0000896435 cik0000896435:C000000457Member cik0000896435:USTreasuryNotesFourPointTwoFivePercentNovemberFifteenTwoThousandThirtyFourMember 2024-12-31 0000896435 cik0000896435:C000084644Member 2014-12-31
SECURITIES AND EXCHANGE COMMISSION
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number
AIM Variable Insurance Funds (Invesco Variable Insurance Funds)
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 1000
Houston, Texas 77046
(Address of principal executive offices) (Zip code)
Glenn Brightman, Principal Executive Officer
11 Greenway Plaza, Suite 1000
Houston, Texas 77046
(Name and address of agent for service)
Registrant's telephone number, including area code:
Date of reporting period:
Item 1. Reports to Stockholders.
(a) The Registrant's annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the "Act") is as follows:
Invesco Oppenheimer V.I. International Growth Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco Oppenheimer V.I. International Growth Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco Oppenheimer V.I. International Growth Fund
(Series I) | $ 99 | 1.00 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
Global equity markets rose during the fiscal year ended December 31, 2024. In the US,
enthusiasm
around the artificial intelligence investment wave led to concentrated market leadership in the megacap technology space and to outperformance relative to non-US equities. The turn in the interest rate cycle towards the end of the period also caused high quality segments to underperform the wider market. Outside of the US, emerging markets outperformed developed markets as news of fiscal stimulus by the Chinese government drove better sentiment towards the emerging market asset class.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned -1.67%. For the same time period, the MSCI ACWI ex USA
®
Index returned 5.53%.
What contributed to performance?
Flutter Entertainment PLC |
The UK company that owns FanDuel, a sports betting service in the US. Legal and regulatory changes in a growing number of states increased the size and value of the addressable market, which positively impacted the company. FanDuel and its top US competitor shared roughly 80% of the US market at period end.
Dollarama, Inc. |
A Canadian discount retailer that is much like Dollar Tree and Dollar General in the US. However, unlike the US, this retail market segment in Canada is not saturated. We have owned Dollarama for several years. The company performed well during the period, which we believe was in part due to the continuing shift to online buying that benefits retailers at the very high and the very low end of pricing.
Hitachi Ltd. |
A Japanese company with a widely diversified portfolio of businesses that it has been working to streamline. Hitachi restructured itself to provide a higher return on capital invested within it over the last serveral years.
What detracted from performance?
JD Sports Fashion PLC
|
A UK company which exclusively retails certain models of several key athletic footwear brands, such as Nike and Adidas, in the US and Western Europe. The company’s share price fell on disappointing earnings results during the period.
AIXTRON SE |
A German company which makes the “metal organic chemical vapor deposition equipment” -“MOCVD equipment” – used in the manufacture of layered semiconductors made of compounds other than just silicon. During the reporting period, the company announced earnings and future guidance below expectations. We exited our position during the fiscal year.
Edenred SE |
Based in France, this company manages employee benefit programs and expenses through prepaid vouchers. It has grown steadily through geographic and service expansion, while digitization has reduced operating costs. French political uncertainty and the lack of a clear catalyst to boost earnings weighed negatively on the share price during portions of the fiscal period.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco Oppenheimer V.I. International Growth Fund (Series I) | (1.67 ) % | 3.04 % | 4.41 % |
MSCI ACWI ex USA ® Index (Net) | 5.53 % | 4.10 % | 4.80 % |
Effective after the close of business on May 24, 2019, Non-Service shares of Oppenheimer International Growth Fund/VA (the predecessor fund), were reorganized into Series I shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Non-Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 306,743,600 |
| Total number of portfolio holdings | 66 |
| Total advisory fees paid | $ 2,607,463 |
| Portfolio turnover rate | 18 % |
What Comprised The Fund's
Holdings
?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| London Stock Exchange Group PLC | 2.93 % |
| Flutter Entertainment PLC | 2.90 % |
| ResMed, Inc. | 2.87 % |
| Dollarama, Inc. | 2.63 % |
| Taiwan Semiconductor Manufacturing Co. Ltd. | 2.63 % |
| Hermes International S.C.A. | 2.61 % |
| Reliance Industries Ltd. | 2.59 % |
| Novo Nordisk A/S, Class B | 2.48 % |
| Compass Group PLC | 2.43 % |
| ASML Holding N.V. | 2.34 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You
can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco Oppenheimer V.I. International Growth Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco Oppenheimer V.I. International Growth Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco Oppenheimer V.I. International Growth Fund
(Series II) | $ 124 | 1.25 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
Global equity markets rose during the fiscal year ended December 31, 2024. In the US, enthusiasm around the artificial intelligence investment wave led to concentrated market leadership in the megacap technology space and to outperformance relative to non-US equities. The turn in the interest rate cycle towards the end of the period also caused high quality segments to underperform the wider market. Outside of the US, emerging markets outperformed developed markets as news of fiscal stimulus by the Chinese government drove better sentiment towards the emerging market asset class.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned -1.81%. For the same time period, the MSCI ACWI ex USA
®
Index returned 5.53%.
What contributed to performance?
Flutter Entertainment PLC |
The UK company that owns FanDuel, a sports betting service in the US. Legal and regulatory changes in a growing number of states increased the size and value of the addressable market, which positively impacted the company. FanDuel and its top US competitor shared roughly 80% of the US market at period end.
Dollarama, Inc. |
A Canadian discount retailer that is much like Dollar Tree and Dollar General in the US. However, unlike the US, this retail market segment in Canada is not saturated. We have owned Dollarama for several years. The company performed well during the period, which we believe was in part due to the continuing shift to online buying that benefits retailers at the very high and the very low end of pricing.
Hitachi Ltd. |
A Japanese company with a widely diversified portfolio of businesses that it has been working to streamline. Hitachi restructured itself to provide a higher return on capital invested within it over the last serveral years.
What detracted from performance?
JD Sports Fashion PLC
|
A UK company which exclusively retails certain models of several key athletic footwear brands, such as Nike and Adidas, in the US and Western Europe. The company’s share price fell on disappointing earnings results during the period.
AIXTRON SE |
A German company which makes the “metal organic chemical vapor deposition equipment” -“MOCVD equipment” – used in the manufacture of layered semiconductors made of compounds other than just silicon. During the reporting period, the company announced earnings and future guidance below expectations. We exited our position during the fiscal year.
Edenred SE |
Based in France, this company manages employee benefit programs and expenses through prepaid vouchers. It has grown steadily through geographic and service expansion, while digitization has reduced operating costs. French political uncertainty and the lack of a clear catalyst to boost earnings weighed negatively on the share price during portions of the fiscal period.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco Oppenheimer V.I. International Growth Fund (Series II) | (1.81 ) % | 2.83 % | 4.15 % |
MSCI ACWI ex USA ® Index (Net) | 5.53 % | 4.10 % | 4.80 % |
Effective after the close of business on May 24, 2019, Service shares of Oppenheimer International Growth Fund/VA (the predecessor fund), were reorganized into Series II shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 306,743,600 |
| Total number of portfolio holdings | 66 |
| Total advisory fees paid | $ 2,607,463 |
| Portfolio turnover rate | 18 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| London Stock Exchange Group PLC | 2.93 % |
| Flutter Entertainment PLC | 2.90 % |
| ResMed, Inc. | 2.87 % |
| Dollarama, Inc. | 2.63 % |
| Taiwan Semiconductor Manufacturing Co. Ltd. | 2.63 % |
| Hermes International S.C.A. | 2.61 % |
| Reliance Industries Ltd. | 2.59 % |
| Novo Nordisk A/S, Class B | 2.48 % |
| Compass Group PLC | 2.43 % |
| ASML Holding N.V. | 2.34 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. American Franchise Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. American Franchise Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. American Franchise Fund
(Series I) | $ 101 | 0.86 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, U.S. large-cap equities benefited from investment themes levered to artificial intelligence (AI) technology and investor anticipation that slowing inflation would cause the Federal Reserve to ease monetary policy.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 34.89%. For the same time period, the Russell 1000
®
Growth Index returned 33.36%. The Fund outperformed the Russell 1000
®
Growth Index primarily due to strong stock selection in the industrials and financials sectors, though results were partially offset by a relative overweight in these sectors. An underweight exposure in the consumer staples and consumer discretionary sectors, and an overweight in the communication services sector, were also beneficial. An underweight exposure and stock selection in the information technology (IT) sector detracted from relative results.
What contributed to performance?
NVIDIA Corp. |
NVIDIA is a company at the heart of digital transformation as it produces graphics processing units (GPUs). The company completed a 10-for-1 stock split and surpassed $3 trillion in market cap over the period. There is significant excitement for the launch of its new Blackwell platform, which is marketed as being able to power generative AI faster with less cost and energy consumption. The GPUs are already sold out until the end of 2025.
Amazon.com, Inc. |
The company's strong growth in its cloud computing division, Amazon Web Services, has been a significant contributor, benefiting from increased demand for cloud solutions across various industries. Additionally, Amazon's focus on expanding its advertising business yielded positive results, with higher ad revenues boosting overall profitability. The company's strategic investments in AI and automation have also enhanced operational efficiency, further supporting its stock performance.
Meta Platforms, Inc. |
Social technology company Meta Platforms realized positive results from its AI investments through better recommendations, higher engagement, improved ad tools and more efficient ad targeting. We believe Meta is uniquely positioned to gain momentum as AI assistants become a larger part of consumer interactions and products.
What detracted from performance?
DexCom, Inc.
|
DexCom is a medical device company that specializes in continuous glucose monitors (CGM). Stocks with exposure to diabetes-related sales have experienced weakness in general following the successful launch of GLP-1 drugs. Recent US Food and Drug Administration clearance of CGMs for non-prescription sales meaningfully expands DexCom’s market to non-diabetics, as a tool that can help users maintain a healthy lifestyle. However, a sales force reorganization significantly slowed their sales forecasts.
MongoDB, Inc. |
MongoDB is a document database that stores and manages data for a variety of applications such as customer relationship management and health care systems. The company struggled with a decline in growth during 2024. Additionally, its Chief Financial Officer/Chief Operating Officer since 2015 announced he was leaving. The team sold the stock during the period.
Snowflake, Inc. |
Snowflake, a cloud-based data storage and analytics service, surprised investors with the announcement that CEO Frank Slootman retired at the end of February 2024. However, the investment team had positive views on the AI-related vision and capabilities of the new CEO, Sridhar Ramaswamy. The company also reduced revenue guidance for 2024 as software sales have generally been under pressure as corporate IT departments, and IT budgets, digest AI implications. The team sold the stock during the period.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. American Franchise Fund (Series I) | 34.89 % | 15.84 % | 14.16 % |
| Russell 1000® Growth Index | 33.36 % | 18.96 % | 16.78 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 889,266,825 |
| Total number of portfolio holdings | 58 |
| Total advisory fees paid | $ 5,540,046 |
| Portfolio turnover rate | 52 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| NVIDIA Corp. | 10.81 % |
| Amazon.com, Inc. | 7.98 % |
| Microsoft Corp. | 7.25 % |
| Apple, Inc. | 6.47 % |
| Meta Platforms, Inc., Class A | 5.11 % |
| Broadcom, Inc. | 4.33 % |
| Alphabet, Inc., Class A | 3.58 % |
| KKR & Co., Inc., Class A | 3.20 % |
| Blackstone, Inc., Class A | 2.88 % |
| ServiceNow, Inc. | 2.81 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. American Franchise Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. American Franchise Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. American Franchise Fund
(Series II) | $ 130 | 1.11 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, U.S. large-cap equities benefited from investment themes levered to artificial intelligence (AI) technology and investor anticipation that slowing inflation would cause the Federal Reserve to ease monetary policy.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 34.56%. For the same time period, the Russell 1000
®
Growth Index returned 33.36%. The Fund outperformed the Russell 1000
®
Growth Index primarily due to strong stock selection in the industrials and financials sectors, though results were partially offset by a relative overweight in these sectors. An underweight exposure in the consumer staples and consumer discretionary sectors, and an overweight in the communication services sector,
were
also beneficial. An underweight exposure and stock selection in the information technology
(IT)
sector detracted from relative results.
What contributed to performance?
NVIDIA Corp. |
NVIDIA is a company at the heart of digital transformation as it produces graphics processing units (GPUs). The company completed a 10-for-1 stock split and surpassed $3 trillion in market cap over the period. There is significant excitement for the launch of its new Blackwell platform, which is marketed as being able to power generative AI faster with less cost and energy consumption. The GPUs are already sold out until the end of 2025.
Amazon.com, Inc. |
The company's strong growth in its cloud computing division, Amazon Web Services, has been a significant contributor, benefiting from increased demand for cloud solutions across various industries. Additionally, Amazon's focus on expanding its advertising business yielded positive results, with higher ad revenues boosting overall profitability. The company's strategic investments in AI and automation have also enhanced operational efficiency, further supporting its stock performance.
Meta Platforms, Inc. |
Social technology company Meta Platforms realized positive results from its AI investments through better recommendations, higher engagement, improved ad tools and more efficient ad targeting. We believe Meta is uniquely positioned to gain momentum as AI assistants become a larger part of consumer interactions and products.
What detracted from performance?
DexCom, Inc.
|
DexCom is a medical device company that specializes in continuous glucose monitors (CGM). Stocks with exposure to diabetes-related sales have experienced weakness in general following the successful launch of GLP-1 drugs. Recent US Food and Drug Administration clearance of CGMs for non-prescription sales meaningfully expands DexCom’s market to non-diabetics, as a tool that can help users maintain a healthy lifestyle. However, a sales force reorganization significantly slowed their sales forecasts.
MongoDB, Inc. |
MongoDB is a document database that stores and manages data for a variety of applications such as customer relationship management and health care systems. The company struggled with a decline in growth during 2024. Additionally, its Chief Financial Officer/Chief Operating Officer since 2015 announced he was leaving. The team sold the stock during the period.
Snowflake, Inc. |
Snowflake, a cloud-based data storage and analytics service, surprised investors with the announcement that CEO Frank Slootman retired at the end of February 2024. However, the investment team had positive views on the AI-related vision and capabilities of the new CEO, Sridhar Ramaswamy. The company also reduced revenue guidance for 2024 as software sales have generally been under pressure as corporate IT departments, and IT budgets, digest AI implications. The team sold the stock during the period.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. American Franchise Fund (Series II) | 34.56 % | 15.56 % | 13.88 % |
| Russell 1000® Growth Index | 33.36 % | 18.96 % | 16.78 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 889,266,825 |
| Total number of portfolio holdings | 58 |
| Total advisory fees paid | $ 5,540,046 |
| Portfolio turnover rate | 52 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| NVIDIA Corp. | 10.81 % |
| Amazon.com, Inc. | 7.98 % |
| Microsoft Corp. | 7.25 % |
| Apple, Inc. | 6.47 % |
| Meta Platforms, Inc., Class A | 5.11 % |
| Broadcom, Inc. | 4.33 % |
| Alphabet, Inc., Class A | 3.58 % |
| KKR & Co., Inc., Class A | 3.20 % |
| Blackstone, Inc., Class A | 2.88 % |
| ServiceNow, Inc. | 2.81 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. American Value Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. American Value Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. American Value Fund
(Series I) | $ 104 | 0.90 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity indices experienced strong returns. The US economy was resilient as data suggested the Federal Reserve (Fed) may have achieved its fabled soft landing, with strong consumer spending and low unemployment providing support. Enthusiasm around the artificial intelligence (AI) investment theme led to concentrated market leadership in the large cap technology space during the period.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 30.41%. For the same time period, the Russell Midcap
®
Value Index returned 13.07%. The Fund outperformed the Russell Midcap
®
Value Index primarily due to strong stock selection in the information technology (IT), utilities and industrials sectors. These sectors were also the largest contributors to absolute performance. Conversely, stock selection and an overweight in energy was the largest detractor from the Fund's relative return. Stock selection and an overweight in health care detracted from both relative and absolute returns.
What contributed to performance?
Vistra Corp. |
Shares of this large US power producer and retail energy provider rose due to a better outlook for long-term demand, driven by the build out of energy-intensive AI data centers. The company’s solid financial results also supported the stock price. The Fund’s positions in Vistra Corp. were sold during the fiscal year.
Coherent Corp. |
This laser company develops and manufactures optoelectronic components and devices used in the communications, electronics and industrial markets. It benefited from the growth of AI as its optical transceivers are key enablers for networking of AI servers.
Vertiv Holdings Co. |
Vertiv is a manufacturer of electrical power, thermal management, and other equipment for data centers. Shares have risen along with the company’s strong financial performance, driven by increased spending in data centers as a result of AI investments.
What detracted from performance?
New Fortress Energy, Inc.
|
Shares of this natural gas infrastructure company fell due to declining gas prices and ongoing project delays.
APA Corp. |
Shares of the oil and gas company declined along with the broader industry due to weak energy prices. We sold this position to fund new opportunities.
Centene Corp. |
Centene is a leading provider of both Medicaid and Affordable Care Act insurance coverage. The stock underperformed because of higher medical costs that hurt the profit margins in its Medicaid segment and uncertainty around potential changes to the healthcare policies under the new Republican administration. We added to the position to take advantage of the stock price decline.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. American Value Fund (Series I) | 30.41 % | 13.69 % | 9.12 % |
Russell Midcap ® Value Index | 13.07 % | 8.59 % | 8.10 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 366,273,668 |
| Total number of portfolio holdings | 75 |
| Total advisory fees paid | $ 2,419,413 |
| Portfolio turnover rate | 39 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Marvell Technology, Inc. | 3.65 % |
| Lumentum Holdings, Inc. | 3.43 % |
| Expedia Group, Inc. | 3.35 % |
| Coherent Corp. | 2.93 % |
| NRG Energy, Inc. | 2.69 % |
| Fidelity National Information Services, Inc. | 2.67 % |
| Western Alliance Bancorporation | 2.44 % |
| Huntington Bancshares, Inc. | 2.32 % |
| MasTec, Inc. | 2.31 % |
| Globe Life, Inc. | 2.23 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. American Value Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. American Value Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024.
You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. American Value Fund
(Series II) | $ 132 | 1.15 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity indices experienced strong returns. The US economy was resilient as data suggested the Federal Reserve (Fed) may have achieved its fabled soft landing, with strong consumer spending and low unemployment providing support. Enthusiasm around the artificial intelligence (AI) investment theme led to concentrated market leadership in the large cap technology space during the period.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 30.09%. For the same time period, the Russell Midcap
®
Value Index returned 13.07%. The Fund outperformed the Russell Midcap
®
Value Index primarily due to strong stock selection in the information technology (IT), utilities and industrials sectors. These sectors were also the largest contributors to absolute performance. Conversely, stock selection and an overweight in energy was the largest detractor from the Fund's relative return. Stock selection and an overweight in health care detracted from both relative and absolute returns.
What contributed to performance?
Vistra Corp. |
Shares of this large US power producer and retail energy provider rose due to a better outlook for long-term demand, driven by the build out of energy-intensive AI data centers. The company’s solid financial results also supported the stock price. The Fund’s positions in Vistra Corp. were sold during the fiscal year.
Coherent Corp. |
This laser company develops and manufactures optoelectronic components and devices used in the communications, electronics and industrial markets. It benefited from the growth of AI as its optical transceivers are key enablers for networking of AI servers.
Vertiv Holdings Co. |
Vertiv is a manufacturer of electrical power, thermal management, and other equipment for data centers. Shares have risen along with the company’s strong financial performance, driven by increased spending in data centers as a result of AI investments.
What detracted from performance?
New Fortress Energy, Inc.
|
Shares of this natural gas infrastructure company fell due to declining gas prices and ongoing project delays.
APA Corp. |
Shares of the oil and gas company declined along with the broader industry due to weak energy prices. We sold this position to fund new opportunities.
Centene Corp. |
Centene is a leading provider of both Medicaid and Affordable Care Act insurance coverage. The stock underperformed because of higher medical costs that hurt the profit margins in its Medicaid segment and uncertainty around potential changes to the healthcare policies under the new Republican administration. We added to the position to take advantage of the stock price decline.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. American Value Fund (Series II) | 30.09 % | 13.40 % | 8.85 % |
Russell Midcap ® Value Index | 13.07 % | 8.59 % | 8.10 % |
| 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 366,273,668 |
| Total number of portfolio holdings | 75 |
| Total advisory fees paid | $ 2,419,413 |
| Portfolio turnover rate | 39 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Marvell Technology, Inc. | 3.65 % |
| Lumentum Holdings, Inc. | 3.43 % |
| Expedia Group, Inc. | 3.35 % |
| Coherent Corp. | 2.93 % |
| NRG Energy, Inc. | 2.69 % |
| Fidelity National Information Services, Inc. | 2.67 % |
| Western Alliance Bancorporation | 2.44 % |
| Huntington Bancshares, Inc. | 2.32 % |
| MasTec, Inc. | 2.31 % |
| Globe Life, Inc. | 2.23 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Balanced-Risk Allocation Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Balanced-Risk Allocation Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Balanced-Risk Allocation Fund
(Series I) | $ 73 | 0.72 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
The global monetary easing cycle finally arrived with several central banks cutting interest rates. Despite some volatility, global growth and disinflationary progress continued, leading to robust gains for global equity markets and more limited gains for fixed income markets. Commodities posted mixed performance; precious metals outperformed, while agricultural and energy commodities broadly struggled due to weaker demand. Broad markets retreated late in the year, driven by the US election and central bank caution. Resilient economic growth combined with mixed inflation data caused a spike in volatility to start the final quarter of the year. Although markets rebounded following the US election, the optimism was short-lived as uncertainty around the new administration’s policies, sticky inflation, tariffs and diverging economic outlooks set in.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 3.76%. For the same time period, the Custom Invesco V.I. Balanced-Risk Allocation Index returned 11.54%.
What contributed to performance?
Growth Macro Factor |
Strategic exposure to the growth macro factor achieved through exchange-traded futures, swaps and listed options, was the top contributor to Fund performance with all six equity markets posting gains. Japanese equities outperformed their international counterparts, driven by a weakening yen in the export heavy region.
Tactical positioning
| Tactical positioning contributed to performance as gains from positioning in equities and commodities outweighed losses from positioning within global bonds.
What detracted from performance?
Defensive Macro Factor
|
Strategic exposure to the defensive macro factor achieved through exchange-traded futures, detracted from Fund results in aggregate, with losses from Australian, German, Canadian and Japanese government bonds. Central bank policy was the primary driver of performance due to inflation risks causing yields to rise on longer term bonds.
Real Return Macro Factor |
Strategic exposure to the real return macro factor achieved through exchange-traded futures, swaps and commodity linked notes, detracted from the Fund's results in aggregate as gains in energy and precious metals were outweighed by losses in agriculture and industrial metals. Agriculture exposure was the top detractor within the real return macro factor as most agricultural commodities faced pressure from oversupply concerns. Industrial metals were a slight detractor due to the threat of potential tariff policy from the Trump administration.
How Has The Fund Historically
Performed
?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Balanced-Risk Allocation Fund (Series I) | 3.76 % | 2.75 % | 3.83 % |
| Custom Invesco V.I. Balanced-Risk Allocation Index | 11.54 % | 6.87 % | 6.75 % |
| MSCI World IndexSM (Net) | 18.67 % | 11.17 % | 9.95 % |
| MSCI ACWI (Net) | 17.49 % | 10.06 % | 9.23 % |
The Custom Invesco V.I. Balanced-Risk Allocation Index is composed of 60% MSCI World Index (Net) and 40% Bloomberg U.S. Aggregate Bond Index. Prior to May 2, 2011, the index comprised the MSCI World Index, JP Morgan GBI Global Index and FTSE US 3-Month Treasury Bill Index.
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
MSCI World Index
SM
(Net) to the MSCI ACWI (Net) to reflect that the MSCI ACWI (Net) can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 422,609,164 |
| Total number of portfolio holdings | 163 |
| Total advisory fees paid | $ 2,342,368 |
| Portfolio turnover rate | 10 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Target risk contribution and
notional asset weights
| Asset Class | Target Risk Contribution* | Notional Asset Exposure Weights** |
| Equities and Options | 50.00 % | 80.03 % |
| Fixed Income | 23.67 | 57.86 |
| Commodities | 26.33 | 28.30 |
| Total | 100.00 % | 166.19 % |
* Reflects the risk that each asset class is expected to contribute to the overall risk of the Fund as measured by standard deviation and estimates of risk based on historical data. Standard deviation measures the annualized fluctuations (volatility) of monthly returns.
** Proprietary models determine the Notional Asset Weights necessary to achieve the Target Risk Contributions. Total Notional Asset Weight greater than 100% is achieved through derivatives and other instruments that create leverage. | | |
Security type allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Balanced-Risk Allocation Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Balanced-Risk Allocation Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024.
You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Balanced-Risk Allocation Fund
(Series II) | $ 99 | 0.97 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
The global monetary easing cycle finally arrived with several central banks cutting interest rates. Despite some volatility, global growth and disinflationary progress continued, leading to robust gains for global equity markets and more limited gains for fixed income markets. Commodities posted mixed performance; precious metals outperformed, while agricultural and energy commodities broadly struggled due to weaker demand. Broad markets retreated late in the year, driven by the US election and central bank caution. Resilient economic growth combined with mixed inflation data caused a spike in volatility to start the final quarter of the year. Although markets rebounded following the US election, the optimism was short-lived as uncertainty around the new administration’s policies, sticky inflation, tariffs and diverging economic outlooks set in.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 3.56%. For the same time period, the Custom Invesco V.I. Balanced-Risk Allocation Index returned 11.54%.
What contributed to performance?
Growth Macro Factor |
Strategic exposure to the growth macro factor achieved through exchange-traded futures, swaps and listed options, was the top contributor to Fund performance with all six equity markets posting gains. Japanese equities outperformed their international counterparts, driven by a weakening yen in the export heavy region.
Tactical positioning
| Tactical positioning contributed to performance as gains from positioning in equities and commodities outweighed losses from positioning within global bonds.
What detracted from performance?
Defensive Macro Factor
|
Strategic exposure to the defensive macro factor achieved through exchange-traded futures, detracted from Fund results in aggregate, with losses from Australian, German, Canadian and Japanese government bonds. Central bank policy was the primary driver of performance due to inflation risks causing yields to rise on longer term bonds.
Real Return Macro Factor |
Strategic exposure to the real return macro factor achieved through exchange-traded futures, swaps and commodity linked notes, detracted from the Fund's results in aggregate as gains in energy and precious metals were outweighed by losses in agriculture and industrial metals. Agriculture exposure was the top detractor within the real return macro factor as most agricultural commodities faced pressure from oversupply concerns. Industrial metals were a slight detractor due to the threat of potential tariff policy from the Trump administration.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Balanced-Risk Allocation Fund (Series II) | 3.56 % | 2.51 % | 3.57 % |
| Custom Invesco V.I. Balanced-Risk Allocation Index | 11.54 % | 6.87 % | 6.75 % |
| MSCI World IndexSM (Net) | 18.67 % | 11.17 % | 9.95 % |
| MSCI ACWI (Net) | 17.49 % | 10.06 % | 9.23 % |
The Custom Invesco V.I. Balanced-Risk Allocation Index is composed of 60% MSCI World Index (Net) and 40% Bloomberg U.S. Aggregate Bond Index. Prior to May 2, 2011, the index comprised the MSCI World Index, JP Morgan GBI Global Index and FTSE US 3-Month Treasury Bill Index.
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
MSCI World Index
SM
(Net) to the MSCI ACWI (Net) to reflect that the MSCI ACWI (Net) can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 422,609,164 |
| Total number of portfolio holdings | 163 |
| Total advisory fees paid | $ 2,342,368 |
| Portfolio turnover rate | 10 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Target risk contribution and
notional asset weights
| Asset Class | Target Risk Contribution* | Notional Asset Exposure Weights** |
| Equities and Options | 50.00 % | 80.03 % |
| Fixed Income | 23.67 | 57.86 |
| Commodities | 26.33 | 28.30 |
| Total | 100.00 % | 166.19 % |
* Reflects the risk that each asset class is expected to contribute to the overall risk of the Fund as measured by standard deviation and estimates of risk based on historical data. Standard deviation measures the annualized fluctuations (volatility) of monthly returns.
** Proprietary models determine the Notional Asset Weights necessary to achieve the Target Risk Contributions. Total Notional Asset Weight greater than 100% is achieved through derivatives and other instruments that create leverage. | | |
Security type allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Capital Appreciation Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Capital Appreciation Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Capital Appreciation Fund
(Series I) | $ 94 | 0.80 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending, and low unemployment provided support. The Fed cut the federal funds rate several times over the period, but suggested less aggressive easing could occur in 2025 should robust economic growth and lingering inflation continue.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 34.16%. For the same time period, the Russell 1000
®
Growth Index returned 33.36%. The Fund outperformed the Russell 1000
®
Growth Index mainly as a result of stock selection in the health care, industrials, and communication services sectors. Weaker stock selection in the information technology and consumer discretionary sectors partially offset these results.
What contributed to performance?
NVIDIA Corp. |
NVIDIA reported strong results and commented that AI-related demand should remain durable for the foreseeable future given the backlog of existing products and upcoming launches of new products.
Amazon.com, Inc. |
Amazon reported strong profits driven by its Amazon Web Services division, which we believe continued to be well positioned for growth at the end of the period.
What detracted from performance?
MongoDB, Inc.
|
MongoDB gained share in the large database software market but reported underwhelming results that saw slower new customer additions and growth within its installed base than expected. The Fund’s positions in MongoDB were sold during the fiscal year.
ASML Holding N.V. |
ASML detracted from the Fund’s performance due to investor concerns about the potential impact on its business from US government restrictions on chip sales to China. The Fund’s positions in ASML were sold during the fiscal year.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Capital Appreciation Fund (Series I) | 34.16 % | 16.05 % | 13.25 % |
| Russell 1000® Growth Index | 33.36 % | 18.96 % | 16.78 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Effective after the close of business on May 24, 2019, Non-Service shares of Oppenheimer International Growth Fund/VA (the predecessor fund), were reorganized into Series I shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Non-Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 812,676,992 |
| Total number of portfolio holdings | 57 |
| Total advisory fees paid | $ 4,809,986 |
| Portfolio turnover rate | 58 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| NVIDIA Corp. | 10.50 % |
| Amazon.com, Inc. | 8.05 % |
| Microsoft Corp. | 7.09 % |
| Apple, Inc. | 6.31 % |
| Meta Platforms, Inc., Class A | 5.15 % |
| Broadcom, Inc. | 4.03 % |
| Alphabet, Inc., Class C | 3.52 % |
| Netflix, Inc. | 2.70 % |
| ServiceNow, Inc. | 2.30 % |
| KKR & Co., Inc., Class A | 2.25 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
Effective on or about April 30, 2025, the name of the Fund and all references thereto will change from Invesco V.I. Capital Appreciation Fund to Invesco V.I. Discovery Large Cap Fund and the Fund will adopt a non-fundamental policy to invest at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of "large-cap" issuers, and in derivatives and other instruments that have economic characteristics similar to such securities. The Fund's investment objective will not change and the changes will not materially impact the way the Fund is managed.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Capital Appreciation Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Capital Appreciation Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Capital Appreciation Fund
(Series II) | $ 123 | 1.05 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending, and low unemployment provided support. The Fed cut the federal funds rate several times over the period, but suggested less aggressive easing could occur in 2025 should robust economic growth and lingering inflation continue.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 33.82%. For the same time period, the Russell 1000
®
Growth Index returned 33.36%. The Fund outperformed the Russell 1000
®
Growth Index mainly as a result of stock selection in the health care, industrials, and communication services sectors. Weaker stock selection in the information technology and consumer discretionary sectors partially offset these results.
What contributed to performance?
NVIDIA Corp. |
NVIDIA reported strong results and commented that AI-related demand should remain durable for the foreseeable future given the backlog of existing products and upcoming launches of new products.
Amazon.com, Inc. |
Amazon reported strong profits driven by its Amazon Web Services division, which we believe continued to be well positioned for growth at the end of the period.
What detracted from performance?
MongoDB, Inc.
|
MongoDB gained share in the large database software market but reported underwhelming results that saw slower new customer additions and growth within its installed base than expected. The Fund’s positions in MongoDB were sold during the fiscal year.
ASML Holding N.V. |
ASML detracted from the Fund’s performance due to investor concerns about the potential impact on its business from US government restrictions on chip sales to China. The Fund’s positions in ASML were sold during the fiscal year.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Capital Appreciation Fund (Series II) | 33.82 % | 15.76 % | 12.97 % |
| Russell 1000® Growth Index | 33.36 % | 18.96 % | 16.78 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Effective after the close of business on May 24, 2019, Service shares of Oppenheimer International Growth Fund/VA (the predecessor fund), were reorganized into Series II shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 812,676,992 |
| Total number of portfolio holdings | 57 |
| Total advisory fees paid | $ 4,809,986 |
| Portfolio turnover rate | 58 % |
What Comprise
d
The Fund's Holding
s
?
Top ten holdings*
(% of net assets)
| NVIDIA Corp. | 10.50 % |
| Amazon.com, Inc. | 8.05 % |
| Microsoft Corp. | 7.09 % |
| Apple, Inc. | 6.31 % |
| Meta Platforms, Inc., Class A | 5.15 % |
| Broadcom, Inc. | 4.03 % |
| Alphabet, Inc., Class C | 3.52 % |
| Netflix, Inc. | 2.70 % |
| ServiceNow, Inc. | 2.30 % |
| KKR & Co., Inc., Class A | 2.25 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
How Has The Fund Changed Over The
Past
Yea
r
?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
Effective on or about April 30, 2025, the name of the Fund and all references thereto will change from Invesco V.I. Capital Appreciation Fund to Invesco V.I. Discovery Large Cap Fund and the Fund will adopt a non-fundamental policy to invest at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of "large-cap" issuers, and in derivatives and other instruments that have economic characteristics similar to such securities. The Fund's investment objective will not change and the changes will not materially impact the way the Fund is managed.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Comstock Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Comstock Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Comstock Fund
(Series I) | $ 82 | 0.76 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ending December 31, 2024, US equity indices experienced strong returns. The US economy remained resilient during the period as data suggested the Federal Reserve may have achieved its fabled soft landing, as strong consumer spending and low unemployment provided support. Driven by investor demand for companies focusing on artificial intelligence (AI), communication services and information technology had strong returns, while materials and health care lagged.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 15.18%. For the same time period, the Russell 1000
®
Value Index returned 14.37%. The Fund outperformed the Russell 1000
®
Value Index primarily due to strong stock selection in communication services, industrials and materials, while relative returns were partially offset by stock selection in health care, information technology and consumer staples.
What contributed to performance?
Communication Services |
Favorable performance came from Meta Platforms and Alphabet. Alphabet had substantial revenue growth in advertising and cloud services during the year. Meta Platforms stock surged significantly in 2024 due to strong revenue growth, mostly in advertisement revenue, and successful advancements in AI and augmented reality technologies.
Industrials |
Performance was mainly driven by stock selection in building products and electrical equipment. Johnson Controls International, Eaton and Emerson Electric were key contributors to relative returns. Johnson Controls International reported strong organic sales growth, robust margin expansion, and a record backlog driven by high demand in data centers. Electrical equipment stocks like Eaton and Emerson Electric performed well in 2024 due to strong order growth, robust backlog, and successful execution of strategic initiatives.
Materials |
Performance was driven by stock selection in containers/packaging and the lack of exposure to metals and mining stocks. International Paper was a key relative contributor, outperforming the sector and the Russell 1000
®
Value Index for the period. International Paper stock benefited due to strategic restructuring, cost reductions, and successful optimization of their box plant operations.
What detracted from performance?
Health Care
|
Some of the largest detractors in health care were in the managed health care and health care services segments. CVS Health underperformed due to high medical costs and high utilization in its health benefits segment. Elevance Health had higher-than-expected costs in its health benefits segment and expenses driven by its investments in growth.
Information Technology (IT) |
Stock selection in IT services company DXC Technology and within semiconductors Intel and NXP Semiconductors were key detractors. DXC Technology underperformed in 2024 due to challenges in sales execution, integration issues, and delays in achieving intended strategic results. Semiconductors not related to AI, such as Intel and NXP Semiconductors, underperformed in 2024 due to competitive disadvantages, production delays, and a weak automotive market.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Comstock Fund (Series I) | 15.18 % | 11.59 % | 9.49 % |
| Russell 1000® Value Index | 14.37 % | 8.68 % | 8.49 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 1,427,947,821 |
| Total number of portfolio holdings | 94 |
| Total advisory fees paid | $ 8,155,886 |
| Portfolio turnover rate | 19 % |
What Comprised The Fund'
s
H
olding
s
?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Wells Fargo & Co. | 3.26 % |
| Bank of America Corp. | 3.19 % |
| Microsoft Corp. | 2.66 % |
| Alphabet, Inc., Class A | 2.32 % |
| Cisco Systems, Inc. | 2.25 % |
| Meta Platforms, Inc., Class A | 2.08 % |
| Johnson Controls International PLC | 1.92 % |
| State Street Corp. | 1.91 % |
| Philip Morris International, Inc. | 1.88 % |
| Chevron Corp. | 1.88 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Comstock Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Comstock Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Comstock Fund
(Series II) | $ 109 | 1.01 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ending December 31, 2024, US equity indices experienced strong returns. The US economy remained resilient during the period as data suggested the Federal Reserve may have achieved its fabled soft landing, as strong consumer spending and low unemployment provided support. Driven by investor demand for companies focusing on artificial intelligence (AI), communication services and information technology had strong returns, while materials and health care lagged.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 14.87%. For the same time period, the Russell 1000
®
Value Index returned 14.37%. The Fund outperformed the Russell 1000
®
Value Index primarily due to strong stock selection in communication services, industrials and materials, while relative returns were partially offset by stock selection in health care, information technology and consumer staples.
What contributed to performance?
Communication Services |
Favorable performance came from Meta Platforms and Alphabet. Alphabet had substantial revenue growth in advertising and cloud services during the year. Meta Platforms stock surged significantly in 2024 due to strong revenue growth, mostly in advertisement revenue, and successful advancements in AI and augmented reality technologies.
Industrials |
Performance was mainly driven by stock selection in building products and electrical equipment. Johnson Controls International, Eaton and Emerson Electric were key contributors to relative returns. Johnson Controls International reported strong organic sales growth, robust margin expansion, and a record backlog driven by high demand in data centers. Electrical equipment stocks like Eaton and Emerson Electric performed well in 2024 due to strong order growth, robust backlog, and successful execution of strategic initiatives.
Materials |
Performance was driven by stock selection in containers/packaging and the lack of exposure to metals and mining stocks. International Paper was a key relative contributor, outperforming the sector and the Russell 1000
®
Value Index for the period. International Paper stock benefited due to strategic restructuring, cost reductions, and successful optimization of their box plant operations.
What detracted from performance?
Health Care
|
Some of the largest detractors in health care were in the managed health care and health care services segments. CVS Health underperformed due to high medical costs and high utilization in its health benefits segment. Elevance Health had higher-than-expected costs in its health benefits segment and expenses driven by its investments in growth.
Information Technology (IT) |
Stock selection in IT services company DXC Technology and within semiconductors Intel and NXP Semiconductors were key detractors. DXC Technology underperformed in 2024 due to challenges in sales execution, integration issues, and delays in achieving intended strategic results. Semiconductors not related to AI, such as Intel and NXP Semiconductors, underperformed in 2024 due to competitive disadvantages, production delays, and a weak automotive market.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Comstock Fund (Series II) | 14.87 % | 11.31 % | 9.21 % |
| Russell 1000® Value Index | 14.37 % | 8.68 % | 8.49 % |
| 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 1,427,947,821 |
| Total number of portfolio holdings | 94 |
| Total advisory fees paid | $ 8,155,886 |
| Portfolio turnover rate | 19 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holding
s
*
(% of net assets)
| Wells Fargo & Co. | 3.26 % |
| Bank of America Corp. | 3.19 % |
| Microsoft Corp. | 2.66 % |
| Alphabet, Inc., Class A | 2.32 % |
| Cisco Systems, Inc. | 2.25 % |
| Meta Platforms, Inc., Class A | 2.08 % |
| Johnson Controls International PLC | 1.92 % |
| State Street Corp. | 1.91 % |
| Philip Morris International, Inc. | 1.88 % |
| Chevron Corp. | 1.88 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More
In
for
m
atio
n
?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Core Equity Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Core Equity Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Core Equity Fund
(Series I) | $ 91 | 0.81 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending, and low unemployment provided support. The Fed cut the federal funds rate several times over the period, but suggested less aggressive easing could take place in 2025 should robust economic growth and lingering inflation continue.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 25.60%. For the same time period, the Russell 1000
®
Index returned 24.51%. The Fund outperformed the Russell 1000
®
Index mainly as a result of stock selection in the information technology, financials, and consumer staples sectors. Weaker stock selection in the consumer discretionary, energy, and real estate sectors partially offset these results.
What contributed to performance?
NVIDIA Corp. |
NVIDIA reported strong results and NVIDIA's results for the period were aided by its public commentary that artificial intelligence-related demand remained strong and that it had a backlog of existing products and upcoming product launches.
Royal Carribean Cruises Ltd. |
Royal Caribbean benefited from a strengthening demand outlook for the cruise industry. The company, during the period, was well-positioned among its competitors in terms of earnings power and balance sheet quality.
What detracted from performance?
Aptiv PLC
|
Aptiv, an automotive technology company, underperformed as it dealt with near-term changes in its customer and product mix along with a challenging global auto outlook that acted as headwinds to growth.
