09/2025(d) | 14,243,000 | 13,962,667 | ||||||
| ||||||||
3.00%, 03/10/2026(d) | 9,496,000 | 9,000,652 | ||||||
| ||||||||
HSBC USA, Inc., 3.75%, 05/24/2024(b) | 14,243,000 | 14,161,063 | ||||||
| ||||||||
ING Groep N.V. (Netherlands), | ||||||||
3.02% (SOFR + 1.01%), 04/01/2027(e) | 4,979,000 | 4,780,965 | ||||||
| ||||||||
6.50%(b)(d)(f) | 7,693,000 | 7,361,778 | ||||||
| ||||||||
JPMorgan Chase & Co., | ||||||||
3.56% (SOFR + 1.32%), 04/26/2026(b)(e) | 9,116,000 | 9,114,046 | ||||||
| ||||||||
4.08%, 04/26/2026(b)(d) | 10,386,000 | 10,241,067 | ||||||
| ||||||||
Series HH, 4.60%(d)(f) | 5,180,000 | 4,566,170 | ||||||
| ||||||||
Series V, 5.60%(3 mo. USD LIBOR + 3.32%)(e)(f) | 1,390,000 | 1,377,837 | ||||||
| ||||||||
Lloyds Banking Group PLC (United Kingdom), 4.72%, 08/11/2026(d) | 8,862,000 | 8,746,870 | ||||||
| ||||||||
Mizuho Financial Group Cayman 3 Ltd. (Japan), 4.60%, 03/27/2024(c) | 6,172,000 | 6,149,592 | ||||||
| ||||||||
National Australia Bank Ltd. (Australia), 3.50%, 06/09/2025(b) | 9,496,000 | 9,354,822 | ||||||
| ||||||||
NatWest Group PLC (United Kingdom), 5.52%, 09/30/2028(d) | 1,900,000 | 1,902,398 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
Diversified Banks–(continued) |
| |||||||
Nordea Bank Abp (Finland), | ||||||||
3.60%, 06/06/2025(b)(c) | $ | 9,496,000 | $ | 9,312,285 | ||||
| ||||||||
6.63%(c)(d)(f) | 3,278,000 | 3,229,066 | ||||||
| ||||||||
Skandinaviska Enskilda Banken AB (Sweden), 3.70%, 06/09/2025(b)(c) | 14,243,000 | 14,010,763 | ||||||
| ||||||||
Svenska Handelsbanken AB (Sweden), 3.65%, 06/10/2025(c) | 9,258,000 | 9,079,319 | ||||||
| ||||||||
Swedbank AB (Sweden), | ||||||||
2.97% (SOFR + 0.91%), 04/04/2025(c)(e) | 785,000 | 780,502 | ||||||
| ||||||||
3.36%, 04/04/2025(c) | 3,641,000 | 3,556,119 | ||||||
| ||||||||
Toronto-Dominion Bank (The) (Canada), 3.77%, 06/06/2025 | 14,243,000 | 14,087,861 | ||||||
| ||||||||
Wells Fargo & Co., 4.54%, 08/15/2026(d) | 6,203,000 | 6,163,518 | ||||||
| ||||||||
289,352,140 | ||||||||
| ||||||||
Diversified Capital Markets–2.48% |
| |||||||
Credit Suisse AG (Switzerland), | ||||||||
6.50%, 08/08/2023(c) | 1,871,000 | 1,879,938 | ||||||
| ||||||||
4.75%, 08/09/2024 | 15,000,000 | 14,920,711 | ||||||
| ||||||||
3.70%, 02/21/2025(b) | 12,187,000 | 11,790,667 | ||||||
| ||||||||
2.95%, 04/09/2025 | 2,262,000 | 2,146,083 | ||||||
| ||||||||
Credit Suisse Group AG (Switzerland), | ||||||||
2.59%, 09/11/2025(c)(d) | 3,449,000 | 3,192,018 | ||||||
| ||||||||
6.37%, 07/15/2026(c)(d) | 11,485,000 | 11,436,277 | ||||||
| ||||||||
Deutsche Bank AG (Germany), 3.96%, 11/26/2025(d) | 4,748,000 | 4,553,324 | ||||||
| ||||||||
OWL Rock Core Income Corp., 4.70%, 02/08/2027 | 3,366,000 | 3,066,832 | ||||||
| ||||||||
UBS Group AG (Switzerland), 4.49%, 05/12/2026(c)(d) | 9,401,000 | 9,306,782 | ||||||
| ||||||||
62,292,632 | ||||||||
| ||||||||
Diversified REITs–0.83% |
| |||||||
VICI Properties L.P., 4.38%, 05/15/2025(b) | 6,647,000 | 6,499,204 | ||||||
| ||||||||
VICI Properties L.P./VICI Note Co., Inc., 5.63%, 05/01/2024(c) | 14,243,000 | 14,284,091 | ||||||
| ||||||||
20,783,295 | ||||||||
| ||||||||
Diversified Support Services–0.13% |
| |||||||
Cintas Corp. No. 2, 3.45%, 05/01/2025 | 3,287,000 | 3,236,300 | ||||||
| ||||||||
Education Services–0.40% |
| |||||||
Grand Canyon University, 3.25%, 10/01/2023 | 10,234,000 | 10,106,075 | ||||||
| ||||||||
Electric Utilities–4.90% |
| |||||||
Alliant Energy Finance LLC, 3.75%, 06/15/2023(c) | 3,510,000 | 3,488,976 | ||||||
| ||||||||
Constellation Energy Generation LLC, 3.25%, 06/01/2025 | 4,440,000 | 4,311,853 | ||||||
| ||||||||
Duke Energy Corp., 4.30%, 03/15/2028 | 2,826,000 | 2,768,222 | ||||||
| ||||||||
EDP Finance B.V. (Portugal), 3.63%, 07/15/2024(c) | 3,635,000 | 3,583,362 | ||||||
| ||||||||
Eversource Energy, 2.90%, 03/01/2027 | 14,243,000 | 13,371,659 | ||||||
| ||||||||
Fells Point Funding Trust, 3.05%, 01/31/2027(c) | 15,193,000 | 14,018,441 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Electric Utilities–(continued) |
| |||||||
Mercury Chile Holdco LLC (Chile), 6.50%, 01/24/2027(c) | $ | 4,412,000 | $ | 3,933,077 | ||||
| ||||||||
NextEra Energy Capital Holdings, Inc., | ||||||||
4.20%, 06/20/2024 | 6,647,000 | 6,650,918 | ||||||
| ||||||||
4.26%, 09/01/2024 | 8,329,000 | 8,336,536 | ||||||
| ||||||||
4.45%, 06/20/2025 | 4,747,000 | 4,762,765 | ||||||
| ||||||||
NextEra Energy Operating Partners L.P., 4.25%, 09/15/2024(c) | 375,000 | 367,447 | ||||||
| ||||||||
NRG Energy, Inc., 3.75%, 06/15/2024(c) | 3,728,000 | 3,621,317 | ||||||
| ||||||||
Pacific Gas and Electric Co., 3.25%, 02/16/2024 | 33,234,000 | 32,524,723 | ||||||
| ||||||||
Southern Co. (The), | ||||||||
4.48%, 08/01/2024(g) | 9,496,000 | 9,529,128 | ||||||
| ||||||||
Series 21-A, 3.75%, 09/15/2051(d) | 2,914,000 | 2,527,895 | ||||||
| ||||||||
Tampa Electric Co., 3.88%, 07/12/2024(b) | 3,148,000 | 3,136,118 | ||||||
| ||||||||
Virginia Electric & Power Co., Series B, 3.75%, 05/15/2027 | 3,474,000 | 3,416,661 | ||||||
| ||||||||
Vistra Operations Co. LLC, 3.55%, 07/15/2024(c) | 2,632,000 | 2,539,392 | ||||||
| ||||||||
122,888,490 | ||||||||
| ||||||||
Electronic Equipment & Instruments–0.07% |
| |||||||
Vontier Corp., 1.80%, 04/01/2026 | 1,954,000 | 1,711,841 | ||||||
| ||||||||
Financial Exchanges & Data–0.16% |
| |||||||
Intercontinental Exchange, Inc., 4.00%, 09/15/2027 | 4,161,000 | 4,104,240 | ||||||
| ||||||||
Food Retail–0.12% |
| |||||||
Albertson’s Cos., Inc./Safeway, Inc./New Albertson’s L.P./Albertson’s LLC, 3.50%, 02/15/2023(c) | 2,922,000 | 2,896,652 | ||||||
| ||||||||
Health Care Equipment–0.08% |
| |||||||
Becton, Dickinson and Co., 3.36%, 06/06/2024(b) | 1,988,000 | 1,965,610 | ||||||
| ||||||||
Health Care Facilities–0.14% |
| |||||||
HCA, Inc., 5.38%, 02/01/2025(b) | 3,567,000 | 3,605,399 | ||||||
| ||||||||
Health Care REITs–0.32% |
| |||||||
Ventas Realty L.P., 2.65%, 01/15/2025 | 3,730,000 | 3,574,332 | ||||||
| ||||||||
Welltower, Inc., 3.63%, 03/15/2024 | 4,390,000 | 4,356,483 | ||||||
| ||||||||
7,930,815 | ||||||||
| ||||||||
Homebuilding–0.63% |
| |||||||
D.R. Horton, Inc., 4.75%, 02/15/2023 | 4,577,000 | 4,584,021 | ||||||
| ||||||||
Lennar Corp., 4.88%, 12/15/2023 | 4,748,000 | 4,778,244 | ||||||
| ||||||||
Meritage Homes Corp., 6.00%, 06/01/2025 | 6,000,000 | 6,004,110 | ||||||
| ||||||||
Toll Brothers Finance Corp., 4.88%, 11/15/2025(b) | 477,000 | 470,012 | ||||||
| ||||||||
15,836,387 | ||||||||
| ||||||||
Hotels, Resorts & Cruise Lines–0.50% |
| |||||||
Expedia Group, Inc., 4.63%, 08/01/2027 | 12,869,000 | 12,540,455 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
Housewares & Specialties–0.03% |
| |||||||
Newell Brands, Inc., 4.10%, 04/01/2023 | $ | 743,000 | $ | 741,180 | ||||
| ||||||||
Industrial Machinery–0.13% |
| |||||||
Weir Group PLC (The) (United Kingdom), 2.20%, 05/13/2026(c) | 3,757,000 | 3,272,049 | ||||||
| ||||||||
Insurance Brokers–0.21% |
| |||||||
Marsh & McLennan Cos., Inc., 3.88%, 03/15/2024 | 2,531,000 | 2,530,019 | ||||||
| ||||||||
Willis North America, Inc., 4.65%, 06/15/2027(b) | 2,862,000 | 2,809,362 | ||||||
| ||||||||
5,339,381 | ||||||||
| ||||||||
Integrated Oil & Gas–0.61% |
| |||||||
BP Capital Markets PLC (United Kingdom), 4.38%(d)(f) | 2,849,000 | 2,734,328 | ||||||
| ||||||||
Gray Oak Pipeline LLC, 2.60%, 10/15/2025(c) | 5,764,000 | 5,310,348 | ||||||
| ||||||||
Occidental Petroleum Corp., 6.95%, 07/01/2024 | 7,000,000 | 7,315,000 | ||||||
| ||||||||
15,359,676 | ||||||||
| ||||||||
Integrated Telecommunication Services–0.14% |
| |||||||
British Telecommunications PLC (United Kingdom), 4.50%, 12/04/2023 | 3,571,000 | 3,581,165 | ||||||
| ||||||||
Interactive Home Entertainment–0.86% |
| |||||||
Take-Two Interactive Software, Inc., | ||||||||
3.30%, 03/28/2024 | 9,496,000 | 9,367,819 | ||||||
| ||||||||
3.55%, 04/14/2025 | 9,496,000 | 9,279,109 | ||||||
| ||||||||
3.70%, 04/14/2027 | 3,033,000 | 2,920,736 | ||||||
| ||||||||
21,567,664 | ||||||||
| ||||||||
Interactive Media & Services–0.94% |
| |||||||
Meta Platforms, Inc., 3.50%, 08/15/2027(b)(c) | 10,001,000 | 9,694,211 | ||||||
| ||||||||
Tencent Holdings Ltd. (China), | ||||||||
2.99%, 01/19/2023(c) | 4,039,000 | 4,027,014 | ||||||
| ||||||||
3.28%, 04/11/2024(c) | 10,000,000 | 9,840,345 | ||||||
| ||||||||
23,561,570 | ||||||||
| ||||||||
Internet & Direct Marketing Retail–0.42% |
| |||||||
Meituan (China), 2.13%, 10/28/2025(b)(c) | 5,622,000 | 4,952,746 | ||||||
| ||||||||
Prosus N.V. (China), 3.26%, 01/19/2027(c) | 6,310,000 | 5,465,628 | ||||||
| ||||||||
10,418,374 | ||||||||
| ||||||||
Internet Services & Infrastructure–0.09% |
| |||||||
VeriSign, Inc., | ||||||||
5.25%, 04/01/2025 | 1,764,000 | 1,792,446 | ||||||
| ||||||||
4.75%, 07/15/2027(b) | 554,000 | 545,636 | ||||||
| ||||||||
2,338,082 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Investment Banking & Brokerage–1.15% |
| |||||||
Goldman Sachs Group, Inc. (The), | ||||||||
Series FRN, 2.57%(SOFR + 0.79%), 12/09/2026(e) | $ | 10,870,000 | $ | 10,426,750 | ||||
| ||||||||
2.59% (SOFR + 0.81%), 03/09/2027(b)(e) | 14,542,000 | 14,025,311 | ||||||
| ||||||||
2.62% (SOFR + 0.82%), 09/10/2027(e) | 1,000,000 | 958,867 | ||||||
| ||||||||
2.64%, 02/24/2028(d) | 3,691,000 | 3,348,950 | ||||||
| ||||||||
28,759,878 | ||||||||
| ||||||||
Life & Health Insurance–2.29% |
| |||||||
Athene Global Funding, 2.95%, 11/12/2026(c) | 5,573,000 | 5,064,996 | ||||||
| ||||||||
Corebridge Financial, Inc., 3.50%, 04/04/2025(c) | 9,496,000 | 9,149,162 | ||||||
| ||||||||
Delaware Life Global Funding, Series 22-1, 3.31%, 03/10/2025(c) | 6,041,000 | 5,771,994 | ||||||
| ||||||||
Five Corners Funding Trust, 4.42%, 11/15/2023(c) | 6,172,000 | 6,176,629 | ||||||
| ||||||||
GA Global Funding Trust, | ||||||||
0.80%, 09/13/2024(c) | 7,200,000 | 6,628,625 | ||||||
| ||||||||
3.85%, 04/11/2025(c) | 14,243,000 | 13,796,235 | ||||||
| ||||||||
Northwestern Mutual Global Funding, 4.00%, 07/01/2025(c) | 10,920,000 | 10,869,437 | ||||||
| ||||||||
57,457,078 | ||||||||
| ||||||||
Managed Health Care–0.14% |
| |||||||
Humana, Inc., 2.90%, 12/15/2022 | 3,642,000 | 3,637,350 | ||||||
| ||||||||
Metal & Glass Containers–0.03% |
| |||||||
Ball Corp., 4.88%, 03/15/2026 | 846,000 | 820,197 | ||||||
| ||||||||
Movies & Entertainment–1.80% |
| |||||||
Magallanes, Inc., | ||||||||
3.43%, 03/15/2024(c) | 5,113,000 | 5,000,825 | ||||||
| ||||||||
3.53%, 03/15/2024(c) | 6,307,000 | 6,163,494 | ||||||
| ||||||||
3.64%, 03/15/2025(c) | 3,945,000 | 3,810,500 | ||||||
| ||||||||
3.79%, 03/15/2025(c) | 9,496,000 | 9,157,807 | ||||||
| ||||||||
Netflix, Inc., | ||||||||
5.75%, 03/01/2024(b) | 6,120,000 | 6,205,527 | ||||||
| ||||||||
5.88%, 02/15/2025(b) | 5,000,000 | 5,121,450 | ||||||
| ||||||||
4.38%, 11/15/2026(b) | 10,000,000 | 9,713,100 | ||||||
| ||||||||
45,172,703 | ||||||||
| ||||||||
Multi-Utilities–0.40% |
| |||||||
Algonquin Power & Utilities Corp. (Canada), 4.75%, | 6,667,000 | 5,783,056 | ||||||
| ||||||||
Dominion Energy, Inc., 3.07%, 08/15/2024(g) | 4,389,000 | 4,303,750 | ||||||
| ||||||||
10,086,806 | ||||||||
| ||||||||
Office REITs–0.40% |
| |||||||
Office Properties Income Trust, | ||||||||
4.25%, 05/15/2024 | 9,131,000 | 8,697,424 | ||||||
| ||||||||
2.65%, 06/15/2026 | 1,556,000 | 1,253,810 | ||||||
| ||||||||
9,951,234 | ||||||||
| ||||||||
Oil & Gas Equipment & Services–0.15% |
| |||||||
Schlumberger Holdings Corp., 3.75%, 05/01/2024(c) | 3,689,000 | 3,664,912 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
Oil & Gas Exploration & Production–1.29% |
| |||||||
Apache Corp., 7.75%, 12/15/2029 | $ | 2,027,000 | $ | 2,156,616 | ||||
| ||||||||
Canadian Natural Resources Ltd. (Canada), 2.95%, 01/15/2023 | 3,642,000 | 3,623,217 | ||||||
| ||||||||
Coterra Energy, Inc., 4.38%, 06/01/2024(c) | 3,508,000 | 3,488,737 | ||||||
| ||||||||
Devon Energy Corp., | ||||||||
5.25%, 10/15/2027 | 8,657,000 | 8,785,522 | ||||||
| ||||||||
5.88%, 06/15/2028 | 9,496,000 | 9,784,100 | ||||||
| ||||||||
EQT Corp., 3.13%, 05/15/2026(c) | 1,899,000 | 1,789,501 | ||||||
| ||||||||
Galaxy Pipeline Assets Bidco Ltd. (United Arab Emirates), 2.16%, 03/31/2034(c) | 3,044,965 | 2,664,539 | ||||||
| ||||||||
32,292,232 | ||||||||
| ||||||||
Oil & Gas Refining & Marketing–0.03% |
| |||||||
Phillips 66, 3.70%, 04/06/2023 | 737,000 | 737,055 | ||||||
| ||||||||
Oil & Gas Storage & Transportation–3.00% |
| |||||||
Enbridge, Inc. (Canada), 2.92%(SOFR + 0.63%), 02/16/2024(e) | 4,330,000 | 4,296,276 | ||||||
| ||||||||
Energy Transfer L.P., | ||||||||
4.25%, 03/15/2023 | 2,774,000 | 2,775,399 | ||||||
| ||||||||
5.88%, 01/15/2024 | 3,596,000 | 3,645,403 | ||||||
| ||||||||
2.90%, 05/15/2025 | 3,873,000 | 3,671,172 | ||||||
| ||||||||
5.50%, 06/01/2027 | 28,060,000 | 28,373,641 | ||||||
| ||||||||
Enterprise Products Operating LLC, Series D, 5.91% (3 mo. USD LIBOR + 2.99%), 08/16/2077(e) | 2,375,000 | 2,118,571 | ||||||
| ||||||||
Kinder Morgan, Inc., 3.15%, 01/15/2023 | 2,983,000 | 2,977,205 | ||||||
| ||||||||
ONEOK Partners L.P., 4.90%, 03/15/2025 | 3,950,000 | 3,950,705 | ||||||
| ||||||||
ONEOK, Inc., 5.85%, 01/15/2026 | 3,528,000 | 3,622,076 | ||||||
| ||||||||
Plains All American Pipeline L.P./PAA Finance Corp., 3.85%, 10/15/2023 | 3,688,000 | 3,674,427 | ||||||
| ||||||||
Tennessee Gas Pipeline Co. LLC, 7.00%, 10/15/2028 | 14,927,000 | 16,104,231 | ||||||
| ||||||||
75,209,106 | ||||||||
| ||||||||
Other Diversified Financial Services–1.25% |
| |||||||
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland), | ||||||||
