UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-05769
Invesco High Income Trust II
(Exact name of registrant as specified in charter)
1555 Peachtree Street, N.E., Suite 1800 Atlanta, Georgia 30309
(Address of principal executive offices) (Zip code)
Sheri Morris 1555 Peachtree Street, N.E., Suite 1800 Atlanta, Georgia 30309
(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: 08/31/19
Item 1. Reports to Stockholders.
![](https://capedge.com/proxy/N-CSRS/0001193125-19-286875/g769276img30ab11b81.jpg)
![](https://capedge.com/proxy/N-CSRS/0001193125-19-286875/g769276imgb7ee10e42.jpg)
Semiannual Report to Shareholders | August 31, 2019 |
2 | Invesco High Income Trust II |
![]() Bruce Crockett |
![](https://capedge.com/proxy/N-CSRS/0001193125-19-286875/g769276img4c7d0b8f3.jpg)
![]() Andrew Schlossberg |
![](https://capedge.com/proxy/N-CSRS/0001193125-19-286875/g769276img378436d44.jpg)
3 | Invesco High Income Trust II |
Trust at NAV | 4.28% |
Trust at Market Value | 4.07 |
Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Index▼ | 4.46 |
Market Price Discount to NAV as of 8/31/19 | -7.94 |
Source:▼FactSet Research Systems Inc. | |
4 | Invesco High Income Trust II |
■ | Add to your account: |
You may increase your shares in your Trust easily and automatically with the Plan. | |
■ | Low transaction costs: |
Shareholders who participate in the Plan may be able to buy shares at below-market prices when the Trust is trading at a premium to its net asset value (NAV). In addition, transaction costs are low because when new shares are issued by the Trust, there is no brokerage fee, and when shares are bought in blocks on the open market, the per share fee is shared among all participants. | |
■ | Convenience: |
You will receive a detailed account statement from Computershare Trust Company, N.A. (the Agent), which administers the Plan. The statement shows your total Distributions, date of investment, shares acquired, and price per share, as well as the total number of shares in your reinvestment account. You can also access your account at invesco.com/closed-end. | |
■ | Safekeeping: |
The Agent will hold the shares it has acquired for you in safekeeping. |
1. | Premium: If the Trust is trading at a premium — a market price that is higher than its NAV — you’ll pay either the NAV or 95 percent of the market price, whichever is greater. When the Trust trades at a premium, you may pay less for your reinvested shares than an investor purchasing shares on the stock exchange. Keep in mind, a portion of your price reduction may be taxable because you are receiving shares at less than market price. |
2. | Discount: If the Trust is trading at a discount — a market price that is lower than its NAV — you’ll pay the market price for your reinvested shares. |
1. | If you opt to continue to hold your non-certificated whole shares (Investment Plan Book Shares), they will be held by the Agent electronically as Direct Registration Book-Shares (Book-Entry Shares) and fractional shares will be sold at the then-current market price. Proceeds will be sent via check to your address of record after deducting applicable fees, including per share fees such as any applicable brokerage commissions the Agent is required to pay. |
2. | If you opt to sell your shares through the Agent, we will sell all full and fractional shares and send the proceeds via check to your address of record after deducting a $2.50 service fee and per share fees. Per share fees include any applicable brokerage commissions the Agent is required to pay. |
3. | You may sell your shares through your financial adviser through the Direct Registration System (DRS). DRS is a service within the securities industry that allows Trust shares to be held in your name in electronic format. You retain full ownership of your shares, without having to hold a share certificate. You should contact your financial adviser to learn more about any restrictions or fees that may apply. |
5 | Invesco High Income Trust II |
Principal Amount | Value | ||||
U.S. Dollar Denominated Bonds & Notes–130.42%(b) | |||||
Aerospace & Defense–4.18% | |||||
Bombardier, Inc. (Canada), | |||||
8.75%, 12/01/2021(c) | $281,000 | $305,939 | |||
5.75%, 03/15/2022(c) | 123,000 | 124,691 | |||
6.13%, 01/15/2023(c) | 410,000 | 408,975 | |||
7.50%, 03/15/2025(c) | 613,000 | 599,207 | |||
7.88%, 04/15/2027(c) | 379,000 | 368,104 | |||
Moog, Inc., 5.25%, 12/01/2022(c) | 335,000 | 342,119 | |||
TransDigm UK Holdings PLC, 6.88%, 05/15/2026 | 801,000 | 841,050 | |||
TransDigm, Inc., | |||||
6.50%, 07/15/2024 | 317,000 | 328,491 | |||
6.50%, 05/15/2025 | 336,000 | 351,540 | |||
6.25%, 03/15/2026(c) | 756,000 | 817,410 | |||
Triumph Group, Inc., 7.75%, 08/15/2025 | 768,000 | 771,840 | |||
5,259,366 | |||||
Agricultural & Farm Machinery–0.82% | |||||
Titan International, Inc., 6.50%, 11/30/2023 | 1,285,000 | 1,031,213 | |||
Agricultural Products–0.39% | |||||
Kernel Holding S.A. (Ukraine), REGS, 8.75%, 01/31/2022(c) | 457,000 | 485,695 | |||
Air Freight & Logistics–0.15% | |||||
XPO Logistics, Inc., 6.50%, 06/15/2022(c) | 187,000 | 191,568 | |||
Alternative Carriers–1.90% | |||||
CenturyLink, Inc., | |||||
Series S, 6.45%, 06/15/2021 | 587,000 | 620,019 | |||
Series Y, 7.50%, 04/01/2024 | 580,000 | 645,238 | |||
Level 3 Financing, Inc., | |||||
5.38%, 05/01/2025 | 612,000 | 638,010 | |||
5.25%, 03/15/2026 | 466,000 | 486,970 | |||
2,390,237 | |||||
Aluminum–0.95% | |||||
Alcoa Nederland Holding B.V., 6.75%, 09/30/2024(c) | 800,000 | 842,000 | |||
Novelis Corp., 6.25%, 08/15/2024(c) | 332,000 | 348,600 | |||
1,190,600 | |||||
Apparel Retail–1.37% | |||||
L Brands, Inc., | |||||
5.63%, 02/15/2022 | 595,000 | 627,725 | |||
6.88%, 11/01/2035 | 416,000 | 353,600 | |||
6.75%, 07/01/2036 | 104,000 | 87,880 |
Principal Amount | Value | ||||
Apparel Retail–(continued) | |||||
Michaels Stores, Inc., 8.00%, 07/15/2027(c) | $684,000 | $657,645 | |||
1,726,850 | |||||
Apparel, Accessories & Luxury Goods–0.29% | |||||
William Carter Co. (The), 5.63%, 03/15/2027(c) | 340,000 | 363,368 | |||
Asset Management & Custody Banks–0.29% | |||||
Prime Security Services Borrower LLC/Prime Finance, Inc., 9.25%, 05/15/2023(c) | 345,000 | 363,449 | |||
Auto Parts & Equipment–0.75% | |||||
Dana, Inc., 5.50%, 12/15/2024 | 229,000 | 234,725 | |||
Delphi Technologies PLC, 5.00%, 10/01/2025(c) | 445,000 | 386,038 | |||
Flexi-Van Leasing, Inc., 10.00%, 02/15/2023(c) | 328,000 | 322,260 | |||
943,023 | |||||
Automobile Manufacturers–1.34% | |||||
Ford Motor Credit Co. LLC, 5.60%, 01/07/2022 | 598,000 | 632,591 | |||
J.B. Poindexter & Co., Inc., 7.13%, 04/15/2026(c) | 1,026,000 | 1,054,215 | |||
Motors Liquidation Co., 0.00%, 07/15/2033(d)(e) | 1,640,000 | 0 | |||
1,686,806 | |||||
Automotive Retail–1.66% | |||||
Capitol Investment Merger Sub 2 LLC, 10.00%, 08/01/2024(c) | 184,000 | 191,360 | |||
Lithia Motors, Inc., 5.25%, 08/01/2025(c) | 230,000 | 238,912 | |||
Murphy Oil USA, Inc., 5.63%, 05/01/2027 | 613,000 | 646,715 | |||
Penske Automotive Group, Inc., 5.50%, 05/15/2026 | 968,000 | 1,017,610 | |||
2,094,597 | |||||
Broadcasting–3.17% | |||||
AMC Networks, Inc., | |||||
5.00%, 04/01/2024 | 741,000 | 765,082 | |||
4.75%, 08/01/2025 | 121,000 | 124,025 | |||
Clear Channel Worldwide Holdings, Inc., 9.25%, 02/15/2024(c) | 1,101,000 | 1,209,724 | |||
Gray Television, Inc., 7.00%, 05/15/2027(c) | 305,000 | 334,646 | |||
iHeartCommunications, Inc., | |||||
8.38%, 05/01/2027 | 545,000 | 590,644 | |||
5.25%, 08/15/2027(c) | 364,000 | 383,630 | |||
Tribune Media Co., 5.88%, 07/15/2022 | 137,000 | 139,013 |
6 | Invesco High Income Trust II |
Principal Amount | Value | ||||
Broadcasting–(continued) | |||||
TV Azteca, S.A.B. de C.V. (Mexico), REGS, 8.25%, 08/09/2024(c) | $450,000 | $441,567 | |||
3,988,331 | |||||
Building Products–0.17% | |||||
Standard Industries, Inc., 6.00%, 10/15/2025(c) | 200,000 | 211,250 | |||
Cable & Satellite–11.16% | |||||
Altice Financing S.A. (Luxembourg), | |||||
6.63%, 02/15/2023(c) | 425,000 | 439,344 | |||