Prologis, Inc. |
Prologis, a real estate logistics company, underperformed during the period as it faced earnings headwinds, including softening near-term lease activity in the face of sign
ifica
nt new supply in a few key markets, most notably Southern California.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Core Equity Fund (Series I) | 25.60 % | 12.35 % | 9.42 % |
| Russell 1000® Index | 24.51 % | 14.28 % | 12.87 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 772,275,894 |
| Total number of portfolio holdings | 73 |
| Total advisory fees paid | $ 4,489,616 |
| Portfolio turnover rate | 46 % |
What Comprised The Fund's Holding
s
?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Microsoft Corp. | 7.21 % |
| NVIDIA Corp. | 7.01 % |
| Apple, Inc. | 6.17 % |
| Amazon.com, Inc. | 4.85 % |
| Meta Platforms, Inc., Class A | 3.40 % |
| JPMorgan Chase & Co. | 2.68 % |
| Broadcom, Inc. | 2.66 % |
| Alphabet, Inc., Class A | 2.58 % |
| Eli Lilly and Co. | 1.91 % |
| Salesforce, Inc. | 1.87 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Core Equity Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Core Equity Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Core Equity Fund
(Series II) | $ 119 | 1.06 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending, and low unemployment provided support. The Fed cut the federal funds rate several times over the period, but suggested less aggressive easing could take place in 2025 should robust economic growth and lingering inflation continue.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 25.29%. For the same time period, the Russell 1000
®
Index returned 24.51%. The Fund outperformed the Russell 1000
®
Index mainly as a result of stock selection in the information technology, financials, and consumer staples sectors. Weaker stock
selection
in the consumer discretionary, energy, and real estate sectors partially offset these results.
What contributed to performance?
NVIDIA Corp. |
NVIDIA reported strong results and NVIDIA's results for the period were aided by its public commentary that artificial intelligence-related demand remained strong and that it had a backlog of existing products and upcoming product launches.
Royal Carribean Cruises Ltd. |
Royal Caribbean benefited from a strengthening demand outlook for the cruise industry. The company, during the period, was well-positioned among its competitors in terms of earnings power and balance sheet quality.
What detracted from performance?
Aptiv PLC
|
Aptiv, an automotive technology company, underperformed as it dealt with near-term changes in its customer and product mix along with a challenging global auto outlook that acted as headwinds to growth.
Prologis, Inc. |
Prologis, a real estate logistics company, unde
rp
erformed during the period as it faced earnings headwinds, including softening near-term lease activity in the face of significant new supply in a few key markets, most notably Southern California.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Core Equity Fund (Series II) | 25.29 % | 12.07 % | 9.15 % |
| 24.51 % | 14.28 % | 12.87 % |
| 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 772,275,894 |
| Total number of portfolio holdings | 73 |
| Total advisory fees paid | $ 4,489,616 |
| Portfolio turnover rate | 46 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Microsoft Corp. | 7.21 % |
| NVIDIA Corp. | 7.01 % |
| Apple, Inc. | 6.17 % |
| Amazon.com, Inc. | 4.85 % |
| Meta Platforms, Inc., Class A | 3.40 % |
| JPMorgan Chase & Co. | 2.68 % |
| Broadcom, Inc. | 2.66 % |
| Alphabet, Inc., Class A | 2.58 % |
| Eli Lilly and Co. | 1.91 % |
| Salesforce, Inc. | 1.87 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Core Plus Bond Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Core Plus Bond Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Core Plus Bond Fund
(Series I) | $ 60 | 0.59 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the corporate bond market benefited from a continuing disinflation trend and resilient economic growth supporting corporate fundamentals, leading to tightening credit spreads. Because the Fund holds predominantly corporate bonds, it benefited from this broader market environment.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 3.06%. For the same time period, the Bloomberg U.S. Aggregate Bond Index returned 1.25%.
What contributed to performance?
Investment grade corporates |
Security selection in the banking sub-sector contributed to relative performance. Strong corporate fundamentals anchored US investment grade credit, the yield backdrop appeared attractive, and a lower average dollar price of bonds across the index presented discounted buying opportunities, and enhanced downside protection for bondholders.
Securitized debt |
Overweights in securitized debt, particularly asset-backed securities (ABS), collateralized mortgage obligations (CMO), and commercial mortgage-backed securities (CMBS), contributed to relative performance, underpinned by attractive valuations and solid technicals.
What detracted from performance?
Treasuries
|
Selection within Treasuries, particularly in longer-maturity Treasury bonds, detracted from relative performance due to an elevated rates environment.
Mortgage-backed securities |
Sec
urity selection in mortgage-backed securities, particularly to conventional 30-year fixed mortgages, detracted from relative performance due to an elevated rates environment.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Core Plus Bond Fund (Series I) | 3.06 % | 0.38 % | 2.25 % |
| Bloomberg U.S. Aggregate Bond Index | 1.25 % | (0.33 ) % | 1.35 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 148,380,952 |
| Total number of portfolio holdings | 1,287 |
| Total advisory fees paid | $ 432,282 |
| Portfolio turnover rate | 419 % |
What Comprised The Fund's Holdings?
Top ten holdings*
(% of net assets)
| Federal National Mortgage Association, TBA, 5.00%, 06/25/2054 | 4.94 % |
| U.S. Treasury Notes, 4.25%, 11/15/2034 | 4.61 % |
| Uniform Mortgage-Backed Securities, TBA, 5.50%, 01/01/2055 | 4.11 % |
| U.S. Treasury Bonds, 4.25%, 08/15/2054 | 2.68 % |
| U.S. Treasury Bonds, 4.63%, 11/15/2044 | 2.07 % |
| Uniform Mortgage-Backed Securities, TBA, 3.50%, 01/01/2055 | 2.03 % |
| Government National Mortgage Association, TBA, 4.50%, 01/01/2055 | 1.71 % |
| U.S. Treasury Notes, 4.38%, 12/31/2029 | 1.65 % |
| Government National Mortgage Association, TBA, 5.50%, 06/20/2054 | 1.40 % |
| U.S. Treasury Notes, 4.25%, 12/31/2026 | 1.27 % |
| * Excluding money market fund holdings, if any. | |
Security type allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Core Plus Bond Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Core Plus Bond Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Core Plus Bond Fund
(Series II) | $ 85 | 0.84 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the corporate bond market benefited from a continuing disinflation trend and resilient economic growth supporting corporate fundamentals, leading to tightening credit spreads. Because the Fund holds predominantly corporate bonds, it benefited from this broader market environment.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 2.72%. For the same time period, the Bloomberg U.S. Aggregate Bond Index returned 1.25%.
What contributed to performance?
Investment grade corporates |
Security selection in the banking sub-sector contributed to relative performance. Strong corporate fundamentals anchored US investment grade credit, the yield backdrop appeared attractive, and a lower average dollar price of bonds across the index presented discounted buying opportunities, and enhanced downside protection for bondholders.
Securitized debt |
Overweights in securitized debt, particularly asset-backed securities (ABS), collateralized mortgage obligations (CMO), and commercial mortgage-backed securities (CMBS), contributed to relative performance, underpinned by attractive valuations and solid technicals.
What detracted from performance?
Treasuries
|
Selection within Treasuries, particularly in longer-maturity Treasury bonds, detracted from relative performance due to an elevated rates environment.
Mortgage-backed securities |
Security selection in mortgage-backed securities, particularly to conventional 30-year fixed mortgages, detracted from relative performance due to an elevated rates environment.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Core Plus Bond Fund (Series II) | 2.72 % | 0.08 % | 1.98 % |
| Bloomberg U.S. Aggregate Bond Index | 1.25 % | (0.33 ) % | 1.35 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 148,380,952 |
| Total number of portfolio holdings | 1,287 |
| Total advisory fees paid | $ 432,282 |
| Portfolio turnover rate | 419 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Federal National Mortgage Association, TBA, 5.00%, 06/25/2054 | 4.94 % |
| U.S. Treasury Notes, 4.25%, 11/15/2034 | 4.61 % |
| Uniform Mortgage-Backed Securities, TBA, 5.50%, 01/01/2055 | 4.11 % |
| U.S. Treasury Bonds, 4.25%, 08/15/2054 | 2.68 % |
| U.S. Treasury Bonds, 4.63%, 11/15/2044 | 2.07 % |
| Uniform Mortgage-Backed Securities, TBA, 3.50%, 01/01/2055 | 2.03 % |
| Government National Mortgage Association, TBA, 4.50%, 01/01/2055 | 1.71 % |
| U.S. Treasury Notes, 4.38%, 12/31/2029 | 1.65 % |
| Government National Mortgage Association, TBA, 5.50%, 06/20/2054 | 1.40 % |
| U.S. Treasury Notes, 4.25%, 12/31/2026 | 1.27 % |
| * Excluding money market fund holdings, if any. | |
Security type allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Discovery Mid Cap Growth Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Discovery Mid Cap Growth Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Discovery Mid Cap Growth Fund
(Series I) | $ 96 | 0.86 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending, and low unemployment provided support. The Fed cut the federal funds rates several times over the period, but suggested less aggressive easing in 2025 should robust economic growth and lingering inflation continue.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 24.23%. For the same time period, the Russell Midcap
®
Growth Index returned 22.10%. The Fund outperformed its benchmark mainly as a result of stock selection in the industrials, health care, and communication services sectors. Weaker stock selection in the information technology and financials sectors partially offset these results.
What contributed to performance?
Targa Resources Corp. |
Targa Resources provides midstream natural gas and natural gas liquid services. The company reported results that outperformed expectations and found incremental growth opportunities surrounding its Permian-centric footprint.
Axon Enterprise, Inc. |
Axon Enterprise is a leading provider of products and services for military and law enforcement. The company continued to post strong orders, revenues and profitability above consensus estimates.
What detracted from performance?
DexCom, Inc.
|
DexCom is a medical device company offering glucose monitoring systems. During the period, management reported disappointing financial results and lowered earnings guidance for the first time in years. The Fund’s positions in DexCom were sold during the fiscal year.
MongoDB, Inc. |
MongoDB has gained share in the large database software market but reported underwhelming results that saw slower new customer additions and growth within its installed base than expected. The Fund’s positions in MongoDB were sold during the fiscal year.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Discovery Mid Cap Growth Fund (Series I) | 24.23 % | 10.21 % | 11.57 % |
Russell Midcap ® Growth Index | 22.10 % | 11.47 % | 11.54 % |
| 25.02 % | 14.53 % | 13.10 % |
Effective after the close of business on May 24, 2019, Non-Service shares of Oppenheimer Discovery Mid Cap Growth Fund/VA (the predecessor fund), were reorganized into Series I shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Non-Service shares of the predecessor fund. Share class returns will differ from
the predecessor fund because of different expenses.
Effective
April 26, 2024
, the Fund changed its broad-based securities market benchmark from the Russell Midcap
®
Growth Index to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 965,670,046 |
| Total number of portfolio holdings | 83 |
| Total advisory fees paid | $ 6,221,861 |
| Portfolio turnover rate | 97 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Ares Management Corp., Class A | 2.69 % |
| Targa Resources Corp. | 2.43 % |
| Trade Desk, Inc. (The), Class A | 2.41 % |
| Hilton Worldwide Holdings, Inc. | 2.39 % |
| GoDaddy, Inc., Class A | 2.15 % |
| Axon Enterprise, Inc. | 2.13 % |
| Quanta Services, Inc. | 2.09 % |
| HubSpot, Inc. | 2.05 % |
| Datadog, Inc., Class A | 1.94 % |
| Deckers Outdoor Corp. | 1.84 % |
| * Excluding money market fund ho ld ings, if any. | |
Sector allocation
(% of net assets)
How Has The Fund Cha
n
ged Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund added active trading risk to its principal risks to reflect that active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Discovery Mid Cap Growth Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Discovery Mid Cap Growth Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Discovery Mid Cap Growth Fund
(Series II) | $ 124 | 1.11 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy
remained
resilient. Data suggested the Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending, and low unemployment provided support. The Fed cut the federal funds rates several times over the period, but suggested less aggressive easing in 2025 should robust economic growth and lingering inflation continue.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 23.92%. For the same time period, the Russell Midcap
®
Growth Index returned 22.10%. The Fund outperformed its benchmark mainly as a result of stock selection in the industrials, health care, and communication services sectors. Weaker stock selection in the information technology and financials sectors partially offset these results.
What contributed to performance?
Targa Resources Corp. |
Targa Resources provides midstream natural gas and natural gas liquid services. The company reported results that outperformed expectations and found incremental growth opportunities surrounding its Permian-centric footprint.
Axon Enterprise, Inc. |
Axon Enterprise is a leading provider of products and services for military and law enforcement. The company continued to post strong orders, revenues and profitability above consensus estimates.
What detracted from performance?
DexCom, Inc.
|
DexCom is a medical device company offering glucose monitoring systems. During the period, management reported disappointing financial results and lowered earnings guidance for the first time in years. The Fund’s positions in DexCom were sold during the fiscal year.
MongoDB, Inc. |
MongoDB has gained share in the large database software market but reported underwhelming results that saw slower new customer additions and growth within its installed base than expected. The Fund’s positions in MongoDB were sold during the fiscal year.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Discovery Mid Cap Growth Fund (Series II) | 23.92 % | 9.92 % | 11.29 % |
Russell Midcap ® Growth Index | 22.10 % | 11.47 % | 11.54 % |
| 25.02 % | 14.53 % | 13.10 % |
Effective after the close of business on May 24, 2019, Service shares of Oppenheimer Discovery Mid Cap Growth Fund/VA (the predecessor fund), were reorganized into Series II shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Service shares of the predecessor fund. Share class returns will differ from
those of
the predecessor fund because of different expenses.
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the Russell Midcap
®
Growth Index to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 965,670,046 |
| Total number of portfolio holdings | 83 |
| Total advisory fees paid | $ 6,221,861 |
| Portfolio turnover rate | 97 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Ares Management Corp., Class A | 2.69 % |
| Targa Resources Corp. | 2.43 % |
| Trade Desk, Inc. (The), Class A | 2.41 % |
| Hilton Worldwide Holdings, Inc. | 2.39 % |
| GoDaddy, Inc., Class A | 2.15 % |
| Axon Enterprise, Inc. | 2.13 % |
| Quanta Services, Inc. | 2.09 % |
| HubSpot, Inc. | 2.05 % |
| Datadog, Inc., Class A | 1.94 % |
| Deckers Outdoor Corp. | 1.84 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023.
For
more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund added active trading risk to its principal risks to reflect that active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Diversified Dividend Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Diversified Dividend Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Diversified Dividend Fund
(Series I) | $ 75 | 0.70 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the US equity markets saw significant milestones, including the S&P 500
®
Index surpassing 5,000 in February, driven by a strong economy and labor market, but faced fluctuations due to persistent inflation and delayed interest rate cuts by the Federal Reserve. Despite positive corporate earnings and gains in artificial intelligence (AI)-related stocks, the market experienced pressure from sticky inflation, geopolitical tensions, and high US debt levels, while fixed income markets suffered as yields rose. In this environment, the Fund delivered a positive return but underperformed the Russell 1000
®
Value Index. On a relative basis, the leading detractors included stock selection in the health care, energy, and real estate sectors. Stock selection in the information technology, consumer staples, and materials sectors contributed the most to relative performance.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 13.22%. For the same time period, the Russell 1000
®
Value Index returned 14.37%.
What contributed to performance?
Walmart, Inc. |
Walmart benefited from pricing rollbacks and an expanding customer base as consumers across income cohorts gravitated toward convenience. The discount retailer made great progress on ecommerce profitability, driven by scale efficiencies, automation and generative AI.
JPMorgan Chase & Co. |
Shares of JPMorgan Chase rose along with the financial sector in general during the fiscal year. Management reported strong earnings during the period and were buoyed by the election results, which contributed to momentum late in the period.
What detracted from performance?
ConocoPhillips
|
ConocoPhillips' share price declined during the fiscal year driven by lower oil prices and the announcement of the acquisition of Marathon Oil. For the six months while the acquisition was pending, the company was required to temporarily pause their capital allocation plans toward share buybacks. However, the deal closed in the fourth quarter of 2024 and share buybacks had resumed by the end of the period.
Prologis, Inc. |
Prologis, a real estate logistics company, struggled against negative investor sentiment stemming from macroeconomic uncertainty, fluctuating interest rates, geopolitical concerns, the election outcome and environmental disasters that caused tenants to delay leasing decisions.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Diversified Dividend Fund (Series I) | 13.22 % | 7.64 % | 7.83 % |
| Russell 1000® Value Index | 14.37 % | 8.68 % | 8.49 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 443,872,833 |
| Total number of portfolio holdings | 81 |
| Total advisory fees paid | $ 2,180,809 |
| Portfolio turnover rate | 46 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| JPMorgan Chase & Co. | 3.28 % |
| Walmart, Inc. | 3.24 % |
| UnitedHealth Group, Inc. | 2.67 % |
| Johnson & Johnson | 2.32 % |
| ConocoPhillips | 2.29 % |
| Chevron Corp. | 2.24 % |
| Philip Morris International, Inc. | 2.19 % |
| Lowe's Cos., Inc. | 2.17 % |
| McDonald's Corp. | 2.14 % |
| PNC Financial Services Group, Inc. (The) | 2.02 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Diversified Dividend Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Diversified Dividend Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Diversified Dividend Fund
(Series II) | $ 101 | 0.95 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the US equity markets saw significant milestones, including the S&P 500
®
Index surpassing 5,000 in February, driven by a strong economy and labor market, but faced fluctuations due to persistent inflation and delayed interest rate cuts by the Federal Reserve. Despite positive corporate earnings and gains in artificial intelligence (AI)-related stocks, the market experienced pressure from sticky inflation, geopolitical tensions, and high US debt levels, while fixed income markets suffered as yields rose. In this environment, the Fund delivered a positive return but underperformed the Russell 1000
®
Value Index. On a relative basis, the leading detractors included stock selection in the health care, energy, and real estate sectors. Stock selection in the information technology, consumer staples, and materials sectors contributed the most to relative performance.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 12.96%. For the same time period, the Russell 1000
®
Value Index returned 14.37%.
What contributed to performance?
Walmart, Inc. |
Walmart benefited from pricing rollbacks and an expanding customer base as consumers across income cohorts gravitated toward convenience. The discount retailer made great progress on ecommerce profitability, driven by scale efficiencies, automation and generative AI.
JPMorgan Chase & Co. |
Shares of JPMorgan Chase rose along with the financial sector in general during the fiscal year. Management reported strong earnings during the period and were buoyed by the election results, which contributed to momentum late in the period.
What detracted from performance?
ConocoPhillips
|
ConocoPhillips' share price declined during the fiscal year driven by lower oil prices and the announcement of the acquisition of Marathon Oil. For the six months while the acquisition was pending, the company was required to temporarily pause their capital allocation plans toward share buybacks. However, the deal closed in the fourth quarter of 2024 and share buybacks had resumed by the end of the period.
Prologis, Inc. |
Prologis, a real estate logistics company, struggled against negative investor sentiment stemming from macroeconomic uncertainty, fluctuating interest rates, geopolitical concerns, the election outcome and environmental disasters that caused tenants to delay leasing decisions.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Diversified Dividend Fund (Series II) | 12.96 % | 7.37 % | 7.57 % |
| Russell 1000® Value Index | 14.37 % | 8.68 % | 8.49 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 443,872,833 |
| Total number of portfolio holdings | 81 |
| Total advisory fees paid | $ 2,180,809 |
| Portfolio turnover rate | 46 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| JPMorgan Chase & Co. | 3.28 % |
| Walmart, Inc. | 3.24 % |
| UnitedHealth Group, Inc. | 2.67 % |
| Johnson & Johnson | 2.32 % |
| ConocoPhillips | 2.29 % |
| Chevron Corp. | 2.24 % |
| Philip Morris International, Inc. | 2.19 % |
| Lowe's Cos., Inc. | 2.17 % |
| McDonald's Corp. | 2.14 % |
| PNC Financial Services Group, Inc. (The) | 2.02 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Equally-Weighted S&P 500 Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Equally-Weighted S&P 500 Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Equally-Weighted S&P 500 Fund
(Series I) | $ 36 | 0.34 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities benefited from investment themes levered to artificial intelligence technology and investor anticipation that slowing inflation would cause the Federal Reserve to ease monetary policy.
•
The Fund seeks to track the investment results (before fees and expenses) of the S&P 500
®
Equal Weight Index (the “Index”).
•
For the fiscal year ended December 31, 2024, Series I share of the Fund returned 12.71%. For the same time period, the S&P 500
®
Equal Weight Index returned 13.01%. The Fund differed from the return of the Index primarily due to fees and expenses incurred by the fund during the period.
What contributed to performance?
Sector Allocations
|
Financials sector, followed by the industrials and information technology sectors, respectively.
Positions |
NVIDIA Corp., an information technology company, and United Airlines, an industrials company.
What detracted from performance?
Sector Allocations
|
Consumer staples, followed by materials.
Positions |
Super Micro Computer, Inc., an information technology company, and
Walgreens
Boots Alliance, Inc., a consumer staples company.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Equally-Weighted S&P 500 Fund (Series I) | 12.71 % | 10.48 % | 9.92 % |
S&P 500 ® Equal Weight Index | 13.01 % | 10.76 % | 10.26 % |
| 25.02 % | 14.53 % | 13.10 % |
Amount includes the effect of the Invesco Advisers, Inc. pay-in for an economic loss as a result of a delay in rebalancing to the Underlying Index that occurred on April 24, 2020. Had the pay-in not been made, the total return would have been lower.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 480,926,019 |
| Total number of portfolio holdings | 508 |
| Total advisory fees paid | $ 584,576 |
| Portfolio turnover rate | 26 % |
What Comprised The Fund's
Holdings
?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Broadcom, Inc. | 0.26 % |
| Darden Restaurants, Inc. | 0.23 % |
| Jabil, Inc. | 0.22 % |
| Boeing Co. (The) | 0.22 % |
| Centene Corp. | 0.22 % |
| Globe Life, Inc. | 0.22 % |
| Pfizer, Inc. | 0.22 % |
| Tapestry, Inc. | 0.22 % |
| Teradyne, Inc. | 0.22 % |
| Dollar Tree, Inc. | 0.22 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Equally-Weighted S&P 500 Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Equally-Weighted S&P 500 Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Equally-Weighted S&P 500 Fund
(Series II) | $ 63 | 0.59 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities benefited from investment themes levered to artificial intelligence technology and investor anticipation that slowing inflation would cause the Federal Reserve to ease monetary policy.
The Fund seeks to track the investment results (before fees and expenses) of the S&P 500
®
Equal Weight Index (the “Index”).
• For the fiscal year ended December 31, 2024, Series II share of the Fund returned 12.42%. For the same time period, the S&P 500
®
Equal Weight Index returned 13.01%. The Fund differed from the return of the Index primarily due to fees and expenses incurred by the fund during the period.
What contributed to performance?
Sector Allocations |
Financials sector, followed by the industrials and information technology sectors, respectively.
NVIDIA Corp., an information technology company, and United Airlines, an industrials company.
What detracted from performance?
Sector Allocations
|
Consumer staples, followed by materials.
Super Micro Computer, Inc., an information technology company, and Walgreens Boots
Alliance
, Inc., a consumer staples company.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Equally-Weighted S&P 500 Fund (Series II) | 12.42 % | 10.20 % | 9.65 % |
| S&P 500® Equal Weight Index | 13.01 % | 10.76 % | 10.26 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Amount includes the effect of the Invesco Advisers, Inc. pay-in for an economic loss as a result of a delay in rebalancing to the Underlying Index that occurred on April 24, 2020. Had the pay-in not been made, the total return would have been lower.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product
issuer
or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 480,926,019 |
| Total number of portfolio holdings | 508 |
| Total advisory fees paid | $ 584,576 |
| Portfolio turnover rate | 26 % |
What Comprised The
Fund's
Holdings?
Top ten holdings*
(% of net assets)
| Broadcom, Inc. | 0.26 % |
| Darden Restaurants, Inc. | 0.23 % |
| Jabil, Inc. | 0.22 % |
| Boeing Co. (The) | 0.22 % |
| Centene Corp. | 0.22 % |
| Globe Life, Inc. | 0.22 % |
| Pfizer, Inc. | 0.22 % |
| Tapestry, Inc. | 0.22 % |
| Teradyne, Inc. | 0.22 % |
| Dollar Tree, Inc. | 0.22 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Equity and Income Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Equity and Income Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Equity and Income Fund
(Series I) | $ 60 | 0.57 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity indices experienced strong returns. The US economy was resilient as data suggested the Federal Reserve (Fed) may have achieved its fabled soft landing, with strong consumer spending and low unemployment providing support. Enthusiasm around the artificial intelligence (AI) investment theme led to concentrated market leadership in the large cap technology space during the period.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 12.12%. For the same time period, the Russell 1000
®
Value Index returned 14.37%. The Fund underperformed the Russell 1000
®
Value Index for the period. Underperformance was primarily due to holdings in fixed income instruments and convertible securities. From an equity perspective, drivers of Fund performance were mainly stock-specific. Stock selection in industrials and energy detracted from relative returns. Stock selection in consumer discretionary and communication services aided relative returns.
What contributed to performance?
Wells Fargo & Co. |
Wells Fargo reported better than expected earnings and non-interest income remained strong, despite ongoing regulatory constraints. The stock also performed well amid optimism that lower interest rates would boost loan growth.
Bank of America Corp. |
Bank of America reported an increase in net interest income, along with strong growth in investment banking and asset management fees.
Amazon.com, Inc. |
The online retailer reported better than expected revenue and earnings, as well as strength in its Amazon Web Services (AWS) cloud business.
What detracted from performance?
Intel Corp.
|
In August, the chipmaker reported much weaker than expected quarterly results as revenues declined and earnings were below expectations. The company also offered weaker guidance going forward, and the stock fell sharply on the news. We sold our position during the third quarter.
Microchip Technology, Inc. |
The chipmaker reported a steep drop in year-over-year revenue and lowered its future guidance due to falling sales. We continued to hold our position in the stock at year end, as we believe an inflection in demand could push the stock higher.
Convertible securities and fixed income instruments |
The Fund holds high grade bonds and convertible securities as a source of income and to help provide a measure of stability in volatile markets. The Fund’s holdings in these securities lagged the Russell 1000
®
Value Index and detracted from relative returns.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Equity and Income Fund (Series I) | 12.12 % | 8.38 % | 7.36 % |
| Russell 1000® Value Index | 14.37 % | 8.68 % | 8.49 % |
| Bloomberg U.S. Government/Credit Index | 1.18 % | (0.21 ) % | 1.50 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
Russell 1000
®
Value Index to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 1,366,960,034 |
| Total number of portfolio holdings | 1,229 |
| Total advisory fees paid | $ 4,898,987 |
| Portfolio turnover rate | 131 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Wells Fargo & Co. | 2.61 % |
| U.S. Treasury Notes, 4.00%, 12/15/2027 | 2.22 % |
| Bank of America Corp. | 2.14 % |
| U.S. Treasury Notes, 4.25%, 12/31/2026 | 2.08 % |
| Amazon.com, Inc. | 1.88 % |
| U.S. Treasury Notes, 4.50%, 12/31/2031 | 1.62 % |
| Alphabet, Inc., Class A | 1.55 % |
| Johnson Controls International PLC | 1.37 % |
| Parker-Hannifin Corp. | 1.34 % |
| Exxon Mobil Corp. | 1.29 % |
| * Excluding money market fund holdings, if any. | |
Security type allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Equity and Income Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Equity and Income Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Equity and Income Fund
(Series II) | $ 87 | 0.82 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity indices experienced strong returns. The US economy was resilient as data suggested the Federal Reserve (Fed) may have achieved its fabled soft landing, with strong consumer spending and low unemployment providing support. Enthusiasm around the artificial intelligence (AI) investment theme led to concentrated market leadership in the large cap technology space during the period.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 11.91%. For the same time period, the Russell 1000
®
Value Index returned 14.37%. The Fund underperformed the Russell 1000
®
Value Index for the period. Underperformance was primarily due to holdings in fixed income instruments and convertible securities. From an equity perspective, drivers of Fund performance were mainly stock-specific. Stock selection in industrials and energy detracted from relative returns. Stock selection in consumer discretionary and communication services aided relative returns.
• The Fund underperformed the Russell 1000
®
Value Index for the period. Underperformance was primarily due to holdings in fixed income instruments and convertible securities. From an equity perspective, drivers of fund performance were mainly stock-specific. However, stock selection in industrials and energy detracted from relative returns. Stock selection in consumer discretionary and communication services aided relative returns.
What contributed to performance?
Wells Fargo & Co. |
Wells Fargo reported better than expected earnings and non-interest income remained strong, despite ongoing regulatory constraints. The stock also performed well amid optimism that lower interest rates would boost loan growth.
Bank of America Corp. |
Bank of America reported an increase in net interest income, along with strong growth in investment banking and asset management fees.
Amazon.com, Inc. |
The online retailer reported better than expected revenue and earnings, as well as strength in its Amazon Web Services (AWS) cloud business.
What detracted from performance?
Intel Corp.
|
In August, the chipmaker reported much weaker than expected quarterly results as revenues declined and earnings were below expectations. The company also offered weaker guidance going forward, and the stock fell sharply on the news. We sold our position during the third quarter.
Microchip Technology, Inc. |
The chipmaker reported a steep drop in year-over-year revenue and lowered its future guidance due to falling sales. We continued to hold our position in the stock at year end, as we believe an inflection in demand could push the stock higher.
Convertible securities and fixed income instruments |
The Fund holds high grade bonds and convertible securities as a source of income and to help provide a measure of stability in volatile markets. The Fund’s holdings in these securities lagged the Russell 1000
®
Value Index and detracted from relative returns.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Equity and Income Fund (Series II) | 11.91 % | 8.12 % | 7.09 % |
| Russell 1000® Value Index | 14.37 % | 8.68 % | 8.49 % |
| Bloomberg U.S. Government/Credit Index | 1.18 % | (0.21 ) % | 1.50 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
Russell 1000
®
Value Index to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 1,366,960,034 |
| Total number of portfolio holdings | 1,229 |
| Total advisory fees paid | $ 4,898,987 |
| Portfolio turnover rate | 131 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Wells Fargo & Co. | 2.61 % |
| U.S. Treasury Notes, 4.00%, 12/15/2027 | 2.22 % |
| Bank of America Corp. | 2.14 % |
| U.S. Treasury Notes, 4.25%, 12/31/2026 | 2.08 % |
| Amazon.com, Inc. | 1.88 % |
| U.S. Treasury Notes, 4.50%, 12/31/2031 | 1.62 % |
| Alphabet, Inc., Class A | 1.55 % |
| Johnson Controls International PLC | 1.37 % |
| Parker-Hannifin Corp. | 1.34 % |
| Exxon Mobil Corp. | 1.29 % |
| * Excluding money market fund holdings, if any. | |
Security type allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. EQV International Equity Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. EQV International Equity Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. EQV International Equity Fund
(Series I) | $ 92 | 0.92 % |
How Did The Fund Perform During The Period?
•
Global equity markets rose strongly during the fiscal year ended December 31, 2024. In the US, enthusiasm around the artificial intelligence (AI) investment wave led to concentrated market leadership in the megacap technology space, and to outperformance relative to non-US equities. Outside of the US, emerging markets (EM) outperformed developed markets as news of fiscal stimulus by the Chinese government drove better sentiment towards the EM asset class. Conversely, potential trade policy risks related to the incoming US administration and a stronger US dollar spurred losses in Latin America.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 0.62%, lagging the MSCI ACWI ex USA
®
Index return of 5.53%. The Fund's relative underperformance for the fiscal year was primarily driven by stock selection in sectors including consumer staples, financials, and industrials; and geographical regions including Japan, France and China. Overweights in consumer staples and France and underweights in financials and China hampered relative results as well.
What contributed to performance?
Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) |
A Taiwan-based semiconductor company. The company benefited from strong AI demand that led to higher-than expected utilization of 3- and 5-nanometer process chips, which pushed gross profit margins higher than expected. The company showed the ability to raise prices due to its technological leadership, thus increasing its dominance over rivals and taking the majority of market share in AI chips.
Broadcom, Inc. |
A US semiconductor and computer software company. Broadcom’s growth outlook continued to improve due to expanding AI demand and the expected addition of new customers. Margins were also better than expected.
Celestica, Inc. |
A Canada-based electronics manufacturing services (EMS) company. Celestica benefited from accelerating demand for its network switches and hardware products, led by AI-centered datacenter growth and hyperscalers’ capital expenditure plans.
What detracted from performance?
Wal-Mart de Mexico S.A.B. de C.V. (Walmex)
|
A Mexico-based retailer. An unexpected CEO change and a broad sell-off in Mexico’s equity market following the June presidential and congressional elections led to a pullback in the company’s share price. However, we believe Walmex’s overall fundamentals remained strong at period end, underpinned by market share gains and robust ecommerce growth.
Samsung Electronics Co. Ltd. |
A South Korea-based global leader in memory semiconductors, smartphones, electronic displays and other products. Memory semiconductor prices have temporarily declined due to weaker smartphone and PC demand, as well as increased supply of dynamic random-access memory (DRAM) from China. There also was a delay in lucrative orders from NVIDIA (not a Fund holding) in the US.
STMicroelectronics N.V. |
A large European semiconductor chipmaker. The company's shares lagged due to challenges in automotive and industrial end markets. At period end, we continued to believe STMicroelectronics is a good quality semiconductor company that is going through a cyclical correction but remained exposed to long-term growth trends.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. EQV International Equity Fund (Series I) | 0.62 % | 3.23 % | 4.36 % |
MSCI ACWI ex USA ® Index (Net) | 5.53 % | 4.10 % | 4.80 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 1,136,186,316 |
| Total number of portfolio holdings | 74 |
| Total advisory fees paid | $ 8,728,787 |
| Portfolio turnover rate | 31 % |
What Comprised The Fund's Ho
l
dings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR | 3.71 % |
| Investor AB, Class B | 3.19 % |
| RELX PLC | 2.85 % |
| RB Global, Inc. | 2.24 % |
| Broadcom, Inc. | 2.22 % |
| Novo Nordisk A/S, Class B | 2.21 % |
| Schneider Electric SE | 2.19 % |
| Aristocrat Leisure Ltd. | 2.11 % |
| CRH PLC | 2.09 % |
| HDFC Bank Ltd., ADR | 2.08 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. EQV International Equity Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. EQV International Equity Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. EQV International Equity Fund
(Series II) | $ 117 | 1.17 % |
How Did The Fund Perform During The Period?
•
Global equity markets rose strongly during the fiscal year ended December 31, 2024. In the US, enthusiasm around the artificial intelligence (AI) investment wave led to concentrated market leadership in the megacap technology space, and to outperformance relative to non-US equities. Outside of the US, emerging markets (EM) outperformed developed markets as news of fiscal stimulus by the Chinese government drove better sentiment towards the EM asset class. Conversely, potential trade policy risks related to the incoming US administration and a stronger US dollar spurred losses in Latin America.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 0.34%, lagging the MSCI ACWI ex USA
®
Index return of 5.53%. The Fund's relative underperformance for the fiscal year was primarily driven by stock selection in sectors including consumer staples, financials, and industrials; and geographical regions including Japan, France and China. Overweights in consumer staples and France and underweights in financials and China hampered relative results as well.
What contributed to performance?
Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) |
A Taiwan-based semiconductor company. The company benefited from strong AI demand that led to higher-than expected utilization of 3- and 5-nanometer process chips, which pushed gross profit margins higher than expected. The company showed the ability to raise prices due to its technological leadership, thus increasing its dominance over rivals and taking the majority of market share in AI chips.
Broadcom, Inc. |
A US semiconductor and computer software company. Broadcom’s growth outlook continued to improve due to expanding AI demand and the expected addition of new customers. Margins were also better than expected.
Celestica, Inc. |
A Canada-based electronics manufacturing services (EMS) company. Celestica benefited from accelerating demand for its network switches and hardware products, led by AI-centered datacenter growth and hyperscalers’ capital expenditure plans.
What detracted from performance?
Wal-Mart de Mexico S.A.B. de C.V. (Walmex)
|
A Mexico-based retailer. An unexpected CEO change and a broad sell-off in Mexico’s equity market following the June presidential and congressional elections led to a pullback in the company’s share price. However, we believe Walmex’s overall fundamentals remained strong at period end, underpinned by market share gains and robust ecommerce growth.
Samsung Electronics Co. Ltd. |
A South Korea-based global leader in memory semiconductors, smartphones, electronic displays and other products. Memory semiconductor prices have temporarily declined due to weaker smartphone and PC demand, as well as increased supply of dynamic random-access memory (DRAM) from China. There also was a delay in lucrative orders from NVIDIA (not a Fund holding) in the US.
STMicroelectronics N.V. |
A large European semiconductor chipmaker. The company's shares lagged due to challenges in automotive and industrial end markets. At period end, we continued to believe STMicroelectronics is a good quality semiconductor company that is going through a cyclical correction but remained exposed to long-term growth trends.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. EQV International Equity Fund (Series II) | 0.34 % | 2.97 % | 4.10 % |
MSCI ACWI ex USA ® Index (Net) | 5.53 % | 4.10 % | 4.80 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 1,136,186,316 |
| Total number of portfolio holdings | 74 |
| Total advisory fees paid | $ 8,728,787 |
| Portfolio turnover rate | 31 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR | 3.71 % |
| Investor AB, Class B | 3.19 % |
| RELX PLC | 2.85 % |
| RB Global, Inc. | 2.24 % |
| Broadcom, Inc. | 2.22 % |
| Novo Nordisk A/S, Class B | 2.21 % |
| Schneider Electric SE | 2.19 % |
| Aristocrat Leisure Ltd. | 2.11 % |
| CRH PLC | 2.09 % |
| HDFC Bank Ltd., ADR | 2.08 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Infor
ma
tion?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Global Core Equity Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Global Core Equity Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Global Core Equity Fund
(Series I) | $ 107 | 0.99 % |
How Did The Fund Perform During The Period?
•
Global equity markets rose strongly during the fiscal year ended December 31, 2024. In the US, enthusiasm around the artificial intelligence (AI) investment wave led to concentrated market leadership in the mega cap technology space, and to outperformance relative to non-US equities. Outside of the US, emerging markets (EM) outperformed developed markets as news of fiscal stimulus by the Chinese government increased sentiment towards the EM asset class. Conversely, potential trade policy risks related to the incoming US administration and a stronger US dollar spurred losses in Latin America.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 16.85%. For the same time period, the MSCI World Index
SM
(Net) returned 18.67%.
What contributed to performance?
3i Group PLC |
3i benefited from the strong performance of its pan-European discount retailer, Action, which we believe is well-positioned for further store expansion across Europe.
Broadcom, Inc. |
Broadcom's shares rose on strong operating results supported by accelerated demand for its AI-oriented data center chips, and early benefits from its acquisition of VMware.
What detracted from perfor
m
ance?
NVIDIA Corp.
|
The rise of AI has accelerated demand for NVIDIA's industry-leading datacenter computer chips. The Fund continued to hold shares in NVIDIA, but at an underweight position, which detracted from relative performance.
Samsung Electronics Co. Ltd. |
Samsung underperformed on apparent concerns that the memory chips cycle has begun to turn down. The company also continued to suffer from execution challenges in advanced high-bandwidth memory for AI.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Global Core Equity Fund (Series I) | 16.85 % | 7.85 % | 7.19 % |
| 18.67 % | 11.17 % | 9.95 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 73,124,599 |
| Total number of portfolio holdings | 65 |
| Total advisory fees paid | $ 444,815 |
| Portfolio turnover rate | 56 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Microsoft Corp. | 6.58 % |
| Amazon.com, Inc. | 3.80 % |
| Apple, Inc. | 3.05 % |
| 3i Group PLC | 3.00 % |
| Mastercard, Inc., Class A | 2.95 % |
| Thermo Fisher Scientific, Inc. | 2.87 % |
| NVIDIA Corp. | 2.79 % |
| RELX PLC | 2.61 % |
| Broadcom, Inc. | 2.49 % |
| O'Reilly Automotive, Inc. | 2.35 % |
| * Excluding money market fund holdings, if any. | |
Country allocation
(% of net assets)
How Has The Fund Changed Over The Pa
st
Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund added active trading risk to its principal risks to reflect that active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
The Fund modified its principal investment strategies with respect to the amount of its net assets required to be invested in investments that are economically tied to countries other than the U.S.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Global Core Equity Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Global Core Equity Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Global Core Equity Fund
(Series II) | $ 134 | 1.24 % |
How Did The Fund Perform During The Period?
•
Global equity markets rose strongly during the fiscal year ended December 31, 2024. In the US, enthusiasm around the artificial intelligence (AI) investment wave led to concentrated market leadership in the mega cap technology space, and to outperformance relative to non-US equities. Outside of the US, emerging markets (EM) outperformed developed markets as news of fiscal stimulus by the Chinese government increased sentiment towards the EM asset class. Conversely, potential trade policy risks related to the incoming US administration and a stronger US dollar spurred losses in Latin America.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 16.72%. For the same time period, the MSCI World Index
SM
(Net) returned 18.67%.
What contributed to performance?
3i Group PLC |
3i benefited from the strong performance of its pan-European discount retailer, Action, which we believe is well-positioned for further store expansion across Europe.
Broadcom, Inc. |
Broadcom's shares rose on strong operating results supported by accelerated demand for its AI-oriented data center chips, and early benefits from its acquisition of VMware.
What detracted from performance?
NVIDIA Corp.
|
The rise of AI has accelerated demand for NVIDIA's industry-leading datacenter computer chips. The Fund continued to hold shares in NVIDIA, but at an underweight position, which detracted from relative performance.
Samsung Electronics Co. Ltd. |
Samsung und
erp
erformed on apparent concerns that the memory chips cycle has begun to turn down. The company also continued to suffer from execution challenges in advanced high-bandwidth memory for
AI
.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Global Core Equity Fund (Series II) | 16.72 % | 7.62 % | 6.93 % |
| 18.67 % | 11.17 % | 9.95 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 73,124,599 |
| Total number of portfolio holdings | 65 |
| Total advisory fees paid | $ 444,815 |
| Portfolio turnover rate | 56 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Microsoft Corp. | 6.58 % |
| Amazon.com, Inc. | 3.80 % |
| Apple, Inc. | 3.05 % |
| 3i Group PLC | 3.00 % |
| Mastercard, Inc., Class A | 2.95 % |
| Thermo Fisher Scientific, Inc. | 2.87 % |
| NVIDIA Corp. | 2.79 % |
| RELX PLC | 2.61 % |
| Broadcom, Inc. | 2.49 % |
| O'Reilly Automotive, Inc. | 2.35 % |
| * Excluding money market fund holdings, if any. | |
Country allocation
(% of net assets)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund added active trading risk to its principal risks to reflect that active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
The Fund modified its principal investment strategies with respect to the amount of its net assets required to be invested in investments that are economically tied to countries other than the U.S.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Global Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Global Fund
(Series I) | $ 89 | 0.82 % |
How Did The Fund Perform During The Period?