1.15%, 10/29/2023 | 16,493,000 | 15,782,794 | ||||||
| ||||||||
1.65%, 10/29/2024 | 8,356,000 | 7,734,038 | ||||||
| ||||||||
2.45%, 10/29/2026 | 5,661,000 | 4,993,906 | ||||||
| ||||||||
Equitable Holdings, Inc., 3.90%, | ||||||||
04/20/2023 | 2,852,000 | 2,856,034 | ||||||
| ||||||||
31,366,772 | ||||||||
| ||||||||
Packaged Foods & Meats–0.14% |
| |||||||
Conagra Brands, Inc., 4.30%, 05/01/2024 | 3,601,000 | 3,601,674 | ||||||
| ||||||||
Paper Packaging–0.65% |
| |||||||
Berry Global, Inc., | ||||||||
4.88%, 07/15/2026(c) | 5,744,000 | 5,599,487 | ||||||
| ||||||||
1.65%, 01/15/2027 | 7,730,000 | 6,650,490 | ||||||
| ||||||||
Packaging Corp. of America, 3.65%, 09/15/2024 | 3,077,000 | 3,053,240 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Paper Packaging–(continued) |
| |||||||
Sealed Air Corp., 5.50%, 09/15/2025(c) | $ | 938,000 | $ | 934,694 | ||||
| ||||||||
16,237,911 | ||||||||
| ||||||||
Personal Products–0.67% |
| |||||||
GSK Consumer Healthcare Capital US LLC, | ||||||||
3.02%, 03/24/2024(c) | 14,243,000 | 13,935,971 | ||||||
| ||||||||
3.38%, 03/24/2027(c) | 3,171,000 | 2,978,457 | ||||||
| ||||||||
16,914,428 | ||||||||
| ||||||||
Pharmaceuticals–0.48% |
| |||||||
Bayer US Finance II LLC, 3.88%, 12/15/2023(c) | 4,913,000 | 4,876,691 | ||||||
| ||||||||
Mylan, Inc., 3.13%, 01/15/2023(c) | 3,642,000 | 3,629,740 | ||||||
| ||||||||
Takeda Pharmaceutical Co. Ltd. (Japan), 4.40%, 11/26/2023 | 3,587,000 | 3,594,143 | ||||||
| ||||||||
12,100,574 | ||||||||
| ||||||||
Real Estate Development–0.13% |
| |||||||
Agile Group Holdings Ltd. (China), | ||||||||
5.75%, 01/02/2025(c) | 202,000 | 83,268 | ||||||
| ||||||||
6.05%, 10/13/2025(c) | 1,650,000 | 650,245 | ||||||
| ||||||||
5.50%, 05/17/2026(c) | 413,000 | 161,152 | ||||||
| ||||||||
Country Garden Holdings Co. Ltd. (China), 5.40%, 05/27/2025(c) | 400,000 | 202,332 | ||||||
| ||||||||
Greentown China Holdings Ltd. (China), 4.70%, 04/29/2025(c) | 987,000 | 838,950 | ||||||
| ||||||||
Logan Group Co. Ltd. (China), 4.25%, 07/12/2025(c) | 1,059,000 | 174,735 | ||||||
| ||||||||
Sino-Ocean Land Treasure Finance I Ltd. (China), 6.00%, 07/30/2024(c) | 1,257,000 | 610,273 | ||||||
| ||||||||
Sino-Ocean Land Treasure IV Ltd. (China), 3.25%, 05/05/2026(c) | 1,054,000 | 434,854 | ||||||
| ||||||||
3,155,809 | ||||||||
| ||||||||
Regional Banks–2.18% |
| |||||||
Banque Federative du Credit Mutuel S.A. (France), 4.52%, 07/13/2025(c) | 9,077,000 | 9,039,981 | ||||||
| ||||||||
Citizens Financial Group, Inc., 4.30%, 12/03/2025 | 11,908,000 | 11,775,148 | ||||||
| ||||||||
KeyBank N.A., 4.15%, 08/08/2025(b) | 7,358,000 | 7,303,704 | ||||||
| ||||||||
KeyCorp, 3.88%, 05/23/2025(d) | 3,914,000 | 3,882,479 | ||||||
| ||||||||
Santander Holdings USA, Inc., 3.50%, 06/07/2024 | 2,994,000 | 2,944,314 | ||||||
| ||||||||
Synovus Financial Corp., | ||||||||
3.13%, 11/01/2022 | 1,937,000 | 1,934,820 | ||||||
| ||||||||
5.20%, 08/11/2025 | 6,710,000 | 6,696,463 | ||||||
| ||||||||
Truist Financial Corp., | ||||||||
4.26%, 07/28/2026(b)(d) | 7,457,000 | 7,443,445 | ||||||
| ||||||||
4.12%, 06/06/2028(d) | 3,876,000 | 3,801,994 | ||||||
| ||||||||
54,822,348 | ||||||||
| ||||||||
Reinsurance–0.25% |
| |||||||
Swiss Re America Holding Corp., 7.00%, 02/15/2026 | 5,800,000 | 6,281,369 | ||||||
| ||||||||
Renewable Electricity–0.13% |
| |||||||
Adani Green Energy Ltd. (India), 4.38%, 09/08/2024(c) | 3,542,000 | 3,196,655 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
Restaurants–0.12% |
| |||||||
Aramark Services, Inc., 5.00%, 04/01/2025(c) | $ | 3,034,000 | $ | 2,966,949 | ||||
| ||||||||
Retail REITs–0.30% |
| |||||||
Kite Realty Group L.P., 4.00%, | ||||||||
10/01/2026 | 6,337,000 | 6,015,991 | ||||||
| ||||||||
Simon Property Group L.P., 3.50%, 09/01/2025 | 1,604,000 | 1,582,560 | ||||||
| ||||||||
7,598,551 | ||||||||
| ||||||||
Semiconductor Equipment–0.15% |
| |||||||
NXP B.V./NXP Funding LLC/NXP USA, Inc. (China), 4.40%, 06/01/2027 | 3,846,000 | 3,751,482 | ||||||
| ||||||||
Semiconductors–1.02% |
| |||||||
Broadcom, Inc., 3.46%, 09/15/2026 | 11,177,000 | 10,730,345 | ||||||
| ||||||||
Marvell Technology, Inc., 4.20%, 06/22/2023 | 3,509,000 | 3,502,724 | ||||||
| ||||||||
Microchip Technology, Inc., | ||||||||
4.33%, 06/01/2023 | 3,508,000 | 3,513,854 | ||||||
| ||||||||
4.25%, 09/01/2025 | 7,910,000 | 7,829,633 | ||||||
| ||||||||
25,576,556 | ||||||||
| ||||||||
Sovereign Debt–0.51% |
| |||||||
Bahamas Government International Bond (Bahamas), 9.00%, 06/16/2029(c) | 4,000,000 | 2,983,598 | ||||||
| ||||||||
Turkey Government International Bond (Turkey), | ||||||||
5.60%, 11/14/2024 | 5,347,000 | 4,941,837 | ||||||
| ||||||||
4.75%, 01/26/2026 | 5,690,000 | 4,884,876 | ||||||
| ||||||||
12,810,311 | ||||||||
| ||||||||
Specialized Finance–0.92% |
| |||||||
Blackstone Private Credit Fund, | ||||||||
2.35%, 11/22/2024 | 6,334,000 | 5,885,905 | ||||||
| ||||||||
2.70%, 01/15/2025 | 6,323,000 | 5,868,459 | ||||||
| ||||||||
2.63%, 12/15/2026 | 6,734,000 | 5,690,119 | ||||||
| ||||||||
National Rural Utilities Cooperative Finance Corp., 3.45%, 06/15/2025 | 5,697,000 | 5,606,598 | ||||||
| ||||||||
23,051,081 | ||||||||
| ||||||||
Specialized REITs–0.31% |
| |||||||
American Tower Corp., 3.00%, 06/15/2023 | 4,527,000 | 4,488,180 | ||||||
| ||||||||
GLP Capital L.P./GLP Financing II, Inc., 3.35%, 09/01/2024 | 3,511,000 | 3,355,717 | ||||||
| ||||||||
7,843,897 | ||||||||
| ||||||||
Specialty Chemicals–1.41% |
| |||||||
Avient Corp., 5.25%, 03/15/2023 | 3,767,000 | 3,771,897 | ||||||
| ||||||||
Celanese US Holdings LLC, | ||||||||
3.50%, 05/08/2024(b) | 3,513,000 | 3,426,814 | ||||||
| ||||||||
5.90%, 07/05/2024(b) | 8,943,000 | 9,013,490 | ||||||
| ||||||||
6.05%, 03/15/2025 | 9,567,000 | 9,595,166 | ||||||
| ||||||||
Sasol Financing USA LLC (South Africa), 4.38%, 09/18/2026 | 7,859,000 | 7,319,442 | ||||||
| ||||||||
Sherwin-Williams Co. (The), 4.25%, 08/08/2025(b) | 2,373,000 | 2,372,639 | ||||||
| ||||||||
35,499,448 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
Steel–0.34% |
| |||||||
ArcelorMittal S.A. (Luxembourg), 3.60%, 07/16/2024 | $ | 3,685,000 | $ | 3,649,361 | ||||
| ||||||||
POSCO (South Korea), 2.38%, 01/17/2023(c) | 5,021,000 | 4,990,211 | ||||||
| ||||||||
8,639,572 | ||||||||
| ||||||||
Tobacco–0.47% |
| |||||||
BAT Capital Corp. (United Kingdom), | ||||||||
3.22%, 08/15/2024 | 4,652,000 | 4,545,533 | ||||||
| ||||||||
2.79%, 09/06/2024 | 3,939,000 | 3,818,537 | ||||||
| ||||||||
Imperial Brands Finance PLC (United Kingdom), 3.13%, 07/26/2024(c) | 3,682,000 | 3,544,376 | ||||||
| ||||||||
11,908,446 | ||||||||
| ||||||||
Trading Companies & Distributors–0.91% |
| |||||||
Air Lease Corp., | ||||||||
2.30%, 02/01/2025 | 3,798,000 | 3,559,427 | ||||||
| ||||||||
1.88%, 08/15/2026 | 5,849,000 | 5,121,030 | ||||||
| ||||||||
Aircastle Ltd., 5.00%, 04/01/2023 | 14,243,000 | 14,238,677 | ||||||
| ||||||||
22,919,134 | ||||||||
| ||||||||
Trucking–1.34% |
| |||||||
Penske Truck Leasing Co. L.P./PTL Finance Corp., | ||||||||
3.45%, 07/01/2024(c) | 5,262,000 | 5,136,888 | ||||||
| ||||||||
4.00%, 07/15/2025(c) | 4,481,000 | 4,386,990 | ||||||
| ||||||||
4.40%, 07/01/2027(c) | 3,107,000 | 3,022,690 | ||||||
| ||||||||
Ryder System, Inc., | ||||||||
4.63%, 06/01/2025 | 5,428,000 | 5,424,630 | ||||||
| ||||||||
3.35%, 09/01/2025 | 7,315,000 | 7,054,897 | ||||||
| ||||||||
4.30%, 06/15/2027 | 2,100,000 | 2,051,202 | ||||||
| ||||||||
Triton Container International Ltd. (Bermuda), 2.05%, 04/15/2026(c) | 7,407,000 | 6,434,563 | ||||||
| ||||||||
33,511,860 | ||||||||
| ||||||||
Wireless Telecommunication Services–1.42% |
| |||||||
Rogers Communications, Inc. (Canada), 3.63%, 12/15/2025 | 11,369,000 | 11,049,102 | ||||||
| ||||||||
Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC/Sprint Spectrum Co. III LLC, 4.74%, 03/20/2025(c) | 8,017,625 | 8,050,674 | ||||||
| ||||||||
T-Mobile USA, Inc., | ||||||||
2.25%, 02/15/2026 | 8,490,000 | 7,812,914 | ||||||
| ||||||||
2.63%, 04/15/2026(b) | 7,121,000 | 6,600,099 | ||||||
| ||||||||
VEON Holdings B.V. (Netherlands), 4.00%, 04/09/2025(c) | 3,001,000 | 2,010,670 | ||||||
| ||||||||
35,523,459 | ||||||||
| ||||||||
Total U.S. Dollar Denominated Bonds & Notes |
| 1,678,008,409 | ||||||
| ||||||||
Asset-Backed Securities–26.56% |
| |||||||
American Credit Acceptance Receivables Trust, Series 2019-2, Class D, 3.41%, 06/12/2025(c) | 1,235,699 | 1,234,054 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
AmeriCredit Automobile Receivables Trust, | ||||||||
Series 2018-3, Class C, 3.74%, 10/18/2024 | $ | 2,249,701 | $ | 2,250,286 | ||||
| ||||||||
Series 2019-2, Class C, 2.74%, 04/18/2025 | 1,335,000 | 1,324,510 | ||||||
| ||||||||
Series 2019-2, Class D, 2.99%, 06/18/2025 | 3,700,000 | 3,624,671 | ||||||
| ||||||||
Series 2019-3, Class D, 2.58%, 09/18/2025 | 1,830,000 | 1,781,020 | ||||||
| ||||||||
Angel Oak Mortgage Trust, | ||||||||
Series 2020-1, Class A1, 2.16%, 12/25/2059(c)(h) | 956,470 | 931,977 | ||||||
| ||||||||
Series 2020-3, Class A1, 1.69%, 04/25/2065(c)(h) | 2,909,437 | 2,722,664 | ||||||
| ||||||||
Series 2020-5, Class A1, 1.37%, 05/25/2065(c)(h) | 1,785,768 | 1,694,016 | ||||||
| ||||||||
Series 2021-3, Class A1, 1.07%, 05/25/2066(c)(h) | 3,486,474 | 3,109,177 | ||||||
| ||||||||
Series 2021-7, Class A1, 1.98%, 10/25/2066(c)(h) | 12,170,584 | 10,891,428 | ||||||
| ||||||||
Series 2022-1, Class A1, 2.88%, 12/25/2066(c)(g) | 7,222,747 | 6,724,904 | ||||||
| ||||||||
Angel Oak Mortgage Trust I LLC, | ||||||||
Series 2018-3, Class A1, 3.65%, 09/25/2048(c)(h) | 182,481 | 181,522 | ||||||
| ||||||||
Series 2019-2, Class A1, 3.63%, 03/25/2049(c)(h) | 82,049 | 81,839 | ||||||
| ||||||||
Bain Capital Credit CLO Ltd., Series 2017-2A, Class AR2, 3.96% (3 mo. USD LIBOR + 1.18%), 07/25/2034(c)(e) | 11,812,000 | 11,549,384 | ||||||
| ||||||||
BAMLL Commercial Mortgage Securities Trust, Series 2015- 200P, Class A, 3.22%, 04/14/2033(c) | 20,000,000 | 18,988,860 | ||||||
| ||||||||
Banc of America Mortgage Trust, Series 2004-D, Class 2A2, 3.04%, 05/25/2034(h) | 16,143 | 15,617 | ||||||
| ||||||||
Bayview MSR Opportunity Master Fund Trust, | ||||||||
Series 2021-4, Class A3, 3.00%, 10/25/2051(c)(h) | 6,016,421 | 5,422,586 | ||||||
| ||||||||
Series 2021-4, Class A4, 2.50%, 10/25/2051(c)(h) | 6,015,534 | 5,129,406 | ||||||
| ||||||||
Series 2021-4, Class A8, 2.50%, 10/25/2051(c)(h) | 5,761,379 | 5,272,944 | ||||||
| ||||||||
Series 2021-5, Class A1, 3.00%, 11/25/2051(c)(h) | 6,469,117 | 5,767,386 | ||||||
| ||||||||
Bear Stearns Adjustable Rate Mortgage Trust, | ||||||||
Series 2003-6, Class 1A3, 3.86%, 08/25/2033(h) | 20,875 | 20,425 | ||||||
| ||||||||
Series 2005-9, Class A1, 0.76% (1 yr. U.S. Treasury Yield Curve Rate + 2.30%), 10/25/2035(e) | 120,983 | 118,015 | ||||||
| ||||||||
Series 2006-1, Class A1, 0.65% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), 02/25/2036(e) | 211,371 | 207,441 | ||||||
| ||||||||
Benchmark Mortgage Trust, Series 2018-B1, Class XA, IO, 0.68%, 01/15/2051(i) | 22,835,135 | 478,467 | ||||||
| ||||||||
BRAVO Residential Funding Trust, Series 2021-NQM2, Class A1, 0.97%, | 1,917,674 | 1,835,051 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
BX Commercial Mortgage Trust, | ||||||||
Series 2021-ACNT, Class A, 3.24% (1 mo. USD LIBOR + 0.85%), 11/15/2038(c)(e) | $ | 3,455,000 | $ | 3,348,120 | ||||
| ||||||||
Series 2021-VOLT, Class A, 3.09% (1 mo. USD LIBOR + 0.70%), 09/15/2036(c)(e) | 6,565,000 | 6,351,330 | ||||||
| ||||||||
Series 2021-VOLT, Class B, 3.34% (1 mo. USD LIBOR + 0.95%), 09/15/2036(c)(e) | 11,325,000 | 10,841,540 | ||||||
| ||||||||
Series 2021-VOLT, Class C, 3.49% (1 mo. USD LIBOR + 1.10%), 09/15/2036(c)(e) | 2,795,000 | 2,644,453 | ||||||
| ||||||||
Series 2021-VOLT, Class D, 4.04% (1 mo. USD LIBOR + 1.65%), 09/15/2023(c)(e) | 6,464,000 | 6,192,121 | ||||||
| ||||||||
Series 2021-XL2, Class B, 3.39% (1 mo. USD LIBOR + 1.00%), 10/15/2038(c)(e) | 2,328,988 | 2,237,387 | ||||||
| ||||||||
BX Trust, | ||||||||
Series 2021-LGCY, Class A, 2.90% (1 mo. USD LIBOR + 0.51%), 10/15/2023(c)(e) | 25,000,000 | 23,852,225 | ||||||
| ||||||||
Series 2022-LBA6, Class A, 3.31% (1.00% + SOFR Term Rate), 01/15/2039(c)(e) | 5,550,000 | 5,398,540 | ||||||
| ||||||||
Series 2022-LBA6, Class B, 3.61% (1.30% + SOFR Term Rate), 01/15/2039(c)(e) | 3,435,000 | 3,291,056 | ||||||
| ||||||||
Series 2022-LBA6, Class C, 3.91% (1.60% + SOFR Term Rate), 01/15/2039(c)(e) | 1,835,000 | 1,763,952 | ||||||
| ||||||||
CarMax Auto Owner Trust, Series 2018-4, Class C, 3.85%, 07/15/2024 | 1,170,000 | 1,170,088 | ||||||
| ||||||||
CCG Receivables Trust, | ||||||||
Series 2019-1, Class B, 3.22%, 09/14/2026(c) | 1,813,475 | 1,813,148 | ||||||
| ||||||||
Series 2019-1, Class C, 3.57%, 09/14/2026(c) | 555,000 | 555,022 | ||||||
| ||||||||
Series 2019-2, Class B, 2.55%, 03/15/2027(c) | 1,445,000 | 1,428,387 | �� | |||||
| ||||||||
Series 2019-2, Class C, 2.89%, 03/15/2027(c) | 695,000 | 686,224 | ||||||
| ||||||||
CD Mortgage Trust, Series 2017- CD6, Class XA, IO, 1.03%, 11/13/2050(i) | 7,976,170 | 242,573 | ||||||
| ||||||||
Cedar Funding IX CLO Ltd., Series 2018-9A, Class A1, 3.69% (3 mo. USD LIBOR + 0.98%), 04/20/2031(c)(e) | 5,813,000 | 5,723,317 | ||||||
| ||||||||
Chase Home Lending Mortgage Trust, | ||||||||
Series 2019-ATR1, Class A15, 4.00%, 04/25/2049(c)(h) | 64,679 | 62,850 | ||||||
| ||||||||
Series 2019-ATR2, Class A3, 3.50%, 07/25/2049(c)(h) | 1,814,197 | 1,701,242 | ||||||
| ||||||||
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, 3.04%, 01/25/2036(h) | 260,793 | 236,827 | ||||||