7.50%, 05/15/2026(c) | 450,000 | 480,375 | |||
Altice Luxembourg S.A. (Luxembourg), | |||||
7.75%, 05/15/2022(c) | 200,000 | 205,605 | |||
10.50%, 05/15/2027(c) | 428,000 | 466,520 | |||
CCO Holdings LLC/CCO Holdings Capital Corp., | |||||
5.75%, 09/01/2023 | 675,000 | 689,917 | |||
5.75%, 02/15/2026(c) | 1,855,000 | 1,968,619 | |||
CSC Holdings, LLC, | |||||
7.75%, 07/15/2025(c) | 750,000 | 807,187 | |||
10.88%, 10/15/2025(c) | 419,000 | 476,351 | |||
6.63%, 10/15/2025(c) | 415,000 | 445,328 | |||
5.50%, 05/15/2026(c) | 425,000 | 450,500 | |||
6.50%, 02/01/2029(c) | 687,000 | 771,157 | |||
5.75%, 01/15/2030(c) | 225,000 | 235,688 | |||
DISH DBS Corp., | |||||
7.88%, 09/01/2019 | 978,000 | 978,000 | |||
5.88%, 11/15/2024 | 1,865,000 | 1,781,168 | |||
7.75%, 07/01/2026 | 178,000 | 175,330 | |||
Sirius XM Radio, Inc., 5.38%, 07/15/2026(c) | 356,000 | 377,360 | |||
Telenet Finance Luxembourg Notes S.a r.l. (Belgium), 5.50%, 03/01/2028(c) | 400,000 | 408,800 | |||
Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH (Germany), 5.00%, 01/15/2025(c) | 855,000 | 886,096 | |||
UPC Holding B.V. (Netherlands), 5.50%, 01/15/2028(c) | 200,000 | 209,000 | |||
UPCB Finance IV Ltd. (Netherlands), 5.38%, 01/15/2025(c) | 250,000 | 258,563 | |||
Virgin Media Finance PLC (United Kingdom), REGS, 6.00%, 10/15/2024(c) | 218,000 | 225,903 | |||
Virgin Media Secured Finance PLC (United Kingdom), 5.50%, 08/15/2026(c) | 269,000 | 282,114 | |||
VTR Finance B.V. (Chile), 6.88%, 01/15/2024(c) | 557,000 | 577,191 | |||
Ziggo B.V. (Netherlands), 5.50%, 01/15/2027(c) | 175,000 | 185,491 | |||
Ziggo Bond Co., B.V. (Netherlands), REGS, 5.88%, 01/15/2025(c) | 250,000 | 259,688 | |||
14,041,295 |
Principal Amount | Value | ||||
Casinos & Gaming–3.24% | |||||
Boyd Gaming Corp., | |||||
6.38%, 04/01/2026 | $230,000 | $244,663 | |||
6.00%, 08/15/2026 | 212,000 | 224,720 | |||
Cirsa Finance International S.a.r.l. (Spain), 7.88%, 12/20/2023(c) | 200,000 | 212,131 | |||
Codere Finance 2 (Luxembourg) S.A. (Spain), 7.63%, 11/01/2021(c) | 240,000 | 234,050 | |||
Melco Resorts Finance Ltd. (Hong Kong), 5.63%, 07/17/2027(c) | 279,000 | 284,955 | |||
MGM China Holdings Ltd. (Macau), 5.88%, 05/15/2026(c) | 206,000 | 214,755 | |||
MGM Resorts International, | |||||
7.75%, 03/15/2022 | 327,000 | 367,950 | |||
6.00%, 03/15/2023 | 325,000 | 358,313 | |||
Scientific Games International, Inc., 10.00%, 12/01/2022 | 426,000 | 443,573 | |||
Studio City Finance Ltd. (Macau), 7.25%, 02/11/2024(c) | 586,000 | 614,567 | |||
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 5.50%, 03/01/2025(c) | 826,000 | 873,495 | |||
4,073,172 | |||||
Coal & Consumable Fuels–0.93% | |||||
SunCoke Energy Partners L.P./SunCoke Energy Partners Finance Corp., 7.50%, 06/15/2025(c) | 1,227,000 | 1,166,417 | |||
Commodity Chemicals–1.04% | |||||
Koppers, Inc., 6.00%, 02/15/2025(c) | 446,000 | 435,965 | |||
Nufarm Australia Ltd./Nufarm Americas, Inc. (Australia), 5.75%, 04/30/2026(c) | 290,000 | 274,775 | |||
Olin Corp., 5.63%, 08/01/2029 | 569,000 | 592,471 | |||
1,303,211 | |||||
Communications Equipment–1.48% | |||||
CommScope Technologies LLC, 6.00%, 06/15/2025(c) | 1,126,000 | 1,010,585 | |||
Hughes Satellite Systems Corp., | |||||
7.63%, 06/15/2021 | 619,000 | 670,068 | |||
5.25%, 08/01/2026 | 171,000 | 181,901 | |||
1,862,554 | |||||
Construction & Engineering–0.82% | |||||
AECOM, 5.13%, 03/15/2027 | 266,000 | 279,172 | |||
William Lyon Homes, Inc., | |||||
6.00%, 09/01/2023 | 136,000 | 141,780 | |||
6.63%, 07/15/2027(c) | 604,000 | 607,020 | |||
1,027,972 | |||||
Consumer Finance–3.25% | |||||
Ally Financial, Inc., | |||||
8.00%, 03/15/2020 | 240,000 | 247,320 | |||
5.13%, 09/30/2024 | 900,000 | 1,008,000 | |||
4.63%, 03/30/2025 | 704,000 | 771,760 |
7 | Invesco High Income Trust II |
Principal Amount | Value | ||||
Consumer Finance–(continued) | |||||
Navient Corp., | |||||
8.00%, 03/25/2020 | $640,000 | $660,800 | |||
7.25%, 01/25/2022 | 325,000 | 357,500 | |||
7.25%, 09/25/2023 | 935,000 | 1,041,356 | |||
4,086,736 | |||||
Copper–1.89% | |||||
First Quantum Minerals Ltd. (Zambia), 7.50%, 04/01/2025(c) | 555,000 | 510,600 | |||
Freeport-McMoRan, Inc., 5.40%, 11/14/2034 | 1,044,000 | 1,007,460 | |||
Taseko Mines Ltd. (Canada), 8.75%, 06/15/2022(c) | 899,000 | 860,792 | |||
2,378,852 | |||||
Diversified Banks–1.07% | |||||
Barclays Bank PLC (United Kingdom), 7.63%, 11/21/2022 | 200,000 | 220,643 | |||
Credit Agricole S.A. (France), REGS, 8.13%(c)(f) | 488,000 | 570,550 | |||
Societe Generale S.A. (France), REGS, 7.38%(c)(f) | 288,000 | 303,480 | |||
Standard Chartered PLC (United Kingdom), REGS, 7.50%(c)(f) | 245,000 | 256,944 | |||
1,351,617 | |||||
Diversified Chemicals–0.36% | |||||
Chemours Co. (The), 7.00%, 05/15/2025 | 210,000 | 207,900 | |||
Trinseo Materials Operating S.C.A./Trinseo Materials Finance, Inc., 5.38%, 09/01/2025(c) | 264,000 | 248,820 | |||
456,720 | |||||
Diversified Metals & Mining–0.77% | |||||
Hudbay Minerals, Inc. (Canada), 7.63%, 01/15/2025(c) | 532,000 | 542,629 | |||
Vedanta Resources Ltd. (India), 6.38%, 07/30/2022(c) | 444,000 | 427,350 | |||
969,979 | |||||
Diversified REITs–0.73% | |||||
Colony Capital, Inc., | |||||
Conv., 3.88%, 01/15/2021 | 36,000 | 35,325 | |||
5.00%, 04/15/2023 | 310,000 | 299,190 | |||
CyrusOne L.P./CyrusOne Finance Corp., | |||||
5.00%, 03/15/2024 | 240,000 | 248,400 | |||
5.38%, 03/15/2027 | 314,000 | 334,803 | |||
917,718 | |||||
Diversified Support Services–0.43% | |||||
IAA Spinco, Inc., 5.50%, 06/15/2027(c) | 504,000 | 538,020 | |||
Electric Utilities–0.25% | |||||
Southern Co. (The), Series B, 5.50%, 03/15/2057 | 298,000 | 309,379 |
Principal Amount | Value | ||||
Electronic Equipment & Instruments–0.64% | |||||
Itron, Inc., 5.00%, 01/15/2026(c) | $460,000 | $471,500 | |||
MTS Systems Corp., 5.75%, 08/15/2027(c) | 317,000 | 332,058 | |||
803,558 | |||||
Environmental & Facilities Services–1.53% | |||||
Core & Main L.P., 6.13%, 08/15/2025(c) | 620,000 | 632,400 | |||
GFL Environmental, Inc. (Canada), 7.00%, 06/01/2026(c) | 825,000 | 858,000 | |||
Waste Pro USA, Inc., 5.50%, 02/15/2026(c) | 418,000 | 436,810 | |||
1,927,210 | |||||
Fertilizers & Agricultural Chemicals–0.42% | |||||
OCI N.V. (Netherlands), 6.63%, 04/15/2023(c) | 504,000 | 534,240 | |||
Financial Exchanges & Data–0.27% | |||||
MSCI, Inc., 5.25%, 11/15/2024(c) | 330,000 | 344,256 | |||
Food Distributors–0.63% | |||||
US Foods, Inc., 5.88%, 06/15/2024(c) | 766,000 | 794,710 | |||
Food Retail–1.41% | |||||
Albertsons Cos. LLC/Safeway, Inc./New Albertson’s, Inc./Albertson’s LLC, | |||||
6.63%, 06/15/2024 | 714,000 | 751,485 | |||
7.50%, 03/15/2026(c) | 494,000 | 552,045 | |||
5.88%, 02/15/2028(c) | 448,000 | 473,249 | |||
1,776,779 | |||||
Forest Products–0.39% | |||||
Norbord, Inc. (Canada), 5.75%, 07/15/2027(c) | 481,000 | 490,620 | |||
Gas Utilities–1.43% | |||||
AmeriGas Partners, L.P./AmeriGas Finance Corp., | |||||
5.63%, 05/20/2024 | 404,000 | 430,765 | |||
5.88%, 08/20/2026 | 408,000 | 445,108 | |||
Suburban Propane Partners, L.P./Suburban Energy Finance Corp., 5.50%, 06/01/2024 | 900,000 | 918,000 | |||
1,793,873 | |||||
Health Care Equipment–0.58% | |||||
Hill-Rom Holdings, Inc., 5.00%, 02/15/2025(c) | 596,000 | 615,370 | |||
Teleflex, Inc., 4.88%, 06/01/2026 | 109,000 | 115,372 | |||
730,742 | |||||
Health Care Facilities–5.38% | |||||
Acadia Healthcare Co., Inc., 6.50%, 03/01/2024 | 375,000 | 389,062 | |||
Community Health Systems, Inc., 6.25%, 03/31/2023 | 438,000 | 425,451 | |||
HCA Healthcare, Inc., 6.25%, 02/15/2021 | 610,000 | 642,269 |
8 | Invesco High Income Trust II |
Principal Amount | Value | ||||
Health Care Facilities–(continued) | |||||
HCA, Inc., | |||||
7.50%, 02/15/2022 | $283,000 | $317,614 | |||
5.38%, 02/01/2025 | 540,000 | 600,750 | |||
5.25%, 04/15/2025 | 551,000 | 615,739 | |||
5.88%, 02/15/2026 | 824,000 | 942,038 | |||
5.38%, 09/01/2026 | 206,000 | 230,205 | |||
5.50%, 06/15/2047 | 831,000 | 956,290 | |||
Tenet Healthcare Corp., | |||||
8.13%, 04/01/2022 | 415,000 | 448,677 | |||