•
Global equity markets rose strongly during the fiscal year ended De
ce
mber 31, 2024. In the U.S., enthusiasm around the Artificial Intelligence (AI) investment wave led to concentrated market leadership in the mega-cap technology space, and to outperformance relative to non-U.S. equities. The turn in the interest rate cycle late in the third quarter also caused high quality segments to underperform the wider market, particularly in the second half of the year. Outside of the U.S., emerging markets (EM) outperformed developed markets as news of fiscal stimulus by the Chinese government increased sentiment towards the EM asset class.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 16.07%. For the same time period, the MSCI All Country World Growth Index (Net) returned 24.23%. The Fund's underperformance for the fiscal year was primarily driven by weaker stock selection results in the information technology and consumer discretionary sectors.
What contributed to performance?
Meta Platforms, Inc. |
In our opinion, during the period Meta Platforms continued its leadership in social media advertising, excelling in user growth, engagement and monetization efficiency. Recent results showed strong network effects, drawing in a larger user base and boosting engagement, enabling Meta to sell more ads at elevated prices.
Alphabet, Inc. |
Alphabet reported strong results from its Google Search, Google Cloud, and YouTube advertising platforms. In addition, Alphabet authorized a $10 billion annual divide
n
d and authorized $70 billion in share repurchases over the period. We believe the perceived risks to Google Search are exaggerated and that Alphabet stands to benefit from generative AI, with its vast data resources, a large user base across various platforms, and advanced AI infrastructure.
NVIDIA Corp. |
NVIDIA continues to capitalize on the surge in AI demand. We believe its comprehensive full-stack strategy and diverse product offerings, including the recent introduction of Blackwell chip architecture, promises substantial performance improvements, further solidifying its leading position.
What detracted from performance?
Adobe, Inc.
|
Adobe stands as a leading pioneer in digital creative and marketing tools, successfully transitioning into a thriving cloud platform with substantial scale, profits and growth. Adobe’s stock fell after providing revenue guidance that was lower than expected, causing investor concern about the sustainability of growth for 2025. We view generative AI as a long-term tailwind for the company, but the business may be more mature than we had originally thought.
LVMH Moet Hennessy Louis Vuitton SE |
LVMH, a leading luxury company with brands like Louis Vuitton and Sephora, has faced disappointing quarters due to a slowdown in luxury goods demand, particularly in China. Luxury has long been an important theme in our portfolio, as the tailwind of increasing affluence globally creates a powerful structural growth driver for companies in this area. We believe the company remains well-positioned for long-term growth due to its strong brand portfolio and global presence.
Atlas Copco AB |
Atlas Copco, a leading Swedish industrial company known for products like air compressors, maintains a strong competitive advantage, in our opinion, due to its dominance in the industry and size. Despite a mixed earnings announcement and weaker performance in its air compressor business, the company saw strong results from its vacuum pump business driven by semiconductor industry demand. We made no significant changes to our position during the period as our long-term investment thesis in the company remained intact.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Global Fund (Series I) | 16.07 % | 9.48 % | 9.85 % |
| MSCI All Country World Growth Index (Net) | 24.23 % | 13.07 % | 11.88 % |
| MSCI ACWI Index (Net) | 17.49 % | 10.06 % | 9.23 % |
Effective after the close of business on May 24, 2019, Non-Service shares of Oppenheimer Global Fund/VA (the predecessor fund), were reorganized into Series I shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Non-Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 2,063,557,466 |
| Total number of portfolio holdings | 64 |
| Total advisory fees paid | $ 13,279,778 |
| Portfolio turnover rate | 10 % |
What Comprised The F
un
d's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Alphabet, Inc., Class A | 11.91 % |
| Meta Platforms, Inc., Class A | 8.88 % |
| DLF Ltd. | 4.62 % |
| S&P Global, Inc. | 4.27 % |
| SAP SE | 3.97 % |
| Analog Devices, Inc. | 3.95 % |
| NVIDIA Corp. | 3.75 % |
| Marvell Technology, Inc. | 3.64 % |
| Visa, Inc., Class A | 2.92 % |
| Intuit, Inc. | 2.87 % |
| * Excluding money market fund holdings, if any. | |
Country allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Global Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Global Fund
(Series II) | $ 115 | 1.07 % |
How Did The Fund Perform During The
P
eriod?
•
Global equity markets rose strongly during the fiscal year ended December 31, 2024. In the U.S., enthusiasm around the Artificial Intelligence (AI) investment wave led to concentrated market leadership in the mega-cap technology space, and to outperformance relative to non-U.S. equities. The turn in the interest rate cycle late in the third quarter also caused high quality segments to underperform the wider market, particularly in the second half of the year. Outside of the U.S., emerging markets (EM) outperformed developed markets as news of fiscal stimulus by the Chinese government increased sentiment towards the EM asset class.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 15.78%. For the same time period, the MSCI All Country World Growth Index (Net) returned 24.23%. The Fund's underperformance for the fiscal year was primarily driven by weaker stock selection results in the information technology and consumer discretionary sectors.
What contributed to performance?
Meta Platforms, Inc. |
In our opinion, during the period Meta Platforms continued its leadership in social media advertising, excelling in user growth, engagement and monetization efficiency. Recent results showed strong network effects, drawing in a larger user base and boosting engagement, enabling Meta to sell more ads at elevated prices.
Alphabet, Inc. |
Alphabet reported strong results from its Google Search, Google Cloud, and YouTube advertising platforms. In addition, Alphabet authorized a $10 billion annual dividend and authorized $70 billion in share repurchases over the period. We believe the perceived risks to Google Search are exaggerated and that Alphabet stands to benefit from generative AI, with its vast data resources, a large user base across various platforms, and advanced AI infrastructure.
NVIDIA Corp. |
NVIDIA continues to capitalize on the surge in AI demand. We believe its comprehensive full-stack strategy and diverse product offerings, including the recent introduction of Blackwell chip architecture, promises substantial performance improvements, further solidifying its leading position.
What detracted from performance?
Adobe, Inc.
|
Adobe stands as a leading pioneer in digital creative and marketing tools, successfully transitioning into a thriving cloud platform with substantial scale, profits and growth. Adobe’s stock fell after providing revenue guidance that was lower than expected, causing investor concern about the sustainability of growth for 2025. We view generative AI as a long-term tailwind for the company, but the business may be more mature than we had originally thought.
LVMH Moet Hennessy Louis Vuitton SE |
LVMH, a leading luxury company with brands like Louis Vuitton and Sephora, has faced disappointing quarters due to a slowdown in luxury goods demand, particularly in China. Luxury has long been an important theme in our portfolio, as the tailwind of increasing affluence globally creates a powerful structural growth driver for companies in this area. We believe the company remains well-positioned for long-term growth due to its strong brand portfolio and global presence.
Atlas Copco AB |
Atlas Copco, a leading Swedish industrial company known for products like air compressors, maintains a strong competitive advantage, in our opinion, due to its dominance in the industry and size. Despite a mixed earnings announcement and weaker performance in its air compressor business, the company saw strong results from its vacuum pump business driven by semiconductor industry demand. We made no significant changes to our position during the period as our long-term investment thesis in the company remained intact.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Global Fund (Series II) | 15.78 % | 9.21 % | 9.58 % |
| MSCI All Country World Growth Index (Net) | 24.23 % | 13.07 % | 11.88 % |
| MSCI ACWI Index (Net) | 17.49 % | 10.06 % | 9.23 % |
Effective after the close of business on May 24, 2019, Service shares of Oppenheimer Global Fund/VA (the predecessor fund), were reorganized into Series II shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 2,063,557,466 |
| Total number of portfolio holdings | 64 |
| Total advisory fees paid | $ 13,279,778 |
| Portfolio turnover rate | 10 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Alphabet, Inc., Class A | 11.91 % |
| Meta Platforms, Inc., Class A | 8.88 % |
| DLF Ltd. | 4.62 % |
| S&P Global, Inc. | 4.27 % |
| SAP SE | 3.97 % |
| Analog Devices, Inc. | 3.95 % |
| NVIDIA Corp. | 3.75 % |
| Marvell Technology, Inc. | 3.64 % |
| Visa, Inc., Class A | 2.92 % |
| Intuit, Inc. | 2.87 % |
| * Excluding money market fund holdings, if any. | |
Country allocation
(% of net assets)
Where Can I F
in
d More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Global Real Estate Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Global Real Estate Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Global Real Estate Fund
(Series I) | $ 104 | 1.05 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the global real estate market delivered single digit positive returns. Real estate delivered muted returns as rising interest rates and economic uncertainty weighed on the asset class.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned -1.80%. For the same time period, the Custom Invesco Global Real Estate Index returned 0.94%. The Fund underperformed the Custom Invesco Global Real Estate Index for the period, driven by underperformance in both stock selection and market allocation.
What contributed to performance?
Australia |
In Australia, the Fund benefited from underweight exposure to industrial focused developer and fund manager Goodman Group, which underperformed after strong performance in prior periods. The Fund also benefited from its residential exposure in Australia.
Singapore |
Underweight exposure to Singapore contributed to relative
performance
. Singapore REITs’ relatively high leverage, overseas asset exposures, and high-interest-rate sensitivity contributed to their underperformance. The Fund benefited from the significant underweight positioning and received an incremental performance lift from favorable stock selection as positioning in Singapore REITs outperformed Singapore Developers.
What detracted from performance?
Hong Kong
|
Stock selection in Hong Kong detracted from relative performance. The key detractor that contributed to the underperformance was the Fund's overweight to Link REIT, a broad portfolio primarily in Hong Kong and key cities in China that cater to necessity consumption needs. After a period of strong performance in 2023, Link REIT saw weaker performance as the expected pace of interest rate declines in the US moderated.
United Kingdom |
The UK underperformed for the period; within the UK, companies with higher growth prospects tended to lag as value was rewarded by the market. In particular, UK industrial real estate offered less upside performance in the period than anticipated.
United States |
The Fund's holding of life science focused Alexandria significantly underperformed other more deeply discounted US office REITs. Additionally, a large holding in single family rental operator Invitation Homes also significantly lagged its residential focused peer group after reporting moderating rental pricing power. Overweight exposure to lodging and stock selection among industrial real estate investors also generated negative relative performance.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Global Real Estate Fund (Series I) | (1.80 ) % | (2.39 ) % | 1.52 % |
| Custom Invesco Global Real Estate Index (Net) | 0.94 % | (1.49 ) % | 2.20 % |
| MSCI World IndexSM (Net) | 18.67 % | 11.17 % | 9.95 % |
The Custom Invesco Global Real Estate Index is composed of the FTSE EPRA/NAREIT Developed Index (gross) from fund inception through Feb. 17, 2005; the FTSE EPRA/NAREIT Developed Index (net) from Feb. 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 performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 96,482,803 |
| Total number of portfolio holdings | 73 |
| Total advisory fees paid | $ 813,836 |
| Portfolio turnover rate | 101 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Equinix, Inc. | 8.00 % |
| Welltower, Inc. | 6.25 % |
| Simon Property Group, Inc. | 4.33 % |
| Prologis, Inc. | 4.05 % |
| Digital Realty Trust, Inc. | 3.59 % |
| Equity LifeStyle Properties, Inc. | 3.42 % |
| Equity Residential | 3.13 % |
| Goodman Group | 2.84 % |
| Invitation Homes, Inc. | 2.55 % |
| Realty Income Corp. | 2.55 % |
| * Excluding money market fund holdings, if any. | |
Country allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Global Real Estate Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Global Real Estate Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Global Real Estate Fund
(Series II) | $ 129 | 1.30 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the global real estate market delivered single digit positive returns. Real estate delivered muted returns as rising interest rates and economic uncertainty weighed on the asset class.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned -2.11% For the same time period, the Custom Invesco Global Real Estate Index returned 0.94%. The Fund underperformed the Custom Invesco Global Real Estate Index for the period, driven by underperformance in both stock selection and market allocation.
What contributed to performance?
Australia |
In Australia, the Fund benefited from underweight exposure to industrial focused developer and fund manager Goodman Group, which underperformed after strong performance in prior periods. The Fund also benefited from its residential exposure in Australia.
Singapore |
Underweight exposure to Singapore contributed to relative performance.
Singapore
REITs’ relatively high leverage, overseas asset exposures, and high-interest-rate sensitivity contributed to their underperformance. The Fund benefited from the significant underweight positioning and received an incremental performance lift from favorable stock selection as positioning in Singapore REITs outperformed Singapore Developers.
What detracted from performance?
Hong Kong
|
Stock selection in Hong Kong detracted from relative performance. The key detractor that contributed to the underperformance was the Fund's overweight to Link REIT, a broad portfolio primarily in Hong Kong and key cities in China that cater to necessity consumption needs. After a period of strong performance in 2023, Link REIT saw weaker performance as the expected pace of interest rate declines in the US moderated.
United Kingdom |
The UK underperformed for the period; within the UK, companies with higher growth prospects tended to lag as value was rewarded by the market. In particular, UK industrial real estate offered less upside performance in the period than anticipated.
United States |
The Fund's holding of life science focused Alexandria significantly underperformed other more deeply discounted US office REITs. Additionally, a large holding in single family rental operator Invitation Homes also significantly lagged its residential focused peer group after reporting moderating rental pricing power. Overweight exposure to lodging and stock selection among industrial real estate investors also generated negative relative performance.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Global Real Estate Fund (Series II) | (2.11 ) % | (2.64 ) % | 1.26 % |
| Custom Invesco Global Real Estate Index (Net) | 0.94 % | (1.49 ) % | 2.20 % |
| MSCI World IndexSM (Net) | 18.67 % | 11.17 % | 9.95 % |
The Custom Invesco Global Real Estate Index is composed of the FTSE EPRA/NAREIT Developed Index (gross) from fund inception through Feb. 17, 2005; the FTSE EPRA/NAREIT Developed Index (net) from Feb. 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 performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 96,482,803 |
| Total number of portfolio holdings | 73 |
| Total advisory fees paid | $ 813,836 |
| Portfolio turnover rate | 101 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Equinix, Inc. | 8.00 % |
| Welltower, Inc. | 6.25 % |
| Simon Property Group, Inc. | 4.33 % |
| Prologis, Inc. | 4.05 % |
| Digital Realty Trust, Inc. | 3.59 % |
| Equity LifeStyle Properties, Inc. | 3.42 % |
| Equity Residential | 3.13 % |
| Goodman Group | 2.84 % |
| Invitation Homes, Inc. | 2.55 % |
| Realty Income Corp. | 2.55 % |
| * Excluding money market fund holdings, if any. | |
Country allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Global Strategic Income Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Global Strategic Income Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Global Strategic Income Fund
(Series I) | $ 95 | 0.93 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the global fixed income market broadly benefited from an environment of global growth, continued disinflation and easing financial conditions, despite heightened political uncertainty amidst a wide array of elections globally. Importantly, the US Federal Reserve and other developed market central banks pivoted to monetary easing, which gave emerging market central banks more confidence in responding to their domestic conditions. We believe diverging inflation and growth dynamics across economies create compelling opportunities.
•
For the fiscal year ended, December 31, 2024, Series I shares of the Fund returned 3.40%. For the same time period, the Bloomberg Global Aggregate Index returned (1.69)%.
What contributed to performance?
Credit Exposure |
The top contributors to relative return were credit exposures in Europe and the US.
Foreign Currency Exposure |
The top contributors to relative return were positioning in the Euro and Turkish lira.
Interest Rate Positioning |
The top contributors to relative return were interest rate positioning in the US and South Africa.
What detracted from performance?
Credit Exposure
|
The top detractors to relative return were credit exposures in Italy and Germany.
Foreign Currency Exposure |
The top detractors to relative return were positioning in the Brazilian real and Mexican peso.
Interest Rate Positioning |
The top detractors to relative return were interest rate positioning in China and Brazil.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Global Strategic Income Fund (Series I) | 3.40 % | (0.14 ) % | 1.53 % |
| Bloomberg Global Aggregate Index | (1.69 ) % | (1.96 ) % | 0.15 % |
Effective after the close of business on May 24, 2019, Non-Service shares of Oppenheimer Global Strategic Income Fund/VA (the predecessor fund), were reorganized into Series I shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Non-Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 679,134,819 |
| Total number of portfolio holdings | 875 |
| Total advisory fees paid | $ 4,828,816 |
| Portfolio turnover rate | 354 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Government National Mortgage Association, TBA, 6.00%, 01/01/2055 | 22.33 % |
| Uniform Mortgage-Backed Securities, TBA, 6.00%, 01/01/2055 | 20.64 % |
| Brazil Notas do Tesouro Nacional, Series F, 10.00%, 01/01/2027 | 4.43 % |
| Government National Mortgage Association, TBA, 5.50%, 06/20/2054 | 2.79 % |
| Invesco Senior Loan ETF | 2.28 % |
| U.S. Treasury Bills, 4.40%, 05/01/2025 | 2.25 % |
| Republic of South Africa Government Bond, Series 2040, 9.00%, 01/31/2040 | 1.79 % |
| Republic of South Africa Government Bond, Series 2032, 8.25%, 03/31/2032 | 1.31 % |
| Mortgage Funding PLC, Series 2008-1, Class B2, 8.05%, 03/13/2046 | 1.15 % |
| YPF S.A., Class D | 1.12 % |
| * Excluding money market fund holdings, if any. | |
Security type allocation
(% of total investments)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Global Strategic Income Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Global Strategic Income Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Global Strategic Income Fund
(Series II) | $ 120 | 1.18 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the global fixed income market broadly benefited from an environment of global growth, continued disinflation and easing financial conditions, despite heightened political uncertainty amidst a wide array of elections globally. Importantly, the US Federal Reserve and other developed market central banks pivoted to monetary easing, which gave emerging market central banks more confidence in responding to their domestic conditions. We believe diverging inflation and growth dynamics across economies create compelling opportunities.
•
For the fiscal year ended, December 31, 2024, Series II shares of the Fund returned 3.02%. For the same time period, the Bloomberg Global Aggregate Index returned (1.69)%.
What contributed to performance?
Credit Exposure |
The top contributors to relative return were credit exposures in Europe and the US.
Foreign Currency Exposure |
The top contributors to relative return were positioning in the Euro and Turkish lira.
Interest Rate Positioning |
The top contributors to relative return were interest rate positioning in the US and South Africa.
What detracted from performance?
Credit Exposure
|
The top detractors to relative return were credit exposures in Italy and Germany.
Foreign Currency Exposure |
The top detractors to relative return were positioning in the Brazilian real and Mexican peso.
Interest Rate Positioning |
The top detractors to relative return were interest rate positioning in China and Brazil.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Global Strategic Income Fund (Series II) | 3.02 % | (0.43 ) % | 1.28 % |
| Bloomberg Global Aggregate Index | (1.69 ) % | (1.96 ) % | 0.15 % |
Effective after the close of business on May 24, 2019, Service shares of Oppenheimer Global Strategic Income Fund/VA (the predecessor fund), were reorganized into Series II shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 679,134,819 |
| Total number of portfolio holdings | 875 |
| Total advisory fees paid | $ 4,828,816 |
| Portfolio turnover rate | 354 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Government National Mortgage Association, TBA, 6.00%, 01/01/2055 | 22.33 % |
| Uniform Mortgage-Backed Securities, TBA, 6.00%, 01/01/2055 | 20.64 % |
| Brazil Notas do Tesouro Nacional, Series F, 10.00%, 01/01/2027 | 4.43 % |
| Government National Mortgage Association, TBA, 5.50%, 06/20/2054 | 2.79 % |
| Invesco Senior Loan ETF | 2.28 % |
| U.S. Treasury Bills, 4.40%, 05/01/2025 | 2.25 % |
| Republic of South Africa Government Bond, Series 2040, 9.00%, 01/31/2040 | 1.79 % |
| Republic of South Africa Government Bond, Series 2032, 8.25%, 03/31/2032 | 1.31 % |
| Mortgage Funding PLC, Series 2008-1, Class B2, 8.05%, 03/13/2046 | 1.15 % |
| YPF S.A., Class D | 1.12 % |
| * Excluding money market fund holdings, if any. | |
Security type allocation
(% of total investments)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Government Money Market Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Government Money Market Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Government Money Market Fund
(Series I) | $ 37 | 0.36 % |
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 941,149,006 |
| Total number of portfolio holdings | 82 |
| Total advisory fees paid | $ 1,368,003 |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Composition by maturity, in days
(% of total investments)*
| 1-7 | 62.5 % |
| 8-30 | 9.0 % |
| 31-60 | 3.1 % |
| 91-180 | 4.5 % |
| 181+ | 20.9 % |
| * 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. | |
Where Can I Find More Information?
You can find more information
about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Government Money Market Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Government Money Market Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Government Money Market Fund
(Series II) | $ 62 | 0.61 % |
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 941,149,006 |
| Total number of portfolio holdings | 82 |
| Total advisory fees paid | $ 1,368,003 |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Composition by maturity, in days
(% of total investments)*
| 1-7 | 62.5 % |
| 8-30 | 9.0 % |
| 31-60 | 3.1 % |
| 91-180 | 4.5 % |
| 181+ | 20.9 % |
| * 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. | |
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Government Securities Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Government Securities Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Government Securities Fund
(Series I) | $ 71 | 0.70 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the Fund generated a positive return despite longer term Treasury yields increasing by 25 to 75 basis points across the yield curve. Non-Treasury sectors of the bond market performed well this year as economic growth and employment outperformed their respective forecasts.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 1.72%. For the same time period, the Bloomberg Intermediate U.S. Government Index returned 2.44%.
What contributed to performance?
Agency mortgage-backed securities |
During 2024, the agency mortgage market, in which the Fund invested a significant portion of its assets during the period, performed better than US Treasury securities, given the significant yield advantage enjoyed by agency mortgage-backed securities versus Treasuries.
Non-agency MBS, CMBS, ABS |
Non-agency mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities performed well due to attractive starting yields and relatively strong economic performance in 2024, which caused market participants to bid up these assets relative to US Treasuries.
What detracted from performance?
Duration positioning
|
The Fund's duration positioning detracted from performance during 2024, given a somewhat longer duration for the Fund versus the Bloomberg Intermediate U.S. Government Index.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Government Securities Fund (Series I) | 1.72 % | (0.17 ) % | 0.91 % |
| Bloomberg Intermediate U.S. Government Index | 2.44 % | 0.49 % | 1.24 % |
| Bloomberg U.S. Aggregate Bond Index | 1.25 % | (0.33 ) % | 1.35 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 321,449,961 |
| Total number of portfolio holdings | 415 |
| Total advisory fees paid | $ 1,614,110 |
| Portfolio turnover rate | 314 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Government National Mortgage Association, TBA, 5.50%, 06/20/2054 | 5.86 % |
| Uniform Mortgage-Backed Securities, TBA, 6.00%, 01/01/2055 | 4.69 % |
| Federal Home Loan Bank, 0.50%, 04/14/2025 | 4.46 % |
| Federal National Mortgage Association, TBA, 5.00%, 06/25/2054 | 4.18 % |
| Government National Mortgage Association, TBA, 5.00%, 01/01/2055 | 3.68 % |
| Government National Mortgage Association, TBA, 4.50%, 01/01/2055 | 3.15 % |
| UBS AG, 4.97%, 05/01/2025 | 2.80 % |
| Mitsubishi UFJ Trust & Banking Corp., 4.65%, 03/07/2025 | 2.80 % |
| U.S. Treasury Notes, 1.13%, 02/28/2027 | 2.67 % |
| Sumitomo Mitsui Banking Corp., 4.75%, 03/18/2025 | 2.49 % |
| * Excluding money market fund holdings, if any. | |
Security type allocation
(% of total investments)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Government Securities Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Government Securities Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Government Securities Fund
(Series II) | $ 96 | 0.95 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the Fund generated a positive return despite longer term Treasury yields increasing by 25 to 75 basis points across the yield curve. Non-Treasury sectors of the bond market performed well this year as economic growth and employment outperformed their respective forecasts.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 1.48%. For the same time period, the Bloomberg Intermediate U.S. Government Index returned 2.44%.
What contributed to performance?
Agency mortgage-backed securities |
During 2024, the agency mortgage market, in which the Fund invested a significant portion of its assets during the period, performed better than US Treasury securities, given the significant yield advantage enjoyed by agency mortgage-backed securities versus Treasuries.
Non-agency MBS, CMBS, ABS |
Non-agency mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities performed well due to attractive starting yields and relatively strong economic performance in 2024, which caused market participants to bid up these assets relative to US Treasuries.
What detracted from performance?
Duration positioning
|
The Fund's duration positioning detracted from performance during 2024, given a somewhat longer duration for the Fund versus the Bloomberg Intermediate U.S. Government Index.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Government Securities Fund (Series II) | 1.48 % | (0.40 ) % | 0.67 % |
| Bloomberg Intermediate U.S. Government Index | 2.44 % | 0.49 % | 1.24 % |
| Bloomberg U.S. Aggregate Bond Index | 1.25 % | (0.33 ) % | 1.35 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 321,449,961 |
| Total number of portfolio holdings | 415 |
| Total advisory fees paid | $ 1,614,110 |
| Portfolio turnover rate | 314 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Government National Mortgage Association, TBA, 5.50%, 06/20/2054 | 5.86 % |
| Uniform Mortgage-Backed Securities, TBA, 6.00%, 01/01/2055 | 4.69 % |
| Federal Home Loan Bank, 0.50%, 04/14/2025 | 4.46 % |
| Federal National Mortgage Association, TBA, 5.00%, 06/25/2054 | 4.18 % |
| Government National Mortgage Association, TBA, 5.00%, 01/01/2055 | 3.68 % |
| Government National Mortgage Association, TBA, 4.50%, 01/01/2055 | 3.15 % |
| UBS AG, 4.97%, 05/01/2025 | 2.80 % |
| Mitsubishi UFJ Trust & Banking Corp., 4.65%, 03/07/2025 | 2.80 % |
| U.S. Treasury Notes, 1.13%, 02/28/2027 | 2.67 % |
| Sumitomo Mitsui Banking Corp., 4.75%, 03/18/2025 | 2.49 % |
| * Excluding money market fund holdings, if any. | |
Security type allocation
(% of total investments)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Growth and Income Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Growth and Income Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Growth and Income Fund
(Series I) | $ 82 | 0.76 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the U.S. economy was resilient as data suggested the Federal Reserve (Fed) may have achieved its fabled soft landing, with strong consumer spending and low unemployment providing support. Enthusiasm around the artificial intelligence (AI) investment theme led to concentrated market leadership in the large cap technology space during the period.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 16.00%. For the same time period, the Russell 1000
®
Value Index returned 14.37%. The Fund outperformed the Russell 1000
®
Value Index primarily due to strong stock selection in the financials and consumer discretionary sectors. Stock selection and an underweight in real estate also aided relative performance. On the flipside, stock selection in industrials was the largest detractor from the Fund's relative return. Stock selection in health care and energy also detracted from relative returns.
What contributed to performance?
Wells Fargo & Co. |
Wells Fargo reported better than expected earnings and non-interest income remained strong, despite ongoing regulatory constraints. The stock also performed well amid optimism that lower interest rates would boost loan growth.
Bank of America Corp. |
Bank of America reported an increase in net interest income, along with strong growth in investment banking and asset management fees.
Amazon.com, Inc. |
The online retailer reported better than expected revenue and earnings, as well as strength in its Amazon Web Services (AWS) cloud business.
What detracted from performance?
CVS Health Corp.
|
CVS faced headwinds due to higher costs and utilization during the period. Shares declined further amid speculation that Congress may force the separation of pharmacy benefit managers from the insurance business, which would negatively affect the company.
Humana, Inc. |
Despite better-than-expected earnings, concerns about Medicaid redetermination negatively impacted Humana's share price.
Stanley Black & Decker, Inc. |
The toolmaker reported earnings that were in line with estimates, but revenues fell below estimates. The company also revised its future estimates lower.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Growth and Income Fund (Series I) | 16.00 % | 10.07 % | 8.80 % |
| Russell 1000® Value Index | 14.37 % | 8.68 % | 8.49 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 1,306,014,265 |
| Total number of portfolio holdings | 105 |
| Total advisory fees paid | $ 7,589,049 |
| Portfolio turnover rate | 23 % |
What Comprised The Fund's Hol
d
in
gs
?
Top ten holdings*
(% of net assets)
| Wells Fargo & Co. | 4.06 % |
| Bank of America Corp. | 3.50 % |
| Amazon.com, Inc. | 2.49 % |
| Johnson Controls International PLC | 2.28 % |
| Parker-Hannifin Corp. | 2.06 % |
| Alphabet, Inc., Class A | 2.03 % |
| Johnson & Johnson | 1.98 % |
| Exxon Mobil Corp. | 1.97 % |
| Willis Towers Watson PLC | 1.97 % |
| CBRE Group, Inc., Class A | 1.95 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Growth and Income Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Growth and Income Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Growth and Income Fund
(Series II) | $ 109 | 1.01 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the U.S. economy was resilient as
data
suggested the Federal Reserve (Fed) may have achieved its fabled soft landing, with strong consumer spending and low unemployment providing support. Enthusiasm around the artificial intelligence (AI) investment theme led to concentrated market leadership in the large cap technology space during the period.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 15.72%. For the same time period, the Russell 1000
®
Value Index returned 14.37%. The Fund outperformed the Russell 1000
®
Value Index primarily due to strong stock selection in the financials and consumer discretionary sectors. Stock selection and an underweight in real estate also aided relative performance. On the flipside, stock selection in industrials was the largest detractor from the Fund's relative return. Stock selection in health care and energy also detracted from relative returns.
What contributed to performance?
Wells Fargo & Co. |
Wells Fargo reported better than expected earnings and non-interest income remained strong, despite ongoing regulatory constraints. The stock also performed well amid optimism that lower interest rates would boost loan growth.
Bank of America Corp. |
Bank of America reported an increase in net interest income, along with strong growth in investment banking and asset management fees.
Amazon.com, Inc. |
The online retailer reported better than expected revenue and earnings, as well as strength in its Amazon Web Services (AWS) cloud business.
What detracted from performance?
CVS Health Corp.
|
CVS faced headwinds due to higher costs and utilization during the period. Shares declined further amid speculation that Congress may force the separation of pharmacy benefit managers from the insurance business, which would negatively affect the company.
Humana, Inc. |
Despite better-than-expected earnings, concerns about Medicaid redetermination negatively impacted Humana's share price.
Stanley Black & Decker, Inc. |
The toolmaker reported earnings that were in line with estimates, but revenues fell below estimates. The company also revised its future estimates lower.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Growth and Income Fund (Series II) | 15.72 % | 9.81 % | 8.53 % |
| Russell 1000® Value Index | 14.37 % | 8.68 % | 8.49 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About
The
Fund
?
(as of December 31, 2024)
| Fund net assets | $ 1,306,014,265 |
| Total number of portfolio holdings | 105 |
| Total advisory fees paid | $ 7,589,049 |
| Portfolio turnover rate | 23 % |
What Comprised The Fund's
H
olding
s
?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Wells Fargo & Co. | 4.06 % |
| Bank of America Corp. | 3.50 % |
| Amazon.com, Inc. | 2.49 % |
| Johnson Controls International PLC | 2.28 % |
| Parker-Hannifin Corp. | 2.06 % |
| Alphabet, Inc., Class A | 2.03 % |
| Johnson & Johnson | 1.98 % |
| Exxon Mobil Corp. | 1.97 % |
| Willis Towers Watson PLC | 1.97 % |
| CBRE Group, Inc., Class A | 1.95 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Health Care Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Health Care Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Health Care Fund
(Series I) | $ 102 | 1.00 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the economy held up well despite higher interest rates and relatively sticky inflation. The health care sector underperformed the broad market as headwinds across multiple health care industries weighed on performance.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 4.17%. For the same time period, the S&P Composite 1500
®
Health Care Index returned 2.81%. The Fund outperformed the S&P Composite 1500
®
Health Care Index primarily due to strong stock selection in the health care equipment, health care providers and pharmaceuticals industries. These results were partially offset by weaker stock selection within the life science tools & services industry.
What contributed to performance?
Eli Lilly and Co. |
Large-cap pharmaceutical company that makes drugs to treat Alzheimer’s, cancer, diabetes, obesity, pain, and autoimmune diseases. The company posted better than expected earnings and raised 2024 guidance, driven by continued success and expansion in its obesity treatments.
Boston Scientific Corp. |
Makes surgical devices and medical equipment to treat cardiovascular, gastrointestinal, and pulmonological conditions. The company reported better than expected organic growth in its cardiovascular systems, driven by strength in Farapulse, the company’s recently launched pulsed field ablation system.
Intuitive Surgical, Inc. |
Makes robotic surgical equipment. The stock rose after the company reported better-than-expected revenues and raised guidance, driven by procedure volume growth and installed base growth.
What detracted from performance?
Zoetis, Inc.
|
Makes animal health medicines, vaccines, devices, tests, and diagnostic products and services. The stock declined due to concerns of lower-than-expected patient volumes in its Companion Animal channel, softer demand for its arthritis pain management drug Librela, competitive pricing pressure, and weakness in diagnostics.
DexCom, Inc. |
Makes wearable continuous glucose monitoring devices used to monitor and treat diabetes. The company reported disappointing results driven by a US salesforce realignment that negatively impacted sales, lower revenue per customer, and softness in its international business. The Fund’s positions in DexCom were sold during the fiscal year.
UnitedHealth Group, Inc. |
Large-cap managed care company that provides health care benefits, services, data and analytics. The stock declined after the company guided to higher-than-expected medical losses.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Health Care Fund (Series I) | 4.17 % | 3.64 % | 5.40 % |
| S&P Composite 1500® Health Care Index | 2.81 % | 7.70 % | 9.18 % |
| MSCI World Health Care Index (Net) | 1.13 % | 6.18 % | 7.33 % |
| MSCI World IndexSM (Net) | 18.67 % | 11.17 % | 9.95 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics
About
The
Fund
?
(as of December 31, 2024)
| Fund net assets | $ 164,681,934 |
| Total number of portfolio holdings | 82 |
| Total advisory fees paid | $ 1,379,265 |
| Portfolio turnover rate | 57 % |
What Comprised The
Fund's
Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Eli Lilly and Co. | 9.42 % |
| Boston Scientific Corp. | 8.11 % |
| UnitedHealth Group, Inc. | 6.75 % |
| Intuitive Surgical, Inc. | 5.50 % |
| Stryker Corp. | 4.22 % |
| Danaher Corp. | 3.82 % |
| Vertex Pharmaceuticals, Inc. | 3.51 % |
| AbbVie, Inc. | 3.14 % |
| Cencora, Inc. | 2.51 % |
| AstraZeneca PLC, ADR | 2.43 % |
| * Excluding money market fund holdings, if any. | |
Country allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Health Care Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Health Care Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Health Care Fund
(Series II) | $ 127 | 1.25 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the economy held up well despite higher interest rates and relatively sticky inflation. The health care sector underperformed the broad market as headwinds across multiple health care industries weighed on performance.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 3.87%. For the same time period, the S&P Composite 1500
®
Health Care Index returned 2.81%. The Fund outperformed the S&P Composite 1500
®
Health Care Index primarily due to strong stock selection in the health care equipment, health care providers and pharmaceuticals industries. These results were partially offset by weaker stock selection within the life science tools & services industry.
What contributed to performance?
Eli Lilly and Co. |
Large-cap pharmaceutical company that makes drugs to treat Alzheimer’s, cancer, diabetes, obesity, pain, and autoimmune diseases. The company posted better than expected earnings and raised 2024 guidance
,
driven by continued success and expansion in its obesity treatments.
Boston Scientific Corp. |
Makes surgical devices and medical equipment to treat cardiovascular, gastrointestinal, and pulmonological conditions. The company reported better than expected organic growth in its cardiovascular systems, driven by strength in Farapulse, the company’s recently launched pulsed field ablation system.
Intuitive Surgical, Inc. |
Makes robotic surgical equipment. The stock rose after the company reported better-than-expected revenues and raised guidance, driven by procedure volume growth and installed base growth.
What detracted from performance?
Zoetis, Inc.
|
Makes animal health medicines, vaccines, devices, tests, and diagnostic products and services. The stock declined due to concerns of lower-than-expected patient volumes in its Companion Animal channel, softer demand for its arthritis pain management drug Librela, competitive pricing pressure, and weakness in diagnostics.
DexCom, Inc. |
Makes wearable continuous glucose monitoring devices used to monitor and treat diabetes. The company reported disappointing results driven by a US salesforce realignment that negatively impacted sales, lower revenue per customer, and softness in its international business. The Fund’s positions in DexCom were sold during the fiscal year.
UnitedHealth Group, Inc. |
Large-cap managed care company that provides health care benefits, services, data and analytics. The stock declined after the company guided to higher-than-expected medical losses.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Health Care Fund (Series II) | 3.87 % | 3.38 % | 5.13 % |
| S&P Composite 1500® Health Care Index | 2.81 % | 7.70 % | 9.18 % |
| MSCI World Health Care Index (Net) | 1.13 % | 6.18 % | 7.33 % |
| MSCI World IndexSM (Net) | 18.67 % | 11.17 % | 9.95 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 164,681,934 |
| Total number of portfolio holdings | 82 |
| Total advisory fees paid | $ 1,379,265 |
| Portfolio turnover rate | 57 % |
What Comprised The
Fund's
Holdings
?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Eli Lilly and Co. | 9.42 % |
| Boston Scientific Corp. | 8.11 % |
| UnitedHealth Group, Inc. | 6.75 % |
| Intuitive Surgical, Inc. | 5.50 % |
| Stryker Corp. | 4.22 % |
| Danaher Corp. | 3.82 % |
| Vertex Pharmaceuticals, Inc. | 3.51 % |
| AbbVie, Inc. | 3.14 % |
| Cencora, Inc. | 2.51 % |
| AstraZeneca PLC, ADR | 2.43 % |
| * Excluding money market fund holdings, if any. | |
Country allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. High Yield Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. High Yield Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. High Yield Fund
(Series I) | $ 95 | 0.91 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the high yield bond market benefited from resilient economic growth, the
beginning
of the Federal Reserve easing cycle, a benign default environment, and elevated yields. Since the Fund is predominantly invested in high yield corporate credit, it benefited from this macroeconomic backdrop.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 7.73%. For the same time period, the Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index returned 8.19%.
What contributed to performance?
Security Selection |
During the period, the Fund benefited from security selection within high yield corporate credit. Within industrials, selection within energy and consumer cyclicals were key drivers of overall performance. Performance was boosted by selection within financial institutions, specifically in banking and real estate investment trusts (REITs).
What detracted from performance?
Security Selection
|
During the period, security selection within technology detracted from overall performance. An underweight to consumer non-cyclicals also dragged on performance for the fiscal year.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. High Yield Fund (Series I) | 7.73 % | 2.97 % | 3.81 % |
| Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index | 8.19 % | 4.20 % | 5.16 % |
| Bloomberg U.S. Aggregate Bond Index | 1.25 % | (0.33 ) % | 1.35 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The
Fund
?
(as of December 31, 2024)
| Fund net assets | $ 152,150,246 |
| Total number of portfolio holdings | 301 |
| Total advisory fees paid | $ 937,884 |
| Portfolio turnover rate | 134 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| American Airlines, Inc./AAdvantage Loyalty IP Ltd., 5.75%, 04/20/2029 | 1.58 % |
| Carriage Services, Inc., 4.25%, 05/15/2029 | 1.51 % |
| Allison Transmission, Inc., 3.75%, 01/30/2031 | 1.42 % |
| Aircastle Ltd., 5.25%, | 1.32 % |
| Vistra Corp., Series C, 8.88%, | 1.08 % |
| NESCO Holdings II, Inc., 5.50%, 04/15/2029 | 1.04 % |
| Melco Resorts Finance Ltd., 5.38%, 12/04/2029 | 1.04 % |
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 6.95%, 03/10/2055 | 1.03 % |
| Studio City Finance Ltd., 5.00%, 01/15/2029 | 0.98 % |
| EMRLD Borrower L.P./Emerald Co-Issuer, Inc., 6.63%, 12/15/2030 | 0.97 % |
| * Excluding money market fund holdings, if any. | |
Credit quality rating breakdown**
(% of net assets)
| BBB | 3.99 |
| BB | 42.25 |
| B | 36.61 |
| CCC and below | 14.18 |
| Cash | 2.85 |
| Not Rated | 0.12 |
| **Source: Standard & Poor's. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice. "Non-Rated" indicates the debtor was not rated, and should not be interpreted as indicating low quality. For more information on Standard & Poor's rating methodology, please visit standardandpoors.com and select "Understanding Ratings" under Rating Resources on the homepage. | |
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may
review
the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund added active trading risk to its principal risks to reflect that active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. High Yield Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. High Yield Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. High Yield Fund
(Series II) | $ 120 | 1.16 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, the high yield bond market benefited from resilient economic growth, the beginning of the Federal Reserve easing cycle, a benign default environment, and elevated yields. Since the Fund is predominantly invested in high yield corporate credit, it benefited from this macroeconomic backdrop.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 7.37%. For the same time period, the Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index returned 8.19%.
What contributed to performance?
Security Selection |
During the period, the Fund benefited from security selection within high yield corporate credit. Within industrials, selection within energy and consumer cyclicals were key drivers of overall performance. Performance was boosted by selection within financial institutions, specifically in banking and real estate investment trusts (REITs).