| ||||||||
CIFC Funding Ltd. (Cayman Islands), | ||||||||
Series 2014-5A, Class A1R2, 3.94% (3 mo. USD LIBOR + 1.20%), 10/17/2031(c)(e) | 2,390,000 | 2,361,867 | ||||||
| ||||||||
Series 2016-1A, Class ARR, 3.81% (3 mo. USD LIBOR + 1.08%), 10/21/2031(c)(e) | 2,424,000 | 2,373,460 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
Citigroup Commercial Mortgage Trust, | ||||||||
Series 2013-GC17, Class XA, IO, 1.15%, 11/10/2046(i) | $ | 10,636,060 | $ | 85,145 | ||||
| ||||||||
Series 2014-GC21, Class AA, 3.48%, 05/10/2047 | 330,165 | 326,992 | ||||||
| ||||||||
Series 2017-C4, Class XA, IO, 1.22%, 10/12/2050(i) | 22,534,436 | 789,142 | ||||||
| ||||||||
Citigroup Mortgage Loan Trust, Inc., | ||||||||
Series 2004-UST1, Class A4, 3.38%, 08/25/2034(h) | 73,456 | 69,663 | ||||||
| ||||||||
Series 2006-AR1, Class 1A1, 3.15% (1 yr. U.S. Treasury Yield Curve Rate + 2.40%), 10/25/2035(e) | 473,782 | 468,219 | ||||||
| ||||||||
Series 2021-INV3, Class A3, 2.50%, 05/25/2051(c)(h) | 6,105,815 | 5,206,389 | ||||||
| ||||||||
COLT Mortgage Loan Trust, | ||||||||
Series 2020-2, Class A1, 1.85%, 03/25/2065(c)(h) | 306,313 | 302,889 | ||||||
| ||||||||
Series 2021-5, Class A1, 1.73%, 11/26/2066(c)(h) | 9,028,297 | 8,108,478 | ||||||
| ||||||||
Series 2022-1, Class A1, 2.28%, 12/27/2066(c)(h) | 4,474,544 | 4,094,408 | ||||||
| ||||||||
Series 2022-2, Class A1, 2.99%, 02/25/2067(c)(g) | 4,472,857 | 4,228,433 | ||||||
| ||||||||
Series 2022-5, Class A1, 4.55%, 04/25/2067(c)(h) | 14,618,960 | 14,320,708 | ||||||
| ||||||||
COMM Mortgage Trust, | ||||||||
Series 2012-CR5, Class XA, IO, 1.54%, 12/10/2045(i) | 7,809,946 | 323 | ||||||
| ||||||||
Series 2014-CR20, Class ASB, 3.31%, 11/10/2047 | 308,402 | 304,986 | ||||||
| ||||||||
Countrywide Home Loans Mortgage Pass-Through Trust, | ||||||||
Series 2005-17, Class 1A8, 5.50%, 09/25/2035 | 201,877 | 190,941 | ||||||
| ||||||||
Series 2005-JA, Class A7, 5.50%, 11/25/2035 | 330,777 | 291,200 | ||||||
| ||||||||
Credit Suisse Mortgage Capital Ctfs., Series 2020-SPT1, Class A1, 1.62%, 04/25/2065(c)(g) | 964,465 | 949,388 | ||||||
| ||||||||
Credit Suisse Mortgage Capital Trust, | ||||||||
Series 2020-AFC1, Class A1, 2.24%, 02/25/2050(c)(h) | 4,124,111 | 3,910,459 | ||||||
| ||||||||
Series 2021-INV1, Class A4, 2.50%, 07/25/2056(c)(h) | 14,509,476 | 13,323,277 | ||||||
| ||||||||
Series 2021-NQM1, Class A1, 0.81%, 05/25/2065(c)(h) | 1,158,954 | 1,101,874 | ||||||
| ||||||||
Series 2021-NQM2, Class A1, 1.18%, 02/25/2066(c)(h) | 5,007,002 | 4,572,403 | ||||||
| ||||||||
Series 2022-ATH1, Class A1A, 2.87%, 01/25/2067(c)(h) | 5,875,234 | 5,658,297 | ||||||
| ||||||||
Series 2022-ATH1, Class A1B, 3.35%, 01/25/2067(c)(h) | 2,955,000 | 2,763,404 | ||||||
| ||||||||
Series 2022-ATH2, Class A1, 4.55%, 05/25/2067(c)(h) | 6,366,542 | 6,254,970 | ||||||
| ||||||||
Series 2022-NQM4, Class A1A, 4.82%, 06/25/2067(c)(g) | 10,016,350 | 9,954,389 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Drive Auto Receivables Trust, | ||||||||
Series 2018-2, Class D, 4.14%, 08/15/2024 | $ | 97,596 | $ | 97,601 | ||||
| ||||||||
Series 2018-3, Class D, 4.30%, 09/16/2024 | 252,291 | 252,663 | ||||||
| ||||||||
Series 2019-3, Class C, 2.90%, 08/15/2025 | 492,897 | 492,471 | ||||||
| ||||||||
Series 2019-3, Class D, 3.18%, 10/15/2026 | 2,885,000 | 2,856,100 | ||||||
| ||||||||
Dryden 93 CLO Ltd., Series 2021- 93A, Class A1A, 3.59% (3 mo. USD LIBOR + 1.08%), 01/15/2034(c)(e) | 1,705,121 | 1,667,619 | ||||||
| ||||||||
DT Auto Owner Trust, Series 2019-3A, Class C, 2.74%, 04/15/2025(c) | 18,776 | 18,771 | ||||||
| ||||||||
Ellington Financial Mortgage Trust, | ||||||||
Series 2020-1, Class A1, 2.01%, 05/25/2065(c)(h) | 459,136 | 445,173 | ||||||
| ||||||||
Series 2021-1, Class A1, 0.80%, 02/25/2066(c)(h) | 1,424,118 | 1,285,502 | ||||||
| ||||||||
Series 2022-1, Class A1, 2.21%, 01/25/2067(c)(h) | 4,093,941 | 3,619,911 | ||||||
| ||||||||
Series 2022-3, Class A1, 5.00%, 08/25/2067(c)(g) | 5,929,033 | 5,870,179 | ||||||
| ||||||||
Exeter Automobile Receivables Trust, | ||||||||
Series 2019-1A, Class D, 4.13%, 12/16/2024(c) | 2,056,987 | 2,058,485 | ||||||
| ||||||||
Series 2019-4A, Class D, 2.58%, 09/15/2025(c) | 3,225,000 | 3,185,650 | ||||||
| ||||||||
Flagstar Mortgage Trust, | ||||||||
Series 2021-11IN, Class A6, 3.70%, 11/25/2051(c)(h) | 9,896,450 | 8,958,615 | ||||||
| ||||||||
Series 2021-8INV, Class A6, 2.50%, 09/25/2051(c)(h) | 2,132,263 | 1,927,959 | ||||||
| ||||||||
FREMF Mortgage Trust, | ||||||||
Series 2013-K25, Class C, 3.73%, 11/25/2045(c)(h) | 2,362,000 | 2,355,205 | ||||||
| ||||||||
Series 2013-K26, Class C, 3.69%, 12/25/2045(c)(h) | 1,642,030 | 1,635,447 | ||||||
| ||||||||
Series 2013-K27, Class C, 3.62%, 01/25/2046(c)(h) | 530,000 | 525,910 | ||||||
| ||||||||
Series 2013-K28, Class C, 3.61%, 06/25/2046(c)(h) | 530,000 | 524,824 | ||||||
| ||||||||
Series 2013-K29, Class C, 3.59%, 05/25/2046(c)(h) | 1,915,000 | 1,892,781 | ||||||
| ||||||||
Series 2013-K30, Class C, 3.67%, 06/25/2045(c)(h) | 917,000 | 903,223 | ||||||
| ||||||||
Series 2015-K721, Class B, 3.68%, 11/25/2047(c)(h) | 405,813 | 404,779 | ||||||
| ||||||||
Series 2017-K724, Class B, 5.26%, 12/25/2049(c)(h) | 1,395,000 | 1,370,871 | ||||||
| ||||||||
GCAT Trust, | ||||||||
Series 2019-NQM3, Class A1, 2.69%, 11/25/2059(c)(h) | 2,249,492 | 2,152,679 | ||||||
| ||||||||
Series 2020-NQM2, Class A1, 1.56%, 04/25/2065(c)(g) | 872,463 | 821,367 | ||||||
| ||||||||
GoldenTree Loan Management US CLO 1 Ltd., Series 2021-9A, Class A, 3.78% (3 mo. USD LIBOR + 1.07%), 01/20/2033(c)(e) | 6,000,000 | 5,872,872 | ||||||
| ||||||||
GoldenTree Loan Management US CLO 2 Ltd., Series 2017-2A, Class AR, 3.62% (3 mo. USD LIBOR + 0.91%), 11/20/2030(c)(e) | 7,612,000 | 7,498,711 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
GoldenTree Loan Management US CLO 5 Ltd., Series 2019-5A, Class AR, 3.78% (3 mo. USD LIBOR + 1.07%), 10/20/2032(c)(e) | $ | 7,000,000 | $ | 6,861,428 | ||||
| ||||||||
Golub Capital Partners CLO 35(B) Ltd., Series 2017-35A, Class AR, 3.90% (3 mo. USD LIBOR + 1.19%), | 8,365,610 | 8,279,310 | ||||||
| ||||||||
GS Mortgage Securities Corp. Trust, Series 2022-SHIP, Class A, 3.04% (1 mo. Term SOFR + 0.73%), | 2,640,000 | 2,600,657 | ||||||
| ||||||||
GS Mortgage Securities Trust, | ||||||||
Series 2013-GCJ12, Class AAB, 2.68%, 06/10/2046 | 15,732 | 15,712 | ||||||
| ||||||||
Series 2014-GC18, Class AAB, 3.65%, 01/10/2047 | 269,105 | 267,283 | ||||||
| ||||||||
GS Mortgage-Backed Securities Trust, Series 2021-INV1, Class A6, 2.50%, 12/25/2051(c)(h) | 5,211,473 | 4,757,123 | ||||||
| ||||||||
GSR Mortgage Loan Trust, Series 2005-AR, Class 6A1, 3.65%, 07/25/2035(h) | 45,349 | 44,038 | ||||||
| ||||||||
Hertz Vehicle Financing LLC, | ||||||||
Series 2021-1A, Class A, 1.21%, 12/26/2025(c) | 1,584,000 | 1,472,412 | ||||||
| ||||||||
Series 2021-1A, Class B, 1.56%, 12/26/2025(c) | 700,000 | 649,001 | ||||||
| ||||||||
Hilton Grand Vacations Trust, Series 2019 AA, Class A, 2.34%, 07/25/2033(c) | 1,723,627 | 1,641,063 | ||||||
| ||||||||
ICG US CLO Ltd., Series 2016-1A, Class A1RR, 4.06% (3 mo. USD LIBOR + 1.25%), 04/29/2034(c)(e) | 3,000,000 | 2,932,626 | ||||||
| ||||||||
IP Lending II Ltd., Series 2021-2A, Class SNR, 3.65%, 07/15/2025(c)(j) | 5,000,000 | 4,589,381 | ||||||
| ||||||||
IP Lending III Ltd., Series 2022-3A, Class SNR, 3.38%, 11/02/2026(c)(j) | 3,978,000 | 3,689,055 | ||||||
| ||||||||
IP Lending IV Ltd., Series 2022-4A, Class SNR, 6.05%, 04/28/2027(c)(j) | 6,557,000 | 6,445,151 | ||||||
| ||||||||
JP Morgan Chase Commercial Mortgage Securities Trust, | ||||||||
Series 2013-C16, Class AS, 4.52%, 12/15/2046 | 2,335,000 | 2,312,846 | ||||||
| ||||||||
Series 2016-JP3, Class A2, 2.43%, 08/15/2049 | 276,845 | 276,375 | ||||||
| ||||||||
JP Morgan Mortgage Trust, Series 2007-A1, Class 5A1, 2.49%, 07/25/2035(h) | 160,398 | 157,721 | ||||||
| ||||||||
JPMBB Commercial Mortgage Securities Trust, Series 2015- C27, Class XA, IO, 1.29%, 02/15/2048(i) | 26,098,668 | 577,759 | ||||||
| ||||||||
KNDL Mortgage Trust, | ||||||||
Series 2019-KNSQ, Class A, 3.19% (1 mo. USD LIBOR + 0.80%), 05/15/2036(c)(e) | 7,750,000 | 7,666,617 | ||||||
| ||||||||
Series 2019-KNSQ, Class C, 3.44% (1 mo. USD LIBOR + 1.05%), 05/15/2036(c)(e) | 4,250,000 | 4,138,985 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Lehman Structured Securities Corp., Series 2002-GE1, Class A, 0.00%, 07/26/2024(c)(h) | $ | 16,932 | $ | 3,792 | ||||
| ||||||||
Life Mortgage Trust, | ||||||||
Series 2021-BMR, Class A, 3.09% (1 mo. USD LIBOR + 0.70%), 03/15/2038(c)(e) | 7,254,320 | 7,032,137 | ||||||
| ||||||||
Series 2021-BMR, Class B, 3.27% (1 mo. USD LIBOR + 0.88%), 03/15/2038(c)(e) | 3,519,033 | 3,394,705 | ||||||
| ||||||||
Master Credit Card Trust II, Series 2020-1A, Class A, 1.99%, 09/21/2024(c) | 15,000,000 | 14,858,432 | ||||||
| ||||||||
Med Trust, | ||||||||
Series 2021-MDLN, Class A, 3.34% (1 mo. USD LIBOR + 0.95%), 11/15/2038(c)(e) | 4,135,000 | 4,005,291 | ||||||
| ||||||||
Series 2021-MDLN, Class B, 3.84% (1 mo. USD LIBOR + 1.45%), 11/15/2038(c)(e) | 6,685,000 | 6,469,191 | ||||||
| ||||||||
Mello Mortgage Capital Acceptance Trust, | ||||||||
Series 2021-INV2, Class A4, 2.50%, 08/25/2051(c)(h) | 3,973,350 | 3,596,817 | ||||||
| ||||||||
Series 2021-INV3, Class A4, 2.50%, 10/25/2051(c)(h) | 3,916,351 | 3,545,220 | ||||||
| ||||||||
Merrill Lynch Mortgage Investors Trust, Series 2005-3, Class 3A, 2.39%, 11/25/2035(h) | 414,781 | 403,384 | ||||||
| ||||||||
MFA Trust, | ||||||||
Series 2021-AEI1, Class A3, 2.50%, 08/25/2051(c)(h) | 4,365,880 | 3,722,758 | ||||||
| ||||||||
Series 2021-AEI1, Class A4, 2.50%, 08/25/2051(c)(h) | 5,303,109 | 4,838,374 | ||||||
| ||||||||
Series 2021-INV2, Class A1, 1.91%, 11/25/2056(c)(h) | 8,374,897 | 7,587,454 | ||||||
| ||||||||
MMAF Equipment Finance LLC, | ||||||||
Series 2020-A, Class A2, 0.74%, 04/09/2024(c) | 1,955,266 | 1,928,880 | ||||||
| ||||||||
Series 2020-A, Class A3, 0.97%, 04/09/2027(c) | 5,800,000 | 5,419,119 | ||||||
| ||||||||
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C9, Class AS, 3.46%, 05/15/2046 | 2,235,000 | 2,206,091 | ||||||
| ||||||||
Morgan Stanley Capital I Trust, | ||||||||
Series 2017-CLS, Class A, 3.09% (1 mo. USD LIBOR + 0.70%), 11/15/2034(c)(e) | 8,028,000 | 7,966,188 | ||||||
| ||||||||
Series 2017-CLS, Class B, 3.24% (1 mo. USD LIBOR + 0.85%), 11/15/2034(c)(e) | 3,944,000 | 3,911,103 | ||||||
| ||||||||
Series 2017-CLS, Class C, 3.39% (1 mo. USD LIBOR + 1.00%), 11/15/2034(c)(e) | 2,676,000 | 2,652,229 | ||||||
| ||||||||
Series 2017-HR2, Class XA, IO, 1.01%, 12/15/2050(i) | 7,175,864 | 262,929 | ||||||
| ||||||||
MVW LLC, Series 2019-2A, Class A, 2.22%, 10/20/2038(c) | 1,711,842 | 1,607,131 | ||||||
| ||||||||
MVW Owner Trust, Series 2019-1A, Class A, 2.89%, 11/20/2036(c) | 1,378,003 | 1,327,152 | ||||||
| ||||||||
Neuberger Berman Loan Advisers CLO 24 Ltd., Series 2017-24A, Class AR, 3.76% (3 mo. USD LIBOR + 1.02%), 04/19/2030(c)(e) | 7,455,000 | 7,365,354 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
New Residential Mortgage Loan Trust, | ||||||||
Series 2019-NQM4, Class A1, 2.49%, 09/25/2059(c)(h) | $ | 732,539 | $ | 705,585 | ||||
| ||||||||
Series 2020-NQM1, Class A1, 2.46%, 01/26/2060(c)(h) | 1,246,452 | 1,175,853 | ||||||
| ||||||||
Series 2022-NQM2, Class A1, 3.08%, 03/27/2062(c)(h) | 4,146,879 | 3,848,594 | ||||||
| ||||||||
OBX Trust, | ||||||||
Series 2019-EXP1, Class 1A3, 4.00%, 01/25/2059(c)(h) | 213,389 | 203,334 | ||||||
| ||||||||
Series 2022-NQM1, Class A1, 2.31%, 11/25/2061(c)(h) | 5,134,734 | 4,669,574 | ||||||
| ||||||||
Series 2022-NQM2, Class A1, 2.94%, 01/25/2062(c)(h) | 6,208,189 | 5,790,062 | ||||||
| ||||||||
Series 2022-NQM2, Class A1A, 2.78%, 01/25/2062(c)(g) | 4,055,005 | 3,826,907 | ||||||
| ||||||||
Series 2022-NQM2, Class A1B, 3.38%, 01/25/2062(c)(g) | 3,610,000 | 3,244,689 | ||||||
| ||||||||
Series 2022-NQM7, Class A1, 5.11%, 08/25/2062(c)(g) | 3,780,000 | 3,778,251 | ||||||
| ||||||||
Oceanview Mortgage Trust, Series 2021-3, Class A5, 2.50%, 07/25/2051(c)(h) | 4,604,751 | 4,208,054 | ||||||
| ||||||||
OCP CLO Ltd. (Cayman Islands), | ||||||||
Series 2017-13A, Class A1AR, 3.47% (3 mo. USD LIBOR + 0.96%), 07/15/2030(c)(e) | 5,145,000 | 5,078,727 | ||||||
| ||||||||
Series 2020-8RA, Class A1, 3.96% (3 mo. USD LIBOR + 1.22%), 01/17/2032(c)(e) | 9,602,000 | 9,448,992 | ||||||
| ||||||||
Octagon Investment Partners 49 Ltd., Series 2020-5A, Class A1, 3.73% (3 mo. USD LIBOR + 1.22%), 01/15/2033(c)(e) | 8,832,000 | 8,715,630 | ||||||
| ||||||||
OHA Loan Funding Ltd., Series 2016-1A, Class AR, 3.97% (3 mo. USD LIBOR + 1.26%), 01/20/2033(c)(e) | 7,550,413 | 7,425,423 | ||||||
| ||||||||
Onslow Bay Mortgage Loan Trust, Series 2021-NQM4, Class A1, 1.96%, 10/25/2061(c)(h) | 6,144,553 | 5,363,385 | ||||||
| ||||||||
PPM CLO 3 Ltd., Series 2019-3A, Class AR, 3.83% (3 mo. USD LIBOR + 1.09%), 04/17/2034(c)(e) | 3,874,000 | 3,724,719 | ||||||
| ||||||||
Prestige Auto Receivables Trust, Series 2019-1A, Class C, 2.70%, 10/15/2024(c) | 1,015,619 | 1,013,372 | ||||||
| ||||||||
Progress Residential Trust, | ||||||||
Series 2020-SFR1, Class A, 1.73%, 04/17/2037(c) | 5,005,000 | 4,728,212 | ||||||
| ||||||||
Series 2021-SFR10, Class A, 2.39%, 12/17/2040(c) | 3,725,000 | 3,274,352 | ||||||
| ||||||||
Series 2022-SFR5, Class A, 4.45%, 06/17/2039(c) | 8,740,000 | 8,626,759 | ||||||
| ||||||||
Residential Accredit Loans, Inc. Trust, Series 2006-QS13, Class 1A8, 6.00%, 09/25/2036 | 3,341 | 2,758 | ||||||
| ||||||||
Residential Mortgage Loan Trust, | ||||||||