6.75%, 06/15/2023 | 1,159,000 | 1,195,219 | |||
6,763,314 | |||||
Health Care REITs–0.74% | |||||
MPT Operating Partnership L.P./MPT Finance Corp., 5.00%, 10/15/2027 | 874,000 | 935,180 | |||
Health Care Services–3.62% | |||||
AMN Healthcare, Inc., 5.13%, 10/01/2024(c) | 410,000 | 422,300 | |||
CHS/Community Health Systems, Inc., 8.00%, 03/15/2026(c) | 481,000 | 462,962 | |||
Eagle Holding Co. II, LLC, 8.38% PIK Rate, 7.63% Cash Rate, 05/15/2022(c)(g) | 683,000 | 691,537 | |||
Envision Healthcare Corp., 8.75%, 10/15/2026(c) | 253,000 | 139,150 | |||
Hadrian Merger Sub, Inc., 8.50%, 05/01/2026(c) | 696,000 | 668,160 | |||
MPH Acquisition Holdings LLC, 7.13%, 06/01/2024(c) | 985,000 | 885,328 | |||
Polaris Intermediate Corp., 9.25% PIK Rate, 8.50% Cash Rate, 12/01/2022(c)(g) | 431,000 | 364,195 | |||
Select Medical Corp., 6.25%, 08/15/2026(c) | 186,000 | 193,998 | |||
Surgery Center Holdings, Inc., | |||||
6.75%, 07/01/2025(c) | 130,000 | 111,881 | |||
10.00%, 04/15/2027(c) | 330,000 | 316,800 | |||
Team Health Holdings, Inc., 6.38%, 02/01/2025(c) | 450,000 | 303,750 | |||
4,560,061 | |||||
Home Improvement Retail–0.57% | |||||
Hillman Group, Inc. (The), 6.38%, 07/15/2022(c) | 801,000 | 714,893 | |||
Homebuilding–3.25% | |||||
Beazer Homes USA, Inc., | |||||
8.75%, 03/15/2022 | 541,000 | 566,697 | |||
6.75%, 03/15/2025 | 641,000 | 648,211 | |||
5.88%, 10/15/2027 | 85,000 | 80,963 | |||
KB Home, 8.00%, 03/15/2020 | 243,000 | 250,594 | |||
Lennar Corp., | |||||
8.38%, 01/15/2021 | 112,000 | 120,960 | |||
5.38%, 10/01/2022 | 640,000 | 685,600 | |||
4.75%, 11/15/2022 | 135,000 | 142,931 | |||
5.25%, 06/01/2026 | 261,000 | 285,143 |
Principal Amount | Value | ||||
Homebuilding–(continued) | |||||
Meritage Homes Corp., 7.15%, 04/15/2020 | $300,000 | $309,375 | |||
Taylor Morrison Communities, Inc., 5.75%, 01/15/2028(c) | 390,000 | 415,350 | |||
Taylor Morrison Communities, Inc./Taylor Morrison Holdings II, Inc., 5.88%, 04/15/2023(c) | 548,000 | 586,360 | |||
4,092,184 | |||||
Household Products–1.44% | |||||
Reynolds Group Issuer Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer (Luxembourg) S.A., 7.00%, 07/15/2024(c) | 874,000 | 905,136 | |||
Reynolds Group Issuer, Inc./LLC, 5.13%, 07/15/2023(c) | 207,000 | 213,324 | |||
Spectrum Brands, Inc., 5.75%, 07/15/2025 | 663,000 | 692,835 | |||
1,811,295 | |||||
Independent Power Producers & Energy Traders–1.93% | |||||
AES Corp. (The), 5.50%, 04/15/2025 | 1,199,000 | 1,254,490 | |||
Calpine Corp., 5.50%, 02/01/2024 | 294,000 | 297,304 | |||
NRG Energy, Inc., | |||||
6.63%, 01/15/2027 | 417,000 | 451,924 | |||
5.25%, 06/15/2029(c) | 398,000 | 425,191 | |||
2,428,909 | |||||
Industrial Machinery–2.20% | |||||
Cleaver-Brooks, Inc., 7.88%, 03/01/2023(c) | 1,051,000 | 969,547 | |||
EnPro Industries, Inc., 5.75%, 10/15/2026 | 888,000 | 932,400 | |||
Mueller Industries, Inc., 6.00%, 03/01/2027 | 847,000 | 859,705 | |||
2,761,652 | |||||
Integrated Oil & Gas–0.58% | |||||
Petrobras Global Finance B.V. (Brazil), 5.75%, 02/01/2029 | 675,000 | 732,713 | |||
Integrated Telecommunication Services–6.11% | |||||
Altice France S.A. (France), | |||||
6.25%, 05/15/2024(c) | 312,000 | 322,817 | |||
7.38%, 05/01/2026(c) | 703,000 | 752,210 | |||
Cincinnati Bell, Inc., | |||||
7.00%, 07/15/2024(c) | 417,000 | 382,598 | |||
8.00%, 10/15/2025(c) | 84,000 | 74,154 | |||
CommScope, Inc., | |||||
6.00%, 03/01/2026(c) | 501,000 | 512,773 | |||
8.25%, 03/01/2027(c) | 169,000 | 166,254 | |||
Frontier Communications Corp., | |||||
10.50%, 09/15/2022 | 1,815,000 | 950,606 | |||
11.00%, 09/15/2025 | 344,000 | 176,300 |
9 | Invesco High Income Trust II |
Principal Amount | Value | ||||
Integrated Telecommunication Services–(continued) | |||||
Intelsat Jackson Holdings S.A. (Luxembourg), | |||||
5.50%, 08/01/2023 | $924,000 | $845,460 | |||
8.50%, 10/15/2024(c) | 490,000 | 487,550 | |||
9.75%, 07/15/2025(c) | 256,000 | 264,000 | |||
Telecom Italia Capital S.A. (Italy), | |||||
6.38%, 11/15/2033 | 92,000 | 97,750 | |||
7.20%, 07/18/2036 | 433,000 | 484,960 | |||
T-Mobile USA, Inc., | |||||
6.38%, 03/01/2025 | 1,270,000 | 1,318,260 | |||
6.50%, 01/15/2026 | 787,000 | 847,992 | |||
7,683,684 | |||||
Interactive Media & Services–1.47% | |||||
Cumulus Media New Holdings, Inc., 6.75%, 07/01/2026(c) | 509,000 | 525,543 | |||
Diamond Sports Group LLC/Diamond Sports Finance Co., | |||||
5.38%, 08/15/2026(c) | 522,000 | 549,405 | |||
6.63%, 08/15/2027(c) | 743,000 | 780,150 | |||
1,855,098 | |||||
Leisure Facilities–0.59% | |||||
Cedar Fair L.P./Canada’s Wonderland Co./Magnum Management Corp., 5.38%, 06/01/2024 | 259,000 | 267,741 | |||
Six Flags Entertainment Corp., 4.88%, 07/31/2024(c) | 455,000 | 472,063 | |||
739,804 | |||||
Leisure Products–0.29% | |||||
Mattel, Inc., 6.75%, 12/31/2025(c) | 350,000 | 360,500 | |||
Managed Health Care–1.42% | |||||
Centene Corp., 5.38%, 06/01/2026(c) | 335,000 | 358,969 | |||
Molina Healthcare, Inc., 4.88%, 06/15/2025(c) | 331,000 | 338,861 | |||
WellCare Health Plans, Inc., | |||||
5.25%, 04/01/2025 | 745,000 | 782,846 | |||
5.38%, 08/15/2026(c) | 290,000 | 309,938 | |||
1,790,614 | |||||
Metal & Glass Containers–0.89% | |||||
Ardagh Packaging Finance PLC/Ardagh Holdings USA, Inc. (Ireland), 6.00%, 02/15/2025(c) | 200,000 | 209,375 | |||
Berry Global, Inc., 6.00%, 10/15/2022 | 333,000 | 340,076 | |||
Flex Acquisition Co., Inc., 7.88%, 07/15/2026(c) | 474,000 | 430,155 | |||
OI European Group B.V., 4.00%, 03/15/2023(c) | 138,000 | 139,380 | |||
1,118,986 | |||||
Movies & Entertainment–1.70% | |||||
AMC Entertainment Holdings, Inc., | |||||
5.75%, 06/15/2025 | 575,000 | 548,406 | |||
6.13%, 05/15/2027 | 611,000 | 566,703 |
Principal Amount | Value | ||||
Movies & Entertainment–(continued) | |||||
Netflix, Inc., | |||||
5.75%, 03/01/2024 | $475,000 | $523,094 | |||
5.88%, 11/15/2028 | 441,000 | 494,471 | |||
2,132,674 | |||||
Multi-line Insurance–0.10% | |||||
Acrisure LLC/Acrisure Finance, Inc., 8.13%, 02/15/2024(c) | 122,000 | 131,684 | |||
Oil & Gas Drilling–3.06% | |||||
Diamond Offshore Drilling, Inc., 4.88%, 11/01/2043 | 226,000 | 129,950 | |||
Ensign Drilling, Inc. (Canada), 9.25%, 04/15/2024(c) | 425,000 | 398,438 | |||
Noble Holding International Ltd., 7.75%, 01/15/2024 | 1,089,000 | 729,630 | |||
Precision Drilling Corp. (Canada), | |||||
6.50%, 12/15/2021 | 71,773 | 71,952 | |||
7.75%, 12/15/2023 | 92,000 | 91,310 | |||
5.25%, 11/15/2024 | 372,000 | 320,850 | |||
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., | |||||
5.25%, 05/01/2023 | 266,000 | 271,238 | |||
5.13%, 02/01/2025 | 478,000 | 492,340 | |||
5.88%, 04/15/2026 | 267,000 | 280,684 | |||
Transocean, Inc., 7.50%, 04/15/2031 | 647,000 | 503,851 | |||
Valaris PLC, 7.75%, 02/01/2026 | 869,000 | 555,986 | |||
3,846,229 | |||||
Oil & Gas Equipment & Services–0.74% | |||||
Calfrac Holdings L.P. (Canada), 8.50%, 06/15/2026(c) | 376,000 | 238,760 | |||
McDermott Technology Americas Inc. / McDermott Technology US Inc., 10.63%, 05/01/2024(c) | 268,000 | 190,280 | |||
SESI, L.L.C., 7.13%, 12/15/2021 | 703,000 | 499,130 | |||
928,170 | |||||
Oil & Gas Exploration & Production–10.02% | |||||
Antero Resources Corp., 5.63%, 06/01/2023 | 794,000 | 736,435 | |||
Ascent Resources Utica Holdings, LLC/ARU Finance Corp., 10.00%, 04/01/2022(c) | 571,000 | 578,137 | |||
Brazos Valley Longhorn LLC/Brazos Valley Longhorn Finance Corp., 6.88%, 02/01/2025 | 365,000 | 326,675 | |||
California Resources Corp., 8.00%, 12/15/2022(c) | 572,000 | 331,760 | |||
Callon Petroleum Co., 6.13%, 10/01/2024 | 975,000 | 950,625 | |||
Centennial Resource Production, LLC, 6.88%, 04/01/2027(c) | 840,000 | 844,200 | |||
Denbury Resources, Inc., 5.50%, 05/01/2022 | 314,000 | 135,020 | |||
EP Energy LLC/Everest Acquisition Finance, Inc., 8.00%, 11/29/2024(c) | 410,000 | 180,400 |
10 | Invesco High Income Trust II |
Principal Amount | Value | ||||
Oil & Gas Exploration & Production–(continued) | |||||
Genesis Energy L.P. / Genesis Energy Finance Corp., 6.25%, 05/15/2026 | $794,000 | $762,550 | |||
Gulfport Energy Corp., 6.00%, 10/15/2024 | 738,000 | 540,585 | |||