What detracted from performance?
Security Selection
|
During the period, security selection within technology detracted from overall performance. An underweight to consumer non-cyclicals also dragged on performance for the fiscal year.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. High Yield Fund (Series II) | 7.37 % | 2.72 % | 3.55 % |
| Bloomberg U.S. Corporate High Yield 2% Issuer Capped Index | 8.19 % | 4.20 % | 5.16 % |
| Bloomberg U.S. Aggregate Bond Index | 1.25 % | (0.33 ) % | 1.35 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 152,150,246 |
| Total number of portfolio holdings | 301 |
| Total advisory fees paid | $ 937,884 |
| Portfolio turnover rate | 134 % |
What Comprised The Fund's Holdings?
Top ten holdings*
(% of net assets)
| American Airlines, Inc./AAdvantage Loyalty IP Ltd., 5.75%, 04/20/2029 | 1.58 % |
| Carriage Services, Inc., 4.25%, 05/15/2029 | 1.51 % |
| Allison Transmission, Inc., 3.75%, 01/30/2031 | 1.42 % |
| Aircastle Ltd., 5.25%, | 1.32 % |
| Vistra Corp., Series C, 8.88%, | 1.08 % |
| NESCO Holdings II, Inc., 5.50%, 04/15/2029 | 1.04 % |
| Melco Resorts Finance Ltd., 5.38%, 12/04/2029 | 1.04 % |
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 6.95%, 03/10/2055 | 1.03 % |
| Studio City Finance Ltd., 5.00%, 01/15/2029 | 0.98 % |
| EMRLD Borrower L.P./Emerald Co-Issuer, Inc., 6.63%, 12/15/2030 | 0.97 % |
| * Excluding money market fund holdings, if any. | |
Credit quality rating breakdown**
(% of net assets)
| BBB | 3.99 |
| BB | 42.25 |
| B | 36.61 |
| CCC and below | 14.18 |
| Cash | 2.85 |
| Not Rated | 0.12 |
| **Source: Standard & Poor's. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice. "Non-Rated" indicates the debtor was not rated, and should not be interpreted as indicating low quality. For more information on Standard & Poor's rating methodology, please visit standardandpoors.com and select "Understanding Ratings" under Rating Resources on the homepa ge. | |
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund added active trading risk to its principal risks to reflect that active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Main Street Fund
®
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Main Street Fund
®
(the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco V.I. Main Street Fund ®
(Series I) | $ 89 | 0.80 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the US Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending and low unemployment provided support. The Fed cut the federal funds rate several times over the period, but suggested less aggressive easing in 2025 should robust economic growth and lingering inflation continue. The Fund underperformed its benchmark mainly as a result of stock selection in the industrials, consumer discretionary and communication services sectors. Stronger stock selection in the information technology, financials and health care sectors partially offset these results.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 23.65%. For the same time period, the S&P 500
®
Index returned 25.02%.
What contributed to performance?
NVIDIA Corp. |
NVIDIA reported strong results and commented that AI-related demand should remain durable for the foreseeable future given the backlog of existing products and upcoming launches of new products.
American Express Co. |
American Express returned strong results as declining interest rates appeared to increase conviction for a soft economic landing, which we believe should benefit its credit card business.
What detracted from performance?
Prologis, Inc.
|
Prologis underperformed during the period as it faced earnings headwinds, including softening near-term lease activity in the face of significant new supply in a few key markets, most notably southern California.
Zimmer Biomet Holdings, Inc. |
Zimmer Biomet detracted from the Fund’s results despite posting strong earnings as investors appeared disappointed with results in its core business of hip and knee replacements.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Main Street Fund® (Series I) | 23.65 % | 12.08 % | 11.24 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Effective after the close of business on May 24, 2019, Non-Service shares of Oppenheimer Main Street Fund
®
/VA (the predecessor fund), were reorganized into Series I shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Non-Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 785,800,399 |
| Total number of portfolio holdings | 76 |
| Total advisory fees paid | $ 4,628,317 |
| Portfolio turnover rate | 50 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| NVIDIA Corp. | 7.45 % |
| Microsoft Corp. | 7.26 % |
| Apple, Inc. | 6.22 % |
| Amazon.com, Inc. | 5.41 % |
| Alphabet, Inc., Class A | 3.38 % |
| Meta Platforms, Inc., Class A | 3.23 % |
| JPMorgan Chase & Co. | 2.75 % |
| Broadcom, Inc. | 2.43 % |
| Philip Morris International, Inc. | 2.17 % |
| Exxon Mobil Corp. | 2.09 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Main Street Fund
®
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Main Street Fund
®
(the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco V.I. Main Street Fund ®
(Series II) | $ 117 | 1.05 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the US Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending and low unemployment provided support. The Fed cut the federal funds rate several times over the period, but suggested less aggressive easing in 2025 should robust economic growth and lingering inflation continue. The Fund underperformed its benchmark mainly as a result of stock selection in the industrials, consumer discretionary and communication services sectors. Stronger stock selection in the information technology, financials and health care sectors partially offset these results.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 23.39%. For the same time period, the S&P 500
®
Index returned 25.02%.
What contributed to performance?
NVIDIA Corp. |
NVIDIA reported strong results and commented that AI-related demand should remain durable for the foreseeable future given the backlog of existing products and upcoming launches of new products.
American Express Co. |
American Express returned strong results as declining interest rates appeared to increase conviction for a soft economic landing, which we believe should benefit its credit card business.
What detracted from performance?
Prologis, Inc.
|
Prologis underperformed during the period as it faced earnings headwinds, including softening near-term lease activity in the face of significant new supply in a few key markets, most notably southern California.
Zimmer Biomet Holdings, Inc. |
Zimmer Biomet detracted from the Fund’s results despite posting strong earnings as investors appeared disappointed with results in its core business of hip and knee replacements.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Main Street Fund® (Series II) | 23.39 % | 11.81 % | 10.97 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Effective after the close of business on May 24, 2019, Service shares of Oppenheimer Main Street Fund
®
/VA (the predecessor fund), were reorganized into Series II shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 785,800,399 |
| Total number of portfolio holdings | 76 |
| Total advisory fees paid | $ 4,628,317 |
| Portfolio turnover rate | 50 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| NVIDIA Corp. | 7.45 % |
| Microsoft Corp. | 7.26 % |
| Apple, Inc. | 6.22 % |
| Amazon.com, Inc. | 5.41 % |
| Alphabet, Inc., Class A | 3.38 % |
| Meta Platforms, Inc., Class A | 3.23 % |
| JPMorgan Chase & Co. | 2.75 % |
| Broadcom, Inc. | 2.43 % |
| Philip Morris International, Inc. | 2.17 % |
| Exxon Mobil Corp. | 2.09 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Main Street Mid Cap Fund
®
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Main Street Mid Cap Fund
®
(the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco V.I. Main Street Mid Cap Fund ®
(Series I) | $ 103 | 0.95 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending, and low unemployment provided support. The Fed cut the federal funds rate several times over the period, but suggested less aggressive easing in 2025 should robust economic growth and lingering inflation continue.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 17.07%. For the same time period, the Russell MidCap
®
Index returned 15.34%. The Fund outperformed its benchmark mainly as a result of stock selection in the industrials, health care, and materials sectors. Weaker stock selection in the financials, energy, and utilities sectors partially offset the Fund's performance results.
What contributed to performance?
Howmet Aerospace, Inc. |
Howmet Aerospace outperformed, as it reported results that showed strength in its commercial aerospace business despite challenges in the global aerospace supply chain. Profit margins and cashflow exceeded investor expectations and the company raised its dividend and increased its share repurchase program.
Astera Labs, Inc. |
Astera Labs makes connectivity chips for cloud and artificial intelligence (AI) data centers. The firm reported revenue growth that exceeded expectations while providing guidance that was interpreted optimistically, including news about expected new products and customer wins.
What detracted from performance?
MongoDB, Inc.
|
MongoDB is a document database that stores and manages data for a variety of applications such as customer relationship management and health care systems. MongoDB has gained market share in the large database software market but underperformed during the period as it reported underwhelming results that saw slower than expected new customer additions and growth within its installed customer base.
Acadia Healthcare Co., Inc. |
Acadia Healthcare underperformed as its operation of acute behavioral healthcare facilities was subject to negative media about its admissions and operating practices, leading to a decline in patient referrals. The Fund’s position in Acadia Healthcare was sold during the fiscal year.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Main Street Mid Cap Fund® (Series I) | 17.07 % | 9.12 % | 7.95 % |
| Russell Midcap® Index | 15.34 % | 9.92 % | 9.63 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 213,453,275 |
| Total number of portfolio holdings | 97 |
| Total advisory fees paid | $ 1,505,864 |
| Portfolio turnover rate | 41 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Royal Caribbean Cruises Ltd. | 1.86 % |
| Trade Desk, Inc. (The), Class A | 1.84 % |
| Raymond James Financial, Inc. | 1.73 % |
| Wyndham Hotels & Resorts, Inc. | 1.64 % |
| Cheniere Energy, Inc. | 1.62 % |
| M&T Bank Corp. | 1.61 % |
| Marvell Technology, Inc. | 1.54 % |
| Motorola Solutions, Inc. | 1.53 % |
| Howmet Aerospace, Inc. | 1.49 % |
| Tyler Technologies, Inc. | 1.46 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Main Street Mid Cap Fund
®
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Main Street Mid Cap Fund
®
(the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco V.I. Main Street Mid Cap Fund ®
(Series II) | $ 130 | 1.20 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending, and low unemployment provided support. The Fed cut the federal funds rate several times over the period, but suggested less aggressive easing in 2025 should robust economic growth and lingering inflation continue.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 16.79%. For the same time period, the Russell MidCap
®
Index returned 15.34%. The Fund outperformed its benchmark mainly as a result of stock selection in the industrials, health care, and materials sectors. Weaker stock selection in the financials, energy, and utilities sectors partially offset the Fund's performance results.
What contributed to performance?
Howmet Aerospace, Inc. |
Howmet Aerospace outperformed, as it reported results that showed strength in its commercial aerospace business despite challenges in the global aerospace supply chain. Profit margins and cashflow exceeded investor expectations and the company raised its dividend and increased its share repurchase program.
Astera Labs, Inc. |
Astera Labs makes connectivity chips for cloud and artificial intelligence (AI) data centers. The firm reported revenue growth that exceeded expectations while providing guidance that was interpreted optimistically, including news about expected new products and customer wins.
What detracted from performance?
MongoDB, Inc.
|
MongoDB is a document database that stores and manages data for a variety of applications such as customer relationship management and health care systems. MongoDB has gained market share in the large database software market but underperformed during the period as it reported underwhelming results that saw slower than expected new customer additions and growth within its installed customer base.
Acadia Healthcare Co., Inc. |
Acadia Healthcare underperformed as its operation of acute behavioral healthcare facilities was subject to negative media about its admissions and operating practices, leading to a decline in patient referrals. The Fund’s position in Acadia Healthcare was sold during the fiscal year.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Main Street Mid Cap Fund® (Series II) | 16.79 % | 8.83 % | 7.68 % |
| Russell Midcap® Index | 15.34 % | 9.92 % | 9.63 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 213,453,275 |
| Total number of portfolio holdings | 97 |
| Total advisory fees paid | $ 1,505,864 |
| Portfolio turnover rate | 41 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Royal Caribbean Cruises Ltd. | 1.86 % |
| Trade Desk, Inc. (The), Class A | 1.84 % |
| Raymond James Financial, Inc. | 1.73 % |
| Wyndham Hotels & Resorts, Inc. | 1.64 % |
| Cheniere Energy, Inc. | 1.62 % |
| M&T Bank Corp. | 1.61 % |
| Marvell Technology, Inc. | 1.54 % |
| Motorola Solutions, Inc. | 1.53 % |
| Howmet Aerospace, Inc. | 1.49 % |
| Tyler Technologies, Inc. | 1.46 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Main Street Small Cap Fund
®
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Main Street Small Cap Fund
®
(the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco V.I. Main Street Small Cap Fund ®
(Series I) | $ 93 | 0.87 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the US Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending and low unemployment provided support. The Fed cut the federal funds rate several times over the period, but suggested less aggressive easing in 2025 should robust economic growth and lingering inflation continue. The Fund outperformed its benchmark mainly as a result of stock selection in the health care, consumer discretionary and materials sectors. Weaker stock selection in the information technology, communication services and industrials sectors partially offset these results.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 12.69%. For the same time period, the Russell 2000
®
Index returned 11.54%.
What contributed to performance?
ADMA Biologics, Inc. |
ADMA, a biopharmaceutical company developing specialty plasma-derived biologics, outperformed as demand outpaced supply while the company appeared to remain on track to expand its manufacturing yields and supply next year.
Tenet Healthcare Corporation |
Tenet outperformed as it reported strong results during the period driven by revenue growth in its ambulatory surgery centers (ASC) and hospitals. The company announced that it expects to expand the footprint of its ambulatory surgery centers, which have higher profit margins, as more procedures move from acute care hospitals into ambulatory surgery centers. We sold the holding during the fiscal year.
What detracted from performance?
Atkore, Inc.
|
Atkore underperformed as it reported underwhelming earnings during the period that included weaker-than-expected sales in its high density polyethylene (HDPE) power and telecommunications business, while pricing in some product lines
was
adversely affected by an increase in steel conduit imported from Mexico.
Acadia Healthcare Company, Inc. |
Acadia Healthcare underperformed as its operation of acute behavioral healthcare facilities was subject to negative media about its admissions and operating practices, leading to a decline in patient referrals. We sold the holding during the fiscal year.
How Has The Fund Historically
Performed
?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Main Street Small Cap Fund® (Series I) | 12.69 % | 10.49 % | 9.00 % |
| Russell 2000® Index | 11.54 % | 7.40 % | 7.82 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Effective after the close of business on May 24, 2019, Non-Service shares of Oppenheimer Main Street Small Cap Fund/VA (the predecessor fund), were reorganized into Series I shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Non-Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the Russell 2000
®
Index to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 969,567,448 |
| Total number of portfolio holdings | 103 |
| Total advisory fees paid | $ 6,117,934 |
| Portfolio turnover rate | 42 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Wintrust Financial Corp. | 1.80 % |
| Zurn Elkay Water Solutions Corp. | 1.78 % |
| Summit Materials, Inc., Class A | 1.77 % |
| AutoNation, Inc. | 1.75 % |
| ESAB Corp. | 1.64 % |
| ADMA Biologics, Inc. | 1.61 % |
| MACOM Technology Solutions Holdings, Inc. | 1.58 % |
| PennyMac Financial Services, Inc. | 1.57 % |
| Allison Transmission Holdings, Inc. | 1.57 % |
| Itron, Inc. | 1.56 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Main Street Small Cap Fund
®
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Main Street Small Cap Fund
®
(the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco V.I. Main Street Small Cap Fund ®
(Series II) | $ 119 | 1.12 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US equity markets posted strong gains as the US economy remained resilient. Data suggested the US Federal Reserve (the Fed) may have achieved its fabled soft landing, as moderating inflation, strong consumer spending and low unemployment provided support. The Fed cut the federal funds rate several times over the period, but suggested less aggressive easing in 2025 should robust economic growth and lingering inflation continue. The Fund outperformed its benchmark mainly as a result of stock selection in the health care, consumer discretionary and materials sectors. Weaker stock selection in the information technology, communication services and industrials sectors partially offset these results.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 12.41%. For the same time period, the Russell 2000
®
Index returned 11.54%.
What contributed to performance?
ADMA Biologics, Inc. |
ADMA, a biopharmaceutical company developing specialty plasma-derived biologics, outperformed as demand outpaced supply while the company appeared to remain on track to expand its manufacturing yields and supply next year.
Tenet Healthcare Corporation |
Tenet outperformed as it reported strong results during the period driven by revenue growth in its ambulatory surgery centers (ASC) and hospitals. The company announced that it expects to expand the footprint of its ambulatory surgery centers, which have higher profit margins, as more procedures move from acute care hospitals into ambulatory surgery centers. We sold the holding during the fiscal year.
What detracted from performance?
Atkore, Inc.
|
Atkore underperformed as it reported underwhelming earnings during the period that included weaker-than-expected sales in its high density polyethylene (HDPE) power and telecommunications business, while pricing in some product lines was adversely affected by an increase in steel conduit imported from Mexico.
Acadia Healthcare Company, Inc. |
Acadia Healthcare underperformed as its operation of acute behavioral healthcare facilities was subject to negative media about its admissions and operating practices, leading to a decline in patient referrals. We sold the holding during the fiscal year.
How Has The Fund Historically Performe
d
?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Main Street Small Cap Fund® (Series II) | 12.41 % | 10.21 % | 8.73 % |
| Russell 2000® Index | 11.54 % | 7.40 % | 7.82 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Effective after the close of business on May 24, 2019, Service shares of Oppenheimer Main Street Small Cap Fund/VA (the predecessor fund), were reorganized into Series II shares of the Fund. Returns shown above for periods ending on or prior to May 24, 2019 are those of Service shares of the predecessor fund. Share class returns will differ from those of the predecessor fund because of different expenses.
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the Russell 2000
®
Index to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 969,567,448 |
| Total number of portfolio holdings | 103 |
| Total advisory fees paid | $ 6,117,934 |
| Portfolio turnover rate | 42 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Wintrust Financial Corp. | 1.80 % |
| Zurn Elkay Water Solutions Corp. | 1.78 % |
| Summit Materials, Inc., Class A | 1.77 % |
| AutoNation, Inc. | 1.75 % |
| ESAB Corp. | 1.64 % |
| ADMA Biologics, Inc. | 1.61 % |
| MACOM Technology Solutions Holdings, Inc. | 1.58 % |
| PennyMac Financial Services, Inc. | 1.57 % |
| Allison Transmission Holdings, Inc. | 1.57 % |
| Itron, Inc. | 1.56 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. Nasdaq 100 Buffer Fund - December
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. Nasdaq 100 Buffer Fund - December (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. Nasdaq 100 Buffer Fund - December
(Series I) | $ 76 | 0.70 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024 US large-cap equities experienced
significant
growth, driven by strong performances in sectors such as technology, healthcare, and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 16.77%. For the same time period, the NASDAQ-100 Index
®
(Price Only) returned 24.88%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, January 1, 2024, and continue to hold them on the last day of the Outcome Period, December 31, 2024, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying NASDAQ-100 Index
®
(Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the NASDAQ-100 Index
®
(Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 17.25%. As a result of the Cap, the Fund's annual returns were limited relative to the NASDAQ-100 Index
®
(Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | |
| Invesco® V.I. Nasdaq 100 Buffer Fund - December (Series I) | 16.77 % | 2.83 % |
| NASDAQ-100 Index® (Price Only) | 24.88 % | 8.79 % |
| NASDAQ Composite Index | 29.57 % | 8.13 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
NASDAQ-100 Index
®
(Price Only) to the NASDAQ Composite Index to reflect that the NASDAQ Composite Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 13,461,747 |
| Total number of portfolio holdings | 10 |
| Total advisory fees paid | $ 0 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's
Holdings
?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund's outcome period was reset on December 31, 2024, and the new outcome period commenced on January 1, 2025. Effective January 1, 2025, the Fund's new outcome period cap is 16.15% (before Fund fees and expenses) and 15.34% (after Fund fees and expenses).
At a meeting held on December 11, 2024, the Board of Trustees of the Fund approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts, including from new insurance company separate accounts or other qualified investors and additional purchases from existing insurance company separate accounts or other qualified investors, after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. Nasdaq 100 Buffer Fund - December
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. Nasdaq 100 Buffer Fund - December (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. Nasdaq 100 Buffer Fund - December
(Series II) | $ 103 | 0.95 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024 US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare, and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 16.53%. For the same time period, the NASDAQ-100 Index
®
(Price Only) returned 24.88%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, January 1, 2024, and continue to hold them on the last day of the Outcome Period, December 31, 2024, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying NASDAQ-100 Index
®
(Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the
maximum
percentage return (expressed as a percentage of the value of the NASDAQ-100 Index
®
(Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 17.25%. As a result of the Cap, the Fund's annual returns were limited relative to the NASDAQ-100 Index
®
(Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(12/31/21) |
| Invesco® V.I. Nasdaq 100 Buffer Fund - December (Series II) | 16.53 % | 2.61 % |
| NASDAQ-100 Index® (Price Only) | 24.88 % | 8.79 % |
| NASDAQ Composite Index | 29.57 % | 8.13 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
NASDAQ-100 Index
®
(Price Only) to the NASDAQ Composite Index to reflect that the NASDAQ Composite Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 13,461,747 |
| Total number of portfolio holdings | 10 |
| Total advisory fees paid | $ 0 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's
Holdings
?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund's outcome period was reset on December 31, 2024, and the new outcome period commenced on January 1, 2025. Effective January 1, 2025, the Fund's new outcome period cap is 16.15% (before Fund fees and expenses) and 15.05% (after Fund fees and expenses).
At a meeting held on December 11, 2024, the Board of Trustees of the Fund approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts, including from new insurance company separate accounts or other qualified investors and additional purchases from existing insurance company separate accounts or other qualified investors, after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. Nasdaq 100 Buffer Fund - June
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. Nasdaq 100 Buffer Fund - June (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. Nasdaq 100 Buffer Fund - June
(Series I) | $ 75 | 0.70 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 14.82%. For the same time period, the NASDAQ-100 Index
®
(Price Only) returned 24.88%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, July 1, 2024, and continue to hold them on the last day of the Outcome Period, June 30, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying NASDAQ-100 Index
®
(Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "
Outcome
Period"), which represents the maximum percentage return (expressed as a percentage of the value of the NASDAQ-100 Index
®
(Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 17.10%. As a result of the Cap, the Fund's annual returns were limited relative to the NASDAQ-100 Index
®
(Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(6/30/22) |
| Invesco® V.I. Nasdaq 100 Buffer Fund - June (Series I) | 14.82 % | 18.85 % |
| NASDAQ-100 Index® (Price Only) | 24.88 % | 27.25 % |
| NASDAQ Composite Index | 29.57 % | 26.13 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
NASDAQ-100 Index
®
(Price Only) to the NASDAQ Composite Index to reflect that the NASDAQ Composite Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 14,007,862 |
| Total number of portfolio holdings | 10 |
| Total advisory fees paid | $ 0 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
At a meeting held on December 11, 2024, the Board of Trustees of the Fund approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts, including from new insurance company separate accounts or other qualified investors and additional purchases from existing insurance company separate accounts or other qualified investors, after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. Nasdaq 100 Buffer Fund - June
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. Nasdaq 100 Buffer Fund - June (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. Nasdaq 100 Buffer Fund - June
(Series II) | $ 102 | 0.95 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 14.44%. For the same time period, the NASDAQ-100 Index
®
(Price Only returned 24.88%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, July 1, 2024, and continue to hold them on the last day of the Outcome Period, June 30, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying NASDAQ-100 Index
®
(Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the NASDAQ-100 Index
®
(Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 17.10%. As a result of the Cap, the Fund's annual returns were limited relative to the NASDAQ-100 Index
®
(Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(6/30/22) |
| Invesco® V.I. Nasdaq 100 Buffer Fund - June (Series II) | 14.44 % | 18.52 % |
| NASDAQ-100 Index® (Price Only) | 24.88 % | 27.25 % |
| NASDAQ Composite Index | 29.57 % | 26.13 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
NASDAQ-100 Index
®
(Price Only) to the NASDAQ Composite Index to reflect that the NASDAQ Composite Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 14,007,862 |
| Total number of portfolio holdings | 10 |
| Total advisory fees paid | $ 0 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
At a meeting held on December 11, 2024, the Board of Trustees of the Fund approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts, including from new insurance company separate accounts or other qualified investors and additional purchases from existing insurance company separate accounts or other qualified investors, after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. Nasdaq 100 Buffer Fund - March
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. Nasdaq 100 Buffer Fund - March (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. Nasdaq 100 Buffer Fund - March
(Series I) | $ 75 | 0.70 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare, and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 14.52%. For the same time period, the NASDAQ-100 Index
®
(Price Only) returned 24.88%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, April 1, 2024, and continue to hold them on the last day of the Outcome Period, March 31, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying NASDAQ-100 Index
®
(Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome
period
(the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the NASDAQ-100 Index
®
(Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 18.65%. As a result of the Cap, the Fund's annual returns were limited relative to the NASDAQ-100 Index
®
(Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(3/31/22) |
| Invesco® V.I. Nasdaq 100 Buffer Fund - March (Series I) | 14.52 % | 9.29 % |
| NASDAQ-100 Index® (Price Only) | 24.88 % | 13.49 % |
| NASDAQ Composite Index | 29.57 % | 12.68 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
NASDAQ-100 Index
®
(Price Only) to the NASDAQ Composite Index to reflect that the NASDAQ Composite Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 11,967,957 |
| Total number of portfolio holdings | 10 |
| Total advisory fees paid | $ 0 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's
Holdings
?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
At a meeting held on December 11, 2024, the Board of Trustees of the Fund approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts, including from new insurance company separate accounts or other qualified investors and additional purchases from existing insurance company separate accounts or other qualified investors, after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. Nasdaq 100 Buffer Fund - March
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. Nasdaq 100 Buffer Fund - March (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. Nasdaq 100 Buffer Fund - March
(Series II) | $ 102 | 0.95 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare, and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 14.19%. For the same time period, the NASDAQ-100 Index
®
(Price Only) returned 24.88%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, April 1, 2024, and continue to hold them on the last day of the Outcome Period, March 31, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying NASDAQ-100 Index
®
(Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"),
which
represents the maximum percentage return (expressed as a percentage of the value of the NASDAQ-100 Index
®
(Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 18.65%. As a result of the Cap, the Fund's annual returns were limited relative to the NASDAQ-100 Index
®
(Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(3/31/22) |
| Invesco® V.I. Nasdaq 100 Buffer Fund - March (Series II) | 14.19 % | 8.99 % |
| NASDAQ-100 Index® (Price Only) | 24.88 % | 13.49 % |
| NASDAQ Composite Index | 29.57 % | 12.68 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
NASDAQ-100 Index
®
(Price Only) to the NASDAQ Composite Index to reflect that the NASDAQ Composite Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 11,967,957 |
| Total number of portfolio holdings | 10 |
| Total advisory fees paid | $ 0 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The
Past
Year
?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
At a meeting held on December 11, 2024, the Board of Trustees of the Fund approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts, including from new insurance company separate accounts or other qualified investors and additional purchases from existing insurance company separate accounts or other qualified investors, after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. Nasdaq 100 Buffer Fund - September
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. Nasdaq 100 Buffer Fund - September (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. Nasdaq 100 Buffer Fund - September
(Series I) | $ 75 | 0.70 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 13.27%. For the same time period, the NASDAQ-100
®
Index (Price Only) returned 24.88%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, October 1, 2024, and continue to hold them on the last day of the Outcome Period, September 30, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying NASDAQ-100 Index
®
(Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current
annual
outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the NASDAQ-100 Index
®
(Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 16.10%. As a result of the Cap, the Fund's annual returns were limited relative to the NASDAQ-100 Index
®
(Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(9/30/21) |
| Invesco® V.I. Nasdaq 100 Buffer Fund - September (Series I) | 13.27 % | 7.71 % |
| NASDAQ-100 Index® (Price Only) | 24.88 % | 11.64 % |
| NASDAQ Composite Index | 29.57 % | 10.20 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
NASDAQ-100 Index
®
(Price Only) to the NASDAQ Composite Index to reflect that the NASDAQ Composite Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 15,765,987 |
| Total number of portfolio holdings | 10 |
| Total advisory fees paid | $ 0 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The
Past
Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
At a meeting held on December 11, 2024, the Board of Trustees of the Fund approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts, including from new insurance company separate accounts or other qualified investors and additional purchases from existing insurance company separate accounts or other qualified investors, after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. Nasdaq 100 Buffer Fund - September
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. Nasdaq 100 Buffer Fund - September (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. Nasdaq 100 Buffer Fund - September
(Series II) | $ 101 | 0.95 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant
growth
, driven by strong performances in sectors such as technology, healthcare and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 12.97%. For the same time period, the NASDAQ-100
®
Index (Price Only) returned 24.88%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, October 1, 2024, and continue to hold them on the last day of the Outcome Period, September 30, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying NASDAQ-100 Index
®
(Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the NASDAQ-100 Index
®
(Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 16.10%. As a result of the Cap, the Fund's annual returns were limited relative to the NASDAQ-100 Index
®
(Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(9/30/21) |
| Invesco® V.I. Nasdaq 100 Buffer Fund - September (Series II) | 12.97 % | 7.45 % |
| NASDAQ-100 Index® (Price Only) | 24.88 % | 11.64 % |
| NASDAQ Composite Index | 29.57 % | 10.20 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
NASDAQ-100 Index
®
(Price Only) to the NASDAQ Composite Index to reflect that the NASDAQ Composite Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future
results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 15,765,987 |
| Total number of portfolio holdings | 10 |
| Total advisory fees paid | $ 0 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The
Past
Year?
This is a summary of certain changes to the Fund since
December 31, 2023
. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
At a meeting held on December 11, 2024, the Board of Trustees of the Fund approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts, including from new insurance company separate accounts or other qualified investors and additional purchases from existing insurance company separate accounts or other qualified investors, after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. S&P 500 Buffer Fund - December
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. S&P 500 Buffer Fund - December (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. S&P 500 Buffer Fund - December
(Series I) | $ 75 | 0.70 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024 US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare, and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 14.89%. For the same time period, the S&P 500
®
Index (Price Only) returned 23.31%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, January 1, 2024, and continue to hold them on the last day of the Outcome Period, December 31, 2024, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying S&P 500
®
Index (Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the S&P 500
®
Index (Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 14.50%. As a result of the Cap, the Fund's annual returns were limited relative the S&P 500
®
Index (Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(12/31/21) |
| Invesco® V.I. S&P 500 Buffer Fund - December (Series I) | 14.89 % | 6.69 % |
| S&P 500® Index (Price Only) | 23.31 % | 7.26 % |
| S&P 500® Index | 25.02 % | 8.94 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
S&P 500
®
Index (Price Only) to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 34,324,421 |
| Total number of portfolio holdings | 6 |
| Total advisory fees paid | $ 60,659 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over
The
Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund's outcome period was reset on December 31, 2024, and the new outcome period commenced on January 1, 2025. Effective January 1, 2025, the Fund's new outcome period cap is 12.92% (before Fund fees and expenses) and 12.13% (after Fund fees and expenses).
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. S&P 500 Buffer Fund - December
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. S&P 500 Buffer Fund - December (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. S&P 500 Buffer Fund - December
(Series II) | $ 102 | 0.95 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024 US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare, and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 13.82%. For the same time period, the S&P 500
®
Index (Price Only) returned 23.31%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, January 1, 2024, and continue to hold them on the last day of the Outcome Period, December 31, 2024, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying S&P 500
®
Index (Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the S&P 500
®
Index (Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 14.50%. As a result of the Cap, the Fund's annual returns were limited relative the S&P 500
®
Index (Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(12/31/21) |
| Invesco® V.I. S&P 500 Buffer Fund - December (Series II) | 13.82 % | 6.42 % |
| S&P 500® Index (Price Only) | 23.31 % | 7.26 % |
| S&P 500® Index | 25.02 % | 8.94 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the
S&P 500
®
Index (Price Only) to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 34,324,421 |
| Total number of portfolio holdings | 6 |
| Total advisory fees paid | $ 60,659 |
| Portfolio turnover rate | 0 % |
What
Comprised
The Fund's Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund's outcome period was reset on December 31, 2024, and the new outcome period commenced on January 1, 2025. Effective January 1, 2025, the Fund's new outcome period cap is 12.92% (before Fund fees and expenses) and 11.85% (after Fund fees and expenses).
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to
additional
material at
invesco.com/reports
.
Invesco
®
V.I. S&P 500 Buffer Fund – June
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. S&P 500 Buffer Fund – June (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment |
| Invesco ® V.I. S&P 500 Buffer Fund – June
(Series I) | $ 75 | 0.70 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 14.03%. For the same time period, the S&P 500
®
Index (Price Only) returned 23.31%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, July 1, 2024, and continue to hold them on the last day of the Outcome Period, June 30, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying S&P 500
®
Index (Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the S&P 500
®
Index (Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 15.00%. As a result of the Cap, the Fund's annual returns were limited relative the S&P 500
®
Index (Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(6/30/22) |
| Invesco® V.I. S&P 500 Buffer Fund – June (Series I) | 14.03 % | 14.19 % |
| S&P 500® Index (Price Only) | 23.31 % | 19.28 % |
| S&P 500® Index | 25.02 % | 21.14 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the S&P 500
®
Index (Price Only) to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit invesco.com/viperformance for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 43,851,517 |
| Total number of portfolio holdings | 6 |
| Total advisory fees paid | $ 74,163 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The
Past
Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's
prospectus
, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. S&P 500 Buffer Fund – June
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. S&P 500 Buffer Fund – June (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at invesco.com/reports. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. S&P 500 Buffer Fund – June
(Series II) | $ 102 | 0.95 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 13.76%. For the same time period, the S&P 500
®
Index (Price Only) returned 23.31%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, July 1, 2024, and continue to hold them on the last day of the Outcome Period, June 30, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying S&P 500
®
Index (Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the S&P 500
®
Index (Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 15.00%. As a result of the Cap, the Fund's annual returns were limited relative the S&P 500
®
Index (Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(6/30/22) |
| Invesco® V.I. S&P 500 Buffer Fund – June (Series II) | 13.76 % | 13.89 % |
| S&P 500® Index (Price Only) | 23.31 % | 19.28 % |
| S&P 500® Index | 25.02 % | 21.14 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the S&P 500
®
Index (Price Only) to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 43,851,517 |
| Total number of portfolio holdings | 6 |
| Total advisory fees paid | $ 74,163 |
| Portfolio turnover rate | 0 % |
What Comprised The
Fund's
Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund
Changed
Over
The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. S&P 500 Buffer Fund - March
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. S&P 500 Buffer Fund - March (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. S&P 500 Buffer Fund - March
(Series I) | $ 75 | 0.70 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare, and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 13.28%. For the same time period, the S&P 500
®
Index (Price Only) returned 23.31%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, April 1, 2024, and continue to hold them on the last day of the Outcome Period, March 31, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying S&P 500
®
Index (Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the S&P 500
®
Index (Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 16.00%. As a result of the Cap, the Fund's annual returns were limited relative the S&P 500
®
Index (Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(3/31/22) |
Invesco ® V.I. S&P 500 Buffer Fund - March (Series I) | 13.28 % | 8.64 % |
| S&P 500® Index (Price Only) | 23.31 % | 9.96 % |
| S&P 500® Index | 25.02 % | 11.69 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the S&P 500
®
Index (Price Only) to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 35,416,634 |
| Total number of portfolio holdings | 6 |
| Total advisory fees paid | $ 51,904 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's
Holdings
?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. S&P 500 Buffer Fund - March
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. S&P 500 Buffer Fund - March (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. S&P 500 Buffer Fund - March
(Series II) | $ 101 | 0.95 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare, and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 13.06%. For the same time period, the S&P 500
®
Index (Price Only) returned 23.31%.
• The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, April 1, 2024, and continue to hold them on the last day of the Outcome Period, March 31, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying S&P 500
®
Index (Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the S&P 500
®
Index (Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 16.00%. As a result of the Cap, the Fund's annual returns were limited relative the S&P 500
®
Index (Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(3/31/22) |
Invesco ® V.I. S&P 500 Buffer Fund - March (Series II) | 13.06 % | 8.38 % |
| S&P 500® Index (Price Only) | 23.31 % | 9.96 % |
| S&P 500® Index | 25.02 % | 11.69 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the S&P 500
®
Index (Price Only) to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 35,416,634 |
| Total number of portfolio holdings | 6 |
| Total advisory fees paid | $ 51,904 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. S&P 500 Buffer Fund - September
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. S&P 500 Buffer Fund - September (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. S&P 500 Buffer Fund - September
(Series I) | $ 74 | 0.70 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 10.44%. For the same time period, the S&P 500
®
Index (Price Only) returned 23.31%.
•
The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, October 1, 2024, and continue to hold them on the last day of the Outcome Period, September 30, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying S&P 500
®
Index (Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the S&P 500
®
Index (Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 12.70%. As a result of the Cap, the Fund's annual returns were limited relative to the S&P 500
®
Index (Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(9/30/21) |
| Invesco® V.I. S&P 500 Buffer Fund - September (Series I) | 10.44 % | 7.65 % |
| S&P 500® Index (Price Only) | 23.31 % | 10.06 % |
| S&P 500® Index | 25.02 % | 11.77 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the S&P 500
®
Index (Price Only) to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 53,240,418 |
| Total number of portfolio holdings | 6 |
| Total advisory fees paid | $ 98,789 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's
Holdings
?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco
®
V.I. S&P 500 Buffer Fund - September
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco
®
V.I. S&P 500 Buffer Fund - September (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
This report describes changes to the Fund that occurred during the reporting period.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
| Invesco ® V.I. S&P 500 Buffer Fund - September
(Series II) | $ 100 | 0.95 % † |
| Reflects fee waivers and/or expense reimbursements, without which expenses would have been higher. |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, US large-cap equities experienced significant growth, driven by strong performances in sectors such as technology, healthcare and consumer discretionary. The market was buoyed by robust corporate earnings and investor confidence in the resilience of the US economy. Additionally, the anticipation of a more accommodative monetary policy by the US Federal Reserve, in response to moderating inflation, further fueled market gains.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 10.02%. For the same time period, the S&P 500
®
Index (Price Only) returned 23.31%.
•
The Fund has characteristics unlike traditional investment products and is not suitable for all investors. The outcomes that the Fund seeks to provide may only be realized if investors are holding shares on the first day of the Outcome Period, October 1, 2024, and continue to hold them on the last day of the Outcome Period, September 30, 2025, approximately one year. There is no guarantee that the Outcomes for an Outcome Period will be realized or that the Fund will achieve its investment objective. The Fund's website provides important Fund information on a daily basis, including information about the Cap and buffer, current Outcome Period start and end dates, and information relating to the remaining potential outcomes of an investment in the Fund.
What contributed to performance?
Passive Index Security Exposure |
Passive exposure to the underlying S&P 500
®
Index (Price Only) through options or underlying funds contributed to the Fund's return.
What detracted from performance?
Strategy Detractors
|
The Fund’s cap for the current annual outcome period (the "Outcome Period"), which represents the maximum percentage return (expressed as a percentage of the value of the S&P 500
®
Index (Price Only) determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the "Cap"), is 12.70%. As a result of the Cap, the Fund's annual returns were limited relative to the S&P 500
®
Index (Price Only).
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | Since
Inception
(9/30/21) |
| Invesco® V.I. S&P 500 Buffer Fund - September (Series II) | 10.02 % | 7.38 % |
| S&P 500® Index (Price Only) | 23.31 % | 10.06 % |
| S&P 500® Index | 25.02 % | 11.77 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the S&P 500
®
Index (Price Only) to the S&P 500® Index to reflect that the S&P 500® Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 53,240,418 |
| Total number of portfolio holdings | 6 |
| Total advisory fees paid | $ 98,789 |
| Portfolio turnover rate | 0 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Security type allocation
(% of total investments)
How Has The Fund Changed Over The Past Year?
This is a summary of certain changes to the Fund since December 31, 2023. For more complete information, you may review the Fund's prospectus, which is available at
invesco.com/reports
or upon request at (800) 959-4246.
The Fund’s sub-adviser, Invesco Asset Management Limited, no longer provides day-to-day management of the Fund.
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Small Cap Equity Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Small Cap Equity Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Small Cap Equity Fund
(Series I) | $ 106 | 0.97 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, U.S. small cap equities saw improved performance as the Federal Reserve began easing monetary policy. The Fund outperformed the Russell 2000
®
Index primarily due to strong stock selection in the financials, industrials, consumer staples, utilities, energy, and materials sectors. An underweight exposure in the health care sector, was also beneficial. These results were partially offset by weaker stock selection in the real estate, communication services, consumer discretionary, and information technology sectors.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 18.09%. For the same time period, the Russell 2000
®
Index returned 11.54%.
What contributed to performance?
Sprouts Farmers Market, Inc. |
Sprouts Farmers is a health centric specialty grocery store chain. During the period, the company delivered a long runway for growth, strong free cash flow, and an attractive valuation.
Q2 Holdings, Inc. |
Q2 Holdings is a provider cloud-based virtual banking solutions. Its performance was bolstered by increased adoption of its virtual banking platform among financial institutions seeking secure and efficient digital solutions.
Tenet Healthcare Corp. |
Tenet Healthcare operates hospitals, diagnostic imaging centers, ambulatory surgery centers, and other health care facilities. The company benefited from improving hospital utilization trends, a positive shift in the variety of procedures performed, and the use of proceeds from the sale of hospitals to reduce debt.
What detracted from performance?
Endava PLC
|
Endava operates as an information technology service company. The company underperformed due to significant headwinds in the UK market and the payments sector. The Fund sold its holdings of Endava during the period.
Quanterix Corp. |
Quanterix is a life science tools and services company that provides analysis instruments, reagent consumables, and contract research services to the biopharma industry. Life science industry capital budget constraints have pressured demand for the company’s capital-intensive instruments. The Fund sold its holdings of Quanterix during the period.