Series 2019-3, Class A1, 2.63%, 09/25/2059(c)(h) | 294,276 | 287,294 | ||||||
| ||||||||
Series 2020-1, Class A1, 2.38%, 01/26/2060(c)(h) | 943,981 | 906,373 | ||||||
| ||||||||
RUN Trust, Series 2022-NQM1, Class A1, 4.00%, 03/25/2067(c) | 3,356,178 | 3,253,324 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Santander Drive Auto Receivables Trust, | ||||||||
Series 2019-2, Class D, 3.22%, 07/15/2025 | $ | 2,105,767 | $ | 2,095,876 | ||||
| ||||||||
Series 2019-3, Class D, 2.68%, 10/15/2025 | 1,841,179 | 1,831,252 | ||||||
| ||||||||
Santander Retail Auto Lease Trust, Series 2019-C, Class C, 2.39%, 11/20/2023(c) | 1,243,165 | 1,242,266 | ||||||
| ||||||||
Sequoia Mortgage Trust, | ||||||||
Series 2013-3, Class A1, 2.00%, 03/25/2043(h) | 517,071 | 455,842 | ||||||
| ||||||||
Series 2013-6, Class A2, 3.00%, 05/25/2043(h) | 723,782 | 668,347 | ||||||
| ||||||||
Series 2013-7, Class A2, 3.00%, 06/25/2043(h) | 450,554 | 415,382 | ||||||
| ||||||||
Sierra Timeshare Receivables Funding LLC, Series 2019-3A, Class A, 2.34%, 08/20/2036(c) | 1,892,553 | 1,808,818 | ||||||
| ||||||||
Sonic Capital LLC, Series 2021-1A, Class A2I, 2.19%, 08/20/2051(c) | 4,567,742 | 3,678,509 | ||||||
| ||||||||
STAR Trust, Series 2021-SFR1, Class A, 2.98% (1 mo. USD LIBOR + 0.60%), 04/17/2038(c)(e) | 18,579,790 | 18,131,348 | ||||||
| ||||||||
Starwood Mortgage Residential Trust, | ||||||||
Series 2020-1, Class A1, 2.28%, 02/25/2050(c)(h) | 111,778 | 111,322 | ||||||
| ||||||||
Series 2020-INV1, Class A1, 1.03%, 11/25/2055(c)(h) | 1,588,540 | 1,477,972 | ||||||
| ||||||||
Series 2022-1, Class A1, 2.45%, 12/25/2066(c)(h) | 5,444,299 | 5,043,964 | ||||||
| ||||||||
Structured Asset Securities Corp. Pass-Through Ctfs., Series 2002-AL1, Class AIO, 3.45%, 02/25/2032(h) | 509,450 | 44,268 | ||||||
| ||||||||
Textainer Marine Containers Ltd., Series 2021-3A, CLass A, 1.94%, 08/20/2046(c) | 2,530,000 | 2,174,314 | ||||||
| ||||||||
Textainer Marine Containers VII Ltd., Series 2021-2A, Class A, 2.23%, 04/20/2046(c) | 7,414,667 | 6,575,180 | ||||||
| ||||||||
TICP CLO XV Ltd., Series 2020-15A, Class A, 3.99% (3 mo. USD LIBOR + 1.28%), 04/20/2033(c)(e) | 7,162,000 | 7,049,635 | ||||||
| ||||||||
Towd Point Mortgage Trust, Series 2017-2, Class A1, 2.75%, 04/25/2057(c)(h) | 722,866 | 717,848 | ||||||
| ||||||||
UBS Commercial Mortgage Trust, Series 2017-C5, Class XA, IO, 1.19%, 11/15/2050(i) | 13,126,579 | 466,337 | ||||||
| ||||||||
Vendee Mortgage Trust, Series 1995-2B, Class 2, IO, 0.79%, 06/15/2025(k) | 552,117 | 4,171 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
Verus Securitization Trust, | ||||||||
Series 2020-1, Class A1, 2.42%, 01/25/2060(c)(g) | $ | 1,411,131 | $ | 1,377,891 | ||||
| ||||||||
Series 2020-INV1, Class A1, 0.33%, 03/25/2060(c)(h) | 403,389 | 397,239 | ||||||
| ||||||||
Series 2021-1, Class A1B, 1.32%, 01/25/2066(c)(h) | 2,920,405 | 2,630,803 | ||||||
| ||||||||
Series 2021-2, Class A1, 1.03%, 02/25/2066(c)(h) | 1,794,348 | 1,595,666 | ||||||
| ||||||||
Series 2021-7, Class A1, 1.83%, 10/25/2066(c)(h) | 5,990,263 | 5,348,509 | ||||||
| ||||||||
Series 2021-R1, Class A1, 0.82%, 10/25/2063(c)(h) | 2,314,634 | 2,179,081 | ||||||
| ||||||||
Series 2022-1, Class A1, 2.72%, 01/25/2067(c)(g) | 4,035,305 | 3,754,156 | ||||||
| ||||||||
Series 2022-7, Class A1, 5.15%, 07/25/2067(c)(g) | 2,189,619 | 2,185,987 | ||||||
| ||||||||
Visio Trust, Series 2020-1R, | 1,620,894 | 1,563,731 | ||||||
| ||||||||
WaMu Mortgage Pass-Through Ctfs. Trust, | ||||||||
Series 2003-AR10, Class A7, 2.53%, 10/25/2033(h) | 99,280 | 95,768 | ||||||
| ||||||||
Series 2005-AR14, Class 1A4, 2.87%, 12/25/2035(h) | 38,856 | 37,609 | ||||||
| ||||||||
Series 2005-AR16, Class 1A1, 2.73%, 12/25/2035(h) | 179,413 | 175,294 | ||||||
| ||||||||
Wells Fargo Commercial Mortgage Trust, | ||||||||
Series 2015-NXS1, Class A2, 2.63%, 05/15/2048 | 19,143 | 19,115 | ||||||
| ||||||||
Series 2017-C42, Class XA, IO, 1.01%, 12/15/2050(i) | 11,931,752 | 438,244 | ||||||
| ||||||||
Wendy’s Funding LLC, Series 2019-1A, Class A2I, 3.78%, 06/15/2049(c) | 6,405,000 | 6,037,333 | ||||||
| ||||||||
Westlake Automobile Receivables Trust, Series 2019-3A, Class C, 2.49%, 10/15/2024(c) | 425,703 | 425,516 | ||||||
| ||||||||
WFRBS Commercial Mortgage Trust, | ||||||||
Series 2012-C10, Class XA, IO, 1.59%, 12/15/2045(c)(i) | 2,297,369 | 23 | ||||||
| ||||||||
Series 2013-C16, Class B, 5.15%, 09/15/2046(h) | 4,500,000 | 4,431,538 | ||||||
| ||||||||
World Financial Network Credit Card Master Trust, Series | 3,130,000 | 3,128,645 | ||||||
| ||||||||
Zaxby’s Funding LLC, | ||||||||
Series 2021-1A, Class A2, 3.24%, 07/30/2051(c) | 9,895,050 | 8,439,758 | ||||||
| ||||||||
Total Asset-Backed Securities |
| 666,638,178 | ||||||
| ||||||||
U.S. Treasury Securities–2.67% |
| |||||||
U.S. Treasury Bills–0.38% | ||||||||
0.80% - 0.93%, 09/15/2022(l)(m) | 1,450,000 | 1,449,399 | ||||||
| ||||||||
1.46% - 2.54%, 11/17/2022(l)(m) | 8,092,000 | 8,045,701 | ||||||
| ||||||||
9,495,100 | ||||||||
|
Principal Amount | Value | |||||||
| ||||||||
U.S. Treasury Notes–2.29% | ||||||||
3.25%, 08/31/2024 | $ | 13,788,600 | $ | 13,730,429 | ||||
| ||||||||
3.13%, 08/15/2025 | 20,040,300 | 19,839,897 | ||||||
| ||||||||
3.13%, 08/31/2027 | 24,143,700 | 23,930,557 | ||||||
| ||||||||
57,500,883 | ||||||||
| ||||||||
Total U.S. Treasury Securities |
| 66,995,983 | ||||||
| ||||||||
U.S. Government Sponsored Agency Mortgage-Backed Securities–0.77% |
| |||||||
Collateralized Mortgage Obligations–0.45% |
| |||||||
Fannie Mae Interest STRIPS, | ||||||||
IO, | ||||||||
7.50%, 05/25/2023 to 11/25/2029(k) | 467,504 | 81,519 | ||||||
| ||||||||
6.50%, 02/25/2032 to 07/25/2032(k) | 259,692 | 43,652 | ||||||
| ||||||||
6.00%, 12/25/2032 to 09/25/2035(k) | 635,613 | 100,481 | ||||||
| ||||||||
5.50%, 11/25/2033 to 06/25/2035(k) | 508,869 | 85,709 | ||||||
| ||||||||
PO, | ||||||||
0.00%, 09/25/2032(n) | 20,968 | 18,433 | ||||||
| ||||||||
Fannie Mae REMICs, | ||||||||
7.50%, 09/25/2022 | 1,312 | 1,309 | ||||||
| ||||||||
6.50%, 06/25/2023 to 11/25/2029 | 58,868 | 61,370 | ||||||
| ||||||||
3.44% (1 mo. USD LIBOR + 1.00%), 04/25/2032(e) | 38,542 | 39,253 | ||||||
| ||||||||
2.88% (1 mo. USD LIBOR + 0.50%), 10/18/2032(e) | 17,862 | 17,875 | ||||||
| ||||||||
2.84% (1 mo. USD LIBOR + 0.40%), 11/25/2033 to 03/25/2042(e) | 87,278 | 86,936 | ||||||
| ||||||||
5.50%, 04/25/2035 to 07/25/2046(k) | 2,978,973 | 2,304,897 | ||||||
| ||||||||
15.61% (24.57% - (3.67 x 1 mo. USD LIBOR)), 03/25/2036(e) | 65,871 | 84,271 | ||||||
| ||||||||
15.24% (24.20% - (3.67 x 1 mo. USD LIBOR)), 06/25/2036(e) | 234,115 | 284,829 | ||||||
| ||||||||
15.24% (24.20% - (3.67 x 1 mo. USD LIBOR)), 06/25/2036(e) | 32,248 | 38,931 | ||||||
| ||||||||
5.00%, 04/25/2040 | 108,954 | 109,550 | ||||||
| ||||||||
4.00%, 03/25/2041 to 08/25/2047(k) | 957,491 | 196,307 | ||||||
| ||||||||
2.89% (1 mo. USD LIBOR + 0.45%), 02/25/2047(e) | 51,898 | 51,641 | ||||||
| ||||||||
IO, | ||||||||
4.26% (6.70% - (1.00 x 1 mo. USD LIBOR)), 02/25/2024 to 02/25/2035(e)(k) | 662,167 | 66,740 | ||||||
| ||||||||
3.00%, 11/25/2027(k) | 818,957 | 40,065 | ||||||
| ||||||||
5.52% (7.90% - (1.00 x 1 mo. USD LIBOR)), 11/18/2031 to 12/18/2031(e)(k) | 140,609 | 16,230 | ||||||
| ||||||||
5.46% (7.90% - (1.00 x 1 mo. USD LIBOR)), 11/25/2031(e)(k) | 28,957 | 3,560 | ||||||
| ||||||||
5.51% (7.95% - (1.00 x 1 mo. USD LIBOR)), 01/25/2032 to 07/25/2032(e)(k) | 167,230 | 16,612 | ||||||
| ||||||||
5.62% (8.00% - (1.00 x 1 mo. USD LIBOR)), 03/18/2032(e)(k) | 57,637 | 7,504 | ||||||
| ||||||||
5.66% (8.10% - (1.00 x 1 mo. USD LIBOR)), 03/25/2032 to 04/25/2032(e)(k) | 79,835 | 10,491 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
Collateralized Mortgage Obligations–(continued) |
| |||||||
4.56% (7.00% - (1.00 x 1 mo. USD LIBOR)), 04/25/2032(e)(k) | $ | 54,534 | $ | 5,314 | ||||
| ||||||||
5.36% (7.80% - (1.00 x 1 mo. USD LIBOR)), 04/25/2032(e)(k) | 26,775 | 3,464 | ||||||
| ||||||||
5.56% (8.00% - (1.00 x 1 mo. USD LIBOR)), 07/25/2032 to 09/25/2032(e)(k) | 176,255 | 24,076 | ||||||
| ||||||||
5.72% (8.10% - (1.00 x 1 mo. USD LIBOR)), 12/18/2032(e)(k) | 123,509 | 14,204 | ||||||
| ||||||||
5.81% (8.25% - (1.00 x 1 mo. USD LIBOR)), 02/25/2033 to 05/25/2033(e)(k) | 151,062 | 23,556 | ||||||
| ||||||||
7.00%, 04/25/2033(k) | 741,658 | 139,419 | ||||||
| ||||||||
3.61% (6.05% - (1.00 x 1 mo. USD LIBOR)), 03/25/2035 to 07/25/2038(e)(k) | 344,438 | 26,181 | ||||||
| ||||||||
4.31% (6.75% - (1.00 x 1 mo. USD LIBOR)), 03/25/2035 to 05/25/2035(e)(k) | 243,165 | 13,099 | ||||||
| ||||||||
4.16% (6.60% - (1.00 x 1 mo. USD LIBOR)), 05/25/2035(e)(k) | 141,606 | 11,271 | ||||||
| ||||||||
3.50%, 08/25/2035(k) | 3,208,577 | 410,560 | ||||||
| ||||||||
4.10% (6.54% - (1.00 x 1 mo. USD LIBOR)), 06/25/2037(e)(k) | 113,328 | 11,428 | ||||||
| ||||||||
4.11% (6.55% - (1.00 x 1 mo. USD LIBOR)), 10/25/2041(e)(k) | 355,462 | 31,355 | ||||||
| ||||||||
3.71% (6.15% - (1.00 x 1 mo. USD LIBOR)), 12/25/2042(e)(k) | 606,606 | 77,344 | ||||||
| ||||||||
4.50%, 02/25/2043(k) | 222,651 | 34,418 | ||||||
| ||||||||
3.46% (5.90% - (1.00 x 1 mo. USD LIBOR)), 09/25/2047(e)(k) | 5,016,385 | 454,125 | ||||||
| ||||||||
Freddie Mac Multifamily Structured Pass-Through Ctfs., | ||||||||
Series KC02, Class X1, IO, 1.91%, 03/25/2024(i) | 51,262,288 | 273,136 | ||||||
| ||||||||
Series KC03, Class X1, IO, 0.63%, 11/25/2024(i) | 35,774,582 | 386,129 | ||||||
| ||||||||
Series K734, Class X1, IO, 0.78%, 02/25/2026(i) | 27,361,700 | 495,129 | ||||||
| ||||||||
Series K735, Class X1, IO, 1.10%, 05/25/2026(i) | 26,866,362 | 782,687 | ||||||
| ||||||||
Series K093, Class X1, IO, 1.09%, 05/25/2029(i) | 22,277,460 | 1,142,569 | ||||||
| ||||||||
Freddie Mac REMICs, | ||||||||
2.00% (COF 11 + 1.45%), 12/15/2023(e) | 130,544 | 131,312 | ||||||
| ||||||||
6.50%, 04/15/2028 to 06/15/2032 | 649,283 | 687,944 | ||||||
| ||||||||
6.00%, 01/15/2029 to 04/15/2029 | 297,060 | 309,278 | ||||||
| ||||||||
7.50%, 09/15/2029 | 42,758 | 45,905 | ||||||
| ||||||||
8.00%, 03/15/2030 | 27,962 | 30,102 | ||||||
| ||||||||
3.34% (1 mo. USD LIBOR + 0.95%), 08/15/2031 to 01/15/2032(e) | 54,247 | 55,141 | ||||||
| ||||||||
3.39% (1 mo. USD LIBOR + 1.00%), 12/15/2031 to 03/15/2032(e) | 111,748 | 113,258 | ||||||
| ||||||||
2.89% (1 mo. USD LIBOR + 0.50%), 01/15/2033(e) | 2,385 | 2,389 | ||||||
| ||||||||
5.00%, 08/15/2035 | 1,105,445 | 1,141,758 | ||||||
| ||||||||
4.00%, 06/15/2038 to 03/15/2045(k) | 387,892 | 85,847 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Collateralized Mortgage Obligations–(continued) |
| |||||||
IO, | ||||||||
3.61% (6.00% - (1.00 x 1 mo. USD LIBOR)), 03/15/2024 to 04/15/2038(e)(k) | $ | 133,355 | $ | 5,150 | ||||
| ||||||||
3.00%, 06/15/2027 to 12/15/2027(k) | 2,795,129 | 140,015 | ||||||
| ||||||||
2.50%, 05/15/2028(k) | 596,880 | 27,743 | ||||||
| ||||||||
6.32% (8.70% - (1.00 x 1 mo. USD LIBOR)), 07/17/2028(e)(k) | 16,821 | 455 | ||||||
| ||||||||
5.66% (8.05% - (1.00 x 1 mo. USD LIBOR)), 02/15/2029(e)(k) | 133,316 | 10,670 | ||||||
| ||||||||
5.36% (7.75% - (1.00 x 1 mo. USD LIBOR)), 06/15/2029(e)(k) | 120,199 | 8,161 | ||||||
| ||||||||
5.71% (8.10% - (1.00 x 1 mo. USD LIBOR)), 06/15/2029 to 09/15/2029(e)(k) | 79,470 | 6,341 | ||||||
| ||||||||
4.31% (6.70% - (1.00 x 1 mo. USD LIBOR)), 01/15/2035(e)(k) | 384,198 | 26,149 | ||||||
| ||||||||
4.36% (6.75% - (1.00 x 1 mo. USD LIBOR)), 02/15/2035(e)(k) | 80,618 | 5,564 | ||||||
| ||||||||
4.33% (6.72% - (1.00 x 1 mo. USD LIBOR)), 05/15/2035(e)(k) | 262,232 | 19,543 | ||||||
| ||||||||
3.76% (6.15% - (1.00 x 1 mo. USD LIBOR)), 07/15/2035(e)(k) | 341,372 | 19,991 | ||||||
| ||||||||
4.61% (7.00% - (1.00 x 1 mo. USD LIBOR)), 12/15/2037(e)(k) | 50,874 | 6,201 | ||||||
| ||||||||
3.68% (6.07% - (1.00 x 1 mo. USD LIBOR)), 05/15/2038(e)(k) | 714,540 | 70,596 | ||||||
| ||||||||
3.86% (6.25% - (1.00 x 1 mo. USD LIBOR)), 12/15/2039(e)(k) | 142,800 | 12,814 | ||||||
| ||||||||
3.71% (6.10% - (1.00 x 1 mo. USD LIBOR)), 01/15/2044(e)(k) | 748,110 | 93,224 | ||||||
| ||||||||
Freddie Mac STRIPS, | ||||||||
IO, | ||||||||
3.00%, 12/15/2027(k) | 1,186,022 | 65,989 | ||||||
| ||||||||
3.27%, 12/15/2027(i) | 304,372 | 14,829 | ||||||
| ||||||||
6.50%, 02/01/2028(k) | 12,142 | 1,368 | ||||||
| ||||||||
7.00%, 09/01/2029(k) | 110,584 | 16,230 | ||||||
| ||||||||
7.50%, 12/15/2029(k) | 45,590 | 7,233 | ||||||
| ||||||||
6.00%, 12/15/2032(k) | 42,752 | 5,751 | ||||||
| ||||||||
11,294,580 | ||||||||
| ||||||||
Federal Home Loan Mortgage Corp. (FHLMC)–0.07% |
| |||||||
6.00%, 03/01/2023 to 07/01/2024 | 68,692 | 70,983 | ||||||
| ||||||||
8.50%, 05/01/2024 to 08/17/2026 | 22,127 | 22,198 | ||||||
| ||||||||
7.00%, 10/25/2024 to 03/01/2035 | 641,854 | 673,146 | ||||||
| ||||||||
9.00%, 01/01/2025 to 05/01/2025 | 1,658 | 1,702 | ||||||
| ||||||||
6.50%, 07/01/2028 to 04/01/2034 | 58,025 | 60,556 | ||||||
| ||||||||
7.50%, 01/01/2032 to 02/01/2032 | 331,880 | 353,974 | ||||||
| ||||||||
5.00%, 07/01/2033 to 06/01/2034 | 195,610 | 203,265 | ||||||
| ||||||||
5.50%, 09/01/2039 | 406,981 | 430,552 | ||||||
| ||||||||
ARM, | ||||||||
3.65% (6 mo. USD LIBOR + 1.65%), 07/01/2036(e) | 14,073 | 14,481 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 | Invesco Short Term Bond Fund |
Principal Amount | Value | |||||||
| ||||||||
Federal Home Loan Mortgage Corp. (FHLMC)–(continued) |
| |||||||
2.61% (1 yr. USD LIBOR + 2.14%), 02/01/2037(e) | $ | 4,467 | $ | 4,556 | ||||
| ||||||||
2.45% (1 yr. USD LIBOR + 2.08%), 01/01/2038(e) | 6,727 | 6,855 | ||||||
| ||||||||