Jagged Peak Energy LLC, 5.88%, 05/01/2026 | 862,000 | 869,327 | |||
NGL Energy Partners L.P./NGL Energy Finance Corp., 7.50%, 04/15/2026(c) | 611,000 | 620,165 | |||
Oasis Petroleum, Inc., 6.88%, 01/15/2023 | 1,141,000 | 1,038,310 | |||
QEP Resources, Inc., | |||||
6.88%, 03/01/2021 | 591,000 | 589,522 | |||
5.25%, 05/01/2023 | 220,000 | 193,600 | |||
5.63%, 03/01/2026 | 207,000 | 168,705 | |||
Range Resources Corp., 5.88%, 07/01/2022 | 429,000 | 412,913 | |||
SM Energy Co., | |||||
6.13%, 11/15/2022 | 435,000 | 406,725 | |||
6.75%, 09/15/2026 | 470,000 | 401,850 | |||
6.63%, 01/15/2027 | 90,000 | 76,950 | |||
Southwestern Energy Co., | |||||
7.50%, 04/01/2026 | 373,000 | 328,315 | |||
7.75%, 10/01/2027 | 806,000 | 705,250 | |||
Whiting Petroleum Corp., 6.25%, 04/01/2023 | 673,000 | 531,670 | |||
WPX Energy, Inc., 5.25%, 09/15/2024 | 863,000 | 880,260 | |||
12,609,949 | |||||
Oil & Gas Refining & Marketing–1.24% | |||||
Calumet Specialty Products Partners L.P./Calumet Finance Corp., 7.63%, 01/15/2022 | �� | 164,000 | 156,210 | ||
NuStar Logistics, L.P., 6.00%, 06/01/2026 | 523,000 | 562,225 | |||
Parkland Fuel Corp. (Canada), 6.00%, 04/01/2026(c) | 411,000 | 433,091 | |||
Sunoco L.P. /Sunoco Finance Corp., 4.88%, 01/15/2023 | 395,000 | 404,875 | |||
1,556,401 | |||||
Oil & Gas Storage & Transportation–3.93% | |||||
Antero Midstream Partners L.P./Antero Midstream Finance Corp., | |||||
5.38%, 09/15/2024 | 460,000 | 435,850 | |||
5.75%, 01/15/2028(c) | 1,010,000 | 921,625 | |||
Energy Transfer Operating, L.P., | |||||
Series A, 6.25%(f) | 314,000 | 292,956 | |||
5.88%, 01/15/2024 | 765,000 | 856,590 | |||
Holly Energy Partners L.P./Holly Energy Finance Corp., 6.00%, 08/01/2024(c) | 253,000 | 266,409 | |||
Plains All American Pipeline, L.P., Series B, 6.13%(f) | 423,000 | 402,493 | |||
SemGroup Corp., 6.38%, 03/15/2025 | 515,000 | 489,250 |
Principal Amount | Value | ||||
Oil & Gas Storage & Transportation–(continued) | |||||
Williams Cos., Inc. (The), | |||||
7.88%, 09/01/2021 | $304,000 | $335,781 | |||
4.55%, 06/24/2024 | 876,000 | 949,362 | |||
4,950,316 | |||||
Other Diversified Financial Services–2.01% | |||||
eG Global Finance PLC (United Kingdom), 6.75%, 02/07/2025(c) | 478,000 | 463,062 | |||
Lions Gate Capital Holdings LLC, 6.38%, 02/01/2024(c) | 572,000 | 605,571 | |||
LPL Holdings, Inc., 5.75%, 09/15/2025(c) | 474,000 | 500,070 | |||
Tempo Acquisition LLC/Tempo Acquisition Finance Corp., 6.75%, 06/01/2025(c) | 770,000 | 794,871 | |||
VFH Parent LLC/Orchestra Co-Issuer, Inc., 6.75%, 06/15/2022(c) | 165,000 | 170,466 | |||
2,534,040 | |||||
Packaged Foods & Meats–1.45% | |||||
B&G Foods, Inc., 5.25%, 04/01/2025 | 626,000 | 637,143 | |||
JBS USA LUX S.A./JBS USA Finance, Inc., 5.75%, 06/15/2025(c) | 176,000 | 183,702 | |||
JBS USA LUX S.A./JBS USA Food Co./JBS USA Finance, Inc., 5.50%, 01/15/2030(c) | 536,000 | 569,232 | |||
TreeHouse Foods, Inc., 6.00%, 02/15/2024(c) | 419,000 | 436,283 | |||
1,826,360 | |||||
Paper Packaging–0.75% | |||||
Graphic Packaging International, LLC, 4.88%, 11/15/2022 | 477,000 | 502,042 | |||
Trivium Packaging Finance B.V. (Netherlands), | |||||
5.50%, 08/15/2026(c) | 207,000 | 219,420 | |||
8.50%, 08/15/2027(c) | 205,000 | 220,888 | |||
942,350 | |||||
Paper Products–1.32% | |||||
Mercer International, Inc. (Germany), | |||||
7.75%, 12/01/2022 | 57,000 | 58,568 | |||
6.50%, 02/01/2024 | 667,000 | 689,511 | |||
5.50%, 01/15/2026 | 170,000 | 168,334 | |||
Schweitzer-Mauduit International, Inc., 6.88%, 10/01/2026(c) | 715,000 | 738,237 | |||
1,654,650 | |||||
Pharmaceuticals–2.80% | |||||
Bausch Health Americas, Inc., 9.25%, 04/01/2026(c) | 372,000 | 422,220 | |||
Bausch Health Cos., Inc., | |||||
6.13%, 04/15/2025(c) | 400,000 | 413,000 | |||
5.50%, 11/01/2025(c) | 346,000 | 364,158 | |||
9.00%, 12/15/2025(c) | 616,000 | 693,000 | |||
5.75%, 08/15/2027(c) | 163,000 | 175,225 |
11 | Invesco High Income Trust II |
Principal Amount | Value | ||||
Pharmaceuticals–(continued) | |||||
Endo Dac/Endo Finance LLC/Endo Finco, Inc., 6.00%, 07/15/2023(c) | $275,000 | $182,875 | |||
HLF Financing S.a.r.l. LLC/Herbalife International, Inc., 7.25%, 08/15/2026(c) | 512,000 | 506,240 | |||
Par Pharmaceutical, Inc., 7.50%, 04/01/2027(c) | 355,000 | 331,925 | |||
Teva Pharmaceutical Finance IV, B.V. (Israel), 3.65%, 11/10/2021 | 460,000 | 439,300 | |||
3,527,943 | |||||
Publishing–0.88% | |||||
Meredith Corp., 6.88%, 02/01/2026 | 1,043,000 | 1,105,580 | |||
Regional Banks–0.49% | |||||
CIT Group, Inc., | |||||
5.00%, 08/15/2022 | 149,000 | 159,220 | |||
5.00%, 08/01/2023 | 415,000 | 451,312 | |||
610,532 | |||||
Research & Consulting Services–0.99% | |||||
Equinix, Inc., 5.88%, 01/15/2026 | 1,171,000 | 1,248,579 | |||
Restaurants–1.03% | |||||
1011778 BC ULC/New Red Finance, Inc. (Canada), 5.00%, 10/15/2025(c) | 783,000 | 810,405 | |||
IRB Holding Corp., 6.75%, 02/15/2026(c) | 476,000 | 479,570 | |||
1,289,975 | |||||
Security & Alarm Services–0.31% | |||||
Brink’s Co. (The), 4.63%, 10/15/2027(c) | 379,000 | 386,580 | |||
Semiconductors–0.48% | |||||
Micron Technology, Inc., 5.50%, 02/01/2025 | 595,000 | 607,849 | |||
Specialized Consumer Services–1.07% | |||||
ServiceMaster Co., LLC (The), | |||||
5.13%, 11/15/2024(c) | 424,000 | 446,103 | |||
7.45%, 08/15/2027 | 814,000 | 906,593 | |||
1,352,696 | |||||
Specialized REITs–1.58% | |||||
GLP Capital, L.P. / GLP Financing II, Inc., 5.38%, 04/15/2026 | 535,000 | 588,586 | |||
Iron Mountain US Holdings, Inc., 5.38%, 06/01/2026(c) | 474,000 | 491,775 | |||
Iron Mountain, Inc., | |||||
6.00%, 08/15/2023 | 386,000 | 395,650 | |||
5.25%, 03/15/2028(c) | 223,000 | 232,477 | |||
SBA Communications Corp., 4.88%, 09/01/2024 | 265,000 | 275,269 | |||
1,983,757 | |||||
Specialty Chemicals–1.98% | |||||
Element Solutions, Inc., 5.88%, 12/01/2025(c) | 541,000 | 568,050 |
Principal Amount | Value | ||||
Specialty Chemicals–(continued) | |||||
GCP Applied Technologies, Inc., 5.50%, 04/15/2026(c) | $585,000 | $601,087 | |||
PolyOne Corp., 5.25%, 03/15/2023 | 395,000 | 426,106 | |||
PQ Corp., 6.75%, 11/15/2022(c) | 413,000 | 430,119 | |||
Rayonier A.M. Products, Inc., 5.50%, 06/01/2024(c) | 693,000 | 464,657 | |||
2,490,019 | |||||
Steel–1.28% | |||||
ArcelorMittal (Luxembourg), 7.00%, 10/15/2039 | 400,000 | 479,427 | |||
Cleveland-Cliffs, Inc., 5.75%, 03/01/2025 | 693,000 | 696,465 | |||
United States Steel Corp., 6.88%, 08/15/2025 | 451,000 | 430,277 | |||
1,606,169 | |||||
Technology Hardware, Storage & Peripherals–0.68% | |||||
Dell International LLC/EMC Corp., 7.13%, 06/15/2024(c) | 809,000 | 852,869 | |||
Textiles–0.37% | |||||
Eagle Intermediate Global Holding B.V./Ruyi US Finance LLC (China), 7.50%, 05/01/2025(c) | 491,000 | 462,768 | |||
Trading Companies & Distributors–2.72% | |||||
AerCap Global Aviation Trust (Ireland), 6.50%, 06/15/2045(c) | 430,000 | 460,637 | |||
Aircastle Ltd., | |||||
7.63%, 04/15/2020 | 80,000 | 82,579 | |||
5.50%, 02/15/2022 | 68,000 | 72,660 | |||
5.00%, 04/01/2023 | 656,000 | 702,212 | |||
BMC East, LLC, 5.50%, 10/01/2024(c) | 647,000 | 673,689 | |||
H&E Equipment Services, Inc., 5.63%, 09/01/2025 | 257,000 | 270,171 | |||
United Rentals North America, Inc., | |||||
5.50%, 07/15/2025 | 469,000 | 490,691 | |||
6.50%, 12/15/2026 | 415,000 | 452,869 | |||
5.50%, 05/15/2027 | 197,000 | 212,122 | |||
3,417,630 | |||||
Trucking–0.99% | |||||
Avis Budget Car Rental LLC/Avis Budget Finance, Inc., 5.25%, 03/15/2025(c) | 269,000 | 274,716 | |||
Kenan Advantage Group, Inc. (The), 7.88%, 07/31/2023(c) | 1,090,000 | 972,825 | |||
1,247,541 | |||||
Wireless Telecommunication Services–3.82% | |||||
Digicel Group One Ltd. (Jamaica), 8.25%, 12/30/2022(c) | 225,000 | 128,250 | |||
Digicel Group Two Ltd. (Jamaica), 8.25%, 09/30/2022(c) | 213,000 | 41,535 | |||
Intelsat Connect Finance S.A. (Luxembourg), 9.50%, 02/15/2023(c) | 292,000 | 261,340 |
12 | Invesco High Income Trust II |
Principal Amount | Value | ||||
Wireless Telecommunication Services–(continued) | |||||