Bloomin' Brands, Inc. |
Bloomin' Brands operates and franchises casual dining restaurant chains under the Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar brands. The company delivered weaker sales in their core Outback chain and their same store sales lagged their closest steakhouse peer. The Fund sold its holdings of Bloomin' Brands during the period.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Small Cap Equity Fund (Series I) | 18.09 % | 10.89 % | 8.09 % |
| Russell 2000® Index | 11.54 % | 7.40 % | 7.82 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 234,224,467 |
| Total number of portfolio holdings | 92 |
| Total advisory fees paid | $ 1,675,234 |
| Portfolio turnover rate | 50 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Q2 Holdings, Inc. | 2.06 % |
| Piper Sandler Cos. | 2.05 % |
| Applied Industrial Technologies, Inc. | 1.89 % |
| Astera Labs, Inc. | 1.80 % |
| Pinnacle Financial Partners, Inc. | 1.77 % |
| ITT, Inc. | 1.68 % |
| Talen Energy Corp. | 1.60 % |
| Ollie's Bargain Outlet Holdings, Inc. | 1.58 % |
| Bancorp, Inc. (The) | 1.53 % |
| Mr. Cooper Group, Inc. | 1.50 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund,
including
the
Fund's
prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Small Cap Equity Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Small Cap Equity Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What
Were The
Fund
Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Small Cap Equity Fund
(Series II) | $ 133 | 1.22 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, U.S. small cap equities saw improved performance as the Federal Reserve began easing monetary policy. The Fund outperformed the Russell 2000
®
Index primarily due to strong stock selection in the financials, industrials, consumer staples, utilities, energy, and materials sectors. An underweight exposure in the health care sector, was also beneficial. These results were partially offset by weaker stock selection in the real estate, communication services, consumer discretionary, and information technology sectors.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 17.85%. For the same time period, the Russell 2000
®
Index returned 11.54%.
What contributed to performance?
Sprouts Farmers Market, Inc. |
Sprouts Farmers is a health centric specialty grocery store chain. During the period, the company delivered a long runway for growth, strong free cash flow, and an attractive valuation.
Q2 Holdings, Inc. |
Q2
Holdings is a provider cloud-based virtual banking solutions. Its performance was bolstered by increased adoption of its virtual banking platform among financial institutions seeking secure and efficient digital solutions.
Tenet Healthcare Corp. |
Tenet Healthcare operates hospitals, diagnostic imaging centers, ambulatory surgery centers, and other health care facilities. The company benefited from improving hospital utilization trends, a positive shift in the variety of procedures performed, and the use of proceeds from the sale of hospitals to reduce debt.
What detracted from performance?
Endava PLC
|
Endava operates as an information technology service company. The company underperformed due to significant headwinds in the UK market and the payments sector. The Fund sold its holdings of Endava during the period.
Quanterix Corp. |
Quanterix is a life science tools and services company that provides analysis instruments, reagent consumables, and contract research services to the biopharma industry. Life science industry capital budget constraints have pressured demand for the company’s capital-intensive instruments. The Fund sold its holdings of Quanterix during the period.
Bloomin' Brands, Inc. |
Bloomin' Brands operates and franchises casual dining restaurant chains under the Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar brands. The company delivered weaker sales in their core Outback chain and their same store sales lagged their closest steakhouse peer. The Fund sold its holdings of Bloomin' Brands during the period.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Small Cap Equity Fund (Series II) | 17.85 % | 10.60 % | 7.82 % |
| Russell 2000® Index | 11.54 % | 7.40 % | 7.82 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What
Are
Key
Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 234,224,467 |
| Total number of portfolio holdings | 92 |
| Total advisory fees paid | $ 1,675,234 |
| Portfolio turnover rate | 50 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| Q2 Holdings, Inc. | 2.06 % |
| Piper Sandler Cos. | 2.05 % |
| Applied Industrial Technologies, Inc. | 1.89 % |
| Astera Labs, Inc. | 1.80 % |
| Pinnacle Financial Partners, Inc. | 1.77 % |
| ITT, Inc. | 1.68 % |
| Talen Energy Corp. | 1.60 % |
| Ollie's Bargain Outlet Holdings, Inc. | 1.58 % |
| Bancorp, Inc. (The) | 1.53 % |
| Mr. Cooper Group, Inc. | 1.50 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Technology Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Technology Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What
Were
The
Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Technology Fund
(Series I) | $ 115 | 0.98 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, U.S. equities benefited from investment themes levered to artificial intelligence (AI) technology and investor anticipation that slowing inflation would cause the Federal Reserve to ease monetary policy.
•
For the fiscal year ended December 31, 2024, Series I shares of the Fund returned 34.27%. For the same time period, the S&P North American Technology Sector Index returned 36.08%. The Fund underperformed the S&P North American Technology Sector Index primarily due to stock selection in the information technology (IT) software & services industry group. An underweight exposure in the interactive media & services industry and a minor allocation to ancillary cash were also key relative detractors. Results were partially offset by strong stock selection in the entertainment, semiconductor & semiconductor equipment, interactive media & services, and electronic equipment, instruments & components industries.
What contributed to performance?
NVIDIA Corp. |
Semiconductor maker NVIDIA benefited from record revenue as all the major large language model developers have increased spending for AI. Their Blackwell B100, NVIDIA’s most advanced Graphics Processing Unit to date, was already sold out until the end of 2025 as of the period end.
Broadcom, Inc. |
Semiconductor maker Broadcom has seen strong revenue growth from AI-related products including semiconductors and infrastructure software. The company successfully integrated its 2023 acquisition of VMware into its operations, enhancing its capabilities in cloud infrastructure and security.
Meta Platforms, Inc. |
Social technology company Meta Platforms realized positive results from its AI investments through better recommendations, higher engagement, improved ad tools and more efficient ad targeting. We believe Meta is uniquely positioned to gain momentum as AI assistants become a large part of consumer interactions and products.
What detracted from performance?
MongoDB, Inc.
|
MongoDB is a document database that stores and manages data for a variety of applications such as customer relationship management and health care systems. The company struggled with a decline in growth during 2024. Additionally, its Chief Financial Officer/Chief Operating Officer since 2015 announced he was leaving. The team sold the stock during the period.
Snowflake, Inc. |
Snowflake, a cloud-based data storage and analytics service, surprised investors with the announcement that CEO Frank Slootman retired at the end of February 2024. However, the investment team had positive views on the AI-related vision and capabilities of the new CEO, Sridhar Ramaswamy. The company also reduced revenue guidance for 2024. Software sales have generally been under pressure as corporate IT departments, and IT budgets, digest AI implications. The team sold the stock during the period.
Micron Technology, Inc. |
Despite positive momentum in its data center and AI end markets, memory and storage semiconductor maker Micron Technology delivered lower than expected guidance in its consumer end markets driven by weak demand and pricing pressure in its personal computer and mobile phone memory businesses.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Technology Fund (Series I) | 34.27 % | 14.65 % | 14.39 % |
| S&P North American Technology Sector Index | 36.08 % | 21.06 % | 20.70 % |
| NASDAQ Composite Index | 29.57 % | 17.49 % | 16.20 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the NASDAQ Composite Index to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What
Are
Key
Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 220,542,693 |
| Total number of portfolio holdings | 70 |
| Total advisory fees paid | $ 1,431,734 |
| Portfolio turnover rate | 109 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
NVIDIA Corp. | 7.97 % |
| Broadcom, Inc. | 4.65 % |
| Meta Platforms, Inc., Class A | 3.47 % |
| Amazon.com, Inc. | 3.24 % |
| Microsoft Corp. | 3.10 % |
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR | 2.95 % |
| Salesforce, Inc. | 2.72 % |
| Alphabet, Inc., Class A | 2.61 % |
| ServiceNow, Inc. | 2.41 % |
| HubSpot, Inc. | 2.33 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. Technology Fund
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. Technology Fund (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What Were The Fund Costs For The Last Year ?
(Based on
a
hypothetical $10,000
investment
)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. Technology Fund
(Series II) | $ 144 | 1.23 % |
How Did The Fund Perform During The Period?
•
During the fiscal year ended December 31, 2024, U.S. equities benefited from investment themes levered to artificial intelligence (AI) technology and investor anticipation that slowing inflation would cause the Federal Reserve to ease monetary policy.
•
For the fiscal year ended December 31, 2024, Series II shares of the Fund returned 33.86%. For the same time period, the S&P North American Technology Sector Index returned 36.08%. The Fund underperformed the S&P North American Technology Sector Index primarily due to stock selection in the information technology (IT) software & services industry group. An underweight exposure in the interactive media & services industry and a minor allocation to ancillary cash were also key relative detractors. Results were partially offset by strong stock selection in the entertainment, semiconductor & semiconductor equipment, interactive media & services, and electronic equipment, instruments & components industries.
What contributed to performance?
NVIDIA Corp. |
Semiconductor maker NVIDIA benefited from record revenue as all the major large language model developers have increased spending for AI. Their Blackwell B100, NVIDIA’s most advanced Graphics Processing Unit to date, was already sold out until the end of 2025 as of the period end.
Broadcom, Inc. |
Semiconductor maker Broadcom has seen strong revenue growth from AI-related products including semiconductors and infrastructure software. The company successfully integrated its 2023 acquisition of VMware into its operations, enhancing its capabilities in cloud infrastructure and security.
Meta Platforms, Inc. |
Social technology company Meta Platforms realized positive results from its AI investments through better recommendations, higher engagement, improved ad tools and more efficient ad targeting. We believe Meta is uniquely positioned to gain momentum as AI assistants become a large part of consumer interactions and products.
What detracted from performance?
MongoDB, Inc.
|
MongoDB is a document database that stores and manages data for a variety of applications such as customer relationship management and health care systems. The company struggled with a decline in growth during 2024. Additionally, its Chief Financial Officer/Chief Operating Officer since 2015 announced he was leaving. The team sold the stock during the period.
Snowflake, Inc. |
Snowflake, a cloud-based data storage and analytics service, surprised investors with the announcement that CEO Frank Slootman retired at the end of February 2024. However, the investment team had positive views on the AI-related vision and capabilities of the new CEO, Sridhar Ramaswamy. The company also reduced revenue guidance for 2024. Software sales have generally been under pressure as corporate IT departments, and IT budgets, digest AI implications. The team sold the stock during the period.
Micron Technology, Inc. |
Despite positive momentum in its data center and AI end markets, memory and storage semiconductor maker Micron Technology delivered lower than expected guidance in its consumer end markets driven by weak demand and pricing pressure in its personal computer and mobile phone memory businesses.
How Has The Fund Historically Performed?
Growth of $10,000 Investment
| AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Years | 10 Years |
| Invesco V.I. Technology Fund (Series II) | 33.86 % | 14.36 % | 14.11 % |
| S&P North American Technology Sector Index | 36.08 % | 21.06 % | 20.70 % |
| NASDAQ Composite Index | 29.57 % | 17.49 % | 16.20 % |
| S&P 500® Index | 25.02 % | 14.53 % | 13.10 % |
Effective April 26, 2024, the Fund changed its broad-based securities market benchmark from the NASDAQ Composite Index to the S&P 500
®
Index to reflect that the S&P 500
®
Index can be considered more broadly representative of the overall applicable securities market.
The performance data quoted represents past performance and cannot guarantee future results; current performance may be lower or higher.
Please visit
invesco.com/viperformance
for more recent performance information.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance figures also do not reflect sales charges, expenses and fees assessed in connection with a variable product. Such variable product charges are determined by the variable product issuers, will vary and will lower the total return. For more recent performance information, including variable product charges, please contact your variable product issuer or financial adviser.
What Are Key Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 220,542,693 |
| Total number of portfolio holdings | 70 |
| Total advisory fees paid | $ 1,431,734 |
| Portfolio turnover rate | 109 % |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Top ten holdings*
(% of net assets)
| NVIDIA Corp. | 7.97 % |
| Broadcom, Inc. | 4.65 % |
| Meta Platforms, Inc., Class A | 3.47 % |
| Amazon.com, Inc. | 3.24 % |
| Microsoft Corp. | 3.10 % |
| Taiwan Semiconductor Manufacturing Co. Ltd., ADR | 2.95 % |
| Salesforce, Inc. | 2.72 % |
| Alphabet, Inc., Class A | 2.61 % |
| ServiceNow, Inc. | 2.41 % |
| HubSpot, Inc. | 2.33 % |
| * Excluding money market fund holdings, if any. | |
Sector allocation
(% of net assets)
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. U.S. Government Money Portfolio
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. U.S. Government Money Portfolio (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What
Were
The
Fund
Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. U.S. Government Money Portfolio
(Series I) | $ 71 | 0.69 % |
What
Are Key
Statistics
About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 309,639,713 |
| Total number of portfolio holdings | 83 |
| Total advisory fees paid | $ 1,257,190 |
What Comprised The Fund's Holdings?
(as of December 31, 2024)
Composition by
maturity
, in days
(% of total investments)*
| 1-7 | 65.8 % |
| 8-30 | 4.0 % |
| 31-60 | 1.4 % |
| 61-90 | 1.5 % |
| 91-180 | 4.1 % |
| 181+ | 23.2 % |
| * 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. | |
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
invesco.com/reports
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
Invesco V.I. U.S. Government Money Portfolio
ANNUAL SHAREHOLDER REPORT | December 31, 2024
This annual shareholder report contains important information about Invesco V.I. U.S. Government Money Portfolio (the “Fund”) for the period January 1, 2024 to December 31, 2024. You can find additional information about the Fund at
invesco.com/reports
. You can also request this information by contacting us at (800) 959-4246.
What
Were
The
Fund Costs For The Last Year ?
(Based on a hypothetical $10,000 investment)
| Fund (Class) | Costs of a $10,000 investment | Costs paid as a percentage
of a $10,000 investment |
Invesco V.I. U.S. Government Money Portfolio
(Series II) | $ 96 | 0.94 % |
What
Are
Key
Statistics About The Fund?
(as of December 31, 2024)
| Fund net assets | $ 309,639,713 |
| Total number of portfolio holdings | 83 |
| Total advisory fees paid | $ 1,257,190 |
What Comprised The Fund's Holdings?
Composition by maturity, in days
(% of total investments)*
| 1-7 | 65.8 % |
| 8-30 | 4.0 % |
| 31-60 | 1.4 % |
| 61-90 | 1.5 % |
| 91-180 | 4.1 % |
| 181+ | 23.2 % |
| * 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. | |
Where Can I Find More Information?
You can find more information about the Fund, including the Fund's prospectus, financial information, and holdings at
. Additionally, the Fund's proxy voting information can be found at
invesco.com/proxy-voting
.
For additional information, please scan the QR code at the left to navigate to additional material at
invesco.com/reports
.
The Registrant has adopted a Code of Ethics (the "Code") that applies to the Registrant's Principal Executive Officer ("PEO") and Principal Financial Officer ("PFO"). This Code is filed as an exhibit to this report on Form N-CSR under Item 19(a)(1). No substantive amendments to this Code were made during the reporting period. The Code was revised to include PEOs and PFOs of certain Invesco exchange traded funds, previously covered by a separate code of ethics. There were no waivers for the fiscal year ended December 31, 2024.
Item 3. Audit Committee Financial Expert.
The Board of Trustees has determined that the Registrant has at least one audit committee financial expert serving on its Audit Committee. The Audit Committee financial expert is Anthony J. LaCava, Jr. Anthony J. LaCava, Jr. is "independent" within the meaning of that term as used in Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) to (d)
Fees Billed by PwC Related to the Registrant
PricewaterhouseCoopers LLP (“PwC”), the Registrant’s independent registered public accounting firm, billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as shown in the following table. The Audit Committee pre-approved all audit and non-audit services provided to the Registrant.
| | |
| Fees Billed by PwC for Services Rendered to the Registrant for Fiscal Year Ended 2024 | Fees Billed by PwC for Services Rendered to the Registrant for Fiscal Year Ended 2023 |
| | |
Audit Fees | $ 1,043,476 | $ 1,030,141 |
Tax Fees(1) | $ 13,454 | $ 0 |
Audit-Related Fees(2) | $ 651,792 | $ 694,869 |
All Other Fees | $ 0 | $ 0 |
Total Fees | $ 1,708,722 | $ 1,725,010 |
(1) | Audit-Related Fees for the fiscal year ended 2024 includes fees billed for reviewing regulatory filings. |
(2) | Tax Fees for the fiscal years ended 2024 and 2023 includes fees billed for preparation of U.S. Tax Returns and Taxable Income calculations, including excise tax and year-to-date estimates for various book-to-tax differences. |
Fees Billed by PwC Related to Invesco and Affiliates
PwC billed Invesco Advisers, Inc. (“Invesco”), the Registrant’s investment adviser, and any entity controlling, controlled by or under common control with Invesco that provides ongoing services to the Registrant (“Affiliates”) aggregate fees for pre-approved non-audit services rendered to Invesco and Affiliates for the last two fiscal years as shown in the following table. The Audit Committee pre-approved all non-audit services provided to Invesco and Affiliates that were required to be pre-approved.
| | |
| Fees Billed for Non- Audit Services Rendered to Invesco and Affiliates for Fiscal Year Ended 2024 That Were Required to be Pre-Approved by the Registrant’s Audit Committee | Fees Billed for Non- Audit Services Rendered to Invesco and Affiliates for Fiscal Year Ended 2023 That Were Required to be Pre-Approved by the Registrant’s Audit Committee |
Audit-Related Fees(1) | $ 1,141,000 | $ 1,094,000 |
Tax Fees | $ 0 | $ 0 |
All Other Fees | $ 0 | $ 0 |
Total Fees | $ 1,141,000 | $ 1,094,000 |
(1) Audit-Related Fees for the fiscal years ended 2024 and 2023 include fees billed related to reviewing controls at a service organization.
(e)(1)
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As adopted by the Audit Committees
of the Invesco Funds (the “Funds”)
Last Amended March 29, 2017
I. | Statement of Principles |
The Audit Committees (the “Audit Committee”) of the Boards of Trustees of the Funds (the “Board”) have adopted these policies and procedures (the “Procedures”) with respect to the pre-approval of audit and non-audit services to be provided by the Funds’ independent auditor (the “Auditor”) to the Funds, and to the Funds’ investment adviser(s) and any entity controlling, controlled by, or under common control with the investment adviser(s) that provides ongoing services to the Funds (collectively, “Service Affiliates”).
Under Section 202 of the Sarbanes-Oxley Act of 2002, all audit and non-audit services provided to the Funds by the Auditor must be preapproved by the Audit Committee. Rule 2-01 of Regulation S-X requires that the Audit Committee also pre-approve a Service Affiliate’s engagement of the Auditor for non-audit services if the engagement relates directly to the operations and financial reporting of the Funds (a “Service Affiliate’s Covered Engagement”).
These Procedures set forth the procedures and the conditions pursuant to which the Audit Committee may pre-approve audit and non-audit services for the Funds and a Service Affiliate’s Covered Engagement pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) and other organizations and regulatory bodies applicable to the Funds (“Applicable Rules”).1 They address both general pre-approvals without consideration of specific case-by-case services (“general pre-approvals”) and pre-approvals on a case-by-case basis (“specific pre-approvals”). Any services requiring pre-approval that are not within the scope of general pre-approvals hereunder are subject to specific pre-approval. These Procedures also address the delegation by the Audit Committee of pre-approval authority to the Audit Committee Chair or Vice Chair.
II. | Pre-Approval of Fund Audit Services |
The annual Fund audit services engagement, including terms and fees, is subject to specific pre-approval by the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by an independent auditor to be able to form an opinion on the Funds’ financial statements. The Audit Committee will receive, review and consider sufficient information concerning a proposed Fund audit engagement to make a reasonable evaluation of the Auditor’s qualifications and independence. The Audit Committee will oversee the Fund audit services engagement as necessary, including approving any changes in terms, audit scope, conditions and fees.
In addition to approving the Fund audit services engagement at least annually and specifically approving any changes, the Audit Committee may generally or specifically pre-approve engagements for other audit services, which are those services that only an independent auditor reasonably can provide. Other audit services may include services associated with SEC registration statements, periodic reports and other documents filed with the SEC.
III. | General and Specific Pre-Approval of Non-Audit Fund Services |
The Audit Committee will consider, at least annually, the list of General Pre-Approved Non-Audit Services which list may be terminated or modified at any time by the Audit Committee. To inform the Audit Committee’s review and approval of General Pre-Approved Non-Audit Services, the Funds’ Treasurer (or his or her designee) and Auditor shall provide such information regarding independence or other matters as the Audit Committee may request.
Any services or fee ranges that are not within the scope of General Pre-Approved Non-Audit Services have not received general pre-approval and require specific pre-approval. Each request for specific pre-approval by the Audit Committee for services to be provided by the Auditor to the Funds must be submitted to the Audit Committee by the Funds’ Treasurer (or his or her designee) and must include detailed information about the services to be provided, the fees or fee ranges to be charged, and other relevant information sufficient to allow the Audit Committee to consider whether to pre-approve such engagement, including evaluating whether the provision of such services will impair the independence of the Auditor and is otherwise consistent with Applicable Rules.
IV. | Non-Audit Service Types |
The Audit Committee may provide either general or specific pre-approval of audit-related, tax or other services, each as described in more detail below.
“Audit-related services” are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements or that are traditionally performed by an independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; services related to mergers, acquisitions or dispositions; compliance with ratings agency requirements and interfund lending activities; and assistance with internal control reporting requirements.
“Tax services” include, but are not limited to, the review and signing of the Funds’ federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committee will not approve proposed services of the Auditor which the Audit Committee believes are to be provided in connection with a service or transaction initially recommended by the Auditor, the sole business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with the Funds’ Treasurer (or his or her designee) and may consult with outside counsel or advisers as necessary to ensure the consistency of tax services rendered by the Auditor with the foregoing policy. The Auditor shall not represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims.
Each request to provide tax services under either the general or specific pre-approval of the Audit Committee will include a description from the Auditor in writing of (i) the scope of the service, the fee structure for the engagement, and any side letter or other amendment to the engagement letter, or any other agreement (whether oral, written, or otherwise) between the Auditor and the Funds, relating to the service; and (ii) any compensation arrangement or other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the Auditor (or an affiliate of the Auditor) and any person (other than the Funds or Service Affiliates receiving the services) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will also discuss with the Audit Committee the potential effects of the services on the independence of the Auditor, and document the substance of its discussion with the Audit Committee.
The Audit Committee may pre-approve other non-audit services so long as the Audit Committee believes that the service will not impair the independence of the Auditor. Appendix I includes a list of services that the Auditor is prohibited from performing by the SEC rules. Appendix I also includes a list of services that would impair the Auditor’s independence unless the Audit Committee reasonably concludes that the results of the services will not be subject to audit procedures during an audit of the Funds’ financial statements.
V. | Pre-Approval of Service Affiliate’s Covered Engagements |
Rule 2-01 of Regulation S-X requires that the Audit Committee pre-approve a Service Affiliate’s engagement of the Auditor for non-audit services if the engagement relates directly to the operations and financial reporting of the Funds, defined above as a “Service Affiliate’s Covered Engagement”.
The Audit Committee may provide either general or specific pre-approval of any Service Affiliate’s Covered Engagement, including for audit-related, tax or other services, as described above, if the Audit Committee believes that the provision of the services to a Service Affiliate will not impair the independence of the Auditor with respect to the Funds. Any Service Affiliate’s Covered Engagements that are not within the scope of General Pre-Approved Non-Audit Services have not received general pre-approval and require specific pre-approval.
Each request for specific pre-approval by the Audit Committee of a Service Affiliate’s Covered Engagement must be submitted to the Audit Committee by the Funds’ Treasurer (or his or her designee) and must include detailed information about the services to be provided, the fees or fee ranges to be charged, a description of the current status of the pre-approval process involving other audit committees in the Invesco investment company complex (as defined in Rule 2-201 of Regulation S-X) with respect to the proposed engagement, and other relevant information sufficient to allow the Audit Committee to consider whether the provision of such services will impair the independence of the Auditor from the Funds. Additionally, the Funds’ Treasurer (or his or her designee) and the Auditor will provide the Audit Committee with a statement that the proposed engagement requires pre-approval by the Audit Committee, the proposed engagement, in their view, will not impair the independence of the Auditor and is consistent with Applicable Rules, and the description of the proposed engagement provided to the Audit Committee is consistent with that presented to or approved by the Invesco audit committee.
Information about all Service Affiliate engagements of the Auditor for non-audit services, whether or not subject to pre-approval by the Audit Committee, shall be provided to the Audit Committee at least quarterly, to allow the Audit Committee to consider whether the provision of such services is compatible with maintaining the Auditor’s independence from the Funds. The Funds’ Treasurer and Auditor shall provide the Audit Committee with sufficiently detailed information about the scope of services provided and the fees for such services, to ensure that the Audit Committee can adequately consider whether the provision of such services is compatible with maintaining the Auditor’s independence from the Fund.
VI. | Pre-Approved Fee Levels or Established Amounts |
Pre-approved fee levels or ranges for audit and non-audit services to be provided by the Auditor to the Funds, and for a Service Affiliate’s Covered Engagement, under general pre-approval or specific pre-approval will be set periodically by the Audit Committee. Any proposed fees exceeding 110% of the maximum pre-approved fee levels or ranges for such services or engagements will be promptly presented to the Audit Committee and will require specific pre-approval by the Audit Committee before payment of any additional fees is made.
The Audit Committee hereby delegates, subject to the dollar limitations set forth below, specific authority to its Chair, or in his or her absence, Vice Chair, to pre-approve audit and non-audit services proposed to be provided by the Auditor to the Funds and/or a Service Affiliate’s Covered Engagement, between Audit Committee meetings. Such delegation does not preclude the Chair or Vice Chair from declining, on a case-by-case basis, to exercise his or her delegated authority and instead convening the Audit Committee to consider and pre-approve any proposed services or engagements.
Notwithstanding the foregoing, the Audit Committee must pre-approve: (a) any non-audit services to be provided to the Funds for which the fees are estimated to exceed $500,000; (b) any Service Affiliate’s Covered Engagement for which the fees are estimated to exceed $500,000; or (c) any cost increase to any previously approved service or engagement that exceeds the greater of $250,000 or 50% of the previously approved fees up to a maximum increase of $500,000.
VIII. | Compliance with Procedures |
Notwithstanding anything herein to the contrary, failure to pre-approve any services or engagements that are not required to be pre-approved pursuant to the de minimis exception provided for in Rule 2-01(c)(7)(i)(C) of Regulation S-X shall not constitute a violation of these Procedures. The Audit Committee has designated the Funds’ Treasurer to ensure services and engagements are pre-approved in compliance with these Procedures. The Funds’ Treasurer will immediately report to the Chair of the Audit Committee, or the Vice Chair in his or her absence, any breach of these Procedures that comes to the attention of the Funds’ Treasurer or any services or engagements that are not required to be pre-approved pursuant to the de minimis exception provided for in Rule 2-01(c)(7)(i)(C) of Regulation S-X.
On at least an annual basis, the Auditor will provide the Audit Committee with a summary of all non-audit services provided to any entity in the investment company complex (as defined in section 2-01(f)(14) of Regulation S-X, including the Funds and Service Affiliates) that were not pre-approved, including the nature of services provided and the associated fees.
IX. | Amendments to Procedures |
All material amendments to these Procedures must be approved in advance by the Audit Committee. Non-material amendments to these Procedures may be made by the Legal and Compliance Departments and will be reported to the Audit Committee at the next regularly scheduled meeting of the Audit Committee.
Appendix I
Non-Audit Services That May Impair the Auditor’s Independence
The Auditor is not independent if, at any point during the audit and professional engagement, the Auditor provides the following non-audit services:
· | Broker-dealer, investment adviser, or investment banking services; |
· | Expert services unrelated to the audit; |
· | Any service or product provided for a contingent fee or a commission; |
· | Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or aggressive tax position transactions, a significant purpose of which is tax avoidance; |
· | Tax services for persons in financial reporting oversight roles at the Fund; and |
· | Any other service that the Public Company Oversight Board determines by regulation is impermissible. |
An Auditor is not independent if, at any point during the audit and professional engagement, the Auditor provides the following non-audit services unless it is reasonable to conclude that the results of the services will not be subject to audit procedures during an audit of the Funds’ financial statements:
· | Bookkeeping or other services related to the accounting records or financial statements of the audit client; |
· | Financial information systems design and implementation; |
· | Appraisal or valuation services, fairness opinions, or contribution-in-kind reports; |
· | Internal audit outsourcing services. |
(e)(2) There were no amounts that were pre-approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) In addition to the amounts shown in the tables above, PwC billed Invesco and Invesco Affiliates aggregate fees of $6,489,000 for the fiscal year ended December 31, 2024 and $6,510,000 for the fiscal year ended December 31, 2023. In total, PwC billed the Registrant, Invesco and Invesco Affiliates aggregate non-audit fees of $8,281,792 for the fiscal year ended December 31, 2024 and $8,298,869 for the fiscal year ended December 31, 2023.
PwC provided audit services to the Investment Company complex of approximately $35 million.
(h) The Audit Committee also has considered whether the provision of non-audit services that were rendered to Invesco and Invesco Affiliates that were not required to be pre-approved pursuant to SEC regulations, if any, is compatible with maintaining PwC’s independence.
(i) Not applicable.
(j) Not applicable.
11 | Applicable Rules include, for example, New York Stock Exchange (“NYSE”) rules applicable to closed-end funds managed by Invesco and listed on NYSE. |
Item 5. Audit Committee of Listed Registrants.
(a) Investments in securities of unaffiliated issuers is filed under Item 7 of this Form N-CSR.
(b) Not applicable.
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco Oppenheimer V.I. International Growth Fund
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| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
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| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
O-VIIGR-NCSR
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Common Stocks & Other Equity Interests–98.02% |
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James Hardie Industries PLC, CDI(a) | | |
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Alimentation Couche-Tard, Inc. | | |
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Alibaba Group Holding Ltd., ADR(b) | | |
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Novo Nordisk A/S, Class B | | |
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Hermes International S.C.A. | | |
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LVMH Moet Hennessy Louis Vuitton SE | | |
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Flutter Entertainment PLC(a) | | |
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FinecoBank Banca Fineco S.p.A. | | |
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OBIC Business Consultants Co. Ltd. | | |
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Universal Music Group N.V. | | |
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Taiwan Semiconductor Manufacturing Co. Ltd. | | |
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London Stock Exchange Group PLC | | |
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Ferguson Enterprises, Inc. | | |
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Total Common Stocks & Other Equity Interests (Cost $184,037,772) | |
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Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco Oppenheimer V.I. International Growth Fund
| | |
Money Market Funds–(continued) |
Invesco Treasury Portfolio, Institutional Class, | | |
Total Money Market Funds (Cost $4,872,774) | |
TOTAL INVESTMENTS IN SECURITIES (excluding Investments purchased with cash collateral from securities on loan)-99.61% (Cost $188,910,546) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
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Invesco Private Government Fund, | | |
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Money Market Funds–(continued) |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $6,998,317) | |
TOTAL INVESTMENTS IN SECURITIES—101.89% (Cost $195,908,863) | |
OTHER ASSETS LESS LIABILITIES–(1.89)% | |
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Investment Abbreviations:
| – American Depositary Receipt |
| – CREST Depository Interest |
Notes to Schedule of Investments:
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| 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 December 31, 2024 was $23,669,549, which represented 7.72% of the Fund’s Net Assets. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
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| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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 1K. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco Oppenheimer V.I. International Growth Fund
Statement of Assets and Liabilities
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Investments in unaffiliated securities, at value
(Cost $184,037,772)* | |
Investments in affiliated money market funds, at value (Cost $11,871,091) | |
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Foreign currencies, at value (Cost $64,329) | |
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Investment for trustee deferred compensation and retirement plans | |
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Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
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Net assets applicable to shares outstanding | |
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Shares of beneficial interest | |
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Shares outstanding, no par value, with an unlimited number of shares authorized: |
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Net asset value per share | |
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Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $3,747,863 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
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Dividends (net of foreign withholding taxes of $309,921) | |
Dividends from affiliated money market funds (includes net securities lending income of $6,653) | |
Foreign withholding tax claims | |
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Administrative services fees | |
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Distribution fees - Series II | |
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Trustees’ and officers’ fees and benefits | |
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Professional services fees | |
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Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities (net of foreign taxes of $78,552) | |
Affiliated investment securities | |
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Forward foreign currency contracts | |
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Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities (net of foreign taxes of $826,037) | |
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Net realized and unrealized gain (loss) | |
Net increase (decrease) in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco Oppenheimer V.I. International Growth Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
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Change in net unrealized appreciation (depreciation) | | |
Net increase (decrease) in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
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Total distributions from distributable earnings | | |
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Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
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See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco Oppenheimer V.I. International Growth Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
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| Calculated using average shares outstanding. |
| Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns are not annualized for periods less than one year, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco Oppenheimer V.I. International Growth Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco Oppenheimer V.I. International Growth Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
7
Invesco Oppenheimer V.I. International Growth 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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.
Foreign Withholding Taxes – The Fund is subject to foreign withholding tax imposed by certain foreign countries in which the Fund may invest. Withholding taxes are incurred on certain foreign dividends and are accrued at the time the dividend is recognized based on applicable foreign tax laws. The Fund may file withholding tax refunds in certain jurisdictions to seek to recover a portion of amounts previously withheld. The Fund will record a receivable for such tax refunds based on several factors including; an assessment of a jurisdiction’s legal obligation to pay reclaims, administrative practices and payment history. Any receivables recorded will be shown under receivables for Foreign withholding tax claims on the Statement of Assets and Liabilities. There is no guarantee that the Fund will receive refunds applied for in a timely manner or at all.
As a result of recent court rulings in certain countries across the European Union, tax refunds for previously withheld taxes on dividends earned in those countries have been received by investment companies. Any tax refund payments are reflected as Foreign withholding tax claims in the Statement of Operations, and any related interest is included in Interest income. The Fund may incur fees paid to third party providers that assist in the recovery of the tax reclaims. These fees are reflected on the Statement of Operations as Professional services fees, if any.
G.
Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets.
H.
Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
I.
Indemnifications – Under the 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.
J.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
K.
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
8
Invesco Oppenheimer V.I. International Growth Fund
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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser fees for securities lending agent services, which were less than $500. Fees paid to the Adviser for securities lending agent services, if any, are included in Dividends from affiliated money market funds on the Statement of Operations.
L.
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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
M.
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 the 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.
N.
Other Risks - Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertain 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. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information, including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country, protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Investments in companies located or operating in Greater China (normally considered to be the geographical area that includes mainland China, Hong Kong, Macau and Taiwan) involve risks and considerations not typically associated with investments in the U.S. and other Western nations, such as greater government control over the economy; political, legal and regulatory uncertainty; nationalization, expropriation, or confiscation of property; lack of willingness or ability of the Chinese government to support the economies and markets of the Greater China region; difficulty in obtaining information necessary for investigations into and/or
9
Invesco Oppenheimer V.I. International Growth Fund
litigation against Chinese companies, as well as in obtaining and/or enforcing judgments; lack of publicly available information; limited legal remedies for shareholders; alteration or discontinuation of economic reforms; military conflicts and the risk of war, either internal or with other countries; public health emergencies resulting in market closures, travel restrictions, quarantines or other interventions; inflation, currency fluctuations and fluctuations in inflation and interest rates that may have negative effects on the economy and securities markets of Greater China; and Greater China’s dependency on the economies of other Asian countries, many of which are developing countries. Events in any one country within Greater China may impact the other countries in the region or Greater China as a whole.
The level of development of the economies of countries in the Asia Pacific region varies greatly. Furthermore, since the economies of the countries in the region are largely intertwined, if an economic recession is experienced by any of these countries, it will likely adversely impact the economic performance of other countries in the region. In addition, export growth continues to be a major driver of China’s rapid economic growth. As a result, a reduction in spending on Chinese products and services, the institution of tariffs, sanctions, capital controls, embargoes, trade wars or other trade barriers, or a downturn in any of the economies of China’s key trading partners may have an adverse impact on the Chinese economy. The current political climate has intensified concerns about a potential trade war between China and the U.S., as each country has recently imposed tariffs on the other country’s products. Further, actions by the U.S. government, such as delisting of certain Chinese companies from U.S. securities exchanges or otherwise restricting their operations in the U.S., may negatively impact the value of such securities held by the Fund.
Certain securities issued by companies located or operating in Greater China, such as China A-shares, are subject to trading restrictions and suspensions, quota limitations and sudden changes in those limitations, and operational, clearing and settlement risks. Significant portions of the Chinese securities markets may become rapidly illiquid, as Chinese issuers have the ability to suspend the trading of their equity securities, and have shown a willingness to exercise that option in response to market volatility and other events. The liquidity of Chinese securities may shrink or disappear suddenly and without warning as a result of adverse economic, market or political events, or adverse investor perceptions, whether or not accurate.
The Fund’s Japanese investments may be adversely affected by protectionist trade policies, slow economic activity worldwide, dependence on exports and international trade, increasing competition from Asia’s other low-cost emerging economies, political and social instability, regional and global conflicts and natural disasters, as well as by commodity markets fluctuations related to Japan’s limited natural resource supply. The Japanese economy also faces several other concerns, including a financial system with large levels of nonperforming loans, over-leveraged corporate balance sheets, extensive cross-ownership by major corporations, a changing corporate governance structure, and large government deficits.
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:
| 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 year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.96%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 1.00% and Series II shares to 1.25% 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 April 30, 2026. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $615,139.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $48,167 for accounting and fund administrative services and was reimbursed $503,121 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the
10
Invesco Oppenheimer V.I. International Growth Fund
average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $1,080 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
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Investments in Securities | | | | |
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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.
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
Forward foreign currency contracts | |
11
Invesco Oppenheimer V.I. International Growth Fund
The table below summarizes the average notional value of derivatives held during the period.
| Forward
Foreign Currency
Contracts |
| |
| |
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.
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.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
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| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
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Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
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The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and corporate actions.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
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 year ended December 31, 2024 was $61,208,660 and $102,200,578, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $198,639,120.
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Invesco Oppenheimer V.I. International Growth Fund
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of corporate actions, on December 31, 2024, undistributed net investment income was increased by $735,260 and undistributed net realized gain was decreased by $735,260. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
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Issued as reinvestment of dividends: | | | | |
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Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 76% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
13
Invesco Oppenheimer V.I. International Growth Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. International Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco Oppenheimer V.I. International Growth Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco Oppenheimer V.I. International Growth Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco Oppenheimer V.I. International Growth Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco Oppenheimer V.I. International Growth Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. American Franchise Fund
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| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
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| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VK-VIAMFR-NCSR
Schedule of Investments(a)
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Common Stocks & Other Equity Interests–100.58% |
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Trade Desk, Inc. (The), Class A(b)(c) | | |
Aerospace & Defense–0.73% |
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Application Software–6.60% |
AppLovin Corp., Class A(b) | | |
Atlassian Corp., Class A(b) | | |
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Datadog, Inc., Class A(b)(c) | | |
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Asset Management & Custody Banks–6.08% |
Blackstone, Inc., Class A | | |
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Automobile Manufacturers–2.13% |
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MercadoLibre, Inc. (Brazil)(b) | | |
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Johnson Controls International PLC | | |
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Flutter Entertainment PLC (Ireland)(b) | | |
Communications Equipment–2.13% |
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Construction Machinery & Heavy Transportation Equipment– 1.12% |
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Construction Materials–0.34% |
Martin Marietta Materials, Inc.(c) | | |
Consumer Staples Merchandise Retail–0.36% |
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Diversified Financial Services–1.20% |
Apollo Global Management, Inc.(c) | | |
Diversified Metals & Mining–0.40% |
Teck Resources Ltd., Class B (Canada) | | |
Diversified Support Services–0.60% |
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Electrical Components & Equipment–2.38% |
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Vertiv Holdings Co., Class A | | |
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Financial Exchanges & Data–0.83% |
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US Foods Holding Corp.(b) | | |
Health Care Equipment–3.77% |
Boston Scientific Corp.(b) | | |
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Intuitive Surgical, Inc.(b) | | |
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Home Improvement Retail–0.87% |
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Hotels, Resorts & Cruise Lines–1.65% |
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Industrial Machinery & Supplies & Components–0.91% |
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Integrated Oil & Gas–0.73% |
Suncor Energy, Inc. (Canada) | | |
Interactive Home Entertainment–1.12% |
Nintendo Co. Ltd. (Japan) | | |
Take-Two Interactive Software, Inc.(b)(c) | | |
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Interactive Media & Services–8.69% |
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Meta Platforms, Inc., Class A | | |
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Internet Services & Infrastructure–0.71% |
Snowflake, Inc., Class A(b)(c) | | |
Investment Banking & Brokerage–1.57% |
Goldman Sachs Group, Inc. (The) | | |
Movies & Entertainment–3.22% |
| | |
Spotify Technology S.A. (Sweden)(b) | | |
| | | |
|
| | |
Real Estate Services–0.78% |
CBRE Group, Inc., Class A(b) | | |
|
DoorDash, Inc., Class A(b)(c) | | |
|
| | |
Monolithic Power Systems, Inc. | | |
| | |
Taiwan Semiconductor Manufacturing Co. Ltd., ADR (Taiwan) | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. American Franchise Fund
| | |
|
| | |
| | |
| | | |
Technology Hardware, Storage & Peripherals–6.47% |
| | |
Trading Companies & Distributors–0.69% |
| | |
Transaction & Payment Processing Services–2.51% |
| | |
| | |
| | | |
Total Common Stocks & Other Equity Interests (Cost $388,189,577) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $1,709,946) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.77% (Cost $389,899,523) | | | |
| | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $45,479,762) | |
TOTAL INVESTMENTS IN SECURITIES–105.89% (Cost $435,379,285) | |
OTHER ASSETS LESS LIABILITIES—(5.89)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. American Franchise Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $388,189,577)* | |
Investments in affiliated money market funds, at value (Cost $47,189,708) | |
| |
Foreign currencies, at value (Cost $10,403) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $42,221,972 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $103,598) | |
Dividends from affiliated money market funds (includes net securities lending income of $74,993) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. American Franchise Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. American Franchise Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. American Franchise Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. American Franchise Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital growth.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
7
Invesco V.I. American Franchise 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
8
Invesco V.I. American Franchise 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $7,143 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
Other Risks - The Fund is non-diversified and may invest in securities of fewer issuers than if it were diversified. Thus, the value of the Fund’s shares may vary more widely and the Fund may be subject to greater market and credit risk than if the Fund invested more broadly.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.67%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (collectively, the "Affiliated Sub-Advisers") the Adviser, not the Fund, will pay 40% of the fees paid to
9
Invesco V.I. American Franchise Fund
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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $4,534.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $117,120 for accounting and fund administrative services and was reimbursed $1,244,833 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $4,790 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
NOTE 4—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.