1,842,268 | ||||||||
| ||||||||
Federal National Mortgage Association (FNMA)–0.20% |
| |||||||
8.00%, 12/01/2022 to 07/01/2032 | 58,900 | 59,297 | ||||||
| ||||||||
6.50%, 11/01/2023 to 10/01/2035 | 1,065,273 | 1,112,810 | ||||||
| ||||||||
7.00%, 11/01/2025 to 08/01/2036 | 1,234,985 | 1,288,878 | ||||||
| ||||||||
7.50%, 02/01/2027 to 08/01/2033 | 823,468 | 875,769 | ||||||
| ||||||||
9.00%, 01/01/2030 | 24,851 | 24,992 | ||||||
| ||||||||
8.50%, 05/01/2030 to 07/01/2030 | 62,643 | 64,955 | ||||||
| ||||||||
6.00%, 06/01/2030 to 03/01/2037 | 1,336,261 | 1,436,051 | ||||||
| ||||||||
5.50%, 02/01/2035 to 05/01/2036 | 181,989 | 192,666 | ||||||
| ||||||||
ARM, | ||||||||
2.56% (1 yr. U.S. Treasury Yield Curve Rate + 2.22%), 11/01/2032(e) | 16,085 | 15,920 | ||||||
| ||||||||
2.99% (1 yr. U.S. Treasury Yield Curve Rate + 2.19%), 05/01/2035(e) | 24,727 | 25,398 | ||||||
| ||||||||
2.47% (1 yr. USD LIBOR + 1.70%), 03/01/2038(e) | 5,675 | 5,795 | ||||||
| ||||||||
5,102,531 | ||||||||
| ||||||||
Government National Mortgage Association (GNMA)–0.05% |
| |||||||
8.00%, 11/15/2022 to 08/15/2028 | 7,286 | 7,296 | ||||||
| ||||||||
7.50%, 12/15/2022 to 11/15/2026 | 13,520 | 13,817 | ||||||
| ||||||||
6.50%, 07/15/2023 to 02/15/2034 | 408,786 | 427,503 | ||||||
| ||||||||
7.00%, 10/15/2026 to 01/20/2030 | 62,990 | 64,164 | ||||||
| ||||||||
8.50%, 07/20/2027 | 19,603 | 20,003 | ||||||
| ||||||||
IO, | ||||||||
4.16% (6.55% - (1.00 x 1 mo. USD LIBOR)), 04/16/2037(e)(k) | 703,245 | 68,134 | ||||||
| ||||||||
4.26% (6.65% - (1.00 x 1 mo. USD LIBOR)), 04/16/2041(e)(k) | 1,092,127 | 87,977 | ||||||
| ||||||||
4.50%, 09/16/2047(k) | 1,855,047 | 313,060 | ||||||
| ||||||||
3.81% (6.20% - (1.00 x 1 mo. USD LIBOR)), 10/16/2047(e)(k) | 1,847,783 | 203,813 | ||||||
| ||||||||
1,205,767 | ||||||||
| ||||||||
Total U.S. Government Sponsored Agency Mortgage-Backed Securities |
| 19,445,146 | ||||||
|
Principal Amount | Value | |||||||
| ||||||||
Agency Credit Risk Transfer Notes–0.71% |
| |||||||
Fannie Mae Connecticut Avenue Securities, | ||||||||
Series 2016-C02, Class 1M2, 8.44% (1 mo. USD LIBOR + 6.00%), 09/25/2028(e) | $ | 1,013,843 | $ | 1,062,701 | ||||
| ||||||||
Series 2018-R07, Class 1M2, 4.84% (1 mo. USD LIBOR + 2.40%), 04/25/2031(c)(e) | 333,043 | 327,517 | ||||||
| ||||||||
Series 2019-R02, Class 1M2, 4.74% (1 mo. USD LIBOR + 2.30%), 08/25/2031(c)(e) | 105,909 | 105,404 | ||||||
| ||||||||
Series 2019-R03, Class 1M2, 4.59% (1 mo. USD LIBOR + 2.15%), 09/25/2031(c)(e) | 111,807 | 111,274 | ||||||
| ||||||||
Series 2022-R03, Class 1M1, 4.28% (30 Day Average SOFR + 2.10%), | 6,703,785 | 6,704,286 | ||||||
| ||||||||
Series 2022-R04, Class 1M1, 4.18% (30 Day Average SOFR + 2.00%), | 3,498,305 | 3,496,336 | ||||||
| ||||||||
Freddie Mac, | ||||||||
Series 2013-DN2, Class M2, STACR®, 6.69% (1 mo. USD LIBOR + 4.25%), 11/25/2023(e) | 1,273,580 | 1,308,363 | ||||||
| ||||||||
Series 2014-DN1, Class M3, STACR®, 6.94% (1 mo. USD LIBOR + 4.50%), 02/25/2024(e) | 752,254 | 760,327 | ||||||
| ||||||||
Series 2014-DN3, Class M3, STACR®, 6.44% (1 mo. USD LIBOR + 4.00%), 08/25/2024(e) | 493,843 | 502,795 | ||||||
| ||||||||
Series 2022-HQA3, Class M1, STACR®, 4.11% (30 Day Average SOFR + 2.30%), 08/25/2042(c)(e) | 2,885,000 | 2,903,082 | ||||||
| ||||||||
Series 2018-HRP1, Class M2, STACR®, 4.09% (1 mo. USD LIBOR + 1.65%), 04/25/2043(c)(e) | 480,431 | 480,491 | ||||||
| ||||||||
Total Agency Credit Risk Transfer Notes |
| 17,762,576 | ||||||
| ||||||||
Shares | ||||||||
Preferred Stocks–0.34% | ||||||||
Diversified Banks–0.26% | ||||||||
JPMorgan Chase & Co., 6.28% (3 mo. USD LIBOR + 3.47%), Series I, Pfd.(e) | 6,622,000 | 6,590,236 | ||||||
| ||||||||
Regional Banks–0.08% |
| |||||||
PNC Financial Services Group, Inc. (The), 6.85% (3 mo. USD LIBOR + 4.07%), Series P, | 75,000 | 1,891,500 | ||||||
| ||||||||
Total Preferred Stocks (Cost $8,664,067) |
| 8,481,736 | ||||||
| ||||||||
Money Market Funds–1.27% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 2.22%(o)(p) | 11,402,147 | 11,402,147 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 2.26%(o)(p) | 8,144,173 | 8,145,802 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, 2.14%(o)(p) | 12,356,109 | 12,356,109 | ||||||
| ||||||||
Total Money Market Funds (Cost $31,902,892) |
| 31,904,058 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.17% | 2,489,236,086 | |||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 | Invesco Short Term Bond Fund |
Shares | Value | |||||||
| ||||||||
Investments Purchased with Cash Collateral from Securities on Loan |
| |||||||
Money Market Funds–4.59% |
| |||||||
Invesco Private Government Fund, 2.29%(o)(p)(q) | 31,829,077 | $ | 31,829,077 | |||||
| ||||||||
Invesco Private Prime Fund, 2.37%(o)(p)(q) | 83,265,015 | 83,273,344 | ||||||
| ||||||||
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $115,098,369) |
| 115,102,421 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES–103.76% |
| 2,604,338,507 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–(3.76)% |
| (94,366,275 | ) | |||||
| ||||||||
NET ASSETS–100.00% |
| $ | 2,509,972,232 | |||||
|
Investment Abbreviations:
| ||
ARM | – Adjustable Rate Mortgage | |
CLO | – Collateralized Loan Obligation | |
COF | – Cost of Funds | |
Ctfs. | – Certificates | |
IO | – Interest Only | |
LIBOR | – London Interbank Offered Rate | |
Pfd. | – Preferred | |
PO | – Principal Only | |
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) | All or a portion of this security was out on loan at August 31, 2022. |
(c) | 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, 2022 was $1,121,224,696, which represented 44.67% of the Fund’s Net Assets. |
(d) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
(e) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2022. |
(f) | Perpetual bond with no specified maturity date. |
(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, 2022. |
(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, 2022. |
(j) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(k) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
(l) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1J. |
(m) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(n) | Zero coupon bond issued at a discount. |
(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, 2022. |
Value February 28, 2022 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain (Loss) | Value August 31, 2022 | Dividend Income | |||||||||||||||||||||||||||||
Investments in Affiliated Money Market Funds: | |||||||||||||||||||||||||||||||||||
Invesco Government & Agency Portfolio, Institutional Class | $ | 6,295,561 | $ | 147,268,241 | $ | (142,161,655 | ) | $ | - | $ | - | $ | 11,402,147 | $ | 37,742 | ||||||||||||||||||||
Invesco Liquid Assets Portfolio, Institutional Class | 4,723,759 | 105,191,600 | (101,771,579 | ) | 1,007 | 1,015 | 8,145,802 | 27,312 | |||||||||||||||||||||||||||
Invesco Treasury Portfolio, Institutional Class | 7,194,927 | 168,306,561 | (163,145,379 | ) | - | - | 12,356,109 | 39,503 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 | Invesco Short Term Bond Fund |
Value February 28, 2022 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation | Realized Gain (Loss) | Value August 31, 2022 | Dividend Income | |||||||||||||||||||||||||||||
Investments Purchased with Cash Collateral from Securities on Loan: | |||||||||||||||||||||||||||||||||||
Invesco Private Government Fund | $ | 34,080,644 | $ | 183,177,693 | $ | (185,429,260 | ) | $ | - | $ | - | $ | 31,829,077 | $ | 138,159* | ||||||||||||||||||||
Invesco Private Prime Fund | 82,102,844 | 344,988,876 | (343,811,825 | ) | 7,620 | (14,171) | 83,273,344 | 384,867* | |||||||||||||||||||||||||||
Total | $ | 134,397,735 | $ | 948,932,971 | $ | (936,319,698 | ) | $ | 8,627 | $ | (13,156) | $ | 147,006,479 | $ | 627,583 |
* | 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) | The rate shown is the 7-day SEC standardized yield as of August 31, 2022. |
(q) | 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 | ||||||||||||||||||||
Long Futures Contracts | Number of Contracts | Expiration Month | Notional Value | Value | Unrealized Appreciation (Depreciation) | |||||||||||||||
Interest Rate Risk | ||||||||||||||||||||
U.S. Treasury 2 Year Notes | 4,927 | December-2022 | $ | 1,026,432,677 | $ | (1,836,953 | ) | $(1,836,953 | ) | |||||||||||
Short Futures Contracts | ||||||||||||||||||||
Interest Rate Risk | ||||||||||||||||||||
U.S. Treasury 5 Year Notes | 3,000 | December-2022 | (332,460,939 | ) | 1,616,553 | 1,616,553 | ||||||||||||||
U.S. Treasury 10 Year Notes | 589 | December-2022 | (68,857,781 | ) | 555,138 | 555,138 | ||||||||||||||
U.S. Treasury 10 Year Ultra Notes | 394 | December-2022 | (49,323,875 | ) | 458,642 | 458,642 | ||||||||||||||
U.S. Treasury Bonds | 254 | December-2022 | (34,504,313 | ) | 293,687 | 293,687 | ||||||||||||||
U.S. Treasury Ultra Bonds | 61 | December-2022 | (9,119,500 | ) | 34,313 | 34,313 | ||||||||||||||
Subtotal–Short Futures Contracts | 2,958,333 | 2,958,333 | ||||||||||||||||||
Total Futures Contracts | $ | 1,121,380 | $ 1,121,380 |
Portfolio Composition
By security type, based on Net Assets
as of August 31, 2022
U.S. Dollar Denominated Bonds & Notes | 66.85 | % | ||
Asset-Backed Securities | 26.56 | |||
U.S. Treasury Securities | 2.67 | |||
Security Types Each Less Than 1% of Portfolio | 1.82 | |||
Money Market Funds Plus Other Assets Less Liabilities | 2.10 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 | Invesco Short Term Bond Fund |
Statement of Assets and Liabilities
August 31, 2022
(Unaudited)
Assets: | ||||
Investments in unaffiliated securities, at value | $ | 2,457,332,028 | ||
| ||||
Investments in affiliated money market funds, at value | 147,006,479 | |||
| ||||
Other investments: | ||||
Variation margin receivable – futures contracts | 595,541 | |||
| ||||
Cash | 365 | |||
| ||||
Receivable for: | ||||
Investments sold | 151 | |||
| ||||
Fund shares sold | 6,393,133 | |||
| ||||
Dividends | 75,342 | |||
| ||||
Interest | 18,286,325 | |||
| ||||
Investments matured, at value | 372,459 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 181,002 | |||
| ||||
Other assets | 126,262 | |||
| ||||
Total assets | 2,630,369,087 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Dividends | 913,847 | |||
| ||||
Fund shares reacquired | 3,064,149 | |||
| ||||
Collateral upon return of securities loaned | 115,098,369 | |||
| ||||
Accrued fees to affiliates | 884,930 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 45,302 | |||
| ||||
Accrued other operating expenses | 187,665 | |||
| ||||
Trustee deferred compensation and retirement plans | 202,593 | |||
| ||||
Total liabilities | 120,396,855 | |||
| ||||
Net assets applicable to shares outstanding | $ | 2,509,972,232 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 2,717,683,574 | ||
| ||||
Distributable earnings (loss) | (207,711,342 | ) | ||
| ||||
$ | 2,509,972,232 | |||
|
Net Assets: | ||||
Class A | $ | 1,292,871,511 | ||
| ||||
Class C | $ | 142,486,898 | ||
| ||||
Class R | $ | 43,267,616 | ||
| ||||
Class Y | $ | 473,356,464 | ||
| ||||
Class R5 | $ | 849,091 | ||
| ||||
Class R6 | $ | 557,140,652 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 160,587,446 | |||
| ||||
Class C | 17,696,262 | |||
| ||||
Class R | 5,361,485 | |||
| ||||
Class Y | 58,766,143 | |||
| ||||
Class R5 | 105,648 | |||
| ||||
Class R6 | 69,129,499 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 8.05 | ||
| ||||
Maximum offering price per share | $ | 8.26 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 8.05 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 8.07 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 8.05 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 8.04 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 8.06 | ||
|
* | At August 31, 2022, security with a value of $111,649,984 was on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20 | Invesco Short Term Bond Fund |
Statement of Operations
For the six months ended August 31, 2022
(Unaudited)
Investment income: | ||||
Interest (net of foreign withholding taxes of $(3,281)) | $ | 38,487,288 | ||
| ||||
Dividends | 54,363 | |||
| ||||
Dividends from affiliated money market funds (includes securities lending income of $116,680) | 221,237 | |||
| ||||
Total investment income | 38,762,888 | |||
| ||||
Expenses: | ||||
Advisory fees | 4,166,471 | |||
| ||||
Administrative services fees | 198,131 | |||
| ||||
Custodian fees | 17,721 | |||
| ||||
Distribution fees: | ||||
Class A | 998,568 | |||
| ||||
Class C | 527,466 | |||
| ||||
Class R | 110,889 | |||
| ||||
Transfer agent fees – A, C, R and Y | 1,336,070 | |||
| ||||
Transfer agent fees – R5 | 384 | |||
| ||||
Transfer agent fees – R6 | 96,192 | |||
| ||||
Trustees’ and officers’ fees and benefits | 16,692 | |||
| ||||
Registration and filing fees | 101,259 | |||
| ||||
Reports to shareholders | 62,756 | |||
| ||||
Professional services fees | 37,789 | |||
| ||||
Other | 26,922 | |||
| ||||
Total expenses | 7,697,310 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (134,008 | ) | ||
| ||||
Net expenses | 7,563,302 | |||
| ||||
Net investment income | 31,199,586 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
| ||||
Unaffiliated investment securities | (39,873,813 | ) | ||
| ||||
Affiliated investment securities | (13,156 | ) | ||
| ||||
Futures contracts | 8,354,390 | |||
| ||||
(31,532,579 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Unaffiliated investment securities | (82,150,583 | ) | ||