Oztel Holdings SPC Ltd. (Oman), 5.63%, 10/24/2023(c) | $451,000 | $463,966 | |||
Sprint Capital Corp., 8.75%, 03/15/2032 | 354,000 | 444,263 | |||
Sprint Communications, Inc., 11.50%, 11/15/2021 | 390,000 | 459,225 | |||
Sprint Corp., | |||||
7.25%, 09/15/2021 | 816,000 | 879,811 | |||
7.88%, 09/15/2023 | 1,309,000 | 1,475,898 | |||
7.63%, 02/15/2025 | 434,000 | 486,623 | |||
7.63%, 03/01/2026 | 141,000 | 158,801 | |||
4,799,712 | |||||
Total U.S. Dollar Denominated Bonds & Notes (Cost $164,443,110) | 164,057,892 | ||||
Non-U.S. Dollar Denominated Bonds & Notes–0.54%(h) | |||||
Diversified Banks–0.20% | |||||
Erste Group Bank AG (Austria), REGS, 6.50%(c)(f) | EUR | 200,000 | 251,854 | ||
Food Retail–0.25% | |||||
Iceland Bondco PLC (United Kingdom), 4.63%, 03/15/2025(c) | GBP | 300,000 | 316,934 |
Principal Amount | Value | ||
Textiles–0.09% | |||
Eagle Intermediate Global Holding B.V./Ruyi US Finance LLC (China), 5.38%, 05/01/2023(c) | EUR | 100,000 | $106,338 |
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost $770,762) | 675,126 | ||
Shares | |||
Money Market Funds–3.56% | |||
Invesco Government & Agency Portfolio, Institutional Class, 2.02%(i) | 1,568,380 | 1,568,380 | |
Invesco Liquid Assets Portfolio, Institutional Class, 2.14%(i) | 1,119,908 | 1,120,356 | |
Invesco Treasury Portfolio, Institutional Class, 1.98%(i) | 1,792,435 | 1,792,435 | |
Total Money Market Funds (Cost $4,481,171) | 4,481,171 | ||
TOTAL INVESTMENTS IN SECURITIES–134.52% (Cost $169,695,043) | 169,214,189 | ||
BORROWINGS–(37.80)% | (47,550,000) | ||
OTHER ASSETS LESS LIABILITIES—3.28% | 4,129,166 | ||
NET ASSETS–100.00% | $125,793,355 |
Conv. | – Convertible |
EUR | – Euro |
GBP | – British Pound Sterling |
PIK | – Pay-in-Kind |
REGS | – Regulation S |
(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) | Calculated as a percentage of net assets. Amounts in excess of 100% are due to the Trust’s use of leverage. |
(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, 2019 was $77,662,905, which represented 61.74% of the Trust’s Net Assets. |
(d) | Defaulted security. Currently, the issuer is partially or fully in default with respect to principal and/or interest payments. The value of this security at August 31, 2019 represented less than 1% of the Trust’s Net Assets. |
(e) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(f) | Perpetual bond with no specified maturity date. |
(g) | All or a portion of this security is Pay-in-Kind. Pay-in-Kind securities pay interest income in the form of securities. |
(h) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
(i) | The money market fund and the Trust are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of August 31, 2019. |
13 | Invesco High Income Trust II |
as of August 31, 2019
BBB | 10.67% |
BB | 47.76 |
B | 33.41 |
CCC | 7.42 |
CC | 0.02 |
Non-Rated | 0.72 |
Open Forward Foreign Currency Contracts | ||||||
Settlement Date | Counterparty | Contract to | Unrealized Appreciation | |||
Deliver | Receive | |||||
Currency Risk | ||||||
11/29/2019 | Goldman Sachs International | EUR | 1,325,731 | USD | 1,482,323 | $15,746 |
11/29/2019 | Goldman Sachs International | GBP | 257,250 | USD | 315,523 | 1,440 |
Total Forward Foreign Currency Contracts | $17,186 |
Abbreviations: | |
EUR | —Euro |
GBP | —British Pound Sterling |
USD | —U.S. Dollar |
14 | Invesco High Income Trust II |
Assets: | |
Investments in securities, at value (Cost $165,213,872) | $164,733,018 |
Investments in affiliated money market funds, at value (Cost $4,481,171) | 4,481,171 |
Other investments: | |
Unrealized appreciation on forward foreign currency contracts outstanding | 17,186 |
Foreign currencies, at value (Cost $1,230,704) | 1,231,039 |
Receivable for: | |
Dividends | 6,004 |
Investments sold | 768,119 |
Interest | 2,915,749 |
Investment for trustee deferred compensation and retirement plans | 20,628 |
Total assets | 174,172,914 |
Liabilities: | |
Payable for: | |
Borrowings | 47,550,000 |
Investments purchased | 436,921 |
Dividends | 24,459 |
Amount due custodian | 101,843 |
Accrued fees to affiliates | 1,559 |
Accrued interest expense | 122,507 |
Accrued trustees’ and officers’ fees and benefits | 2,164 |
Accrued other operating expenses | 118,375 |
Trustee deferred compensation and retirement plans | 21,731 |
Total liabilities | 48,379,559 |
Net assets applicable to common shares | $125,793,355 |
Net assets applicable to common shares consist of: | |
Shares of beneficial interest — common shares | $138,955,092 |
Distributable earnings | (13,161,737) |
$125,793,355 | |
Common shares outstanding, no par value, with an unlimited number of common shares authorized: | |
Common shares outstanding | 8,118,429 |
Net asset value per common share | $15.49 |
Market value per common share | $14.26 |
15 | Invesco High Income Trust II |
Investment income: | |
Interest | $5,130,918 |
Dividends from affiliated money market funds | 41,384 |
Total investment income | 5,172,302 |
Expenses: | |
Advisory fees | 610,918 |
Administrative services fees | 8,865 |
Custodian fees | 3,668 |
Interest, facilities and maintenance fees | 807,368 |
Transfer agent fees | 20,082 |
Trustees’ and officers’ fees and benefits | 11,576 |
Registration and filing fees | 11,250 |
Reports to shareholders | 18,743 |
Professional services fees | 118,917 |
Other | 12,332 |
Total expenses | 1,623,719 |
Less: Fees waived | (1,908) |
Net expenses | 1,621,811 |
Net investment income | 3,550,491 |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Investment securities | 298,010 |
Foreign currencies | (28,948) |
Forward foreign currency contracts | 76,394 |
345,456 | |
Change in net unrealized appreciation (depreciation) of: | |
Investment securities | 1,064,795 |
Foreign currencies | (200) |
Forward foreign currency contracts | 28,735 |
1,093,330 | |
Net realized and unrealized gain | 1,438,786 |
Net increase in net assets resulting from operations applicable to common shares | $4,989,277 |
16 | Invesco High Income Trust II |
August 31, 2019 | February 28, 2019 | |
Operations: | ||
Net investment income | $3,550,491 | $7,487,345 |
Net realized gain (loss) | 345,456 | (250,406) |
Change in net unrealized appreciation (depreciation) | 1,093,330 | (2,465,586) |
Net increase in net assets resulting from operations applicable to common shares | 4,989,277 | 4,771,353 |
Distributions to common shareholders from distributable earnings | (4,695,700) | (8,320,593) |
Return of capital applicable to common shares | — | (466,795) |
Total distributions | (4,695,700) | (8,787,388) |
Net increase (decrease) in net assets applicable to common shares | 293,577 | (4,016,035) |
Net assets applicable to common shares: | ||
Beginning of period | 125,499,778 | 129,515,813 |
End of period | $125,793,355 | $125,499,778 |
17 | Invesco High Income Trust II |
Cash provided by operating activities: | |
Net increase in net assets resulting from operations applicable to common shares | $4,989,277 |
Adjustments to reconcile the change in net assets applicable to common shares from operations to net cash provided by operating activities: | |
Purchases of investments | (29,986,701) |
Proceeds from sales of investments | 35,094,552 |
Amortization of premium on investment securities | 483,423 |
Accretion of discount on investment securities | (163,174) |
Increase in receivables and other assets | (41,624) |
Increase in accrued expenses and other payables | 37,810 |
Net realized gain from investment securities | (298,010) |
Net change in unrealized appreciation on investment securities | (1,064,795) |
Net change in unrealized appreciation of forward foreign currency contracts | (28,735) |
Net cash provided by operating activities | 9,022,023 |
Cash provided by (used in) financing activities: | |
Dividends paid to common shareholders from distributable earnings | (4,693,426) |
Increase in payable for amount due custodian | 101,843 |
Net cash provided by (used in) financing activities | (4,591,583) |
Net increase in cash and cash equivalents | 4,430,440 |