10
Invesco V.I. American Franchise Fund
NOTE 5—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.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
Tax Components of Net Assets at Period-End: |
| |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 has a capital loss carryforward as of December 31, 2024, as follows:
Capital Loss Carryforward* |
| | | |
Not subject to expiration | | | |
*
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 7—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 year ended December 31, 2024 was $422,444,861 and $497,684,371, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $438,420,417.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $2,966,389, undistributed net realized gain was increased by $6,116 and shares of beneficial interest was decreased by $2,972,505. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
11
Invesco V.I. American Franchise Fund
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| 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. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco V.I. American Franchise Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. American Franchise Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. American Franchise Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco V.I. American Franchise Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco V.I. American Franchise Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco V.I. American Franchise Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. American Value Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VK-VIAMVA-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–97.32% |
Aerospace & Defense–1.93% |
| | |
Agricultural & Farm Machinery–1.50% |
| | |
Application Software–2.03% |
AppLovin Corp., Class A(c) | | |
Automotive Parts & Equipment–0.68% |
| | |
|
Amicus Therapeutics, Inc.(b)(c) | | |
Apellis Pharmaceuticals, Inc.(b)(c) | | |
Ascendis Pharma A/S, ADR (Denmark)(c) | | |
Ionis Pharmaceuticals, Inc.(b)(c) | | |
Neurocrine Biosciences, Inc.(c) | | |
Ultragenyx Pharmaceutical, Inc.(c) | | |
| | | |
Coal & Consumable Fuels–2.09% |
| | |
Communications Equipment–3.43% |
Lumentum Holdings, Inc.(b)(c) | | |
Construction & Engineering–3.86% |
| | |
| | |
| | | |
Construction Machinery & Heavy Transportation Equipment– 0.85% |
| | |
|
| | |
|
| | |
Diversified Chemicals–0.90% |
| | |
Diversified Metals & Mining–2.10% |
Anglo American PLC (South Africa) | | |
Teck Resources Ltd., Class B (Canada) | | |
| | | |
|
| | |
Electrical Components & Equipment–1.88% |
Vertiv Holdings Co., Class A | | |
Electronic Components–2.93% |
| | |
Fertilizers & Agricultural Chemicals–1.34% |
| | |
| | |
Fertilizers & Agricultural Chemicals–(continued) |
| | |
| | | |
|
Performance Food Group Co.(b)(c) | | |
|
Agnico Eagle Mines Ltd. (Canada) | | |
| | |
| | | |
Health Care Services–0.37% |
Fresenius Medical Care AG (Germany) | | |
Hotels, Resorts & Cruise Lines–3.85% |
| | |
| | |
| | | |
Human Resource & Employment Services–0.51% |
| | |
Industrial Machinery & Supplies & Components–1.99% |
Chart Industries, Inc.(c) | | |
|
| | |
Integrated Oil & Gas–0.78% |
Cenovus Energy, Inc. (Canada) | | |
Investment Banking & Brokerage–1.72% |
Goldman Sachs Group, Inc. (The) | | |
IT Consulting & Other Services–1.71% |
| | |
Life & Health Insurance–2.23% |
| | |
Life Sciences Tools & Services–2.91% |
| | |
| | |
| | | |
Managed Health Care–3.14% |
| | |
Molina Healthcare, Inc.(c) | | |
| | | |
Oil & Gas Exploration & Production–4.31% |
Antero Resources Corp.(b)(c) | | |
ARC Resources Ltd. (Canada) | | |
| | |
| | |
| | |
| | | |
Oil & Gas Refining & Marketing–0.35% |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. American Value Fund
| | |
Oil & Gas Storage & Transportation–0.56% |
New Fortress Energy, Inc. | | |
Paper & Plastic Packaging Products & Materials–0.98% |
| | |
|
Axsome Therapeutics, Inc.(c) | | |
Intra-Cellular Therapies, Inc.(c) | | |
| | | |
|
Citizens Financial Group, Inc. | | |
Huntington Bancshares, Inc. | | |
Pinnacle Financial Partners, Inc. | | |
| | |
Western Alliance Bancorporation | | |
| | | |
Research & Consulting Services–4.08% |
Amentum Holdings, Inc.(c) | | |
| | |
| | |
| | | |
Semiconductor Materials & Equipment–4.05% |
| | |
| | |
| | |
| | | |
|
| | |
| | |
STMicroelectronics N.V., New York Shares (France) | | |
| | | |
|
Pan American Silver Corp. (Canada) | | |
| | |
Trading Companies & Distributors–4.04% |
Air Lease Corp., Class A(b) | | |
Beacon Roofing Supply, Inc.(b)(c) | | |
WESCO International, Inc. | | |
| | | |
Transaction & Payment Processing Services–2.67% |
Fidelity National Information Services, | | |
Total Common Stocks & Other Equity Interests (Cost $272,035,677) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $9,548,574) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.93% (Cost $281,584,251) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
Money Market Funds–10.40% |
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $38,113,407) | |
TOTAL INVESTMENTS IN SECURITIES–110.33% (Cost $319,697,658) | |
OTHER ASSETS LESS LIABILITIES—(10.33)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
Notes to Schedule of Investments:
| 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. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Non-income producing security. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. American Value Fund
| | | | Change in Unrealized Appreciation (Depreciation) | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. American Value Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $272,035,677)* | |
Investments in affiliated money market funds, at value (Cost $47,661,981) | |
| |
Foreign currencies, at value (Cost $32,885) | |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $37,338,753 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $121,514) | |
Dividends from affiliated money market funds (includes net securities lending income of $84,366) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. American Value Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. American Value Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended December 31, 2021, the portfolio turnover calculation excludes the value of securities purchased of $61,601,599 in connection with the acquisition of Invesco V.I. Value Opportunities Fund into the Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. American Value Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. American Value Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
8
Invesco V.I. American 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
9
Invesco V.I. American Value 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $8,131 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
Other Risks - Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.69%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the
10
Invesco V.I. American Value Fund
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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $6,014.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $48,761 for accounting and fund administrative services and was reimbursed $528,661 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $29,334 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
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.
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Invesco V.I. American Value Fund
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
Forward foreign currency contracts | |
Change in Net Unrealized Appreciation: | |
Forward foreign currency contracts | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| Forward
Foreign Currency
Contracts |
| |
| |
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.
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.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
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Invesco V.I. American Value Fund
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 year ended December 31, 2024 was $136,537,998 and $197,587,190, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $324,069,641.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, on December 31, 2024, undistributed net investment income was increased by $311 and undistributed net realized gain was decreased by $311. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 56% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
13
Invesco V.I. American Value Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. American Value Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. American Value Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco V.I. American Value Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco V.I. American Value Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco V.I. American Value Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Balanced-Risk Allocation Fund
| Consolidated Schedule of Investments |
| Consolidated Financial Statements |
| Consolidated Financial Highlights |
| Notes to Consolidated Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VIIBRA-NCSR
Consolidated Schedule of Investments
| | | | |
U.S. Treasury Securities–2.12%(a) | | |
U.S. Treasury Floating Rate Notes–2.12% |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.18%) | | | | | |
| | | | |
Money Market Funds–89.73%(c) |
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d) | | | | | |
Invesco Government Money Market Fund, Cash Reserve Shares, 4.38%(d) | | | | | |
Invesco Premier U.S. Government Money Portfolio, Institutional Class, 4.42%(d) | | | | | |
Invesco Treasury Obligations Portfolio, Institutional Class, 4.36%(d) | | | | | |
Invesco Treasury Portfolio, Institutional Class, 4.38%(d) | | | | | |
Invesco US Dollar Liquidity Portfolio (Ireland), Agency Class, 4.63%(d) | | | | | |
Invesco V.I. Government Money Market Fund, Series I, 4.27%(d) | | | | | |
Total Money Market Funds (Cost $379,224,838) | | |
|
|
| | |
TOTAL INVESTMENTS IN SECURITIES–92.71% (Cost $394,122,160) | | |
OTHER ASSETS LESS LIABILITIES–7.29% | | |
| | |
Notes to Consolidated Schedule of Investments:
| Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2024. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Government Money Market Fund, Cash Reserve Shares | | | | | | | |
Invesco Premier U.S. Government Money Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Obligations Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Invesco US Dollar Liquidity Portfolio, Agency Class | | | | | | | |
Invesco V.I. Government Money Market Fund, Series I | | | | | | | |
| | | | | | | |
| The table below details options purchased. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Balanced-Risk Allocation Fund
Open Exchange-Traded Index Options Purchased |
| | | | | | |
|
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
MSCI Emerging Markets Index | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Balanced-Risk Allocation Fund
Open Exchange-Traded Index Options Purchased—(continued) |
| | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Total Index Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Futures Contracts(a) |
| | | | | Unrealized Appreciation (Depreciation) |
|
| | | | | |
Gasoline Reformulated Blendstock Oxygenate Blending | | | | | |
New York Harbor Ultra-Low Sulfur Diesel | | | | | |
| | | | | |
| | | | | |
| | |
|
E-Mini Russell 2000 Index | | | | | |
| | | | | |
| | | | | |
| | | | | |
MSCI Emerging Markets Index | | | | | |
| | | | | |
| | |
|
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | |
| | |
| Futures contracts collateralized by $18,895,483 cash held with Goldman Sachs International, the futures commission merchant. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Balanced-Risk Allocation Fund
Open Over-The-Counter Total Return Swap Agreements(a)(b) |
| | | | | | | | Upfront
Payments
Paid
(Received) | | Unrealized
Appreciation
(Depreciation) |
| | | | | | | | | | | |
| | Barclays Soybeans Seasonal Index Excess Return | | | | | | | | | |
Canadian Imperial Bank of Commerce | | Canadian Imperial Bank of Commerce Soybean Meal 1 Excess Return Commodity Index | | | | | | | | | |
Canadian Imperial Bank of Commerce | | Cibc Seasonally Enhanced Live Cattle Commodity Index | | | | | | | | | |
Goldman Sachs International | | Enhanced Strategy AB42 on the S&P GSCI Soybeans Excess Return | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | J.P. Morgan Contag Beta Gas Oil Excess Return Index | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | S&P GSCI Gold Index Excess Return | | | | | | | | | |
| | Macquarie Single Commodity Soymeal type A Excess Return | | | | | | | | | |
Merrill Lynch International | | MLCISCE Excess Return Index | | | | | | | | | |
Merrill Lynch International | | MLCX Natural Gas Annual Excess Return Index | | | | | | | | | |
Merrill Lynch International | | MLCX Natural Gas Annual Excess Return Index | | | | | | | | | |
Merrill Lynch International | | MLCX Natural Gas Annual Excess Return Index | | | | | | | | | |
Merrill Lynch International | | MLCX6CTE Excess Return Index | | | | | | | | | |
| | RBC Commodity CT01 Excess Return Custom Index | | | | | | | | | |
| | RBC Commodity KCEO Excess Return Custom Index | | | | | | | | | |
| | RBC Commodity SB01 Excess Return Custom Index | | | | | | | | | |
| | RBC Commodity SO01 Excess Return Custom Index | | | | | | | | | |
| | RBC Gold E0 Excess Return Index | | | | | | | | | |
| | | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Balanced-Risk Allocation Fund
Open Over-The-Counter Total Return Swap Agreements(a)(b)—(continued) |
| | | | | | | | Upfront Payments Paid (Received) | | Unrealized Appreciation (Depreciation) |
| | | | | | | | | | | |
| | Barclays Commodity Strategy 1452 Excess Return Index | | | | | | | | | |
| | Barclays Soybeans Seasonal Index Excess Return | | | | | | | | | |
| | Barclays Wheat Seasonal Index | | | | | | | | | |
Canadian Imperial Bank of Commerce | | Canadian Imperial Bank of Commerce Dynamic Roll LME Copper Excess Return Index 2 | | | | | | | | | |
Canadian Imperial Bank of Commerce | | Canadian Imperial Bank of Commerce Seasonally Enhanced Bean Oil Commodity Index | | | | | | | | | |
Canadian Imperial Bank of Commerce | | Canadian Imperial Bank of Commerce Seasonally Enhanced Cotton Commodity Excess Return Index | | | | | | | | | |
Canadian Imperial Bank of Commerce | | Cibc Seasonally Enhanced Lean Hog Commodity Index | | | | | | | | | |
Canadian Imperial Bank of Commerce | | Cibz Enhanced Sugar 2 Excess Return Index | | | | | | | | | |
| | Citi Commodities Benchmark (Regular Roll) Mono Index Coffee | | | | | | | | | |
Goldman Sachs International | | S&P GSCI Soybean Oil Excess Return Index | | | | | | | | | |
Goldman Sachs International | | S&P GSCI Wheat Excess Return A48 Strategy | | | | | | | | | |
| | Macquarie Aluminum Dynamic Selection Index | | | | | | | | | |
Morgan Stanley and Co. International PLC | | S&P GSCI Aluminum Dynamic Index Excess Return | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | BNP Paribas AIR VAR Intraday US Calendar Excess Return Index | | | | | | | | | |
| | Citi EQ US Volatility Carry Series 5 Index | | | | | | | | | |
Goldman Sachs International | | Systematic Volatility Carry DO Series 04 Excess Return Strategy | | | | | | | | | |
| | Macquarie Volatility Product VMAQWSL5 | | | | | | | | | |
Morgan Stanley and Co. International PLC | | Morgan Stanley Volatility Relative Value SPX | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | |
Total — Total Return Swap Agreements | | | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Balanced-Risk Allocation Fund
| Open Over-The-Counter Total Return Swap Agreements are collateralized by cash held with the swap Counterparties in the amount of $6,000,000. |
| The Fund receives or pays payments based on any positive or negative return on the Reference Entity, respectively. |
| The Reference Entity Components table below includes additional information regarding the underlying components of certain reference entities that are not publicly available. |
Open Over-The-Counter Total Return Swap Agreements(a)(b) |
| | | | | | | | Upfront
Payments
Paid
(Received) | | Unrealized
Appreciation
(Depreciation) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | MSCI Japan Minimum Volatility Index | | | | | | | | | |
| | MSCI Japan Minimum Volatility Index | | | | | | | | | |
| | MSCI Japan Minimum Volatility Index | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | Invesco UK Broad Low Volatility Net Total Return Index | | | | | | | | | |
| | Invesco UK Broad Low Volatility Net Total Return Index | | | | | | | | | |
| | Invesco UK Broad Low Volatility Net Total Return Index | | | | | | | | | |
| | Invesco UK Broad Low Volatility Net Total Return Index | | | | | | | | | |
| | Invesco UK Broad Price Momentum Net Total Return Index | | | | | | | | | |
| | Invesco UK Broad Price Momentum Net Total Return Index | | | | | | | | | |
| | Invesco UK Broad Price Momentum Net Total Return Index | | | | | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Balanced-Risk Allocation Fund
Open Over-The-Counter Total Return Swap Agreements(a)(b)—(continued) |
| | | | | | | | Upfront Payments Paid (Received) | | Unrealized Appreciation (Depreciation) |
| | Invesco UK Broad Price Momentum Net Total Return Index | | | | | | | | | |
| | Invesco UK Broad Quality Net Total Return Index | | | | | | | | | |
| | Invesco UK Broad Quality Net Total Return Index | | | | | | | | | |
| | MSCI EMU Minimum Volatility Index | | | | | | | | | |
| | MSCI EMU Minimum Volatility Index | | | | | | | | | |
| | MSCI EMU Minimum Volatility Index | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | MSCI Japan Minimum Volatility Index | | | | | | | | | |
| | MSCI Japan Minimum Volatility Index | | | | | | | | | |
| | MSCI Japan Minimum Volatility Index | | | | | | | | | |
| | MSCI Japan Minimum Volatility Index | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | Invesco U.S. Large Cap Broad Price Momentum Total Return Index | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | Invesco U.S. Large Cap Broad Quality Total Return Index | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | Invesco U.S. Low Volatility Total Return Index | | | | | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
8
Invesco V.I. Balanced-Risk Allocation Fund
Open Over-The-Counter Total Return Swap Agreements(a)(b)—(continued) |
| | | | | | | | Upfront Payments Paid (Received) | | Unrealized Appreciation (Depreciation) |
J.P. Morgan Chase Bank, N.A. | | Invesco UK Broad Low Volatility Net Total Return Index | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | Invesco UK Broad Price Momentum Net Total Return Index | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | Invesco UK Broad Quality Net Total Return Index | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | Invesco UK Broad Quality Net Total Return Index | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | MSCI EMU Minimum Volatility Index | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | | | | | | | | | | |
Merrill Lynch International | | Invesco UK Broad Quality Net Total Return Index | | | | | | | | | |
Merrill Lynch International | | Invesco UK Broad Quality Net Total Return Index | | | | | | | | | |
Merrill Lynch International | | MSCI EMU Minimum Volatility Index | | | | | | | | | |
Merrill Lynch International | | | | | | | | | | | |
Total — Total Return Swap Agreements | | | | | | | |
| Open Over-The-Counter Total Return Swap Agreements are collateralized by cash held with the swap Counterparties in the amount of $6,000,000. |
| The Fund receives or pays payments based on any positive or negative return on the Reference Entity, respectively. |
Reference Entity Components |
| | |
Barclays Soybeans Seasonal Index Excess Return | | |
| | |
| | |
Canadian Imperial Bank of Commerce Soybean Meal 1 Excess Return Commodity Index | | |
| | |
| | |
Cibc Seasonally Enhanced Live Cattle Commodity Index | | |
| | |
| | |
Enhanced Strategy AB42 on the S&P GSCI Soybeans Excess Return | | |
| | |
| | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
9
Invesco V.I. Balanced-Risk Allocation Fund
Reference Entity Components—(continued) |
| | |
J.P. Morgan Contag Beta Gas Oil Excess Return Index | | |
| | |
| | |
S&P GSCI Gold Index Excess Return | | |
| | |
| | |
Macquarie Single Commodity Soymeal type A Excess Return | | |
| | |
| | |
MLCISCE Excess Return Index | | |
| | |
| | |
MLCX Natural Gas Annual Excess Return Index | | |
| | |
| | |
MLCX6CTE Excess Return Index | | |
| | |
| | |
RBC Commodity CT01 Excess Return Custom Index | | |
| | |
| | |
RBC Commodity KCEO Excess Return Custom Index | | |
| | |
| | |
RBC Commodity SB01 Excess Return Custom Index | | |
| | |
| | |
RBC Commodity SO01 Excess Return Custom Index | | |
| | |
| | |
RBC Gold E0 Excess Return Index | | |
| | |
| | |
Barclays Commodity Strategy 1452 Excess Return Index | | |
| | |
| | |
Barclays Soybeans Seasonal Index Excess Return | | |
| | |
| | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
10
Invesco V.I. Balanced-Risk Allocation Fund
Reference Entity Components—(continued) |
| | |
Barclays Wheat Seasonal Index | | |
| | |
| | |
Canadian Imperial Bank of Commerce Dynamic Roll LME Copper Excess Return Index 2 | | |
| | |
| | |
Canadian Imperial Bank of Commerce Seasonally Enhanced Bean Oil Commodity Index | | |
| | |
| | |
Canadian Imperial Bank of Commerce Seasonally Enhanced Cotton Commodity Excess Return Index | | |
| | |
| | |
Cibc Seasonally Enhanced Lean Hog Commodity Index | | |
| | |
| | |
Cibz Enhanced Sugar 2 Excess Return Index | | |
| | |
| | |
Citi Commodities Benchmark (Regular Roll) Mono Index Coffee | | |
| | |
| | |
S&P GSCI Soybean Oil Excess Return Index | | |
| | |
| | |
S&P GSCI Wheat Excess Return A48 Strategy | | |
| | |
| | |
Macquarie Aluminum Dynamic Selection Index | | |
| | |
| | |
S&P GSCI Aluminum Dynamic Index Excess Return | | |
| | |
| | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
11
Invesco V.I. Balanced-Risk Allocation Fund
|
| —European Economic and Monetary Union |
| |
| |
| —Euro Interbank Offered Rate |
| |
| |
| —Secured Overnight Financing Rate |
| —Sterling Overnight Index Average |
| —Tokyo Overnight Average Rate |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
12
Invesco V.I. Balanced-Risk Allocation Fund
Consolidated Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $14,897,322) | |
Investments in affiliated money market funds, at value (Cost $379,224,838) | |
| |
Variation margin receivable — futures contracts | |
| |
Unrealized appreciation on swap agreements — OTC | |
| |
Cash collateral — exchange-traded futures contracts | |
Cash collateral — OTC Derivatives | |
| |
Foreign currencies, at value (Cost $8,773,697) | |
| |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
Unrealized depreciation on swap agreements—OTC | |
| |
| |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
Distributable earnings (loss) | |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
Consolidated Statement of Operations
For the year ended December 31, 2024
| |
| |
Dividends from affiliated money market funds | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
| |
| |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
| |
| |
| |
| |
Net realized and unrealized gain (loss) | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
13
Invesco V.I. Balanced-Risk Allocation Fund
Consolidated Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
14
Invesco V.I. Balanced-Risk Allocation Fund
Consolidated Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | | Net asset
value, end
of period | | 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 | |
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| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.19%, 0.17%, 0.11% and 0.15% for the years ended December 31, 2024, 2023, 2022 and 2020, respectively. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
15
Invesco V.I. Balanced-Risk Allocation Fund
Notes to Consolidated Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Balanced-Risk Allocation Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. Information presented in these consolidated financial statements pertains only to the Fund and the Invesco Cayman Commodity Fund IV Ltd. (the “Subsidiary”), a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund will seek to gain exposure to the commodity markets primarily through investments in the Subsidiary. The Subsidiary was organized by the Fund to invest in commodity-linked derivatives and other securities that may provide leveraged and non-leveraged exposure to commodities. The Fund may invest up to 25% of its total assets in the Subsidiary.
The Fund’s investment objective is total return with a low to moderate correlation to traditional financial market indices.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 consolidated 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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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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Invesco V.I. Balanced-Risk Allocation 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 consolidated 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. 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 Consolidated 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 Consolidated Statement of Operations and the Consolidated Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Consolidated 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 Consolidated Statement of Operations and the Consolidated 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 Consolidated Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C.
Country Determination — For the purposes of making investment selection decisions and presentation in the Consolidated 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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 consolidated 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 Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
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 and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets.
G.
Accounting Estimates – The financial statements are prepared on a consolidated basis in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which 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. The accompanying financial statements reflect the financial position of the Fund and its Subsidiary and the results of operations on a consolidated basis. All inter-company accounts and transactions have been eliminated in consolidation.
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 consolidated financial statements are released to print.
H.
Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust, and under the Subsidiary’s organizational documents, the directors and officers of the Subsidiary, are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund and/or the Subsidiary, respectively. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial
17
Invesco V.I. Balanced-Risk Allocation Fund
statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its 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 Consolidated 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 Consolidated Statement of Operations.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Consolidated Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. Because of the inherent uncertainties of valuation, the values reflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.
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 the 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 Consolidated 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 Consolidated Statement of Assets and Liabilities.
L.
Futures Contracts — The Fund may enter into futures contracts to equitize the Fund’s cash holdings or to manage exposure to interest rate, equity, commodity 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 Consolidated 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 Consolidated 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 Consolidated Statement of Assets and Liabilities.
M.
Put Options Purchased – The Fund may purchase put options including options on securities indexes, or foreign currency and/or futures contracts. By purchasing a put option, the Fund obtains the right (but not the obligation) to sell the option’s underlying instrument at a fixed strike price. In return for this right, the Fund pays an option premium. The option’s underlying instrument may be a security, securities index, or a futures contract. Put options may be used by the Fund to hedge securities it owns by locking in a minimum price at which the Fund can sell. If security prices fall, the put option could be exercised to offset all or a portion of the Fund’s resulting losses. At the same time, because the maximum the Fund has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Fund to profit from an increase in the value of the securities hedged. Realized and unrealized gains and losses on put options purchased are included in the Consolidated 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, commodity or credit risk. Such transactions are agreements between Counterparties. 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. At the maturity date, a net cash flow is
18
Invesco V.I. Balanced-Risk Allocation Fund
exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event of a negative total return.
A total return swap is an agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income generated and capital gains, if any. The unrealized appreciation (depreciation) on total return swaps includes dividends on the underlying securities and financing rate payable from the Counterparty. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event of a negative total return.
Changes in the value of swap agreements are recognized as unrealized gains (losses) in the Consolidated 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 Consolidated 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 Consolidated Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Consolidated Statement of Operations. Cash held as collateral is recorded as deposits with brokers on the Consolidated 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 Consolidated 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, which could result in the Fund accruing additional expenses. 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 Agreements, 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.
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.
Other Risks - The Fund will seek to gain exposure to commodity markets primarily through an investment in the Subsidiary and through investments in commodity futures and swaps, commodity related exchange-traded funds and exchange-traded notes and commodity linked notes, some or all of which will be owned through the Subsidiary. The Subsidiary, unlike the Fund, may invest without limitation in commodity-linked derivatives and other securities, such as exchange-traded and commodity-linked notes, that may provide leveraged and non-leveraged exposure to commodity markets. The Fund is indirectly exposed to the risks associated with the Subsidiary’s investments.
Fluctuations in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed income markets to heightened volatility, perhaps suddenly and to a significant degree, and to reduced liquidity for certain fixed income investments, particularly those with longer maturities, when rates increase. Such changes and resulting increased volatility may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult to predict the impact of interest rate changes on various markets. 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 and other governmental actions and political events within the U.S. and abroad may also, among other things, affect investor and consumer expectations and confidence in the financial markets. This could result in higher than normal redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
In addition to risks associated with the underlying commodities, investments in commodity-linked notes may be subject to additional risks, such as non-payment of interest and loss of principal, counterparty risk, lack of a secondary market and risk of greater volatility than traditional equity and debt securities. The value of the commodity-linked notes the Fund buys may fluctuate significantly because the values of the underlying investments to which they are linked are themselves volatile. Additionally, certain commodity-linked notes employ “economic” leverage by requiring payment by the issuer of an amount that is a multiple of the price increase or decrease of the underlying commodity, commodity index, or other economic variable. Such economic leverage will increase the volatility of the value of these commodity-linked notes and the Fund to the extent it invests in such notes.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
By investing in the Subsidiary, the Fund is indirectly exposed to risks associated with the Subsidiary’s investments. The Subsidiary is not registered under the 1940 Act, and, except as otherwise noted in the Fund’s prospectus, is not subject to the investor protections of the 1940 Act. Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary, respectively, are organized, could result in the inability of the Fund and/or the Subsidiary to operate as intended, and could negatively affect the Fund and its shareholders.
Obligations of U.S. Government agencies and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. Government, which could affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.
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 less the amount paid by the Subsidiary to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.94%.
19
Invesco V.I. Balanced-Risk Allocation Fund
The Subsidiary has entered into a separate contract with the Adviser whereby the Adviser provides investment advisory and other services to the Subsidiary. In consideration of these services, the Subsidiary pays an advisory fee to the Adviser based on the annual rate of the Subsidiary’s average daily net assets as set forth in the table above. To the extent the Fund invests in the Subsidiary, the Adviser shall not collect the portion of the advisory fee that the Adviser would otherwise be entitled to collect from the Fund, in an amount equal to 100% of the advisory fee that the Adviser receives from the Subsidiary.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 (including fiscal year-end Acquired Fund Fees and Expenses of 0.19% and excluding certain items discussed below) of Series I shares to 0.88% and Series II shares to 1.13% 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. Acquired Fund Fees and Expenses are not operating expenses of the Fund directly, but are fees and expenses, including management fees, of the investment companies in which the Fund invests. As a result, the total annual fund operating expenses after expense reimbursement may exceed the expense limits above. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $1,876,202.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $52,046 for accounting and fund administrative services and was reimbursed $672,202 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Consolidated Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Consolidated Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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 consolidated financial statements may materially differ from the value received upon actual sale of those investments.
| | | | |
Investments in Securities | | | | |
| | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
20
Invesco V.I. Balanced-Risk Allocation Fund
| | | | |
Other Investments - Assets* | | | | |
| | | | |
| | | | |
| | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| 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 Consolidated 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 December 31, 2024:
| |
| | | | |
Unrealized appreciation on futures contracts —Exchange-Traded(a) | | | | |
Unrealized appreciation on swap agreements — OTC | | | | |
Options purchased, at value — Exchange-Traded(b) | | | | |
| | | | |
Derivatives not subject to master netting agreements | | | | |
Total Derivative Assets subject to master netting agreements | | | | |
| |
| | | | |
Unrealized depreciation on futures contracts —Exchange-Traded(a) | | | | |
Unrealized depreciation on swap agreements — OTC | | | | |
Total Derivative Liabilities | | | | |
Derivatives not subject to master netting agreements | | | | |
Total Derivative Liabilities subject to master netting agreements | | | | |
| The daily variation margin receivable (payable) at period-end is recorded in the Consolidated Statement of Assets and Liabilities. |
| Options purchased, at value as reported in the Consolidated Schedule of Investments. |
21
Invesco V.I. Balanced-Risk Allocation Fund
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2024.
| Financial Derivative Assets | Financial Derivative Liabilities | | Collateral
(Received)/Pledged | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Goldman Sachs International | | | | | | |
J.P. Morgan Chase Bank, N.A. | | | | | | |
| | | | | | |
Merrill Lynch International | | | | | | |
Morgan Stanley and Co. International PLC | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Canadian Imperial Bank of Commerce | | | | | | |
| | | | | | |
Goldman Sachs International | | | | | | |
J.P. Morgan Chase Bank, N.A. | | | | | | |
| | | | | | |
Merrill Lynch International | | | | | | |
Morgan Stanley and Co. International PLC | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
(a)
The Fund and the Subsidiary are recognized as separate legal entities and as such are subject to separate netting arrangements with the Counterparty.
Effect of Derivative Investments for the year ended December 31, 2024
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
Consolidated Statement of Operations |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Change in Net Unrealized Appreciation (Depreciation): | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Options purchased are included in the net realized gain (loss) from investment securities and the change in net unrealized appreciation (depreciation) on investment securities. |
22
Invesco V.I. Balanced-Risk Allocation Fund
The table below summarizes the average notional value of derivatives held during the period.
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.
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 Consolidated 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—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Net unrealized appreciation (depreciation) — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Capital loss carryforward | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to derivative instruments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 has a capital loss carryforward as of December 31, 2024, as follows:
Capital Loss Carryforward* |
| | | |
Not subject to expiration | | | |
*
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 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 year ended December 31, 2024 was $6,241,669 and $657,876, respectively. As of December 31, 2024, the aggregate cost of investments,
23
Invesco V.I. Balanced-Risk Allocation Fund
including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $381,797,768.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, income from the Subsidiary, elimination entry and derivative instruments, on December 31, 2024, undistributed net investment income was increased by $16,640,801 and undistributed net realized gain (loss) was decreased by $16,640,801. This reclassification had no effect on the net assets or the distributable earnings (loss) of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 74% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
24
Invesco V.I. Balanced-Risk Allocation Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Balanced-Risk Allocation Fund
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, of Invesco V.I. Balanced-Risk Allocation Fund and its subsidiary (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related consolidated statement of operations for the year ended December 31, 2024, the consolidated statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the consolidated financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These consolidated financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
25
Invesco V.I. Balanced-Risk Allocation Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
26
Invesco V.I. Balanced-Risk Allocation Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
27
Invesco V.I. Balanced-Risk Allocation Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Capital Appreciation Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
O-VICAPA-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–100.61% |
|
Trade Desk, Inc. (The), Class A(b) | | |
Aerospace & Defense–0.69% |
| | |
|
| | |
Application Software–7.64% |
AppLovin Corp., Class A(b) | | |
Atlassian Corp., Class A(b) | | |
| | |
Datadog, Inc., Class A(b)(c) | | |
| | |
| | |
Samsara, Inc., Class A(b) | | |
Tyler Technologies, Inc.(b) | | |
| | | |
Asset Management & Custody Banks–5.79% |
Ares Management Corp., Class A | | |
| | |
Blackstone, Inc., Class A | | |
| | |
| | | |
Automobile Manufacturers–1.92% |
| | |
|
| | |
MercadoLibre, Inc. (Brazil)(b) | | |
| | | |
|
| | |
Communications Equipment–1.87% |
| | |
Construction & Engineering–1.35% |
| | |
|
| | |
Consumer Staples Merchandise Retail–1.02% |
| | |
Diversified Support Services–0.41% |
| | |
Electrical Components & Equipment–2.24% |
| | |
Vertiv Holdings Co., Class A | | |
| | | |
Health Care Equipment–3.70% |
Boston Scientific Corp.(b) | | |
| | |
Health Care Equipment–(continued) |
Intuitive Surgical, Inc.(b) | | |
| | | |
|
| | |
Heavy Electrical Equipment–0.97% |
| | |
Hotels, Resorts & Cruise Lines–1.03% |
Hilton Worldwide Holdings, Inc. | | |
Industrial Machinery & Supplies & Components–1.19% |
| | |
Interactive Media & Services–8.67% |
Alphabet, Inc., Class C(c) | | |
Meta Platforms, Inc., Class A | | |
| | | |
Internet Services & Infrastructure–0.49% |
Snowflake, Inc., Class A(b) | | |
Investment Banking & Brokerage–0.96% |
Goldman Sachs Group, Inc. (The) | | |
Movies & Entertainment–3.68% |
| | |
Spotify Technology S.A. (Sweden)(b) | | |
| | | |
Oil & Gas Storage & Transportation–0.67% |
| | |
|
| | |
Property & Casualty Insurance–1.34% |
| | |
Real Estate Services–1.03% |
CBRE Group, Inc., Class A(b) | | |
|
Chipotle Mexican Grill, Inc.(b) | | |
DoorDash, Inc., Class A(b) | | |
| | | |
|
| | |
Monolithic Power Systems, Inc. | | |
| | |
Taiwan Semiconductor Manufacturing Co. Ltd., ADR (Taiwan) | | |
| | | |
|
| | |
| | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Capital Appreciation Fund
| | |
Technology Hardware, Storage & Peripherals–6.31% |
| | |
Trading Companies & Distributors–1.03% |
| | |
Transaction & Payment Processing Services–3.44% |
| | |
Mastercard, Inc., Class A | | |
| | |
| | | |
Total Common Stocks & Other Equity Interests (Cost $396,354,063) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.61% (Cost $396,354,063) | | | |
| | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $5,882,365) | |
TOTAL INVESTMENTS IN SECURITIES–101.33% (Cost $402,236,428) | |
OTHER ASSETS LESS LIABILITIES—(1.33)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
| – Real Estate Investment Trust |
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Capital Appreciation Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $396,354,063)* | |
Investments in affiliated money market funds, at value (Cost $5,882,365) | |
| |
Foreign currencies, at value (Cost $287) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $5,029,980 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $15,321) | |
Dividends from affiliated money market funds (includes net securities lending income of $42,809) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Capital Appreciation Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Capital Appreciation Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Distributions
from net
realized
gains | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Capital Appreciation Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Capital Appreciation Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
7
Invesco V.I. Capital Appreciation 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
8
Invesco V.I. Capital Appreciation 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $2,893 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
Other Risks – The Fund is non-diversified and may invest in securities of fewer issuers than if it were diversified. Thus, the value of the Fund’s shares may vary more widely and the Fund may be subject to greater market and credit risk than if the Fund invested more broadly.
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:
| 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 year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.69%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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.
9
Invesco V.I. Capital Appreciation Fund
The Adviser has contractually agreed, through at least April 30, 2026, 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 Series I shares to 0.80% and Series II shares to 1.05% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $606,194.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $112,468 for accounting and fund administrative services and was reimbursed $1,143,106 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $5,966 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
NOTE 4—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.
10
Invesco V.I. Capital Appreciation Fund
NOTE 5—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.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Components of Net Assets at Period-End: |
| |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $447,441,023 and $564,399,575, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $402,799,896.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $2,467,798, undistributed net realized gain was decreased by $271 and shares of beneficial interest was decreased by $2,467,527. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 67% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
11
Invesco V.I. Capital Appreciation Fund
NOTE 10—Subsequent Event
Effective on or about April 30, 2025, the name of the Fund and all references thereto will change from Invesco V.I. Capital Appreciation Fund to Invesco V.I. Discovery Large Cap Fund.
12
Invesco V.I. Capital Appreciation Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Capital Appreciation Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Capital Appreciation Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco V.I. Capital Appreciation Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco V.I. Capital Appreciation Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco V.I. Capital Appreciation Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Comstock Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VK-VICOM-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–97.70% |
Aerospace & Defense–2.14% |
| | |
| | |
| | | |
Air Freight & Logistics–1.86% |
| | |
Asset Management & Custody Banks–1.91% |
| | |
|
Anheuser-Busch InBev S.A./N.V. (Belgium) | | |
|
| | |
|
Johnson Controls International PLC | | |
|
Charter Communications, Inc., | | |
| | |
| | | |
|
| | |
Communications Equipment–3.14% |
| | |
| | |
| | | |
Construction Machinery & Heavy Transportation Equipment– 2.59% |
| | |
| | |
| | | |
|
| | |
| | |
| | |
| | |
| | | |
Electrical Components & Equipment–3.15% |
| | |
| | |
| | | |
Fertilizers & Agricultural Chemicals–2.23% |
CF Industries Holdings, Inc. | | |
| | |
| | | |
|
| | |
| | |
Health Care Distributors–0.92% |
| | |
Health Care Equipment–3.34% |
Baxter International, Inc.(b) | | |
Becton, Dickinson and Co. | | |
GE HealthCare Technologies, Inc. | | |
| | |
| | | |
Health Care Services–1.51% |
| | |
|
| | |
Reckitt Benckiser Group PLC (United Kingdom) | | |
| | | |
Integrated Oil & Gas–4.78% |
| | |
| | |
Suncor Energy, Inc. (Canada) | | |
| | | |
Interactive Media & Services–4.40% |
| | |
Meta Platforms, Inc., Class A | | |
| | | |
Investment Banking & Brokerage–1.52% |
Goldman Sachs Group, Inc. (The) | | |
| | |
| | | |
IT Consulting & Other Services–2.07% |
Cognizant Technology Solutions Corp., Class A | | |
| | |
| | | |
Life & Health Insurance–1.04% |
| | |
Life Sciences Tools & Services–0.78% |
| | |
Managed Health Care–2.49% |
| | |
| | |
| | | |
Movies & Entertainment–1.80% |
Universal Music Group N.V. (Netherlands) | | |
| | |
Warner Bros. Discovery, Inc.(c) | | |
| | | |
Multi-line Insurance–1.52% |
American International Group, Inc. | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Comstock Fund
| | |
|
| | |
| | |
| | | |
Oil & Gas Equipment & Services–0.59% |
| | |
Oil & Gas Exploration & Production–2.73% |
| | |
| | |
| | |
| | | |
Oil & Gas Storage & Transportation–1.12% |
| | |
Paper & Plastic Packaging Products & Materials–0.93% |
International Paper Co.(b) | | |
|
AstraZeneca PLC (United Kingdom) | | |
| | |
| | |
| | |
| | |
| | | |
Property & Casualty Insurance–1.05% |
| | |
|
Citizens Financial Group, Inc. | | |
Huntington Bancshares, Inc. | | |
| | |
| | | |
|
| | |
| | |
| | | |
|
| | |
NXP Semiconductors N.V. (China) | | |
| | |
| | | |
| | |
Soft Drinks & Non-alcoholic Beverages–2.54% |
| | |
| | |
| | | |
|
| | |
Telecom Tower REITs–0.38% |
SBA Communications Corp., Class A(b) | | |
|
Philip Morris International, Inc. | | |
Wireless Telecommunication Services–0.87% |
| | |
Total Common Stocks & Other Equity Interests (Cost $923,193,695) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $31,274,728) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.89% (Cost $954,468,423) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $85,642,595) | |
TOTAL INVESTMENTS IN SECURITIES–105.89% (Cost $1,040,111,018) | |
OTHER ASSETS LESS LIABILITIES—(5.89)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
| – Real Estate Investment Trust |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Comstock Fund
Notes to Schedule of Investments:
| 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. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Non-income producing security. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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 Forward Foreign Currency Contracts |
| | | Unrealized
Appreciation
(Depreciation) |
| |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Canadian Imperial Bank of Commerce | | | | | |
| Canadian Imperial Bank of Commerce | | | | | |
| | | | | | |
| Goldman Sachs International | | | | | |
| | | | | | |
| |
| | | | | | |
| | | | | | |
| Goldman Sachs International | | | | | |
| J.P. Morgan Chase Bank, N.A. | | | | | |
| J.P. Morgan Chase Bank, N.A. | | | | | |
| |
Total Forward Foreign Currency Contracts | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Comstock Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $923,193,695)* | |
Investments in affiliated money market funds, at value (Cost $116,917,323) | |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | |
Foreign currencies, at value (Cost $664) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $83,210,921 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $379,097) | |
Dividends from affiliated money market funds (includes net securities lending income of $92,705) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Comstock Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Comstock Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Comstock Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Comstock Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital growth and income through investments in equity securities, including common stocks, preferred stocks and securities convertible into common and preferred stocks.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
8
Invesco V.I. Comstock 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
9
Invesco V.I. Comstock 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $8,658 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. Effective July 1, 2024, 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:
Prior to July 1, 2024, the Fund accrued daily and paid monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.57%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the
10
Invesco V.I. Comstock Fund
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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $43,077.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $204,125 for accounting and fund administrative services and was reimbursed $2,166,658 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $41,393 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Assets* | | | | |
Forward Foreign Currency Contracts | | | | |
Other Investments - Liabilities* | | | | |
Forward Foreign Currency Contracts | | | | |
| | | | |
| | | | |
| 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
11
Invesco V.I. Comstock 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 December 31, 2024:
| |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
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 December 31, 2024.
| Financial
Derivative
Assets | Financial
Derivative
Liabilities | | Collateral
(Received)/Pledged | |
| Forward Foreign
Currency Contracts | Forward Foreign
Currency Contracts | | | | |
| | | | | | |
Canadian Imperial Bank of Commerce | | | | | | |
| | | | | | |
Goldman Sachs International | | | | | | |
J.P. Morgan Chase Bank, N.A. | | | | | | |
| | | | | | |
| | | | | | |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
Forward foreign currency contracts | |
Change in Net Unrealized Appreciation: | |
Forward foreign currency contracts | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| Forward
Foreign Currency
Contracts |
| |
| |
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
12
Invesco V.I. Comstock Fund
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.