| ||||
Affiliated investment securities | 8,627 | |||
| ||||
Futures contracts | 2,537,633 | |||
| ||||
(79,604,323 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (111,136,902 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (79,937,316 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21 | Invesco Short Term Bond Fund |
Statement of Changes in Net Assets
For the six months ended August 31, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, | February 28, | |||||||
2022 | 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 31,199,586 | $ | 47,334,436 | ||||
| ||||||||
Net realized gain (loss) | (31,532,579 | ) | 1,322,076 | |||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (79,604,323 | ) | (110,059,396 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (79,937,316 | ) | (61,402,884 | ) | ||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (12,875,451 | ) | (21,025,505 | ) | ||||
| ||||||||
Class C | (1,243,198 | ) | (2,395,084 | ) | ||||
| ||||||||
Class R | (345,725 | ) | (514,728 | ) | ||||
| ||||||||
Class Y | (5,247,464 | ) | (9,796,714 | ) | ||||
| ||||||||
Class R5 | (8,132 | ) | (9,131 | ) | ||||
| ||||||||
Class R6 | (6,255,435 | ) | (10,914,927 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (25,975,405 | ) | (44,656,089 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (61,324,851 | ) | (67,886,583 | ) | ||||
| ||||||||
Class C | (34,734,581 | ) | (45,892,566 | ) | ||||
| ||||||||
Class R | (521,383 | ) | (3,226,692 | ) | ||||
| ||||||||
Class Y | (89,409,461 | ) | (23,708,763 | ) | ||||
| ||||||||
Class R5 | 173,694 | 202,520 | ||||||
| ||||||||
Class R6 | (18,217,423 | ) | (24,343,162 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (204,034,005 | ) | (164,855,246 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (309,946,726 | ) | (270,914,219 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 2,819,918,958 | 3,090,833,177 | ||||||
| ||||||||
End of period | $ | 2,509,972,232 | $ | 2,819,918,958 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
22 | 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 08/31/22 | $8.37 | $0.09 | $(0.33 | ) | $(0.24 | ) | $(0.08 | ) | $ - | $(0.08 | ) | $8.05 | (2.89 | )% | $1,292,872 | 0.63 | %(d) | 0.63 | %(d) | 2.29 | %(d) | 87 | % | |||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 8.68 | 0.13 | (0.32 | ) | (0.19 | ) | (0.12 | ) | - | (0.12 | ) | 8.37 | (2.20 | ) | 1,407,707 | 0.62 | 0.62 | 1.49 | 141 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.66 | 0.16 | 0.04 | 0.20 | (0.18 | ) | - | (0.18 | ) | 8.68 | 2.33 | 1,527,875 | 0.63 | 0.63 | 1.85 | 245 | ||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 8.38 | 0.08 | (0.35 | ) | (0.27 | ) | (0.06 | ) | - | (0.06 | ) | 8.05 | (3.17 | ) | 142,487 | 0.98 | (d) | 1.13 | (d) | 1.94 | (d) | 87 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 8.68 | 0.10 | (0.31 | ) | (0.21 | ) | (0.09 | ) | - | (0.09 | ) | 8.38 | (2.41 | ) | 183,817 | 0.97 | 1.12 | 1.14 | 141 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.66 | 0.13 | 0.03 | 0.16 | (0.14 | ) | - | (0.14 | ) | 8.68 | 1.93 | 237,167 | 0.98 | 0.98 | 1.50 | 245 | ||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 8.39 | 0.08 | (0.34 | ) | (0.26 | ) | (0.06 | ) | - | (0.06 | ) | 8.07 | (3.05 | ) | 43,268 | 0.98 | (d) | 0.98 | (d) | 1.94 | (d) | 87 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 8.70 | 0.10 | (0.32 | ) | (0.22 | ) | (0.09 | ) | - | (0.09 | ) | 8.39 | (2.54 | ) | 45,537 | 0.97 | 0.97 | 1.14 | 141 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.68 | 0.13 | 0.04 | 0.17 | (0.15 | ) | - | (0.15 | ) | 8.70 | 1.98 | 50,473 | 0.98 | 0.98 | 1.50 | 245 | ||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 8.38 | 0.10 | (0.35 | ) | (0.25 | ) | (0.08 | ) | - | (0.08 | ) | 8.05 | (2.93 | ) | 473,356 | 0.48 | (d) | 0.48 | (d) | 2.44 | (d) | 87 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 8.68 | 0.14 | (0.31 | ) | (0.17 | ) | (0.13 | ) | - | (0.13 | ) | 8.38 | (1.94 | ) | 583,784 | 0.47 | 0.47 | 1.64 | 141 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.66 | 0.17 | 0.04 | 0.21 | (0.19 | ) | - | (0.19 | ) | 8.68 | 2.50 | 629,462 | 0.45 | 0.48 | 2.03 | 245 | ||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 8.36 | 0.10 | (0.33 | ) | (0.23 | ) | (0.09 | ) | - | (0.09 | ) | 8.04 | (2.80 | ) | 849 | 0.45 | (d) | 0.45 | (d) | 2.47 | (d) | 87 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 8.66 | 0.15 | (0.31 | ) | (0.16 | ) | (0.14 | ) | - | (0.14 | ) | 8.36 | (1.89 | ) | 705 | 0.41 | 0.41 | 1.70 | 141 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.65 | 0.18 | 0.03 | 0.21 | (0.20 | ) | - | (0.20 | ) | 8.66 | 2.48 | 524 | 0.38 | 0.38 | 2.10 | 245 | ||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 8.38 | 0.10 | (0.33 | ) | (0.23 | ) | (0.09 | ) | - | (0.09 | ) | 8.06 | (2.76 | ) | 557,141 | 0.38 | (d) | 0.38 | (d) | 2.54 | (d) | 87 | ||||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 8.69 | 0.15 | (0.32 | ) | (0.17 | ) | (0.14 | ) | - | (0.14 | ) | 8.38 | (1.95 | ) | 598,369 | 0.37 | 0.37 | 1.74 | 141 | |||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 8.67 | 0.18 | 0.04 | 0.22 | (0.20 | ) | - | (0.20 | ) | 8.69 | 2.62 | 645,331 | 0.35 | 0.35 | 2.13 | 245 | ||||||||||||||||||||||||||||||||||||||||
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 |
(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 year ended February 28, 2021, 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) | Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
23 | Invesco Short Term Bond Fund |
August 31, 2022 (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 eight 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 eighth anniversary after a purchase of Class C shares.
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. |
Fixed income securities (including convertible debt securities) generally are valued on the basis of prices provided by independent pricing services. Prices 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, and their value may be adjusted accordingly. 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 is generally valued at its trade price or official closing price that day as of the close of the exchange where the security is principally traded, or lacking any trades 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 using prices provided by an independent pricing service they may be considered fair valued.
Securities of investment companies that are not exchange-traded (e.g., open-end mutual funds) are valued using such company’s end-of-business-day net asset value per share.
Deposits, other obligations of U.S. and non-U.S. banks and financial institutions are valued at their daily account value.
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 New York Stock Exchange (“NYSE”). If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Invesco Advisers, Inc. (the “Adviser” or “Invesco”) may use various pricing services to obtain market quotations as well as fair value prices. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become not representative of market value in the Adviser’s judgment (“unreliable”). If, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, a significant event occurs that makes the closing price of the security unreliable, the Adviser 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 in accordance with Board- approved policies and related Adviser procedures (“Valuation Procedures”). 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 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.
Unlisted securities will be valued using prices provided by independent pricing services or by another method that the Adviser, in its judgment, believes better reflects the security’s fair value in accordance with the Valuation Procedures.
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 may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available and unreliable are fair valued by the Adviser in accordance with the Valuation Procedures. If a fair value price provided by a pricing service is unreliable, the Adviser will fair value the security using the Valuation Procedures. 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, significant governmental actions 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.
The price the Fund could receive upon the sale of any investment may differ from the Adviser’s valuation of the investment, particularly for securities that are valued using a fair valuation technique. When fair valuation techniques are applied, the Adviser uses available information, including both observable and unobservable inputs and assumptions, to determine a methodology that will result in a valuation that the Adviser believes approximates market value. Fund securities that are fair valued may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. Because of the inherent uncertainties of valuation, and the degree of subjectivity in such decisions, the Fund could realize a greater or lesser than expected gain or loss upon the sale of the investment.
B. | Securities Transactions and Investment Income – Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are |
24 | Invesco Short Term Bond 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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 based on relative net assets of Class R5 and Class R6. 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. 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, unregistered investment companies that comply with Rule 2a-7 under the 1940 Act and money market funds (collectively, “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. |
The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon (“BNYM”) also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in
25 | Invesco Short Term Bond Fund |
a manner consistent with the federal securities laws. For the six months ended August 31, 2022, there were no securities lending transactions with the Adviser. Fees paid to the Adviser for securities lending agent services are included in Dividends from affiliated money market funds on the Statement of Operations.
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 instrument or asset. 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. |
K. | LIBOR Risk – The Fund may have investments in financial instruments that utilize the London Interbank Offered Rate (“LIBOR”) as the reference or benchmark rate for variable interest rate calculations. LIBOR is intended to measure the rate generally at which banks can lend and borrow from one another in the relevant currency on an unsecured basis. The UK Financial Conduct Authority (“FCA”), the regulator that oversees LIBOR, announced that the majority of LIBOR rates would cease to be published or would no longer be representative on January 1, 2022. Although the publication of most LIBOR rates ceased at the end of 2021, a selection of widely used USD LIBOR rates continues to be published until June 2023 to allow for an orderly transition away from these rates. |
There remains uncertainty and risks relating to the continuing LIBOR transition and its effects on the Fund and the instruments in which the Fund invests. There can be no assurance that the composition or characteristics of any alternative reference rates (“ARRs”) or financial instruments in which the Fund invests that utilize ARRs will be similar to or produce the same value or economic equivalence as LIBOR or that these instruments will have the same volume or liquidity. Additionally, there remains uncertainty and risks relating to certain “legacy” USD LIBOR instruments that were issued or entered into before December 31, 2021 and the process by which a replacement interest rate will be identified and implemented into these instruments when USD LIBOR is ultimately discontinued. The effects of such uncertainty and risks in “legacy” USD LIBOR instruments held by the Fund could result in losses to the Fund.
L. | 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. This practice does not apply to securities pledged as collateral for securities lending transactions. |
M. | Other Risks – Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
N. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2022, 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, 2023 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 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 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 June 30, 2023. 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, the Adviser has contractually agreed, through at least June 30, 2024, 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, 2022, the Adviser waived advisory fees of $8,821.
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, 2022, 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
26 | Invesco Short Term Bond Fund |
(“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, 2022, 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, reimburses IDI compensation at the annual rate of 0.15% of the Fund’s average daily net assets of Class A shares. The Fund pursuant to the Class C Plan and Class R Plan, pays IDI compensation at the annual rate of 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, 2023, to waive 12b-1 fees for Class C shares to the extent necessary to limit 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, 2022, 12b-1 fees incurred for Class C shares were $405,743 after fee waivers of $121,723.