Cash and cash equivalents at beginning of period | 1,281,770 |
Cash and cash equivalents at end of period | $5,712,210 |
Supplemental disclosure of cash flow information: | |
Cash paid during the period for interest, facilities and maintenance fees | $806,166 |
18 | Invesco High Income Trust II |
Six Months Ended August 31, 2019 | Years Ended February 28, | Year Ended February 29, 2016 | Year Ended February 28, 2015 | |||
2019 | 2018 | 2017 | ||||
Net asset value per common share, beginning of period | $15.46 | $15.95 | $16.36 | $14.37 | $17.11 | $17.88 |
Net investment income(a) | 0.44 | 0.92 | 0.93 | 1.08 | 1.14 | 1.18 |
Net gains (losses) on securities (both realized and unrealized) | 0.17 | (0.33) | (0.33) | 2.04 | (2.64) | (0.66) |
Total from investment operations | 0.61 | 0.59 | 0.60 | 3.12 | (1.50) | 0.52 |
Less: | ||||||
Dividends paid to common shareholders from net investment income | (0.58) | (1.03) | (1.01) | (1.07) | (1.15) | (1.29) |
Return of capital | — | (0.05) | — | (0.06) | (0.09) | — |
Total distributions | (0.58) | (1.08) | (1.01) | (1.13) | (1.24) | (1.29) |
Net asset value per common share, end of period | $15.49 | $15.46 | $15.95 | $16.36 | $14.37 | $17.11 |
Market value per common share, end of period | $14.26 | $14.26 | $14.04 | $14.66 | $12.61 | $15.29 |
Total return at net asset value(b) | 4.28% | 4.92% | 4.42% | 23.29% | (8.09)% | 3.73% |
Total return at market value(c) | 4.07% | 9.94% | 2.57% | 25.90% | (9.74)% | (0.46)% |
Net assets applicable to common shares, end of period (000’s omitted) | $125,793 | $125,500 | $129,516 | $132,783 | $116,643 | $138,940 |
Portfolio turnover rate(d) | 17% | 38% | 38% | 91% | 87% | 99% |
Ratios/supplemental data based on average net assets: | ||||||
Ratio of expenses: | ||||||
With fee waivers and/or expense reimbursements | 2.56%(e) | 2.37% | 1.95% | 1.71% | 1.67% | 1.49% |
With fee waivers and/or expense reimbursements excluding interest, facilities and maintenance fees | 1.29%(e) | 1.23% | 1.15% | 1.14% | 1.21% | 1.11% |
Without fee waivers and/or expense reimbursements | 2.56%(e) | 2.37% | 1.95% | 1.72% | 1.67% | 1.53% |
Ratio of net investment income to average net assets | 5.60%(e) | 5.97% | 5.73% | 6.85%(f) | 7.13% | 6.81% |
Senior securities: | ||||||
Asset coverage per $1,000 unit of senior indebtedness(g) | $3,645 | $3,639 | $3,724 | $3,792 | $3,453 | $3,749 |
Total borrowings (000’s omitted) | $47,550 | $47,550 | $47,550 | $47,550 | $47,550 | $50,550 |
(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. Not annualized for periods less than one year, if applicable. |
(c) | Total return assumes an investment at the common share market price at the beginning of the period indicated, reinvestment of all distributions for the period in accordance with the Trust’s dividend reinvestment plan, and sale of all shares at the closing common share market price at the end of the period indicated. Not annualized for periods less than one year, if applicable. |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(e) | Ratios are annualized and based on average daily net assets applicable to common shares (000’s omitted) of $126,049. |
(f) | Amount includes the effect of insurance settlement proceeds received related to ARPS previously issued by the Trust. The ratio of net investment income excluding these payments would have been 6.66%. |
(g) | Calculated by subtracting the Trust’s total liabilities (not including the Borrowings) from the Trust’s total assets and dividing by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. |
19 | Invesco High Income Trust II |
A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
20 | Invesco High Income Trust II |
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
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– The Trust has adopted a Managed Distribution Plan (the “Plan”) whereby the Trust will pay a monthly dividend to common shareholders at a stated fixed monthly distribution amount based on a distribution rate of 8.5% of the market price per share on August 1, 2018. The Plan is intended to provide shareholders with a consistent, but not guaranteed, periodic cash payment from the Trust, regardless of when or whether income is earned or capital gains are realized. If sufficient income is not available for a monthly distribution, the Trust will distribute long-term capital gains and/or return of capital in order to maintain its managed distribution level under the Plan. Distributions from net investment income are declared and paid monthly, and recorded on the ex-dividend date. The Plan may be amended or terminated at any time by the Board. |
E. | Cash and Cash Equivalents – For the purposes of the Statement of Cash Flows, the Trust defines Cash and Cash Equivalents as cash (including foreign currency), money market funds and other investments held in lieu of cash and excludes investments made with cash collateral received. |
F. | Federal Income Taxes – The Trust 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 Trust’s taxable earnings to shareholders. As such, the Trust 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. |
G. | Interest, Facilities and Maintenance Fees— Interest, Facilities and Maintenance Fees include interest and related borrowing costs such as commitment fees and other expenses associated with lines of credit and interest and administrative expenses related to establishing and maintaining the credit agreement. |
H. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Trust monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
I. | Indemnifications – Under the 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 Trust. Additionally, in the normal course of business, the Trust enters into contracts, including the Trust’s servicing agreements, that contain a variety of indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
J. | Securities Purchased on a When-Issued and Delayed Delivery Basis — The Trust 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 Trust on such interests or securities in connection with such transactions prior to the date the Trust actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Trust will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date. |
21 | Invesco High Income Trust II |
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 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 Trust 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 Trust’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. |
L. | Forward Foreign Currency Contracts— The Trust 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. |
M. | 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 bid/ask spreads, and extended trade settlement periods, which may impair the Trust’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 Trust. As a result, the Trust 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 that an entity with which the Trust has unsettled or open transactions may fail to or be unable to perform on its commitments. The Trust 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. |
N. | Other Risks – The Trust may invest in lower-quality debt securities, i.e., “junk bonds”. Investments in lower-rated securities or unrated securities of comparable quality tend to be more sensitive to economic conditions than higher rated securities. Junk bonds involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other creditors’ claim. |
O. | Leverage Risk – The Trust may utilize leverage to seek to enhance the yield of the Trust by borrowing. There are risks associated with borrowing in an effort to increase the yield and distributions on the shares, including that the costs of the financial leverage may exceed the income from investments purchased with such leverage proceeds, the higher volatility of the net asset value of the shares, and that fluctuations in the interest rates on the borrowing may affect the yield and distributions to the shareholders. There can be no assurance that the Trust’s leverage strategy will be successful. |