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.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
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 year ended December 31, 2024 was $271,292,450 and $457,646,321, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $1,055,110,090.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, on December 31, 2024, undistributed net investment income was increased by $15,509 and undistributed net realized gain was decreased by $15,509. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
13
Invesco V.I. Comstock Fund
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 58% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
14
Invesco V.I. Comstock Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Comstock Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Comstock Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
15
Invesco V.I. Comstock Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
16
Invesco V.I. Comstock Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
17
Invesco V.I. Comstock Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Core Equity Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VICEQ-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–98.82% |
Aerospace & Defense–2.40% |
| | |
| | |
| | |
| | | |
Application Software–2.76% |
| | |
Tyler Technologies, Inc.(b) | | |
| | | |
Asset Management & Custody Banks–1.43% |
| | |
Automobile Manufacturers–0.30% |
| | |
|
| | |
|
Johnson Controls International PLC | | |
|
| | |
Communications Equipment–0.78% |
| | |
Construction Materials–0.97% |
| | |
|
| | |
Discover Financial Services | | |
| | | |
Consumer Staples Merchandise Retail–1.67% |
| | |
|
Digital Realty Trust, Inc. | | |
Distillers & Vintners–0.94% |
Constellation Brands, Inc., Class A | | |
|
| | |
| | |
| | | |
Diversified Financial Services–0.68% |
| | |
|
Constellation Energy Corp. | | |
| | |
| | | |
Electrical Components & Equipment–3.34% |
| | |
| | |
Electrical Components & Equipment–(continued) |
| | |
Rockwell Automation, Inc. | | |
| | | |
Fertilizers & Agricultural Chemicals–0.50% |
| | |
Health Care Distributors–0.73% |
| | |
Health Care Equipment–2.23% |
Boston Scientific Corp.(b) | | |
Zimmer Biomet Holdings, Inc. | | |
| | | |
Health Care Facilities–0.71% |
Tenet Healthcare Corp.(b) | | |
Health Care Supplies–0.73% |
Cooper Cos., Inc. (The)(b) | | |
Home Improvement Retail–1.16% |
| | |
Hotels, Resorts & Cruise Lines–2.15% |
Royal Caribbean Cruises Ltd. | | |
Wyndham Hotels & Resorts, Inc. | | |
| | | |
|
Procter & Gamble Co. (The) | | |
Human Resource & Employment Services–0.93% |
Paylocity Holding Corp.(b) | | |
|
| | |
|
Arthur J. Gallagher & Co. | | |
Integrated Oil & Gas–1.49% |
| | |
Interactive Media & Services–5.98% |
| | |
Meta Platforms, Inc., Class A | | |
| | | |
Internet Services & Infrastructure–0.56% |
| | |
Investment Banking & Brokerage–3.19% |
Charles Schwab Corp. (The) | | |
| | |
Raymond James Financial, Inc. | | |
| | | |
Life Sciences Tools & Services–0.85% |
Lonza Group AG (Switzerland) | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Core Equity Fund
| | |
Managed Health Care–1.84% |
| | |
Multi-line Insurance–1.07% |
American International Group, Inc. | | |
|
| | |
Oil & Gas Exploration & Production–1.48% |
| | |
Oil & Gas Storage & Transportation–0.78% |
| | |
Passenger Ground Transportation–0.73% |
Uber Technologies, Inc.(b) | | |
Personal Care Products–1.44% |
| | |
Estee Lauder Cos., Inc. (The), Class A | | |
| | | |
|
| | |
| | |
| | | |
Property & Casualty Insurance–0.72% |
Hartford Financial Services Group, Inc. (The) | | |
|
| | |
Semiconductor Materials & Equipment–0.62% |
| | |
|
| | |
| | |
| | |
| | | |
Specialty Chemicals–0.50% |
| | |
| | |
|
| | |
| | |
| | | |
Technology Hardware, Storage & Peripherals–6.17% |
| | |
|
Philip Morris International, Inc. | | |
Trading Companies & Distributors–0.66% |
Air Lease Corp., Class A(c) | | |
Transaction & Payment Processing Services–1.61% |
| | |
Total Common Stocks & Other Equity Interests (Cost $485,814,537) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional Class, | | |
Total Money Market Funds (Cost $9,212,472) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.01% (Cost $495,027,009) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $4,388,652) | |
TOTAL INVESTMENTS IN SECURITIES–100.58% (Cost $499,415,661) | |
OTHER ASSETS LESS LIABILITIES—(0.58)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
| – Real Estate Investment Trust |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Core Equity Fund
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Core Equity Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $485,814,537)* | |
Investments in affiliated money market funds, at value (Cost $13,601,124) | |
Foreign currencies, at value (Cost $1,580) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, security with a value of $4,303,610 was on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $5,432) | |
Dividends from affiliated money market funds (includes net securities lending income of $53,667) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Core Equity Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Core Equity Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Core Equity Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Core Equity Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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.
8
Invesco V.I. Core Equity 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. 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.
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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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
9
Invesco V.I. Core Equity Fund
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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $5,571 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. Effective July 1, 2024, 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:
Prior to July 1, 2024, the Fund accrued daily and paid monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.62%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary 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
10
Invesco V.I. Core Equity Fund
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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $7,407.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $102,786 for accounting and fund administrative services and was reimbursed $1,091,236 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $23,164 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
NOTE 4—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.
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.
11
Invesco V.I. Core Equity Fund
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $333,267,083 and $393,229,776, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $501,485,673.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions and federal taxes, on December 31, 2024, undistributed net investment income was increased by $2,524, undistributed net realized gain was increased by $19,771 and shares of beneficial interest was decreased by $22,295. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
12
Invesco V.I. Core Equity Fund
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 63% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
13
Invesco V.I. Core Equity Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Core Equity Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Core Equity Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco V.I. Core Equity Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco V.I. Core Equity Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco V.I. Core Equity Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Core Plus Bond Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VICPB-NCSR
Schedule of Investments(a)
| | |
U.S. Dollar Denominated Bonds & Notes–42.02% |
Aerospace & Defense–0.63% |
BAE Systems Holdings, Inc. (United Kingdom), 3.85%, 12/15/2025(b) | | | |
BAE Systems PLC (United Kingdom), | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
Howmet Aerospace, Inc., 4.85%, 10/15/2031 | | | |
Huntington Ingalls Industries, Inc., | | |
| | | |
| | | |
L3Harris Technologies, Inc., 5.40%, 07/31/2033 | | | |
| | |
| | | |
| | | |
| | | |
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Agricultural & Farm Machinery–0.04% |
| | |
| | | |
| | | |
John Deere Capital Corp., 5.10%, 04/11/2034 | | | |
| | | |
Air Freight & Logistics–0.13% |
| | |
| | | |
| | | |
United Parcel Service, Inc., | | |
| | | |
| | | |
| | | |
| | | |
Application Software–0.13% |
Cadence Design Systems, Inc., 4.70%, 09/10/2034 | | | |
Intuit, Inc., 5.20%, 09/15/2033 | | | |
| | |
Application Software–(continued) |
Roper Technologies, Inc., | | |
| | | |
| | | |
| | | |
SS&C Technologies, Inc., 6.50%, | | | |
| | | |
Asset Management & Custody Banks–0.33% |
Affiliated Managers Group, Inc., 5.50%, 08/20/2034 | | | |
Ameriprise Financial, Inc., | | |
| | | |
| | | |
| | |
| | | |
| | | |
Bank of New York Mellon Corp. (The), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Series J, 4.97%, 04/26/2034(c) | | | |
| | | |
Blackstone Secured Lending Fund, | | |
| | | |
| | | |
Brookfield Corp. (Canada), 4.00%, 01/15/2025 | | | |
Northern Trust Corp., 6.13%, 11/02/2032 | | | |
| | |
| | | |
| | | |
| | | |
Automobile Manufacturers–1.83% |
American Honda Finance Corp., 4.90%, 01/10/2034 | | | |
Daimler Truck Finance North America LLC (Germany), | | |
| | | |
| | | |
Ford Motor Credit Co. LLC, | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Core Plus Bond Fund
| | |
Automobile Manufacturers–(continued) |
Mercedes-Benz Finance North America LLC (Germany), | | |
| | | |
| | | |
| | | |
| | | |
PACCAR Financial Corp., 4.00%, 09/26/2029 | | | |
Toyota Motor Credit Corp., | | |
| | | |
| | | |
| | | |
Volkswagen Group of America Finance LLC (Germany), | | |
| | | |
| | | |
| | | |
Automotive Parts & Equipment–0.51% |
| | |
| | | |
| | | |
| | | |
PHINIA, Inc., 6.63%, 10/15/2032(b) | | | |
ZF North America Capital, Inc. (Germany), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Advance Auto Parts, Inc., 5.95%, 03/09/2028 | | | |
AutoZone, Inc., 5.20%, 08/01/2033 | | | |
O’Reilly Automotive, Inc., 5.00%, 08/19/2034 | | | |
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|
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|
Anheuser-Busch InBev Worldwide, Inc. (Belgium), 8.20%, 01/15/2039 | | | |
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|
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| | | |
| | | |
|
Carrier Global Corp., 5.90%, 03/15/2034 | | | |
Lennox International, Inc., 5.50%, 09/15/2028 | | | |
| | | |
|
CCO Holdings LLC/CCO Holdings Capital Corp., | | |
| | | |
| | | |
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., 6.65%, 02/01/2034 | | | |
Comcast Corp., 5.50%, 11/15/2032 | | | |
Cox Communications, Inc., | | |
| | | |
| | | |
| | | |
Cargo Ground Transportation–0.07% |
Penske Truck Leasing Co. L.P./PTL Finance Corp., | | |
| | | |
| | | |
| | | |
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| | |
| | | |
| | | |
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Commercial & Residential Mortgage Finance–0.17% |
Aviation Capital Group LLC, | | |
| | | |
| | | |
Nationwide Building Society (United Kingdom), 6.56%, | | | |
Radian Group, Inc., 6.20%, 05/15/2029 | | | |
| | | |
Commodity Chemicals–0.03% |
Mativ Holdings, Inc., 8.00%, | | | |
Communications Equipment–0.00% |
Cisco Systems, Inc., 5.30%, 02/26/2054 | | | |
Computer & Electronics Retail–0.00% |
Dell International LLC/EMC Corp., 5.30%, 10/01/2029 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Core Plus Bond Fund
| | |
Construction Machinery & Heavy Transportation Equipment– 0.06% |
| | |
| | | |
| | | |
Northriver Midstream Finance L.P. (Canada), 6.75%, 07/15/2032(b) | | | |
| | | |
Consumer Electronics–0.27% |
LG Electronics, Inc. (South Korea), | | |
| | | |
| | | |
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|
| | |
| | | |
| | | |
Capital One Financial Corp., 7.15%, | | | |
| | | |
General Motors Financial Co., Inc., 5.40%, 04/06/2026 | | | |
OneMain Finance Corp., 6.63%, 05/15/2029 | | | |
| | | |
Consumer Staples Merchandise Retail–0.01% |
Dollar General Corp., 5.50%, 11/01/2052 | | | |
Target Corp., 4.80%, 01/15/2053 | | | |
| | | |
Distillers & Vintners–0.00% |
Constellation Brands, Inc., 4.90%, 05/01/2033 | | | |
|
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|
ABN AMRO Bank N.V. (Netherlands), | | | |
Australia and New Zealand Banking Group Ltd. (Australia), | | |
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Banco Bilbao Vizcaya Argentaria S.A. | | | |
Banco Santander S.A. (Spain), | | |
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Diversified Banks–(continued) |
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Bank of Montreal (Canada), | | |
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| | | |
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Bank of Nova Scotia (The) (Canada), | | |
| | | |
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Barclays PLC (United Kingdom), | | | |
BBVA Bancomer S.A. (Mexico), | | | |
Canadian Imperial Bank of Commerce (Canada), 6.95%, 01/28/2085(c) | | | |
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Series EE, 6.75%(c)(d)(f) | | | |
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| | | |
Cooperatieve Rabobank U.A. (Netherlands), 3.65%, | | | |
Credit Agricole S.A. (France), | | | |
Discover Bank, 4.65%, 09/13/2028 | | | |
Federation des caisses Desjardins du Quebec (Canada), 4.55%, | | | |
| | |
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HSBC Holdings PLC (United Kingdom), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Core Plus Bond Fund
| | |
Diversified Banks–(continued) |
ING Groep N.V. (Netherlands), | | | |
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Series W, 5.79% (3 mo. Term SOFR + 1.26%), 05/15/2047(e) | | | |
| | | |
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Manufacturers & Traders Trust Co., | | |
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Mitsubishi UFJ Financial Group, Inc. (Japan), | | |
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Mizuho Financial Group, Inc. (Japan), | | |
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Morgan Stanley Bank N.A., 5.88%, | | | |
Multibank, Inc. (Panama), 7.75%, | | | |
Nordea Bank Abp (Finland), | | | |
Panama Infrastructure Receivable Purchaser PLC (United Kingdom), | | | |
PNC Financial Services Group, Inc. (The), | | |
| | | |
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Royal Bank of Canada (Canada), | | |
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| | |
Diversified Banks–(continued) |
Standard Chartered PLC (United Kingdom), | | |
| | | |
| | | |
| | | |
Sumitomo Mitsui Financial Group, Inc. | | | |
Sumitomo Mitsui Trust Bank Ltd. (Japan), | | |
| | | |
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Synovus Bank, 5.63%, 02/15/2028 | | | |
Toronto-Dominion Bank (The) (Canada), | | |
| | | |
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UBS AG (Switzerland), 5.65%, 09/11/2028 | | | |
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Westpac Banking Corp. (Australia), | | |
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| | | |
| | | |
Diversified Capital Markets–1.44% |
Ares Strategic Income Fund, 5.70%, | | | |
Blackstone Private Credit Fund, | | |
| | | |
| | | |
Jefferies Finance LLC/JFIN Co-Issuer Corp., 6.63%, 10/15/2031(b) | | | |
SMBC Aviation Capital Finance DAC (Ireland), | | |
| | | |
| | | |
UBS Group AG (Switzerland), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Core Plus Bond Fund
| | |
Diversified Financial Services–2.34% |
Apollo Debt Solutions BDC, 6.90%, | | | |
Apollo Global Management, Inc., 6.38%, 11/15/2033 | | | |
Atlas Warehouse Lending Co. L.P., | | |
| | | |
| | | |
Avolon Holdings Funding Ltd. (Ireland), | | |
| | | |
| | | |
| | | |
| | | |
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| | |
| | | |
| | | |
Blue Owl Technology Finance Corp. II, | | | |
Corebridge Financial, Inc., | | |
| | | |
| | | |
Gabon Blue Bond Master Trust, Series 2, 6.10%, 08/01/2038(b) | | | |
Horizon Mutual Holdings, Inc., | | | |
Jane Street Group/JSG Finance, Inc., | | | |
LPL Holdings, Inc., 5.70%, 05/20/2027 | | | |
Macquarie Airfinance Holdings Ltd. (United Kingdom), | | |
| | | |
| | | |
| | | |
OPEC Fund for International Development (The) (Supranational), 4.50%, | | | |
| | | |
Diversified Metals & Mining–0.17% |
BHP Billiton Finance (USA) Ltd. (Australia), | | |
| | | |
| | | |
| | | |
Corporacion Nacional del Cobre de Chile (Chile), 5.13%, | | | |
Glencore Funding LLC (Australia), | | |
| | | |
| | | |
| | | |
| | | |
|
Brixmor Operating Partnership L.P., 4.13%, 05/15/2029 | | | |
Trust Fibra Uno (Mexico), 5.25%, | | | |
| | |
Diversified REITs–(continued) |
| | |
| | | |
| | | |
| | | |
Diversified Support Services–0.47% |
Amazon Conservation DAC (Ecuador), | | | |
Element Fleet Management Corp. (Canada), 6.32%, 12/04/2028(b) | | | |
Ritchie Bros. Holdings, Inc. (Canada), | | |
| | | |
| | | |
Stena International S.A. (Sweden), | | | |
| | | |
|
CK Hutchison International (23) Ltd. (United Kingdom), 4.88%, | | | |
CVS Pass-Through Trust, 5.77%, | | | |
| | | |
|
| | | |
Alabama Power Co., 5.85%, 11/15/2033 | | | |
Alexander Funding Trust II, 7.47%, | | | |
American Electric Power Co., Inc., | | |
| | | |
| | | |
California Buyer Ltd./Atlantica Sustainable Infrastructure PLC (United Kingdom), 6.38%, | | | |
CenterPoint Energy Houston Electric LLC, | | |
| | | |
| | | |
Series AJ, 4.85%, 10/01/2052 | | | |
Chile Electricity Lux MPC II S.a.r.l. (Chile), 5.58%, 10/20/2035(b) | | | |
Consolidated Edison Co. of New York, Inc., | | |
| | | |
| | | |
Constellation Energy Generation LLC, | | |
| | | |
| | | |
| | | |
Dominion Energy South Carolina, Inc., 6.25%, 10/15/2053 | | | |
Duke Energy Carolinas LLC, 5.35%, 01/15/2053 | | | |
| | |
| | | |
| | | |
| | | |
Duke Energy Indiana LLC, 5.40%, 04/01/2053 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Core Plus Bond Fund
| | |
Electric Utilities–(continued) |
Edison International, 7.88%, | | | |
Electricite de France S.A. (France), | | | |
Enel Finance International N.V. (Italy), | | | |
| | | |
Entergy Louisiana LLC, 5.15%, 09/15/2034 | | | |
Entergy Texas, Inc., 5.55%, 09/15/2054 | | | |
Evergy Metro, Inc., 4.95%, 04/15/2033 | | | |
Eversource Energy, 5.50%, 01/01/2034 | | | |
| | |
| | | |
| | | |
| | | |
FirstEnergy Pennsylvania Electric Co., | | | |
FirstEnergy Transmission LLC, | | |
| | | |
| | | |
Florida Power & Light Co., 4.80%, 05/15/2033 | | | |
Georgia Power Co., 4.95%, 05/17/2033 | | | |
| | |
| | | |
| | | |
| | | |
National Rural Utilities Cooperative Finance Corp., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
NextEra Energy Capital Holdings, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Niagara Mohawk Power Corp., 5.29%, | | | |
Ohio Power Co., 5.65%, 06/01/2034 | | | |
Oklahoma Gas and Electric Co., 5.60%, 04/01/2053 | | | |
Oncor Electric Delivery Co. LLC, | | |
| | | |
| | | |
Pacific Gas and Electric Co., 5.90%, 10/01/2054 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
Electric Utilities–(continued) |
PPL Capital Funding, Inc., 5.25%, 09/01/2034 | | | |
Public Service Co. of Colorado, 5.25%, 04/01/2053 | | | |
Public Service Co. of New Hampshire, 5.35%, 10/01/2033 | | | |
San Diego Gas & Electric Co., | | |
| | | |
| | | |
Sierra Pacific Power Co., 5.90%, 03/15/2054 | | | |
| | |
| | | |
| | | |
Southwestern Electric Power Co., 5.30%, 04/01/2033 | | | |
| | |
| | | |
| | | |
Virginia Electric & Power Co., | | |
| | | |
| | | |
Vistra Operations Co. LLC, | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Electrical Components & Equipment–0.01% |
| | |
| | | |
| | | |
| | | |
Electronic Components–0.08% |
| | |
| | | |
| | | |
| | | |
Electronic Manufacturing Services–0.05% |
EMRLD Borrower L.P./Emerald Co-Issuer, Inc., 6.63%, | | | |
Environmental & Facilities Services–0.10% |
| | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
Waste Management, Inc., 5.35%, 10/15/2054 | | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Core Plus Bond Fund
| | |
Financial Exchanges & Data–0.03% |
Intercontinental Exchange, Inc., | | |
| | | |
| | | |
Moody’s Corp., 5.25%, 07/15/2044 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
Piedmont Natural Gas Co., Inc., 5.40%, 06/15/2033 | | | |
Southwest Gas Corp., 5.45%, 03/23/2028 | | | |
| | | |
Health Care Distributors–0.03% |
Cardinal Health, Inc., 5.45%, 02/15/2034 | | | |
Cencora, Inc., 5.13%, 02/15/2034 | | | |
McKesson Corp., 4.25%, 09/15/2029 | | | |
| | | |
Health Care Equipment–0.09% |
Smith & Nephew PLC (United Kingdom), 5.40%, 03/20/2034 | | | |
| | |
| | | |
| | | |
| | | |
Health Care Facilities–0.21% |
Adventist Health System, 5.76%, 12/01/2034 | | | |
| | |
| | | |
| | | |
Select Medical Corp., 6.25%, | | | |
Universal Health Services, Inc., | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | |
|
Alexandria Real Estate Equities, Inc., | | |
| | | |
| | | |
DOC DR LLC, 4.30%, 03/15/2027 | | | |
| | | |
Health Care Services–1.23% |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
DaVita, Inc., 6.88%, 09/01/2032(b) | | | |
Icon Investments Six DAC, | | |
| | | |
| | | |
| | | |
Laboratory Corp. of America Holdings, 4.35%, 04/01/2030 | | | |
Piedmont Healthcare, Inc., 2.86%, 01/01/2052 | | | |
Providence St. Joseph Health Obligated Group, Series 21-A, 2.70%, 10/01/2051 | | | |
Quest Diagnostics, Inc., 6.40%, 11/30/2033 | | | |
| | | |
Health Care Supplies–0.08% |
| | |
| | | |
| | | |
| | | |
| | | |
Home Improvement Retail–0.02% |
Home Depot, Inc. (The), 4.90%, 04/15/2029 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
Hotel & Resort REITs–0.04% |
Phillips Edison Grocery Center Operating Partnership I L.P., | | |
| | | |
| | | |
| | | |
Hotels, Resorts & Cruise Lines–0.24% |
| | | |
Choice Hotels International, Inc., 5.85%, 08/01/2034 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8
Invesco V.I. Core Plus Bond Fund
| | |
Hotels, Resorts & Cruise Lines–(continued) |
Hilton Domestic Operating Co., Inc., | | |
| | | |
| | | |
Marriott International, Inc., | | |
| | | |
| | | |
| | | |
| | | |
Royal Caribbean Cruises Ltd., | | |
| | | |
| | | |
| | | |
Housewares & Specialties–0.04% |
| | |
| | | |
| | | |
| | | |
Independent Power Producers & Energy Traders–0.06% |
| | | |
Vistra Corp., 7.00%(b)(c)(d) | | | |
| | | |
Industrial Conglomerates–0.06% |
Honeywell International, Inc., | | |
| | | |
| | | |
| | | |
| | | |
Industrial Machinery & Supplies & Components–0.04% |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
nVent Finance S.a.r.l. (United Kingdom), 5.65%, 05/15/2033 | | | |
| | | |
|
Americold Realty Operating Partnership L.P., 5.41%, 09/12/2034 | | | |
LXP Industrial Trust, 6.75%, 11/15/2028 | | | |
| | | |
|
Arthur J. Gallagher & Co., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
AssuredPartners, Inc., 7.50%, | | | |
| | |
Insurance Brokers–(continued) |
Marsh & McLennan Cos., Inc., | | |
| | | |
| | | |
| | | |
| | | |
Integrated Oil & Gas–0.64% |
BP Capital Markets PLC, 6.13%(c)(d) | | | |
Ecopetrol S.A. (Colombia), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Occidental Petroleum Corp., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Integrated Telecommunication Services–0.16% |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
Verizon Communications, Inc., 2.85%, 09/03/2041 | | | |
Zegona Finance PLC (United Kingdom), 8.63%, 07/15/2029(b) | | | |
| | | |
Interactive Media & Services–0.23% |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Internet Services & Infrastructure–0.02% |
Wayfair LLC, 7.25%, 10/31/2029(b) | | | |
Investment Banking & Brokerage–1.44% |
Brookfield Finance, Inc. (Canada), 5.97%, 03/04/2054 | | | |
Charles Schwab Corp. (The), | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9
Invesco V.I. Core Plus Bond Fund
| | |
Investment Banking & Brokerage–(continued) |
Goldman Sachs Group, Inc. (The), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Saks Global Enterprises LLC, 11.00%, | | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
Life & Health Insurance–1.53% |
AIA Group Ltd. (Hong Kong), | | |
| | | |
| | | |
| | | |
Athene Global Funding, 5.58%, | | | |
Athene Holding Ltd., 6.25%, 04/01/2054 | | | |
Corebridge Global Funding, | | |
| | | |
| | | |
| | | |
F&G Annuities & Life, Inc., 7.40%, 01/13/2028 | | | |
GA Global Funding Trust, 5.50%, | | | |
MAG Mutual Holding Co., 4.75%, | | | |
Manulife Financial Corp. (Canada), | | | |
MetLife, Inc., 5.25%, 01/15/2054 | | | |
| | |
Life & Health Insurance–(continued) |
Nippon Life Insurance Co. (Japan), | | | |
Pacific Life Global Funding II, 5.15% (SOFR + 0.80%), | | | |
Penn Mutual Life Insurance Co. (The), | | | |
Pricoa Global Funding I, 4.65%, | | | |
Sumitomo Life Insurance Co. (Japan), | | | |
| | | |
Managed Health Care–0.04% |
Humana, Inc., 5.75%, 12/01/2028 | | | |
UnitedHealth Group, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Marine Transportation–0.00% |
A.P. Moller - Maersk A/S (Denmark), | | | |
Movies & Entertainment–0.13% |
Netflix, Inc., 5.40%, 08/15/2054 | | | |
Warnermedia Holdings, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Multi-Family Residential REITs–0.15% |
AvalonBay Communities, Inc., 5.30%, 12/07/2033 | | | |
Essex Portfolio L.P., 5.50%, 04/01/2034 | | | |
Invitation Homes Operating Partnership L.P., 4.88%, 02/01/2035 | | | |
Mid-America Apartments L.P., 5.30%, 02/15/2032 | | | |
UDR, Inc., 5.13%, 09/01/2034 | | | |
| | | |
Multi-line Insurance–0.29% |
Allianz SE (Germany), 3.50%(b)(c)(d) | | | |
Metropolitan Life Global Funding I, | | | |
| | | |
|
Algonquin Power & Utilities Corp. (Canada), 5.37%, 06/15/2026 | | | |
Ameren Illinois Co., 4.95%, 06/01/2033 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10
Invesco V.I. Core Plus Bond Fund
| | |
Multi-Utilities–(continued) |
Black Hills Corp., 6.15%, 05/15/2034 | | | |
| | |
| | | |
| | | |
Series B, 7.00%, 06/01/2054(c) | | | |
Series A, 6.88%, 02/01/2055(c) | | | |
DTE Electric Co., 5.20%, 03/01/2034 | | | |
| | |
| | | |
| | | |
ENGIE S.A. (France), 5.25%, | | | |
| | |
| | | |
| | | |
| | | |
| | | |
Public Service Enterprise Group, Inc., 5.88%, 10/15/2028 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
WEC Energy Group, Inc., 5.15%, 10/01/2027 | | | |
| | | |
|
Boston Properties L.P., 5.75%, 01/15/2035 | | | |
Brandywine Operating Partnership L.P., | | |
| | | |
| | | |
| | |
| | | |
| | | |
Office Properties Income Trust, | | | |
Piedmont Operating Partnership L.P., | | |
| | | |
| | | |
| | | |
|
Patterson-UTI Energy, Inc., 7.15%, 10/01/2033 | | | |
Oil & Gas Equipment & Services–0.00% |
Northern Natural Gas Co., 5.63%, | | | |
Oil & Gas Exploration & Production–0.42% |
Aethon United BR L.P./Aethon United Finance Corp., 7.50%, | | | |
ConocoPhillips Co., 5.70%, 09/15/2063 | | | |
| | |
Oil & Gas Exploration & Production–(continued) |
Diamondback Energy, Inc., | | |
| | | |
| | | |
| | | |
| | | |
Expand Energy Corp., 5.38%, 03/15/2030 | | | |
Hilcorp Energy I L.P./Hilcorp Finance Co., | | |
| | | |
| | | |
Transocean Titan Financing Ltd., | | | |
| | | |
Oil & Gas Refining & Marketing–0.13% |
Phillips 66 Co., 5.30%, 06/30/2033 | | | |
Raizen Fuels Finance S.A. (Brazil), | | | |
| | | |
Oil & Gas Storage & Transportation–1.90% |
Antero Midstream Partners L.P./Antero Midstream Finance Corp., 6.63%, 02/01/2032(b) | | | |
Cheniere Energy Partners L.P., 5.95%, 06/30/2033 | | | |
Columbia Pipelines Holding Co. LLC, | | |
| | | |
| | | |
Columbia Pipelines Operating Co. LLC, | | | |
Eastern Energy Gas Holdings LLC, 5.65%, 10/15/2054 | | | |
| | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
GreenSaif Pipelines Bidco S.a.r.l. (Saudi Arabia), | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
NGL Energy Operating LLC/NGL Energy Finance Corp., 8.38%, | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11
Invesco V.I. Core Plus Bond Fund
| | |
Oil & Gas Storage & Transportation–(continued) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
South Bow Canadian Infrastructure Holdings Ltd. (Canada), | | |
| | | |
| | | |
South Bow USA Infrastructure Holdings LLC (Canada), | | |
| | | |
| | | |
| | | |
Southern Co. Gas Capital Corp., 5.75%, 09/15/2033 | | | |
Tallgrass Energy Partners L.P./Tallgrass Energy Finance Corp., 7.38%, 02/15/2029(b) | | | |
| | |
| | | |
| | | |
Venture Global LNG, Inc., | | |
| | | |
| | | |
| | | |
Western Midstream Operating L.P., | | |
| | | |
| | | |
Williams Cos., Inc. (The), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Other Specialized REITs–0.04% |
Iron Mountain, Inc., 6.25%, | | | |
Other Specialty Retail–0.00% |
Tractor Supply Co., 5.25%, 05/15/2033 | | | |
Packaged Foods & Meats–0.42% |
| | |
| | | |
| | | |
| | | |
Gruma, S.A.B. de C.V. (Mexico), | | | |
J.M. Smucker Co. (The), 6.20%, | | | |
McCormick & Co., Inc., 4.70%, 10/15/2034 | | | |
Minerva (Luxembourg) S.A. (Brazil), | | | |
Post Holdings, Inc., 6.25%, | | | |
| | | |
| | |
Paper & Plastic Packaging Products & Materials–0.31% |
Graphic Packaging International LLC, | | | |
| | |
| | | |
| | | |
Smurfit Kappa Treasury Unlimited Co. (Ireland), | | |
| | | |
| | | |
| | | |
| | | |
|
| | | |
|
American Airlines Pass-Through Trust, Series 2021-1, Class A, 2.88%, 07/11/2034 | | | |
American Airlines, Inc./AAdvantage Loyalty IP Ltd., 5.50%, | | | |
| | |
| | | |
| | | |
British Airways Pass-Through Trust (United Kingdom), Series 2021-1, Class A, 2.90%, 03/15/2035(b) | | | |
Delta Air Lines, Inc./SkyMiles IP Ltd., | | |
| | | |
| | | |
United Airlines Pass-Through Trust, | | |
Series 2020-1, Class A, 5.88%, 10/15/2027 | | | |
Series 24-A, 5.88%, 02/15/2037 | | | |
Series AA, 5.45%, 02/15/2037 | | | |
| | | |
Passenger Ground Transportation–0.13% |
| | |
| | | |
| | | |
| | | |
| | | |
Personal Care Products–0.25% |
Coty, Inc., 5.00%, 04/15/2026(b)(f) | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
AstraZeneca Finance LLC (United Kingdom), | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12
Invesco V.I. Core Plus Bond Fund
| | |
Pharmaceuticals–(continued) |
Bristol-Myers Squibb Co., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
Novartis Capital Corp. (Switzerland), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Property & Casualty Insurance–0.15% |
Allstate Corp. (The), 4.20%, 12/15/2046 | | | |
Fairfax Financial Holdings Ltd. (Canada), | | |
| | | |
| | | |
Markel Group, Inc., 6.00%(c)(d) | | | |
Travelers Cos., Inc. (The), 5.45%, 05/25/2053 | | | |
| | | |
Rail Transportation–0.04% |
CSX Corp., 4.90%, 03/15/2055 | | | |
| | |
| | | |
| | | |
| | | |
Union Pacific Corp., 5.15%, 01/20/2063 | | | |
| | | |
|
Citizens Financial Group, Inc., | | | |
Huntington Bancshares, Inc., 4.00%, 05/15/2025 | | | |
Regions Financial Corp., 5.72%, | | | |
Synovus Financial Corp., 6.17%, | | | |
| | |
Regional Banks–(continued) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Global Atlantic (Fin) Co., | | |
| | | |
| | | |
| | | |
| | | |
Renewable Electricity–0.01% |
Idaho Power Co., 5.20%, 08/15/2034 | | | |
|
1011778 BC ULC/New Red Finance, Inc. (Canada), 5.63%, | | | |
| | |
| | | |
| | | |
| | | |
Raising Cane’s Restaurants LLC, | | | |
| | | |
|
Agree L.P., 5.63%, 06/15/2034 | | | |
Brixmor Operating Partnership L.P., 5.75%, 02/15/2035 | | | |
Kimco Realty OP LLC, 4.85%, 03/01/2035 | | | |
| | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
Simon Property Group L.P., 4.75%, 09/26/2034 | | | |
| | | |
|
Extra Space Storage L.P., | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13
Invesco V.I. Core Plus Bond Fund
| | |
Self-Storage REITs–(continued) |
Goodman US Finance Six LLC (Australia), 5.13%, | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Public Storage Operating Co., | | |
| | | |
| | | |
| | | |
| | | |
|
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
Micron Technology, Inc., 5.30%, 01/15/2031 | | | |
| | | |
Single-Family Residential REITs–0.09% |
American Homes 4 Rent L.P., | | |
| | | |
| | | |
Dell International LLC/EMC Corp., 6.02%, 06/15/2026 | | | |
| | | |
Soft Drinks & Non-alcoholic Beverages–0.04% |
Coca-Cola Co. (The), 5.40%, 05/13/2064 | | | |
|
Brazilian Government International Bond (Brazil), | | |
| | | |
| | | |
| | | |
Colombia Government International Bond (Colombia), 7.75%, 11/07/2036 | | | |
Costa Rica Government International Bond (Costa Rica), 7.30%, | | | |
Guatemala Government Bond (Guatemala), 6.05%, | | | |
Peruvian Government International Bond (Peru), 5.38%, 02/08/2035 | | | |
Republic of Poland Government International Bond (Poland), 5.75%, 11/16/2032 | | | |
| | |
Sovereign Debt–(continued) |
Romanian Government International Bond (Romania), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Trinidad & Tobago Government International Bond (Trinidad), | | | |
| | | |
Specialized Finance–0.03% |
Jefferson Capital Holdings LLC, | | | |
Specialty Chemicals–0.41% |
Sasol Financing USA LLC (South Africa), | | |
| | | |
| | | |
Sociedad Quimica y Minera de Chile S.A. (Chile), 6.50%, | | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
POSCO (South Korea), 5.63%, | | | |
Vale Overseas Ltd. (Brazil), 6.40%, 06/28/2054 | | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Technology Hardware, Storage & Peripherals–0.19% |
| | |
| | | |
| | | |
Hewlett Packard Enterprise Co., | | |
| | | |
| | | |
Leidos, Inc., 5.75%, 03/15/2033 | | | |
| | | |
Telecom Tower REITs–0.00% |
American Tower Corp., 4.00%, 06/01/2025 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14
Invesco V.I. Core Plus Bond Fund
| | |
|
B.A.T Capital Corp. (United Kingdom), | | |
| | | |
| | | |
| | | |
| | | |
Philip Morris International, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Trading Companies & Distributors–0.41% |
Air Lease Corp., Series D, 6.00%(c)(d) | | | |
Ferguson Enterprises, Inc., 5.00%, 10/03/2034 | | | |
Fortress Transportation and Infrastructure Investors LLC, | | | |
Mitsubishi Corp. (Japan), | | |
| | | |
| | | |
| | | |
Transaction & Payment Processing Services–0.04% |
| | |
| | | |
| | | |
| | | |
Mastercard, Inc., 4.85%, 03/09/2033 | | | |
| | | |
Wireless Telecommunication Services–0.12% |
Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC/Sprint Spectrum Co. III LLC, | | |
| | | |
| | | |
Vodafone Group PLC (United Kingdom), 5.13%, 06/04/2081(c) | | | |
| | | |
Total U.S. Dollar Denominated Bonds & Notes (Cost $62,360,204) | |
|
Asset-Backed Securities–20.62% |
Adjustable Rate Mortgage Trust, Series 2004-2, Class 6A1, | | | |
AMSR Trust, Series 2021-SFR3, Class B, 1.73%, 10/17/2038(b) | | | |
| | |
|
Angel Oak Mortgage Trust, | | |
Series 2020-1, Class A1, 2.16%, | | | |
Series 2020-3, Class A1, 1.69%, | | | |
Series 2020-5, Class A1, 1.37%, | | | |
Series 2021-3, Class A1, 1.07%, | | | |
Series 2021-7, Class A1, 1.98%, | | | |
Series 2022-1, Class A1, 2.88%, | | | |
Series 2023-6, Class A1, 6.50%, | | | |
Series 2024-10, Class A1, | | | |
Series 2024-2, Class A1, 5.99%, | | | |
Apidos CLO XII, Series 2013-12A, Class ARR, 5.74% (3 mo. Term SOFR + 1.08%), 04/15/2031(b)(e) | | | |
Apidos CLO XXV, Series 2016-25A, Class A1R3, 5.47% (3 mo. Term SOFR + 1.14%), 01/20/2037(b)(e) | | | |
Avis Budget Rental Car Funding (AESOP) LLC, | | |
Series 2022-1A, Class A, 3.83%, | | | |
Series 2023-1A, Class A, 5.25%, | | | |
Series 2023-4A, Class A, 5.49%, | | | |
Bain Capital Credit CLO Ltd., Series 2021-1A, Class A, 5.95% (3 mo. Term SOFR + 1.32%), | | | |
Banc of America Commercial Mortgage Trust, Series 2015- UBS7, Class AS, 3.99%, | | | |
Banc of America Funding Trust, | | |
Series 2007-1, Class 1A3, 6.00%, 01/25/2037 | | | |
Series 2007-C, Class 1A4, | | | |
Banc of America Mortgage Trust, Series 2007-1, Class 1A24, 6.00%, 03/25/2037 | | | |
Bank, Series 2019-BNK16, Class XA, | | | |
Bank5, Series 2024-5YR10, Class A, 5.64%, 10/15/2057 | | | |
Bayview MSR Opportunity Master Fund Trust, | | |
Series 2021-4, Class A3, 3.00%, | | | |
Series 2021-4, Class A4, 2.50%, | | | |
Series 2021-4, Class A8, 2.50%, | | | |
Series 2021-5, Class A1, 3.00%, | | | |
Series 2021-5, Class A2, 2.50%, | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15
Invesco V.I. Core Plus Bond Fund
| | |
|
Bear Stearns Adjustable Rate Mortgage Trust, | | |
Series 2005-9, Class A1, 0.76% (1 yr. U.S. Treasury Yield Curve Rate + 2.30%), 10/25/2035(e) | | | |
Series 2006-1, Class A1, 0.65% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), 02/25/2036(e) | | | |
Benchmark Mortgage Trust, | | |
Series 2018-B1, Class XA, IO, | | | |
Series 2018-B3, Class C, 4.55%, | | | |
Series 2019-B14, Class A5, 3.05%, 12/15/2062 | | | |
Series 2019-B15, Class B, 3.56%, 12/15/2072 | | | |
BRAVO Residential Funding Trust, Series 2021-NQM2, Class A1, | | | |
BX Commercial Mortgage Trust, | | |
Series 2021-ACNT, Class A, 5.36% (1 mo. Term SOFR + | | | |
Series 2021-VOLT, Class A, 5.21% (1 mo. Term SOFR + | | | |
Series 2021-VOLT, Class B, 5.46% (1 mo. Term SOFR + | | | |
Series 2021-VOLT, Class D, 6.16% (1 mo. Term SOFR + | | | |
Series 2024-VLT5, Class A, | | | |
Series 2024-VLT5, Class B, | | | |
| | |
Series 2022-CLS, Class A, 5.76%, | | | |
Series 2022-LBA6, Class A, 5.40% (1 mo. Term SOFR + | | | |
Series 2022-LBA6, Class B, 5.70% (1 mo. Term SOFR + | | | |
Series 2022-LBA6, Class C, 6.00% (1 mo. Term SOFR + | | | |
Carlyle Global Market Strategies CLO Ltd., | | |
Series 2015-4A, Class A1RR, 5.84% (3 mo. Term SOFR + | | | |
Series 2015-5A, Class A1R3, 5.72% (3 mo. Term SOFR + | | | |
CD Mortgage Trust, Series 2017-CD6, Class XA, IO, 0.89%, | | | |
Cedar Funding XI CLO Ltd., Series 2019-11A, Class A1R2, 5.57% (3 mo. Term SOFR + | | | |
| | |
|
Chase Home Lending Mortgage Trust, | | |
Series 2019-ATR1, Class A15, | | | |
Series 2019-ATR2, Class A3, | | | |
Series 2024-9, Class A4, 5.50%, | | | |
Chase Mortgage Finance Corp., | | |
Series 2016-SH1, Class M3, | | | |
Series 2016-SH2, Class M3, | | | |
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, | | | |
CIFC Funding Ltd., Series 2016-1A, Class AR3, 0.00% (3 mo. Term SOFR + 1.00%), | | | |
Citigroup Commercial Mortgage Trust, Series 2017-C4, Class XA, IO, | | | |
Citigroup Mortgage Loan Trust, Inc., | | |
Series 2006-AR1, Class 1A1, 7.20% (1 yr. U.S. Treasury Yield Curve Rate + 2.40%), | | | |
Series 2021-INV3, Class A3, | | | |
Series 2024-1, Class A3A, | | | |
Clover CLO LLC, Series 2021-3A, Class AR, 0.00% (3 mo. Term SOFR + 1.07%), | | | |
COLT Mortgage Loan Trust, | | |
Series 2021-5, Class A1, 1.73%, | | | |
Series 2022-1, Class A1, 2.28%, | | | |
Series 2022-2, Class A1, 2.99%, | | | |
Series 2022-3, Class A1, 3.90%, | | | |
Commercial Mortgage Trust, Series 2015-CR25, Class B, | | | |
Countrywide Home Loans Mortgage Pass-Through Trust, | | |
Series 2005-17, Class 1A8, 5.50%, 09/25/2035 | | | |
Series 2005-26, Class 1A8, 5.50%, 11/25/2035 | | | |
Series 2005-J4, Class A7, 5.50%, 11/25/2035 | | | |
Credit Suisse Mortgage Capital Trust, | | |
Series 2021-NQM1, Class A1, | | | |
Series 2021-NQM2, Class A1, | | | |
Series 2022-ATH1, Class A1A, | | | |
Series 2022-ATH1, Class A1B, | | | |
Series 2022-ATH2, Class A1, | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16
Invesco V.I. Core Plus Bond Fund
| | |
|
| | |
Series 2024-H2, Class A1, | | | |
Series 2024-H8, Class A1, | | | |
CSAIL Commercial Mortgage Trust, Series 2020-C19, Class A3, 2.56%, 03/15/2053 | | | |
CSFB Mortgage-Backed Pass-Through Ctfs., Series 2004-AR5, Class 3A1, 4.76%, 06/25/2034(i) | | | |
CSMC Mortgage-Backed Trust, Series 2006-6, Class 1A4, 6.00%, 07/25/2036 | | | |
| | |
Series 2019-1A, Class A23, | | | |
Series 2019-1A, Class A2II, | | | |
Domino’s Pizza Master Issuer LLC, Series 2019-1A, Class A2, | | | |
Ellington Financial Mortgage Trust, | | |
Series 2019-2, Class A1, 2.74%, | | | |
Series 2020-1, Class A1, 2.01%, | | | |
Series 2021-1, Class A1, 0.80%, | | | |
Series 2022-1, Class A1, 2.21%, | | | |
Series 2022-3, Class A1, 5.00%, | | | |
Series 2024-INV2, Class A1, | | | |
Enterprise Fleet Financing LLC, | | |
Series 2024-2, Class A4, 5.69%, | | | |
Series 2024-4, Class A3, 4.56%, | | | |
Extended Stay America Trust, Series 2021-ESH, Class B, 5.89% (1 mo. Term SOFR + 1.49%), | | | |
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA8, Class 1A6, 5.10% (1 mo. Term SOFR + 0.76%), 11/25/2035(e) | | | |
| | |
Series 2021-11IN, Class A6, | | | |
Series 2021-8INV, Class A6, | | | |
Frontier Issuer LLC, Series 2023-1, Class A2, 6.60%, 08/20/2053(b) | | | |