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, 2022, IDI advised the Fund that IDI retained $39,292 in front-end sales commissions from the sale of Class A shares and $96,646 and $2,723 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 Adviser’s 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, 2022. 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 | $ | – | $ | 1,678,008,409 | $ | – | $ | 1,678,008,409 | ||||||||
| ||||||||||||||||
Asset-Backed Securities | – | 651,914,591 | 14,723,587 | 666,638,178 | ||||||||||||
| ||||||||||||||||
U.S. Treasury Securities | – | 66,995,983 | – | 66,995,983 | ||||||||||||
| ||||||||||||||||
U.S. Government Sponsored Agency Mortgage-Backed Securities | – | 19,445,146 | – | 19,445,146 | ||||||||||||
| ||||||||||||||||
Agency Credit Risk Transfer Notes | – | 17,762,576 | – | 17,762,576 | ||||||||||||
| ||||||||||||||||
Preferred Stocks | 1,891,500 | 6,590,236 | – | 8,481,736 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 31,904,058 | 115,102,421 | – | 147,006,479 | ||||||||||||
| ||||||||||||||||
Total Investments in Securities | 33,795,558 | 2,555,819,362 | 14,723,587 | 2,604,338,507 | ||||||||||||
| ||||||||||||||||
Other Investments - Assets* | ||||||||||||||||
| ||||||||||||||||
Investments Matured | – | 372,459 | – | 372,459 | ||||||||||||
| ||||||||||||||||
Futures Contracts | 2,958,333 | – | – | 2,958,333 | ||||||||||||
| ||||||||||||||||
2,958,333 | 372,459 | – | 3,330,792 | |||||||||||||
| ||||||||||||||||
Other Investments - Liabilities* | ||||||||||||||||
| ||||||||||||||||
Futures Contracts | (1,836,953 | ) | – | – | (1,836,953 | ) | ||||||||||
| ||||||||||||||||
Total Other Investments | 1,121,380 | 372,459 | – | 1,493,839 | ||||||||||||
| ||||||||||||||||
Total Investments | $ | 34,916,938 | $ | 2,556,191,821 | $ | 14,723,587 | $ | 2,605,832,346 | ||||||||
|
* | Futures contracts 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
27 | Invesco Short Term Bond Fund |
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, 2022:
Value | ||||
Derivative Assets | Interest Rate Risk | |||
| ||||
Unrealized appreciation on futures contracts –Exchange-Traded(a) | $ | 2,958,333 | ||
| ||||
Derivatives not subject to master netting agreements | (2,958,333 | ) | ||
| ||||
Total Derivative Assets subject to master netting agreements | $ | – | ||
|
Value | ||||
Derivative Liabilities | Interest Rate Risk | |||
| ||||
Unrealized depreciation on futures contracts –Exchange-Traded(a) | $ | (1,836,953 | ) | |
| ||||
Derivatives not subject to master netting agreements | 1,836,953 | |||
| ||||
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, 2022
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain on Statement of Operations | ||||
Interest Rate Risk | ||||
| ||||
Realized Gain: | ||||
Futures contracts | $ 8,354,390 | |||
| ||||
Change in Net Unrealized Appreciation: | ||||
Futures contracts | 2,537,633 | |||
| ||||
Total | $10,892,023 | |||
|
The table below summarizes the average notional value of derivatives held during the period.
Futures Contracts | ||||
| ||||
Average notional value | $ | 1,716,200,000 | ||
|
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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $3,464.
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.
28 | Invesco Short Term Bond Fund |
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 carryforward 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 28, 2022, as follows:
Capital Loss Carryforward* | ||||||||||||
| ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
| ||||||||||||
Not subject to expiration | $ | 34,576,752 | $ | 33,156,153 | $ | 67,732,905 | ||||||
|
* | 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the six months ended August 31, 2022 was $1,056,420,987 and $1,287,241,560, 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 | $ | 6,146,480 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (122,755,181 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (116,608,701 | ) | |
|
Cost of investments for tax purposes is $2,722,441,047.
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended August 31, 2022(a) | Year ended February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 21,952,846 | $ | 179,176,764 | 47,121,642 | $ | 405,494,521 | ||||||||||
| ||||||||||||||||
Class C | 1,307,147 | 10,660,463 | 7,301,728 | 62,972,099 | ||||||||||||
| ||||||||||||||||
Class R | 443,200 | 3,614,522 | 1,248,996 | 10,778,096 | ||||||||||||
| ||||||||||||||||
Class Y | 13,348,292 | 108,794,795 | 36,676,908 | 315,378,024 | ||||||||||||
| ||||||||||||||||
Class R5 | 25,155 | 204,692 | 28,429 | 242,350 | ||||||||||||
| ||||||||||||||||
Class R6 | 7,584,172 | 62,029,558 | 16,074,685 | 138,582,798 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 1,325,053 | 10,761,970 | 2,044,656 | 17,572,982 | ||||||||||||
| ||||||||||||||||
Class C | 126,378 | 1,026,170 | 227,765 | 1,959,880 | ||||||||||||
| ||||||||||||||||
Class R | 41,872 | 340,715 | 58,729 | 506,199 | ||||||||||||
| ||||||||||||||||
Class Y | 405,074 | 3,291,676 | 688,982 | 5,923,725 | ||||||||||||
| ||||||||||||||||
Class R5 | 989 | 8,013 | 1,038 | 8,892 | ||||||||||||
| ||||||||||||||||
Class R6 | 745,456 | 6,063,310 | 1,234,546 | 10,623,341 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 783,460 | 6,378,592 | 1,658,543 | 14,242,266 | ||||||||||||
| ||||||||||||||||
Class C | (783,413 | ) | (6,378,592 | ) | (1,658,225 | ) | (14,242,266 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (31,584,444 | ) | (257,642,177 | ) | (58,766,805 | ) | (505,196,352 | ) | ||||||||
| ||||||||||||||||
Class C | (4,902,143 | ) | (40,042,622 | ) | (11,240,934 | ) | (96,582,279 | ) | ||||||||
| ||||||||||||||||
Class R | (548,560 | ) | (4,476,620 | ) | (1,684,427 | ) | (14,510,987 | ) | ||||||||
| ||||||||||||||||
Class Y | (24,664,192 | ) | (201,495,932 | ) | (40,179,180 | ) | (345,010,512 | ) | ||||||||
| ||||||||||||||||
Class R5 | (4,782 | ) | (39,011 | ) | (5,702 | ) | (48,722 | ) | ||||||||
| ||||||||||||||||
Class R6 | (10,582,328 | ) | (86,310,291 | ) | (20,202,696 | ) | (173,549,301 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (24,980,768 | ) | $ | (204,034,005 | ) | (19,371,322 | ) | $ | (164,855,246 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 46% 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. |
29 | 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, 2022 through August 31, 2022.
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 | ACTUAL | HYPOTHETICAL expenses) | Annualized Expense Ratio | |||||||||
Ending Account Value | Expenses Paid During Period2 | Ending Account Value | Expenses Paid During Period2 | |||||||||
Class A | $1,000.00 | $971.10 | $3.13 | $1,022.03 | $3.21 | 0.63% | ||||||
Class C | 1,000.00 | 969.40 | 4.86 | 1,020.27 | 4.99 | 0.98 | ||||||
Class R | 1,000.00 | 969.50 | 4.86 | 1,020.27 | 4.99 | 0.98 | ||||||
Class Y | 1,000.00 | 970.70 | 2.38 | 1,022.79 | 2.45 | 0.48 | ||||||
Class R5 | 1,000.00 | 972.00 | 2.24 | 1,022.94 | 2.29 | 0.45 | ||||||
Class R6 | 1,000.00 | 972.40 | 1.89 | 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, 2022 through August 31, 2022, 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. |
30 | Invesco Short Term Bond Fund |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance with certain negotiated regulatory requirements. In
addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed 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 and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption through challenging environments. The Board
reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe and against the Bloomberg U.S. Government & Credit 1-3 Year Index (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, 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, which did not change its 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
31 | Invesco Short Term Bond 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 is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board 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 also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco
Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination 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. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the fees paid by the affiliated money market funds to Invesco Advisers and its affiliates. In this regard, the Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to the Fund’s investments. The Board also noted that Invesco Advisers has contractually agreed to waive through varying periods 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 advisory fees payable to Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds are for services that are not duplicative of services provided by Invesco Advisers to the Fund.
The Board considered that Invesco Advisers may serve as the Fund’s affiliated securities lending agent and evaluated the benefits realized by Invesco Advisers when serving in such role, including the compensation received. The Board considered Invesco Advisers’ securities lending platform and corporate governance structure for securities lending, including Invesco Advisers’ Securities Lending Governance Committee and its related responsibilities. The Board noted that to the extent the Fund utilizes Invesco Advisers as an affiliated
securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services without obtaining exemptive relief. The Board considered information provided by Invesco Advisers related to the performance of Invesco Advisers as securities lending agent, including a summary of the securities lending services provided to the Fund by Invesco Advisers and the compensation paid to Invesco Advisers for such services, as well as any revenues generated for the Fund in connection with such securities lending activity and the allocation of such revenue between the Fund and Invesco Advisers.
The Board also received information about commissions that an affiliated broker may receive for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers advised the Board of the benefits to the Fund of executing trades through the affiliated broker and that such trades were executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
32 | Invesco Short Term Bond 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 portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/ corporate/about-us/esg. 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 number(s): 811-05686 and 033-39519 | Invesco Distributors, Inc. | STB-SAR-1 |
Semiannual Report to Shareholders | August 31, 2022 |
Invesco U.S. Government Money Portfolio
Nasdaq:
Invesco Cash Reserve: GMQXX ∎ C: GMCXX ∎ R: GMLXX ∎ Y: OMBXX ∎ R6: GMRXX
2 | Fund Information | |
3 | Schedule of Investments | |
6 | Financial Statements | |
9 | Financial Highlights | |
10 | Notes to Financial Statements | |
14 | Fund Expenses | |
15 | Approval of Investment Advisory and Sub-Advisory Contracts |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data is 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 |
August 31, 2022
(Unaudited)
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||
U.S. Treasury Securities-47.20% | ||||||||||||||
U.S. Treasury Bills-34.57%(a) | ||||||||||||||
U.S. Treasury Bills | 0.08% | 09/08/2022 | $ | 8,000 | $ 7,999,883 | |||||||||
U.S. Treasury Bills | 2.27% | 09/20/2022 | 35,000 | 34,958,142 | ||||||||||
U.S. Treasury Bills | 1.29% | 09/27/2022 | 15,000 | 14,986,133 | ||||||||||
U.S. Treasury Bills | 2.29% | 10/04/2022 | 10,000 | 9,979,100 | ||||||||||
U.S. Treasury Bills | 1.86% | 10/06/2022 | 14,000 | 13,974,819 | ||||||||||
U.S. Treasury Bills | 1.52% | 10/11/2022 | 15,000 | 14,974,833 | ||||||||||
U.S. Treasury Bills | 2.12%-2.21% | 10/13/2022 | 24,000 | 23,939,660 | ||||||||||
U.S. Treasury Bills | 2.50% | 10/18/2022 | 25,000 | 24,918,729 | ||||||||||
U.S. Treasury Bills | 2.49% | 10/20/2022 | 24,000 | 23,919,313 | ||||||||||
U.S. Treasury Bills | 2.54% | 10/27/2022 | 26,000 | 25,898,080 | ||||||||||
U.S. Treasury Bills | 2.51% | 11/03/2022 | 40,000 | 39,825,700 | ||||||||||
U.S. Treasury Bills | 2.25% | 11/08/2022 | 30,000 | 29,873,633 | ||||||||||
U.S. Treasury Bills | 2.60% | 11/10/2022 | 20,000 | 19,899,667 | ||||||||||
U.S. Treasury Bills | 2.62% | 11/15/2022 | 12,000 | 11,935,000 | ||||||||||
U.S. Treasury Bills | 2.63% | 11/17/2022 | 20,000 | 19,888,350 | ||||||||||
U.S. Treasury Bills | 2.59%-2.74% | 11/22/2022 | 55,000 | 54,666,078 | ||||||||||
U.S. Treasury Bills | 2.76% | 11/25/2022 | 25,000 | 24,838,178 | ||||||||||
U.S. Treasury Bills | 2.71% | 11/29/2022 | 20,000 | 19,866,994 | ||||||||||
U.S. Treasury Bills | 2.81% | 12/13/2022 | 15,000 | 14,880,692 | ||||||||||
U.S. Treasury Bills | 2.92% | 12/20/2022 | 15,000 | 14,867,542 | ||||||||||
U.S. Treasury Bills | 1.19% | 02/23/2023 | 4,000 | 3,977,153 | ||||||||||
U.S. Treasury Bills | 3.01% | 07/13/2023 | 6,000 | 5,846,648 | ||||||||||
455,914,327 | ||||||||||||||
U.S. Treasury Floating Rate Notes-12.63% | ||||||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.06%)(b) | 2.96% | 10/31/2022 | 25,000 | 24,999,975 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.05%)(b) | 2.95% | 01/31/2023 | 10,000 | 10,000,067 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.03%)(b) | 2.94% | 04/30/2023 | 38,000 | 38,000,696 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.03%)(b) | 2.93% | 07/31/2023 | 21,000 | 21,000,194 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.04%)(b) | 2.94% | 10/31/2023 | 29,000 | 29,000,247 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate - 0.02%)(b) | 2.89% | 01/31/2024 | 5,000 | 4,998,782 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate - 0.08%)(b) | 2.83% | 04/30/2024 | 28,500 | 28,468,682 | ||||||||||
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.04%)(b) | 2.94% | 07/31/2024 | 10,000 | 9,999,996 | ||||||||||
166,468,639 | ||||||||||||||
Total U.S. Treasury Securities (Cost $622,382,966) | 622,382,966 | |||||||||||||
U.S. Government Sponsored Agency Securities-15.05% | ||||||||||||||
Federal Farm Credit Bank (FFCB)-11.11% | ||||||||||||||
Federal Farm Credit Bank (SOFR + 0.03%)(b) | 2.32% | 10/12/2022 | 7,000 | 6,999,976 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.01%)(b) | 2.30% | 11/16/2022 | 7,000 | 6,999,971 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.07%)(b) | 2.36% | 11/18/2022 | 5,000 | 5,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.06%)(b) | 2.35% | 12/28/2022 | 5,000 | 5,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.06%)(b) | 2.35% | 01/20/2023 | 5,000 | 5,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.06%)(b) | 2.35% | 02/09/2023 | 7,000 | 7,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34% | 02/17/2023 | 9,000 | 9,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.32% | 03/10/2023 | 6,000 | 6,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.33% | 05/19/2023 | 3,000 | 3,000,000 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3 | Invesco U.S. Government Money Portfolio |
Interest Rate | Maturity Date | Principal Amount (000) | Value | |||||||||||
Federal Farm Credit Bank (FFCB)-(continued) | ||||||||||||||
Federal Farm Credit Bank (SOFR + 0.03%)(b) | 2.32% | 06/14/2023 | $ | 3,500 | $ 3,500,000 | |||||||||
Federal Farm Credit Bank (SOFR + 0.02%)(b) | 2.31% | 06/23/2023 | 7,000 | 6,999,757 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.03%)(b) | 2.32% | 07/07/2023 | 4,000 | 4,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.32% | 09/20/2023 | 8,000 | 8,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34% | 09/29/2023 | 3,000 | 3,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34% | 10/16/2023 | 2,000 | 2,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.06%)(b) | 2.35% | 12/13/2023 | 3,000 | 3,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.33% | 12/15/2023 | 4,000 | 3,999,740 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.32% | 01/04/2024 | 3,000 | 3,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.06%)(b) | 2.35% | 01/10/2024 | 4,000 | 4,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.32% | 01/25/2024 | 4,500 | 4,500,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.33% | 02/05/2024 | 7,000 | 7,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34% | 02/20/2024 | 4,500 | 4,500,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34% | 02/23/2024 | 1,000 | 1,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.33% | 03/08/2024 | 2,000 | 2,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.33% | 03/15/2024 | 2,000 | 2,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.04%)(b) | 2.33% | 03/18/2024 | 13,000 | 13,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34% | 04/25/2024 | 4,000 | 4,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34% | 05/09/2024 | 5,000 | 5,000,000 | ||||||||||
Federal Farm Credit Bank (SOFR + 0.05%)(b) | 2.34% | 05/24/2024 | 8,000 | 8,000,000 | ||||||||||
146,499,444 | ||||||||||||||
Federal Home Loan Bank (FHLB)-3.94% | ||||||||||||||
Federal Home Loan Bank(c) | 0.00% | 09/16/2022 | 15,000 | 14,988,125 | ||||||||||
Federal Home Loan Bank (SOFR + 0.03%)(b) | 2.32% | 10/20/2022 | 17,000 | 17,000,000 | ||||||||||
Federal Home Loan Bank (SOFR + 0.07%)(b) | 2.36% | 11/10/2022 | 5,000 | 5,000,000 | ||||||||||
Federal Home Loan Bank (SOFR + 0.06%)(b) | 2.35% | 12/08/2022 | 15,000 | 15,000,000 | ||||||||||
51,988,125 | ||||||||||||||
Total U.S. Government Sponsored Agency Securities (Cost $198,487,569) |
| 198,487,569 | ||||||||||||
TOTAL INVESTMENTS IN SECURITIES (excluding Repurchase Agreements)-62.25% |
| 820,870,535 | ||||||||||||
Repurchase Amount | ||||||||||||||
Repurchase Agreements-37.72%(d) | ||||||||||||||
Bank of Nova Scotia, joint agreement dated 08/31/2022, aggregate maturing value of $500,031,944 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $510,000,069; 2.50% - 7.00%; 03/01/2024 - 08/01/2059) | 2.30% | 09/01/2022 | 20,001,278 | 20,000,000 | ||||||||||
Citigroup Global Markets, Inc., joint agreement dated 08/31/2022, aggregate maturing value of $300,019,167 (collateralized by U.S. Treasury obligations valued at $306,000,048; 0.13% - 2.13%; 11/15/2022 - 01/15/2023) | 2.30% | 09/01/2022 | 75,004,792 | 75,000,000 | ||||||||||
RBC Dominion Securities Inc., joint agreement dated 08/31/2022, aggregate maturing value of $1,500,095,833 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,530,000,000; 0.25% - 5.50%; 09/30/2022 - 06/25/2059) | 2.30% | 09/01/2022 | 150,009,583 | 150,000,000 | ||||||||||
Standard Chartered Bank, joint term agreement dated 08/25/2022, aggregate maturing value of $1,000,447,222 (collateralized by U.S. Treasury obligations valued at $1,020,456,176; 0.13% - 3.63%; 09/30/2022 - 05/15/2052)(e) | 2.30% | 09/01/2022 | 50,022,361 | 50,000,000 | ||||||||||
Sumitomo Mitsui Banking Corp., joint agreement dated 08/31/2022, aggregate maturing value of $1,800,115,500 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,836,000,000; 1.13% - 4.50%; 02/28/2025 - 10/20/2051) | 2.31% | 09/01/2022 | 72,440,413 | 72,435,765 | ||||||||||
TD Securities (USA) LLC, joint term agreement dated 08/31/2022, aggregate maturing value of $350,156,528 (collateralized by agency mortgage-backed securities valued at $357,000,001; 2.50% - 5.00%; 04/01/2047 - 07/01/2052)(e) | 2.30% | 09/07/2022 | 130,058,139 | 130,000,000 | ||||||||||
Total Repurchase Agreements (Cost $497,435,765) | 497,435,765 | |||||||||||||
TOTAL INVESTMENTS IN SECURITIES(f)-99.97% (Cost $1,318,306,300) | 1,318,306,300 | |||||||||||||
OTHER ASSETS LESS LIABILITIES-0.03% | 374,667 | |||||||||||||
NET ASSETS-100.00% | $1,318,680,967 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 | Invesco U.S. Government Money Portfolio |
Investment Abbreviations:
SOFR -Secured Overnight Financing Rate
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, 2022. |
(c) | Denotes a zero coupon security issued at a substantial discount from its value at maturity. |
(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) | Also represents cost for federal income tax purposes. |
Portfolio Composition by Maturity*
In days, as of 08/31/2022
1-7 | 37.6 | % | ||
8-30 | 5.5 | |||
31-60 | 12.3 | |||
61-90 | 20.0 | |||
91-180 | 6.4 | |||
181+ | 18.2 |
* | 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.