22 | Invesco High Income Trust II |
Level 1 | Level 2 | Level 3 | Total | |
Investments in Securities | ||||
U.S. Dollar Denominated Bonds & Notes | $— | $164,057,892 | $0 | $164,057,892 |
Non-U.S. Dollar Denominated Bonds & Notes | — | 675,126 | — | 675,126 |
Money Market Funds | 4,481,171 | — | — | 4,481,171 |
Total Investments in Securities | 4,481,171 | 164,733,018 | 0 | 169,214,189 |
Other Investments - Assets* | ||||
Forward Foreign Currency Contracts | — | 17,186 | — | 17,186 |
Total Investments | $4,481,171 | $164,750,204 | $0 | $169,231,375 |
* | Unrealized appreciation. |
Value | |
Derivative Assets | Currency Risk |
Unrealized appreciation on forward foreign currency contracts outstanding | $17,186 |
Derivatives not subject to master netting agreements | - |
Total Derivative Assets subject to master netting agreements | $17,186 |
23 | Invesco High Income Trust II |
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 | |
Goldman Sachs International | $17,186 | $– | $17,186 | $– | $– | $17,186 |
Location of Gain on Statement of Operations | |
Currency Risk | |
Realized Gain: | |
Forward foreign currency contracts | $76,394 |
Change in Net Unrealized Appreciation: | |
Forward foreign currency contracts | 28,735 |
Total | $105,129 |
Forward Foreign Currency Contracts | |
Average notional value | $1,813,576 |
24 | Invesco High Income Trust II |
Capital Loss Carryforward* | |||
Expiration | Short-Term | Long-Term | Total |
Not subject to expiration | $5,066,974 | $5,730,255 | $10,797,229 |
* | Capital loss carryforwards as of the date listed above 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. |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
Aggregate unrealized appreciation of investments | $5,987,170 |
Aggregate unrealized (depreciation) of investments | (7,534,337) |
Net unrealized appreciation (depreciation) of investments | $(1,547,167) |
Six Months Ended August 31, 2019 | Year Ended February 28, 2019 | |
Beginning shares | 8,118,429 | 8,118,429 |
Shares issued through dividend reinvestment | — | — |
Ending shares | 8,118,429 | 8,118,429 |
Declaration Date | Amount per Share | Record Date | Payable Date |
September 3, 2019 | $0.0964 | September 18, 2019 | September 30, 2019 |
October 1, 2019 | $0.0964 | October 16, 2019 | October 31, 2019 |
25 | Invesco High Income Trust II |
Approval of Investment Advisory andSub-Advisory Contracts
At the meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco High Income Trust II (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established threeSub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). As part of a regularly scheduled basis ofin-person Board meetings, theSub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee andSub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement andsub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract
renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement andsub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement andsub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 10, 2019.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the AffiliatedSub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also reviewed and considered the benefits to shareholders of investing in a fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board reviewed and considered information about the resources that Invesco Advisers intends to continue to commit to managing the Invesco family of funds following Invesco Ltd.’s acquisition of OppenheimerFunds, Inc. and its subsidiaries. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted the AffiliatedSub-Advisers’ expertise with respect to certain asset classes and that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 thesub-advisory contracts for the Fund, as Invesco Canada Ltd. currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2018 to the performance of funds in the Broadridge performance universe and against the LipperClosed-End Leveraged High Yield Bond Funds Index. The Board noted that the Fund’s performance was in the fourth quintile of its performance universe for the one year period, the fifth quintile for the three year period and the third quintile for the five year period (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that the Fund’s performance was below the performance of the Index for the one and three year periods and reasonably comparable to the performance of the Index for the five year period. The Board noted that the Fund’s use of leverage and underweight exposure to and selection in certain industries and securities detracted from Fund performance. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions. The Board also reviewed supplementally historic premium and discount levels of the Fund as provided to the Board at meetings throughout the year, and noted the impact of a managed distribution plan implemented for the Fund in August 2018.
26 Invesco High Income Trust II
C. | Advisory andSub-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 shares of the Fund was the same as 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 certainnon-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent audited annual reports 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 also considered the fees charged by Invesco Advisers and the AffiliatedSub-Advisers to other similarly managed client accounts. The Board noted that Invesco Advisers or the AffiliatedSub-Advisers may charge lower fees to large institutional clients. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to certain other types of client accounts, including 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, preparation of financial information and compliance with federal and state laws and regulations.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board noted that Invesco Advisers retains overall responsibility for, and provides services to,sub-advised Invesco Funds, including oversight of the AffiliatedSub-Advisers as well as the additional services described herein other thanday-to-day portfolio management.
D. | Economies of Scale and Breakpoints |
The Board noted that mostclosed-end funds do not have fund level breakpoints becauseclosed-end funds generally do not experience substantial asset growth after the initial public offering. The Board noted that the Fund does not benefit from economies of scale through contractual breakpoints, but does share directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The
Board considered Invesco’s reinvestment in its business, including investments in business infrastructure and cybersecurity. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements.
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. The Board considered the methodology used for calculating profitability and noted the periodic review of such methodology by an independent consultant. 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 and the Fund. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the AffiliatedSub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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. The Board considered the organizational structure employed to provide these services.
The Board considered that the Fund’s uninvested cash may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board considered information regarding the returns of the affiliated money market funds relative to comparable overnight investments, as well as the costs to the Fund of such investments. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash.
27 Invesco High Income Trust II
September 2019
INVESCO HIGH INCOME TRUST II—Common Shares—Cusip: 46131F101
Distribution Notice
Form1099-DIV for the calendar year will report distributions for US federal income tax purposes. The Trust’s annual report to shareholders will include information regarding the tax character of Trust distributions for the fiscal year. This Notice is sent to comply with certain US Securities and Exchange Commission requirements.
On August 1, 2018, Invesco Advisers, Inc. (Invesco) announced that the Board of Trustees of the Trust approved a managed distribution plan (the “Plan”) for the Trust, whereby the Trust will pay common shareholders a stable monthly distribution. Under the Plan, the Trust increased its dividend to a stated fixed monthly amount based on a distribution of 8.5% of market price per share as of August 1, 2018, which is the date the Plan became effective. The Trust’s distributions may include net investment income, long-term capital gains, short-term capital gains and/or return of capital. In order to make multiple long-term capital gains distributions over the course of the year, the Trust will rely on an exemptive order granted by the US Securities and Exchange Commission.
The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year to date from the sources indicated. You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Plan. All amounts are expressed per common share. The Trust estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Trust is paid back to you. A return of capital distribution does not necessarily reflect the Trust’s investment performance and should not be confused with “yield” or “income.” The amounts and sources of distributions reported in this 19(a) Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend on the Trust’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Trust will send you a Form1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
DISTRIBUTION ESTIMATES | September 2019 | CUMULATIVE FISCAL YEAR-TO-DATE (YTD) August 31, 2019* | ||||||||||||||
Source | Per Share Amount | % of Current Distribution | Per Share Amount | % of 2019 Distributions | ||||||||||||
Net Investment Income | $ | 0.0774 | 80.29 | % | $ | 0.4580 | 79.18 | % | ||||||||
Net Realized Short-Term Capital Gains | $ | 0.0000 | 0.00 | % | $ | 0.0000 | 0.00 | % | ||||||||
Net Realized Long-Term Capital Gains | $ | 0.0000 | 0.00 | % | $ | 0.0000 | 0.00 | % | ||||||||
Return of Capital (or Other Capital Source) | $ | 0.0190 | 19.71 | % | $ | 0.1204 | 20.82 | % | ||||||||
Total Current Distribution (per common share) | $ | 0.0964 | 100.00 | % | $ | 0.5784 | 100.00 | % |
* | Form1099-DIV for the calendar year will report distributions for federal income tax purposes. The Trust’s annual report to shareholders will include information regarding the tax character of Trust distributions for the fiscal year. The final determination of the source and tax characteristics of all distributions in 2019 will be made after the end of the year. |
The monthly distributions are based on estimates and terms of the Trust’s Plan. Monthly distribution amounts may vary from these estimates based on a multitude of factors. Changes in portfolio and market conditions may cause deviations from estimates. These estimates should not be taken as indication of the Trust’s earnings and performance. The actual amounts and its sources may be subject to additional adjustments and will be reported after year end.
The Trust’s Performance and Distribution Rate Information disclosed in the table below is based on the Trust’s net asset value per share (NAV). Shareholders should take note of the relationship between the FiscalYear-to-date Cumulative Total Return with the Trust’s Cumulative Distribution Rate and the Average Annual Total Return with the Trust’s Current Annualized Distribution Rate. The Trust’s NAV is calculated as the total market value of all the securities and other assets held by the Trust minus the total liabilities, divided by the total number of shares outstanding. NAV performance may be indicative of the Trust’s investment performance. The value of a shareholder’s investment in the Trust is determined by the Trust’s market price, which is based on the supply and demand for the Trust’s shares in the open market.
28 Invesco High Income Trust II
Trust Performance and Distribution Rate Information:
FiscalYear-to-date March 1, 2019 to August 31, 2019 |
| |||
FiscalYear-to-date Cumulative Total Return1 | 4.07 | % | ||
Cumulative Distribution Rate2 | 3.73 | % | ||
Current Annualized Distribution Rate3 | 7.47 | % |
Five-year period ending August 31, 2019 |
| |||
Average Annual Total Return4 | 5.22 | % |
1 | Fiscalyear-to-date Cumulative Total Return assumes reinvestment of distributions. This is calculated as the percentage change in the Trust’s NAV over the fiscalyear-to-date time period including distributions paid and reinvested. |
2 | Cumulative Distribution Rate for the Trust’s current fiscal period (March 1, 2019 through August 31, 2019) is calculated as the dollar value of distributions in the fiscalyear-to-date period as a percentage of the Trust’s NAV as of August 31, 2019. |
3 | The Current Annualized Distribution Rate is the current fiscal period’s distribution rate annualized as a percentage of the Trust’s NAV as of August 31, 2019. |
4 | Average Annual Total Return represents the compound average of the annual NAV Total Returns of the Trust for the five-year period ending August 31, 2019. Annual NAV Total Return is the percentage change in the Trust’s NAV over a year including distributions paid and reinvested. |
The Plan may be amended or terminated at any time by the Trust’s Board of Trustees and as a result, the amount of dividends paid by the Trust may vary from time to time. Past amounts of dividends are no guarantee of future dividend payment amounts.
The amount of dividends paid by the Trust may vary from time to time. Past amounts of dividends are no guarantee of future payment amounts.
Investing involves risk and it is possible to lose money on any investment in the Trust.
Visit www.invesco.com for more details. If you have any questions, please contact our Client Services Department at1-800-341-2929 between the hours of 8:00 am – 5:00 pm CT, Monday through Friday.
About Invesco Ltd.
Invesco is a global independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. Our 13 distinctive investment teams deliver a comprehensive range of active, passive and alternative investment capabilities. With offices in 25 countries, Invesco managed $1.1 trillion in assets on behalf of clients worldwide as of August 31, 2019. For more information, visitwww.Invesco.com.
Invesco Distributors, Inc. is the US distributor for Invesco Ltd. It is an indirect, wholly owned subsidiary of Invesco Ltd.
Note: There is no assurance that aclosed-end Trust will achieve its investment objective. Shares are bought on the secondary market and may trade at a discount or premium to NAV. Regular brokerage commissions apply.
NOT FDIC INSURED l MAY LOSE VALUE l NO BANK GUARANTEE
—Invesco—
29 Invesco High Income Trust II
Proxy Results
A Joint Annual Meeting (“Meeting”) of Shareholders of Invesco High Income Trust II (the “Fund”) was held on August 9, 2019. The Meeting was held for the following purpose:
(1). | Election of Trustees by Common Shareholders. |
The results of the voting on the above matter was as follows:
Matter | Votes For | Votes Withheld | ||||||||
(1). | Cynthia Hostetler | 7,263,031.06 | 384,859.49 | |||||||
Eli Jones | 7,256,457.49 | 391,433.06 | ||||||||
Prema Mathai-Davis | 7,250,984.32 | 396,906.23 | ||||||||
Ann Barnett Stern | 7,244,842.66 | 403,047.89 | ||||||||
Raymond Stickel, Jr. | 7,266,622.36 | 381,268.19 |
30 Invesco High Income Trust II
![](https://capedge.com/proxy/N-CSRS/0001193125-19-286875/g769276img30ab11b81.jpg)
SEC file number: 811-05769 | VK-CE-HINC2-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. |
During the reporting period, PricewaterhouseCoopers LLC (“PwC”) advised the Audit Committee of the following matters for consideration under the SEC’s auditor independence rules. PwC advised the Audit Committee that a PwC Manager and a PwC Senior Associate each held financial interests in investment companies within the Invesco Fund Complex that were inconsistent with the requirements of Rule2-01(c)(1) of RegulationS-X. PwC noted, among other things, that during the time of its audit, the engagement team was not aware of the investments, (or with respect to the PwC Senior Associate was not aware until after the investments were confirmed as SEC exceptions), the individuals were not in the chain of command of the audit or the audit partners of Invesco or the affiliate of the Registrant, the services each individual provided were not relied upon by the audit engagement team with respect to the audit of the Registrant or its affiliates (or with respect to the PwC Senior Associate, the services were performed by an individual who did not have decision-making responsibility for matters that materially affected the audit and were reviewed by team members at least two levels higher than the PwC Senior Associate), and the investments were not material to the net worth of each individual or their respective immediate family members which they considered in reaching their conclusion. PwC advised the Audit Committee that it believes its objectivity and impartiality had not been adversely affected by these matters as they related to the audit of the Registrant.
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 FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 8. | PORTFOLIO MANAGERS OFCLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BYCLOSED-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 16, 2019, 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 Rule30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of October 16, 2019, the Registrant’s disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on FormN-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 Rule30a-3(d) under the Act) that occurred during the period covered by the report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES |
Not applicable.
ITEM 13. | EXHIBITS. |
13(a) (1) | Not applicable. |
13(a) (2) | Certifications of principal executive officer and principal financial officer as required by Rule30a-2(a) under the Investment Company Act of 1940. |
13(a) (3) | Not applicable. |
13(a) (4) | Not applicable |
13(b) | Certifications of principal executive officer and principal financial officer as required by Rule30a-2(b) under the Investment Company Act of 1940. |
13(c) | Pursuant to the Securities and Exchange Commission’s Order granting relief from Section 19(b) of the Investment Company Act of 1940, the Section 19(a) notices to shareholders are attached hereto |
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: Invesco High Income Trust II
By: | /s/ Sheri Morris | |
Sheri Morris | ||
Principal Executive Officer | ||
Date: | November 7, 2019 |
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 7, 2019 | |
By: | /s/ Kelli Gallegos | |
Kelli Gallegos | ||
Principal Financial Officer | ||
Date: | November 7, 2019 |