5 | Invesco U.S. Government Money Portfolio |
Statement of Assets and Liabilities
August 31, 2022
(Unaudited)
Assets: | ||||
Investments in unaffiliated securities, excluding repurchase agreements, at value and cost | $ | 820,870,535 | ||
| ||||
Repurchase agreements, at value and cost | 497,435,765 | |||
| ||||
Receivable for: | ||||
Fund shares sold | 1,489,018 | |||
| ||||
Interest | 933,707 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 111,041 | |||
| ||||
Total assets | 1,320,840,066 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 1,703,350 | |||
| ||||
Dividends | 9,978 | |||
| ||||
Accrued fees to affiliates | 222,386 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 4,062 | |||
| ||||
Accrued operating expenses | 17,995 | |||
| ||||
Trustee deferred compensation and retirement plans | 201,328 | |||
| ||||
Total liabilities | 2,159,099 | |||
| ||||
Net assets applicable to shares outstanding | $ | 1,318,680,967 | ||
|
Net assets consist of: | ||||
Shares of beneficial interest | $ | 1,318,981,328 | ||
| ||||
Distributable earnings (loss) | (300,361 | ) | ||
| ||||
$ | 1,318,680,967 | |||
| ||||
Net Assets: | ||||
Invesco Cash Reserve | $ | 53,806,255 | ||
| ||||
Class C | $ | 10,184,811 | ||
| ||||
Class R | $ | 6,396,062 | ||
| ||||
Class Y | $ | 1,248,283,840 | ||
| ||||
Class R6 | $ | 9,999 | ||
| ||||
Shares outstanding, no par value, unlimited number of shares authorized: | ||||
Invesco Cash Reserve | 53,808,833 | |||
| ||||
Class C | 10,185,315 | |||
| ||||
Class R | 6,396,354 | |||
| ||||
Class Y | 1,248,344,030 | |||
| ||||
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.
6 | Invesco U.S. Government Money Portfolio |
Statement of Operations
For the six months ended August 31, 2022
(Unaudited)
Investment income: | ||||
Interest | $ | 7,303,259 | ||
| ||||
Expenses: | ||||
Advisory fees | 2,789,070 | |||
| ||||
Administrative services fees | 298,908 | |||
| ||||
Custodian fees | 3,183 | |||
| ||||
Distribution fees: | ||||
Invesco Cash Reserve | 41,551 | |||
| ||||
Class C | 49,159 | |||
| ||||
Class R | 13,796 | |||
| ||||
Transfer agent fees - Invesco Cash Reserve, C, R and Y | 1,254,331 | |||
| ||||
Transfer agent fees - R6 | 2 | |||
| ||||
Trustees’ and officers’ fees and benefits | 16,547 | |||
| ||||
Registration and filing fees | 41,822 | |||
| ||||
Reports to shareholders | 43,928 | |||
| ||||
Professional services fees | 34,393 | |||
| ||||
Other | 8,173 | |||
| ||||
Total expenses | 4,594,863 | |||
| ||||
Less: Expenses reimbursed and expense offset arrangement(s) | (1,224,674 | ) | ||
| ||||
Net expenses | 3,370,189 | |||
| ||||
Net investment income | 3,933,070 | |||
| ||||
Net realized gain (loss) from unaffiliated investment securities | (70,582 | ) | ||
| ||||
Net increase in net assets resulting from operations | $ | 3,862,488 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 | Invesco U.S. Government Money Portfolio |
Statement of Changes in Net Assets
For the six months ended August 31, 2022 and the year ended February 28, 2022
(Unaudited)
August 31, | February 28, | |||||||
2022 | 2022 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 3,933,070 | $ | 65,540 | ||||
| ||||||||
Net realized gain (loss) | (70,582 | ) | (7,637 | ) | ||||
| ||||||||
Net increase in net assets resulting from operations | 3,862,488 | 57,903 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Invesco Cash Reserve | (139,260 | ) | (2,953 | ) | ||||
| ||||||||
Class C | (8,387 | ) | (502 | ) | ||||
| ||||||||
Class R | (10,903 | ) | (293 | ) | ||||
| ||||||||
Class Y | (3,774,486 | ) | (61,788 | ) | ||||
| ||||||||
Class R6 | (34 | ) | (4 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (3,933,070 | ) | (65,540 | ) | ||||
| ||||||||
Share transactions-net: | ||||||||
Invesco Cash Reserve | 328,304 | (7,223,024 | ) | |||||
| ||||||||
Class C | 2,080,813 | (2,914,449 | ) | |||||
| ||||||||
Class R | 1,354,765 | (815,540 | ) | |||||
| ||||||||
Class Y | (34,962,574 | ) | (187,178,723 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (31,198,692 | ) | (198,131,736 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (31,269,274 | ) | (198,139,373 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 1,349,950,241 | 1,548,089,614 | ||||||
| ||||||||
End of period | $ | 1,318,680,967 | $ | 1,349,950,241 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 | 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 on securities | 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 fee waivers | Ratio of net to average | ||||||||||||||||||||||||||||||||||||||||
Invesco Cash Reserve | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | $1.00 | $0.00 | $(0.00 | ) | $0.00 | $(0.00 | ) | $ - | $(0.00 | ) | $1.00 | 0.25 | % | $53,806 | 0.59 | %(d) | 0.81 | %(d) | 0.49 | %(d) | ||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.01 | 53,481 | 0.07 | 0.83 | 0.00 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.03 | 60,704 | 0.18 | 0.89 | 0.04 | |||||||||||||||||||||||||||||||||||||
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 | (d) | 0.94 | (d) | 1.14 | (d) | |||||||||||||||||||||||||||||||||
Period ended 07/31/19(e) | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | 1.00 | 0.30 | 3,285 | 0.67 | (d) | 0.86 | (d) | 1.67 | (d) | |||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.08 | 10,185 | 0.96 | (d) | 1.66 | (d) | 0.12 | (d) | |||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.01 | 8,105 | 0.07 | 1.68 | 0.00 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.01 | 11,019 | 0.19 | 1.74 | 0.03 | |||||||||||||||||||||||||||||||||||||
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 | (d) | 1.79 | (d) | 0.31 | (d) | |||||||||||||||||||||||||||||||||
Period ended 07/31/19(e) | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | 1.00 | 0.16 | 497 | 1.43 | (d) | 1.64 | (d) | 0.91 | (d) | |||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.17 | 6,396 | 0.77 | (d) | 1.16 | (d) | 0.31 | (d) | |||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.01 | 5,042 | 0.07 | 1.18 | 0.00 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.02 | 5,857 | 0.19 | 1.24 | 0.03 | |||||||||||||||||||||||||||||||||||||
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 | (d) | 1.28 | (d) | 0.81 | (d) | |||||||||||||||||||||||||||||||||
Period ended 07/31/19(e) | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | 1.00 | 0.23 | 182 | 1.08 | (d) | 1.08 | (d) | 1.27 | (d) | |||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.30 | 1,248,284 | 0.49 | (d) | 0.66 | (d) | 0.59 | (d) | |||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.01 | 1,283,313 | 0.07 | 0.68 | 0.00 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.04 | 1,470,499 | 0.18 | 0.74 | 0.04 | |||||||||||||||||||||||||||||||||||||
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 | (d) | 0.80 | (d) | 1.28 | (d) | |||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 08/31/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.33 | 10 | 0.42 | (d) | 0.51 | (d) | 0.66 | (d) | |||||||||||||||||||||||||||||||||
Year ended 02/28/22 | 1.00 | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.01 | 10 | 0.07 | 0.53 | 0.00 | ||||||||||||||||||||||||||||||||||||
Year ended 02/28/21 | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | - | (0.00 | ) | 1.00 | 0.05 | 10 | 0.16 | 0.57 | 0.06 | |||||||||||||||||||||||||||||||||||||
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 | (d) | 0.54 | (d) | 1.38 | (d) | |||||||||||||||||||||||||||||||||
Period ended 07/31/19(e) | 1.00 | 0.00 | 0.00 | 0.00 | (0.00 | ) | (0.00 | ) | (0.00 | ) | 1.00 | 0.34 | 10 | 0.48 | (d) | 0.48 | (d) | 1.88 | (d) |
(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 29, 2020 and the years ended July 31, 2019, 2018 and 2017, respectively. |
(d) | Annualized. |
(e) | 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.
9 | Invesco U.S. Government Money Portfolio |
August 31, 2022
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco U.S. Government Money Portfolio, (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 eight 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 eighth anniversary after a purchase of Class C shares.
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. |
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 (“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 |
10 | Invesco U.S. Government Money Portfolio |
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. 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of the Fund that holds securities of that entity will be adversely impacted. |
K. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations (including business closures) and supply chains, layoffs, lower consumer demand and employee availability, and defaults and credit downgrades, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally and cause general concern and uncertainty. The full economic impact and ongoing effects of COVID-19 (or other future epidemics or pandemics) at the macro-level and on individual businesses are unpredictable and may result in significant and prolonged effects on the Fund’s performance. |
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, 2022, 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, 2023, 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, 2023. 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 and/or Invesco Distributors, Inc., (“IDI”) voluntarily agreed to waive fees and/or reimburse expenses in order to increase the Fund’s yield. Voluntary fee waivers and/or reimbursements may be modified at any time upon consultation with the Board of Trustees without further notice to investors. For the six months ended August 31, 2022, Invesco voluntarily reimbursed class level expenses of $39,118, $29,687, $8,440 , $567,254 and $3 of Invesco Cash Reserve, Class C, Class R and Class Y shares, respectively, in order to increase the yield.
For the six months ended August 31, 2022, the Adviser contractually reimbursed class level expenses of $23,223, $4,121, $2,313, $535,532 and $2, of Invesco Cash Reserve, Class C, Class R, Class Y 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, 2022, 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
11 | Invesco U.S. Government Money Portfolio |
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, 2022, 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 the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund plans. Expenses before fee waivers under this agreement are shown as Distribution fees in the Statement of Operations. For the the six months ended August 31, 2022, expenses incurred after combined contractual waivers and voluntary yield waivers and reimbursements were $26,601, $23,249 and $7,566 for Invesco Cash Reserve, 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, 2022, IDI advised the Fund that IDI imposed CDSC on redemptions by shareholders for Class C shares of $2,401.
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, 2022, 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, 2022, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $14,982.
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 carryforward 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 28, 2022, as follows:
Capital Loss Carryforward* | ||||||
Expiration | Short-Term | Long-Term | Total | |||
Not subject to expiration | $7,637 | $- | $7,637 |
* | 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. |
12 | Invesco U.S. Government Money Portfolio |
NOTE 8–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
August 31, 2022 | February 28, 2022 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Invesco Cash Reserve | 23,291,081 | $ | 23,291,081 | 32,606,251 | $ | 32,606,251 | ||||||||||
| ||||||||||||||||
Class C | 7,105,074 | 7,105,074 | 4,837,791 | 4,837,791 | ||||||||||||
| ||||||||||||||||
Class R | 3,039,519 | 3,039,519 | 4,368,523 | 4,368,523 | ||||||||||||
| ||||||||||||||||
Class Y | 154,923,129 | 154,923,129 | 277,034,909 | 277,034,909 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Invesco Cash Reserve | 138,562 | 138,562 | 2,953 | 2,953 | ||||||||||||
| ||||||||||||||||
Class C | 8,387 | 8,387 | 502 | 502 | ||||||||||||
| ||||||||||||||||
Class R | 10,903 | 10,903 | 293 | 293 | ||||||||||||
| ||||||||||||||||
Class Y | 3,738,275 | 3,738,275 | 61,788 | 61,788 | ||||||||||||
| ||||||||||||||||
Automatic Conversion of Class C shares to Invesco Cash Reserve shares: | ||||||||||||||||
Invesco Cash Reserve | 230,861 | 230,861 | 896,898 | 896,898 | ||||||||||||
| ||||||||||||||||
Class C | (230,681 | ) | (230,861 | ) | (896,898 | ) | (896,898 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Invesco Cash Reserve | (23,332,200 | ) | (23,332,200 | ) | (40,729,126 | ) | (40,729,126 | ) | ||||||||
| ||||||||||||||||
Class C | (4,801,787 | ) | (4,801,787 | ) | (6,855,844 | ) | (6,855,844 | ) | ||||||||
| ||||||||||||||||
Class R | (1,695,657 | ) | (1,695,657 | ) | (5,184,356 | ) | (5,184,356 | ) | ||||||||
| ||||||||||||||||
Class Y | (193,623,978 | ) | (193,623,978 | ) | (464,275,420 | ) | (464,275,420 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (31,198,692 | ) | $ | (31,198,692 | ) | (198,131,736 | ) | $ | (198,131,736 | ) | ||||||
|
13 | 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, 2022 through August 31, 2022.
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) | |||||||||||
Class | Beginning Account Value (03/01/22) | Ending Account Value (08/31/22)1 | Expenses Paid During Period2 | Ending Account Value (08/31/22) | Expenses Paid During Period2 | Annualized Expense Ratio | ||||||
Invesco Cash Reserve | $1,000.00 | $1,002.50 | $2.98 | $1,022.23 | $3.01 | 0.59% | ||||||
C | 1,000.00 | 1,000.80 | 4.84 | 1,020.37 | 4.89 | 0.96 | ||||||
R | 1,000.00 | 1,001.70 | 3.88 | 1,021.32 | 3.92 | 0.77 | ||||||
Y | 1,000.00 | 1,003.00 | 2.47 | 1,022.74 | 2.50 | 0.49 | ||||||
R6 | 1,000.00 | 1,003.30 | 2.12 | 1,023.09 | 2.14 | 0.42 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2022 through August 31, 2022, 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. |
14 | Invesco U.S. Government Money Portfolio |
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 13, 2022, 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 (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, 2022. 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 has established an Investments Committee, which in turn has established Sub-Committees that 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 has established additional standing and ad hoc committees that meet regularly throughout the year to review matters within their purview. The Board took into account evaluations and reports that it received from its committees and sub-committees, as well as the information provided to the Board and its committees and sub-committees 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 and the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Board receives comparative investment performance and fee and expense data regarding the Invesco Funds prepared by 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. 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 accordance with certain negotiated regulatory requirements. In addition to meetings with Invesco Advisers and fund counsel throughout the year and as part of meetings convened on May 2, 2022 and June 13, 2022, the independent Trustees also discussed 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 and sub-advisory contracts, 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. The information received and considered by the Board was current as of various dates prior to the Board’s approval on June 13, 2022.
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 and oversight, credit analysis, and research capabilities. The Board considered information regarding Invesco Advisers’ programs for and resources devoted to risk management, including management of investment, enterprise, operational, liquidity, valuation and compliance risks, and technology used to manage such risks. The Board received a description of, and reports related to, Invesco Advisers’ global security program and business continuity plans and of its approach to data privacy and cybersecurity, including related testing. The Board considered how the cybersecurity and business continuity plans of Invesco Advisers and its key service providers operated in the remote and hybrid working environment resulting from the novel coronavirus (“COVID-19”) pandemic and paved the way for a hybrid working framework in a normalized environment as employees return to the office. 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 observed that Invesco Advisers’ systems preparedness and ongoing investment enabled Invesco Advisers to manage, operate and oversee the Invesco Funds with minimal impact or disruption
through challenging environments. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in running an investment management business, as well as its commitment of financial and other resources to such business. 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 to the Fund 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, 2021 to the performance of funds in the Broadridge performance universe. The Board noted that performance of Class Y shares of the Fund was in the second quintile of its performance universe for the one year period and the third 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 the Fund was equal to the performance universe median for the one year period and reasonably comparable to the performance universe median for the three and five year periods. The Board considered that the Fund was created in connection with Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries (the “Transaction”) and that the Fund’s performance prior to the closing of the Transaction 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, which did not change its conclusions.
15 | Invesco U.S. Government Money Portfolio |
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 is not able to provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in calculating 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 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 further noted that Invesco Advisers has voluntarily undertaken to waive fees to the extent necessary to assist the Fund in attempting to maintain a positive yield.
The Board also considered the fees charged by Invesco Advisers and its affiliates to other client accounts that are similarly managed. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to that provided by Invesco Advisers and its affiliates 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. Invesco Advisers also advised the Board that many of the similarly managed client accounts have all-inclusive fee structures, which are not easily un-bundled.
The Board also compared the Fund’s effective advisory fee rate (defined for this purpose as 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, 2021.
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 and the Invesco Funds, and the extent to which such economies of scale are shared with the Fund and the Invesco Funds. The Board 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 also shares in economies of scale through Invesco Advisers’ ability to negotiate lower fee arrangements with third party service providers. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements, as well as Invesco Advisers’ investment 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 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 most Funds individually. 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 noted that Invesco Advisers provided information demonstrating that Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the investment advisory agreement, and provided representations indicating that the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the 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 received comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board reviewed the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board noted that these services are provided to the Fund pursuant to written contracts that are reviewed and subject to approval on an annual basis by the Board based on its determination that the services are required for the operation of the Fund.
16 | Invesco U.S. Government Money Portfolio |
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Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
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∎ 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 portfolio 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, respectively, 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/corporate/about-us/esg. 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 number(s): 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 18, 2022, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the Principal Executive Officer (“PEO”) and Principal Financial Officer (“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 (“Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of October 18, 2022, the Registrant’s disclosure controls and procedures were reasonably designed so as 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. |
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 4, 2022 |
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 4, 2022 |
By: | /s/ Adrien Deberghes | |
Adrien Deberghes | ||
Principal Financial Officer | ||
Date: | November 4, 2022 |