GCAT Trust, Series 2019-NQM3, Class A1, 3.69%, | | | |
GMACM Mortgage Loan Trust, Series 2006-AR1, Class 1A1, | | | |
GoldenTree Loan Management US CLO 5 Ltd., Series 2019-5A, Class ARR, 5.69% (3 mo. Term SOFR + 1.07%), 10/20/2032(b)(e) | | | |
| | |
|
GoldenTree Loan Management US CLO 8 Ltd., Series 2020-8A, Class ARR, 5.75% (3 mo. Term SOFR + 1.15%), 10/20/2034(b)(e) | | | |
Golub Capital Partners CLO 40(B) Ltd., Series 2019-40A, Class AR, 5.98% (3 mo. Term SOFR + | | | |
GS Mortgage Securities Trust, | | |
Series 2020-GC45, Class A5, 2.91%, 02/13/2053 | | | |
Series 2020-GC47, Class A5, 2.38%, 05/12/2053 | | | |
GS Mortgage-Backed Securities Trust, Series 2021-INV1, Class A6, | | | |
GSR Mortgage Loan Trust, Series 2005-AR4, Class 6A1, | | | |
Hertz Vehicle Financing III L.P., | | |
Series 2021-2A, Class A, 1.68%, | | | |
Series 2021-2A, Class B, 2.12%, | | | |
HPEFS Equipment Trust, Series 2023-2A, Class A2, | | | |
Invitation Homes Trust, Series 2024-SFR1, Class A, | | | |
JP Morgan Chase Commercial Mortgage Securities Trust, Series 2013-LC11, Class AS, 3.22%, 04/15/2046 | | | |
JP Morgan Mortgage Trust, | | |
Series 2007-A1, Class 5A1, | | | |
Series 2021-LTV2, Class A1, | | | |
Series 2024-8, Class A3, 5.50%, | | | |
Series 2024-VIS1, Class A1, | | | |
JPMBB Commercial Mortgage Securities Trust, | | |
Series 2014-C24, Class B, | | | |
Series 2014-C25, Class AS, 4.07%, 11/15/2047 | | | |
Series 2015-C27, Class XA, IO, | | | |
KKR CLO 15 Ltd., Series 15, Class A1R2, 5.73% (3 mo. Term SOFR + 1.10%), 01/18/2032(b)(e) | | | |
| | |
Series 2021-BMR, Class A, 5.21% (1 mo. Term SOFR + 0.81%), | | | |
Series 2021-BMR, Class B, 5.39% (1 mo. Term SOFR + 0.99%), | | | |
Series 2021-BMR, Class C, 5.61% (1 mo. Term SOFR + 1.21%), | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17
Invesco V.I. Core Plus Bond Fund
| | |
|
Madison Park Funding XLVIII Ltd., Series 2021-48A, Class A, 6.03% (3 mo. Term SOFR + 1.41%), | | | |
MASTR Asset Backed Securities Trust, Series 2006-WMC3, Class A3, 4.65% (1 mo. Term SOFR + | | | |
Mello Mortgage Capital Acceptance Trust, | | |
Series 2021-INV2, Class A4, | | | |
Series 2021-INV3, Class A4, | | | |
Merrill Lynch Mortgage Investors Trust, Series 2005-3, Class 3A, | | | |
MFA Trust, Series 2021-INV2, Class A1, 1.91%, | | | |
MHP Commercial Mortgage Trust, | | |
Series 2021-STOR, Class A, 5.21% (1 mo. Term SOFR + | | | |
Series 2021-STOR, Class B, 5.41% (1 mo. Term SOFR + | | | |
Morgan Stanley Capital I Trust, | | |
Series 2017-HR2, Class XA, IO, | | | |
Series 2019-L2, Class A4, 4.07%, 03/15/2052 | | | |
Series 2019-L3, Class AS, 3.49%, 11/15/2052 | | | |
Morgan Stanley Re-REMIC Trust, Series 2012-R3, Class 1B, | | | |
Morgan Stanley Residential Mortgage Loan Trust, | | |
Series 2024-3, Class A1, 6.00%, | | | |
Series 2024-NQM5, Class A1, | | | |
Neuberger Berman Loan Advisers CLO 40 Ltd., Series 2021-40A, Class A, 5.97% (3 mo. Term SOFR + 1.32%), 04/16/2033(b)(e) | | | |
Neuberger Berman Loan Advisers CLO 49 Ltd., Series 2022-49A, Class AR, 5.78% (3 mo. Term SOFR + 1.15%), 07/25/2035(b)(e) | | | |
New Residential Mortgage Loan Trust, | | |
Series 2019-NQM4, Class A1, | | | |
Series 2020-NQM1, Class A1, | | | |
Series 2022-NQM2, Class A1, | | | |
Series 2024-NQM3, Class A1, | | | |
| | |
|
| | |
Series 2021-NQM4, Class A1, | | | |
Series 2022-NQM1, Class A1, | | | |
Series 2022-NQM2, Class A1B, | | | |
Series 2024-NQM14, Class A1, | | | |
Series 2024-NQM18, Class A1, | | | |
Oceanview Mortgage Trust, Series 2021-3, Class A5, 2.50%, | | | |
OCP CLO Ltd., Series 2020-8RA, Class AR, 5.77% (3 mo. Term SOFR + 1.25%), 10/17/2036(b)(e) | | | |
One Bryant Park Trust, Series 2019-OBP, Class A, 2.52%, | | | |
Progress Residential Trust, | | |
Series 2021-SFR10, Class A, | | | |
Series 2022-SFR5, Class A, | | | |
Qdoba Funding LLC, Series 2023-1A, Class A2, 8.50%, 09/14/2053(b) | | | |
Rate Mortgage Trust, Series 2024- J4, Class A1, 6.00%, | | | |
Residential Accredit Loans, Inc. Trust, | | |
Series 2006-QS13, Class 1A8, 6.00%, 09/25/2036 | | | |
Series 2007-QS6, Class A28, 5.75%, 04/25/2037 | | | |
Residential Mortgage Loan Trust, Series 2020-1, Class A1, 2.38%, | | | |
RUN Trust, Series 2022-NQM1, Class A1, 4.00%, 03/25/2067(b) | | | |
SG Residential Mortgage Trust, | | |
Series 2022-1, Class A1, 3.17%, | | | |
Series 2022-1, Class A2, 3.58%, | | | |
Shackleton CLO Ltd., Series 2015- 7RA, Class ARR, 5.76% (3 mo. Term SOFR + 1.10%), | | | |
Signal Peak CLO 1 Ltd., Series 2014-1A, Class AR4, 5.42% (3 mo. Term SOFR + | | | |
| | |
Series 2020-1A, Class A2I, | | | |
Series 2021-1A, Class A2I, | | | |
Series 2021-1A, Class A2II, | | | |
STAR Trust, Series 2021-1, Class A1, | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18
Invesco V.I. Core Plus Bond Fund
| | |
|
Starwood Mortgage Residential Trust, | | |
Series 2020-1, Class A1, 2.28%, | | | |
Series 2020-INV1, Class A1, | | | |
Series 2021-6, Class A1, 1.92%, | | | |
Series 2022-1, Class A1, 2.45%, | | | |
Structured Adjustable Rate Mortgage Loan Trust, Series 2004-12, Class 3A2, 5.87%, | | | |
Structured Asset Securities Corp. Mortgage Pass-Through Ctfs., Series 2003-34A, Class 5A5, | | | |
| | |
Series 2024-1A, Class A23, | | | |
Series 2024-1A, Class A2I, | | | |
Series 2024-1A, Class A2I, | | | |
Series 2024-3A, Class A23, | | | |
Series 2024-3A, Class A2I, | | | |
Series 2024-3A, Class A2I, | | | |
Symphony CLO XX Ltd., Series 2018-20A, Class AR2, 5.75% (3 mo. Term SOFR + | | | |
Symphony CLO XXII Ltd., Series 2020-22A, Class A1AR, 5.81% (3 mo. Term SOFR + | | | |
Synchrony Card Funding LLC, | | |
Series 2022-A2, Class A, 3.86%, 07/15/2028 | | | |
Series 2024-A2, Class A, 4.93%, 07/15/2030 | | | |
Textainer Marine Containers VII Ltd., Series 2021-2A, Class A, 2.23%, | | | |
Thornburg Mortgage Securities Trust, Series 2005-1, Class A3, 4.66%, | | | |
TierPoint Issuer LLC, Series 2023-1A, Class A2, 6.00%, 06/25/2053(b) | | | |
Tricon American Homes Trust, Series 2020-SFR2, Class A, | | | |
UBS Commercial Mortgage Trust, | | |
Series 2017-C5, Class XA, IO, | | | |
Series 2019-C16, Class A4, 3.60%, 04/15/2052 | | | |
| | |
|
Verus Securitization Trust, | | |
Series 2020-1, Class A1, 3.42%, | | | |
Series 2020-1, Class A2, 3.64%, | | | |
Series 2021-1, Class A1B, 1.32%, | | | |
Series 2021-7, Class A1, 1.83%, | | | |
Series 2021-R1, Class A1, | | | |
Series 2022-1, Class A1, 2.72%, | | | |
Series 2022-3, Class A1, 4.13%, | | | |
Series 2022-7, Class A1, 5.15%, | | | |
Series 2022-INV2, Class A1, | | | |
Series 2024-7, Class A1, 5.10%, | | | |
Visio Trust, Series 2020-1R, Class A1, 1.31%, 11/25/2055(b) | | | |
WaMu Mortgage Pass-Through Ctfs. Trust, | | |
Series 2003-AR10, Class A7, | | | |
Series 2005-AR14, Class 1A4, | | | |
Series 2005-AR16, Class 1A1, | | | |
Wells Fargo Commercial Mortgage Trust, Series 2017-C42, Class XA, | | | |
Wendy’s Funding LLC, Series 2018- 1A, Class A2II, 3.88%, | | | |
WF Card Issuance Trust, Series 2024-A1, Class A, 4.94%, 02/15/2029 | | | |
WFRBS Commercial Mortgage Trust, Series 2013-C14, Class AS, 3.49%, 06/15/2046 | | | |
| | |
Series 2021-1A, Class A2, | | | |
Series 2024-1A, Class A2I, | | | |
Ziply Fiber Issuer LLC, Series 2024-1A, Class A2, | | | |
Total Asset-Backed Securities (Cost $32,447,820) | |
U.S. Government Sponsored Agency Mortgage-Backed Securities–16.93% |
Collateralized Mortgage Obligations–0.47% |
Fannie Mae Interest STRIPS, | | |
| | | |
| | | |
| | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19
Invesco V.I. Core Plus Bond Fund
| | |
Collateralized Mortgage Obligations–(continued) |
| | |
| | | |
2.42% (7.10% - (30 Day Average SOFR + 0.11%)), | | | |
3.19% (7.90% - (30 Day Average SOFR + 0.11%)), 11/18/2031 to | | | |
3.22% (7.90% - (30 Day Average SOFR + 0.11%)), | | | |
2.57% (7.25% - (30 Day Average SOFR + 0.11%)), | | | |
3.27% (7.95% - (30 Day Average SOFR + 0.11%)), | | | |
3.29% (8.00% - (30 Day Average SOFR + 0.11%)), 03/18/2032 to | | | |
3.42% (8.10% - (30 Day Average SOFR + 0.11%)), 03/25/2032 to | | | |
2.32% (7.00% - (30 Day Average SOFR + 0.11%)), 04/25/2032 to | | | |
3.12% (7.80% - (30 Day Average SOFR + 0.11%)), | | | |
3.32% (8.00% - (30 Day Average SOFR + 0.11%)), 04/25/2032 to | | | |
3.39% (8.10% - (30 Day Average SOFR + 0.11%)), | | | |
3.57% (8.25% - (30 Day Average SOFR + 0.11%)), 02/25/2033 to | | | |
| | | |
1.37% (6.05% - (30 Day Average SOFR + 0.11%)), 03/25/2035 to | | | |
2.07% (6.75% - (30 Day Average SOFR + 0.11%)), 03/25/2035 to | | | |
1.92% (6.60% - (30 Day Average SOFR + 0.11%)), | | | |
2.02% (6.70% - (30 Day Average SOFR + 0.11%)), | | | |
| | | |
1.42% (6.10% - (30 Day Average SOFR + 0.11%)), | | | |
| | | |
1.87% (6.55% - (30 Day Average SOFR + 0.11%)), | | | |
1.47% (6.15% - (30 Day Average SOFR + 0.11%)), | | | |
| | | |
| | |
Collateralized Mortgage Obligations–(continued) |
1.22% (5.90% - (30 Day Average SOFR + 0.11%)), | | | |
6.50%, 10/25/2028 to 10/25/2031 | | | |
6.00%, 11/25/2028 to 12/25/2031 | | | |
4.93% (30 Day Average SOFR + | | | |
7.39% (24.57% - (3.67 x (30 Day Average SOFR + 0.11%))), | | | |
7.03% (24.20% - (3.67 x (30 Day Average SOFR + 0.11%))), | | | |
7.03% (24.20% - (3.67 x (30 Day Average SOFR + 0.11%))), | | | |
5.62% (30 Day Average SOFR + | | | |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | |
Series K734, Class X1, IO,
| | | |
Series K735, Class X1, IO,
| | | |
| | | |
| | | |
| | | |
| | | |
Series K093, Class X1, IO,
| | | |
| | |
IO,
2.94% (7.65% - (30 Day Average SOFR + 0.11%)), 07/15/2026 to | | | |
| | | |
| | | |
3.39% (8.10% - (30 Day Average SOFR + 0.11%)), | | | |
1.99% (6.70% - (30 Day Average SOFR + 0.11%)), | | | |
2.04% (6.75% - (30 Day Average SOFR + 0.11%)), | | | |
2.01% (6.72% - (30 Day Average SOFR + 0.11%)), | | | |
1.44% (6.15% - (30 Day Average SOFR + 0.11%)), | | | |
2.29% (7.00% - (30 Day Average SOFR + 0.11%)), | | | |
1.29% (6.00% - (30 Day Average SOFR + 0.11%)), | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20
Invesco V.I. Core Plus Bond Fund
| | |
Collateralized Mortgage Obligations–(continued) |
1.36% (6.07% - (30 Day Average SOFR + 0.11%)), | | | |
1.54% (6.25% - (30 Day Average SOFR + 0.11%)), | | | |
1.39% (6.10% - (30 Day Average SOFR + 0.11%)), | | | |
| | | |
6.50%, 02/15/2028 to 06/15/2032 | | | |
| | | |
5.71% (30 Day Average SOFR + | | | |
| | | |
7.47% (24.75% - (3.67 x (30 Day Average SOFR + 0.11%))), | | | |
5.11% (30 Day Average SOFR + | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Federal Home Loan Mortgage Corp. (FHLMC)–0.13% |
| | | |
6.50%, 07/01/2028 to 04/01/2034 | | | |
| | | |
7.00%, 10/01/2031 to 10/01/2037 | | | |
| | | |
| | | |
4.00%, 11/01/2048 to 07/01/2049 | | | |
| | | |
Federal National Mortgage Association (FNMA)–5.14% |
7.00%, 01/01/2030 to 12/01/2032 | | | |
3.50%, 12/01/2030 to 05/01/2047 | | | |
6.50%, 09/01/2031 to 01/01/2034 | | | |
| | | |
5.50%, 02/01/2035 to 05/01/2036 | | | |
| | | |
| | | |
| | |
Government National Mortgage Association (GNMA)–3.33% |
7.00%, 03/15/2026 to 08/15/2031 | | | |
| | | |
| | | |
| | | |
IO,
2.04% (6.55% - (1 mo. Term SOFR + 0.11%)), | | | |
2.14% (6.65% - (1 mo. Term SOFR + 0.11%)), | | | |
| | | |
1.69% (6.20% - (1 mo. Term SOFR + 0.11%)), | | | |
| | | |
| | | |
| | | |
| | | |
Uniform Mortgage-Backed Securities–7.86% |
| | | |
| | | |
| | | |
| | | |
| | | |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities (Cost $26,683,532) | |
U.S. Treasury Securities–13.68% |
U.S. Treasury Bills–0.40% |
| | | |
U.S. Treasury Bonds–4.75% |
| | | |
| | | |
| | | |
U.S. Treasury Notes–8.53% |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Total U.S. Treasury Securities (Cost $20,738,095) | |
| | |
|
Aerospace & Defense–0.04% |
Boeing Co. (The), 6.00%, Conv. Pfd. | | |
|
Citigroup, Inc., 6.25%, Series T, Pfd.(c) | | |
Citigroup, Inc., 4.00%, Series W, Pfd.(c) | | |
Wells Fargo & Co., 7.50%, Class A, Series L, Conv. Pfd. | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21
Invesco V.I. Core Plus Bond Fund
| | |
Diversified Financial Services–0.24% |
Apollo Global Management, Inc., 7.63%, | | |
Investment Banking & Brokerage–0.08% |
Morgan Stanley, 6.88%, Series F, Pfd. | | |
Life & Health Insurance–0.00% |
MetLife, Inc., 3.85%, Series G, Pfd.(c) | | |
|
M&T Bank Corp., 7.50%, Series J, Pfd. | | |
Total Preferred Stocks (Cost $704,830) | |
| | |
Agency Credit Risk Transfer Notes–0.47% |
Fannie Mae Connecticut Avenue Securities, | | |
Series 2022-R03, Class 1M1, 6.67% (30 Day Average SOFR + | | | |
Series 2022-R04, Class 1M1, 6.57% (30 Day Average SOFR + | | | |
Series 2023-R02, Class 1M1, 6.87% (30 Day Average SOFR + | | | |
| | |
Series 2022-DNA3, Class M1A, STACR®, 6.57% (30 Day Average SOFR + 2.00%), 04/25/2042(b)(e) | | | |
Series 2022-HQA3, Class M1, STACR®, 6.87% (30 Day Average SOFR + 2.30%), 08/25/2042(b)(e) | | | |
Series 2023-DNA1, Class M1, STACR®, 6.66% (30 Day Average SOFR + 2.10%), 03/25/2043(b)(e) | | | |
Total Agency Credit Risk Transfer Notes (Cost $682,722) | |
|
Municipal Obligations–0.26% |
New Jersey (State of) Transportation Trust Fund Authority, Series 2024 BB, Ref. RB, 5.09%, 06/15/2025 | | | |
| | |
|
Texas (State of) Transportation Commission (Central Texas Turnpike System), Series 2020 C, Ref. RB, 3.03%, 08/15/2041 | | | |
Total Municipal Obligations (Cost $465,000) | |
Non-U.S. Dollar Denominated Bonds & Notes–0.07% |
Movies & Entertainment–0.07% |
Netflix, Inc., 3.88%, 11/15/2029(b) (Cost $110,854) | | | |
| | |
Money Market Funds–21.43% |
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(o)(p) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $31,798,515) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-115.98% (Cost $175,991,572) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(o)(p)(q) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $2,778,415) | |
TOTAL INVESTMENTS IN SECURITIES–117.85% (Cost $178,769,987) | |
OTHER ASSETS LESS LIABILITIES—(17.85)% | |
| |
Investment Abbreviations:
| |
| |
| |
| |
| |
| |
| |
| |
| – Real Estate Investment Trust |
| – Real Estate Mortgage Investment Conduits |
| – Secured Overnight Financing Rate |
| – Structured Agency Credit Risk |
| – Separately Traded Registered Interest and Principal Security |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
22
Invesco V.I. Core Plus Bond Fund
Notes to Schedule of Investments:
| 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. |
| 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 December 31, 2024 was $58,371,102, which represented 39.34% of the Fund’s Net Assets. |
| Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| Perpetual bond with no specified maturity date. |
| Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2024. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Zero coupon bond issued at a discount. |
| Security valued using significant unobservable inputs (Level 3). See Note 3. |
| 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 December 31, 2024. |
| 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 December 31, 2024. |
| Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
| Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1P. |
| All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1O. |
| Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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 1L. |
|
| | | | | Unrealized Appreciation (Depreciation) |
|
U.S. Treasury 2 Year Notes | | | | | |
U.S. Treasury 5 Year Notes | | | | | |
U.S. Treasury 10 Year Notes | | | | | |
| | | | | |
U.S. Treasury Ultra Bonds | | | | | |
Subtotal—Long Futures Contracts | | |
| | | | | |
|
U.S. Treasury 10 Year Ultra Notes | | | | | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
23
Invesco V.I. Core Plus Bond Fund
Open Forward Foreign Currency Contracts |
| | | |
| |
| | | | | | |
| State Street Bank & Trust Co. | | | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
24
Invesco V.I. Core Plus Bond Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $144,193,057)* | |
Investments in affiliated money market funds, at value (Cost $34,576,930) | |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | |
| |
Cash collateral — TBA commitments | |
| |
Foreign currencies, at value (Cost $192,802) | |
| |
| |
| |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Variation margin payable — futures contracts | |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
Distributable earnings (loss) | |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $2,706,742 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Interest (net of foreign withholding taxes of $(531)) | |
| |
Dividends from affiliated money market funds (includes net securities lending income of $37,038) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
| |
Net realized and unrealized gain (loss) | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
25
Invesco V.I. Core Plus Bond Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
26
Invesco V.I. Core Plus Bond Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended December 31, 2022, the portfolio turnover calculation excludes the value of securities purchased of $96,195,733 in connection with the acquisition of Invesco V.I. Core Bond Fund into the Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
27
Invesco V.I. Core Plus Bond Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Core Plus Bond Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is total return, comprised of current income and capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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.
28
Invesco V.I. Core Plus Bond Fund
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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Securities Purchased on a When-Issued and Delayed Delivery Basis — The Fund may purchase and sell interests in corporate loans and corporate debt securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date.
K.
Lower-Rated Securities – 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.
L.
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
29
Invesco V.I. Core Plus Bond Fund
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 also serves as a securities 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 year ended December 31, 2024, there were no securities lending transactions with the Adviser. Fees paid to the Adviser for securities lending agent services, if any, are included in Dividends from affiliated money market funds on the Statement of Operations.
M.
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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
N.
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 the 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.
O.
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.
P.
Dollar Rolls and Forward Commitment Transactions - The Fund may enter into dollar roll transactions to enhance the Fund’s performance. The Fund
30
Invesco V.I. Core Plus Bond 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.
Q.
Leverage Risk — Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction.
R.
Collateral —To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. This practice does not apply to securities pledged as collateral for securities lending transactions.
S.
Other Risks - Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Fluctuations in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed income markets to heightened volatility, perhaps suddenly and to a significant degree, and to reduced liquidity for certain fixed income investments, particularly those with longer maturities, when rates increase. Such changes and resulting increased volatility may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult to predict the impact of interest rate changes on various markets. 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 and other governmental actions and political events within the U.S. and abroad may also, among other things, affect investor and consumer expectations and confidence in the financial markets. This could result in higher than normal redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
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.
Obligations of U.S. Government agencies and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. Government, which could affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.
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:
For the year ended December 31, 2024, 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. and a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 0.61% and Series II shares to 0.86% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $190,946.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $19,725 for accounting and fund administrative services and was reimbursed $206,189 for fees paid to insurance companies. 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.
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Invesco V.I. Core Plus Bond 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
U.S. Dollar Denominated Bonds & Notes | | | | |
| | | | |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | | |
| | | | |
| | | | |
Agency Credit Risk Transfer Notes | | | | |
| | | | |
Non-U.S. Dollar Denominated Bonds & Notes | | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Assets* | | | | |
| | | | |
Forward Foreign Currency Contracts | | | | |
| | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| | | | |
| 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.
32
Invesco V.I. Core Plus 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 December 31, 2024:
| |
| | | |
Unrealized appreciation on futures contracts —Exchange-Traded(a) | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | |
| | | |
Derivatives not subject to master netting agreements | | | |
Total Derivative Assets subject to master netting agreements | | | |
| |
| |
Unrealized depreciation on futures contracts —Exchange-Traded(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| 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 December 31, 2024.
| Financial
Derivative
Assets | | Collateral
(Received)/Pledged | |
| Forward Foreign
Currency Contracts | | | | |
State Street Bank & Trust Co. | | | | | |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| | | |
| | | |
Forward foreign currency contracts | | | |
| | | |
Change in Net Unrealized Appreciation (Depreciation): | | | |
Forward foreign currency contracts | | | |
| | | |
| | | |
The table below summarizes the average notional value of derivatives held during the period.
| Forward
Foreign Currency
Contracts | |
| | |
| | |
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.
33
Invesco V.I. Core Plus Bond 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.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Net unrealized appreciation (depreciation) — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Capital loss carryforward | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to derivative instruments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 has a capital loss carryforward as of December 31, 2024, as follows:
Capital Loss Carryforward* |
| | | |
Not subject to expiration | | | |
*
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 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 year ended December 31, 2024 was $122,542,763 and $113,230,053, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $178,559,125.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of amortization and accretion on debt securities, dollar rolls and paydowns, on December 31, 2024, undistributed net investment income was increased by $55,876 and undistributed net realized gain (loss) was decreased by $55,876. Further, as a result of tax deferrals acquired in the reorganization of into the Fund, and . These reclassifications had no effect on the net assets or the distributable earnings (loss) of the Fund.
34
Invesco V.I. Core Plus Bond Fund
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 52% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
35
Invesco V.I. Core Plus Bond Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Core Plus Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Core Plus Bond Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
36
Invesco V.I. Core Plus Bond Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
37
Invesco V.I. Core Plus Bond Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
38
Invesco V.I. Core Plus Bond Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Discovery Mid Cap Growth Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
O-VIDMCG-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–98.46% |
|
Trade Desk, Inc. (The), Class A(b) | | |
Aerospace & Defense–4.70% |
| | |
| | |
| | |
| | | |
|
Burlington Stores, Inc.(b) | | |
Application Software–12.24% |
AppLovin Corp., Class A(b) | | |
BILL Holdings, Inc.(b)(c) | | |
Datadog, Inc., Class A(b) | | |
| | |
Guidewire Software, Inc.(b) | | |
| | |
Manhattan Associates, Inc.(b) | | |
Samsara, Inc., Class A(b) | | |
Tyler Technologies, Inc.(b) | | |
| | | |
Asset Management & Custody Banks–4.09% |
Ares Management Corp., Class A | | |
| | |
Hamilton Lane, Inc., Class A(c) | | |
| | | |
|
Alnylam Pharmaceuticals, Inc.(b) | | |
| | |
| | | |
|
| | |
Builders FirstSource, Inc.(b)(c) | | |
Lennox International, Inc.(c) | | |
| | | |
Cargo Ground Transportation–1.34% |
| | |
Communications Equipment–1.04% |
| | |
Construction & Engineering–4.45% |
Comfort Systems USA, Inc. | | |
| | |
| | |
| | | |
Construction Machinery & Heavy Transportation Equipment– 1.54% |
| | |
Consumer Electronics–1.14% |
| | |
| | |
|
| | |
Electrical Components & Equipment–1.73% |
Vertiv Holdings Co., Class A | | |
Electronic Components–1.59% |
| | |
Electronic Equipment & Instruments–1.20% |
Zebra Technologies Corp., Class A(b) | | |
Electronic Manufacturing Services–1.38% |
| | |
Environmental & Facilities Services–0.94% |
| | |
Financial Exchanges & Data–1.62% |
Tradeweb Markets, Inc., Class A(c) | | |
|
| | |
Health Care Distributors–1.35% |
| | |
Health Care Equipment–1.04% |
| | |
Health Care Facilities–2.80% |
| | |
Tenet Healthcare Corp.(b) | | |
| | | |
Health Care Supplies–0.84% |
Cooper Cos., Inc. (The)(b) | | |
Hotels, Resorts & Cruise Lines–3.16% |
Hilton Worldwide Holdings, Inc. | | |
| | |
| | | |
Independent Power Producers & Energy Traders–0.88% |
| | |
Industrial Machinery & Supplies & Components–1.82% |
| | |
| | |
| | | |
|
| | |
Interactive Media & Services–0.64% |
| | |
Internet Services & Infrastructure–2.98% |
Cloudflare, Inc., Class A(b) | | |
GoDaddy, Inc., Class A(b) | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Discovery Mid Cap Growth Fund
| | |
Investment Banking & Brokerage–4.90% |
| | |
Jefferies Financial Group, Inc. | | |
Raymond James Financial, Inc. | | |
Robinhood Markets, Inc., Class A(b) | | |
| | | |
IT Consulting & Other Services–0.77% |
| | |
Movies & Entertainment–1.38% |
Spotify Technology S.A. (Sweden)(b) | | |
Oil & Gas Equipment & Services–0.53% |
TechnipFMC PLC (United Kingdom) | | |
Oil & Gas Storage & Transportation–3.12% |
| | |
| | |
| | | |
Other Specialty Retail–0.68% |
| | |
Packaged Foods & Meats–0.65% |
| | |
Paper & Plastic Packaging Products & Materials–1.02% |
Packaging Corp. of America | | |
Real Estate Services–1.52% |
Jones Lang LaSalle, Inc.(b) | | |
Research & Consulting Services–0.87% |
| | |
|
| | |
| | |
| | | |
|
| | |
MACOM Technology Solutions Holdings, | | |
Monolithic Power Systems, Inc. | | |
| | | |
|
Carpenter Technology Corp. | | |
| | |
|
| | |
| | | |
|
CyberArk Software Ltd.(b) | | |
Trading Companies & Distributors–4.06% |
| | |
| | |
| | |
| | | |
Transaction & Payment Processing Services–1.85% |
Affirm Holdings, Inc.(b)(c) | | |
Fidelity National Information Services, Inc. | | |
| | |
| | | |
Total Common Stocks & Other Equity Interests (Cost $696,312,192) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $17,477,372) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.27% (Cost $713,789,564) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $50,300,923) | |
TOTAL INVESTMENTS IN SECURITIES–105.48% (Cost $764,090,487) | |
OTHER ASSETS LESS LIABILITIES—(5.48)% | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Discovery Mid Cap Growth Fund
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Discovery Mid Cap Growth Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $696,312,192)* | |
Investments in affiliated money market funds, at value (Cost $67,778,295) | |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $49,080,396 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
| |
Dividends from affiliated money market funds (includes net securities lending income of $126,616) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
Less: Expenses reimbursed | |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Discovery Mid Cap Growth Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Discovery Mid Cap Growth Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended December 31, 2020, the portfolio turnover calculation excludes the value of securities purchased of $123,217,891 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco V.I. Mid Cap Growth Fund into the Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Discovery Mid Cap Growth Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Discovery Mid Cap Growth Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
8
Invesco V.I. Discovery Mid Cap Growth 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
9
Invesco V.I. Discovery Mid Cap Growth 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $12,546 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
L.
Other Risks - Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
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:
| 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 year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.68%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $22,035.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of
10
Invesco V.I. Discovery Mid Cap Growth Fund
master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $132,533 for accounting and fund administrative services and was reimbursed $1,368,584 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $25,895 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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 consolidated financial statements may materially differ from the value received upon actual sale of those investments.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
NOTE 4—Security Transactions with Affiliated Funds
The Fund is permitted to purchase securities from or sell securities to certain other affiliated funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund that is or could be considered an "affiliated person" by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers is made in reliance on Rule 17a-7 of the 1940 Act and, to the extent applicable, related SEC staff positions. Each such transaction is effected at the security’s "current market price", as provided for in these procedures and Rule 17a-7. Pursuant to these procedures, for the year ended December 31, 2024, the Fund engaged in securities purchases of $5,839,731.
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.
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.
11
Invesco V.I. Discovery Mid Cap Growth Fund
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Components of Net Assets at Period-End: |
| |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to passive foreign investment companies and wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
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 year ended December 31, 2024 was $877,138,481 and $949,407,243, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $766,571,764.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $1,030,532 and shares of beneficial interest was decreased by $1,030,532. This reclassification had no effect on the net assets of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 49% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco V.I. Discovery Mid Cap Growth Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Discovery Mid Cap Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Discovery Mid Cap Growth Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco V.I. Discovery Mid Cap Growth Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco V.I. Discovery Mid Cap Growth Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco V.I. Discovery Mid Cap Growth Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Diversified Dividend Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VIDDI-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–97.07% |
Aerospace & Defense–3.14% |
| | |
| | |
| | |
| | | |
|
| | |
Application Software–2.50% |
| | |
| | |
| | | |
Asset Management & Custody Banks–2.16% |
Ares Management Corp., Class A | | |
| | |
| | | |
|
| | |
|
| | |
Fortune Brands Innovations, Inc. | | |
Johnson Controls International PLC | | |
| | | |
|
| | |
Communications Equipment–1.47% |
| | |
Construction Materials–1.62% |
| | |
|
| | |
Capital One Financial Corp. | | |
| | | |
Consumer Staples Merchandise Retail–3.24% |
| | |
|
| | |
| | |
PNC Financial Services Group, Inc. (The) | | |
| | |
| | |
| | | |
Diversified Metals & Mining–0.50% |
Teck Resources Ltd., Class B (Canada) | | |
|
American Electric Power Co., Inc. | | |
| | |
| | |
Electric Utilities–(continued) |
| | |
| | | |
Electrical Components & Equipment–3.76% |
| | |
| | |
| | |
| | | |
Electronic Manufacturing Services–0.58% |
TE Connectivity PLC (Switzerland) | | |
Financial Exchanges & Data–1.02% |
| | |
|
| | |
Health Care Equipment–3.74% |
Becton, Dickinson and Co. | | |
| | |
| | |
| | | |
Health Care Supplies–0.45% |
| | |
Home Improvement Retail–2.17% |
| | |
Hotels, Resorts & Cruise Lines–0.77% |
Marriott International, Inc., Class A | | |
|
| | |
Industrial Machinery & Supplies & Components–1.51% |
| | |
|
| | |
Integrated Oil & Gas–3.49% |
| | |
Suncor Energy, Inc. (Canada) | | |
| | | |
Integrated Telecommunication Services–2.18% |
| | |
Deutsche Telekom AG (Germany) | | |
| | | |
Investment Banking & Brokerage–2.96% |
Charles Schwab Corp. (The) | | |
| | |
| | | |
Life Sciences Tools & Services–0.56% |
Lonza Group AG (Switzerland) | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Diversified Dividend Fund
| | |
Managed Health Care–2.67% |
| | |
Movies & Entertainment–1.81% |
| | |
Multi-line Insurance–1.83% |
American International Group, Inc. | | |
|
Public Service Enterprise Group, Inc. | | |
Oil & Gas Exploration & Production–2.29% |
| | |
Oil & Gas Storage & Transportation–0.70% |
| | |
Paper & Plastic Packaging Products & Materials–0.80% |
| | |
Personal Care Products–0.41% |
| | |
|
AstraZeneca PLC (United Kingdom) | | |
| | |
| | |
| | |
| | | |
Property & Casualty Insurance–0.73% |
Hartford Financial Services Group, Inc. (The) | | |
Rail Transportation–1.95% |
| | |
|
Huntington Bancshares, Inc. | | |
|
| | |
Semiconductor Materials & Equipment–0.53% |
| | |
|
| | |
| | |
| | |
| | | |
| | |
Soft Drinks & Non-alcoholic Beverages–0.91% |
| | |
Specialty Chemicals–0.49% |
| | |
|
| | |
Telecom Tower REITs–0.63% |
| | |
|
| | |
|
Philip Morris International, Inc. | | |
Trading Companies & Distributors–0.55% |
AerCap Holdings N.V. (Ireland) | | |
Transaction & Payment Processing Services–1.29% |
| | |
Total Common Stocks & Other Equity Interests (Cost $332,246,286) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(c)(d) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $12,160,824) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.81% (Cost $344,407,110) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(c)(d)(e) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $33,049,494) | |
TOTAL INVESTMENTS IN SECURITIES–107.25% (Cost $377,456,604) | |
OTHER ASSETS LESS LIABILITIES—(7.25)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
| – Real Estate Investment Trust |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Diversified Dividend Fund
Notes to Schedule of Investments:
| 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. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Diversified Dividend Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $332,246,286)* | |
Investments in affiliated money market funds, at value (Cost $45,210,318) | |
Foreign currencies, at value (Cost $798) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $24,423,796 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $82,272) | |
Dividends from affiliated money market funds (includes net securities lending income of $37,851) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Diversified Dividend Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Diversified Dividend Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Diversified Dividend Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Diversified Dividend Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to provide reasonable current income and long-term growth of income and capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
8
Invesco V.I. Diversified Dividend 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
9
Invesco V.I. Diversified Dividend 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $4,075 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
Other Risks - As a group, securities that pay high dividends may fall out of favor with investors and underperform companies that do not pay high dividends. Companies that pay dividends are not required to continue paying them. Therefore, there is the possibility that such companies could reduce or eliminate the payment of dividends in the future or an anticipated acceleration of dividends may not occur. Depending on market conditions, dividend paying that meet the Fund’s investment criteria may not be widely available for purchase by the Fund, which may increase the volatility of the Fund’s returns and limit its ability to produce current income while remaining fully diversified. High-dividend stocks may not experience high earnings growth or capital appreciation. The Fund’s performance during a broad market advance could suffer because dividend paying stocks may not experience the same capital appreciation as non-dividend paying stocks.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.49%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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).
10
Invesco V.I. Diversified Dividend Fund
The Adviser has agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $9,593.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $63,356 for accounting and fund administrative services and was reimbursed $669,785 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $193 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
NOTE 4—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.
11
Invesco V.I. Diversified Dividend Fund
NOTE 5—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.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $202,514,921 and $246,637,272, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $377,954,963.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, on December 31, 2024, undistributed net investment income was increased by $7,477 and undistributed net realized gain was decreased by $7,477. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
12
Invesco V.I. Diversified Dividend Fund
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 62% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
13
Invesco V.I. Diversified Dividend Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Diversified Dividend Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Diversified Dividend Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco V.I. Diversified Dividend Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco V.I. Diversified Dividend Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco V.I. Diversified Dividend Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Equally-Weighted S&P 500 Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
MS-VIEWSP-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–99.33% |
|
Interpublic Group of Cos., Inc. (The) | | |
| | |
| | | |
Aerospace & Defense–2.43% |
| | |
| | |
General Dynamics Corp.(c) | | |
| | |
| | |
Huntington Ingalls Industries, Inc. | | |
L3Harris Technologies, Inc. | | |
| | |
| | |
| | |
| | |
| | |
| | | |
Agricultural & Farm Machinery–0.20% |
| | |
Agricultural Products & Services–0.39% |
Archer-Daniels-Midland Co.(c) | | |
| | |
| | | |
Air Freight & Logistics–0.80% |
C.H. Robinson Worldwide, Inc.(c) | | |
Expeditors International of | | |
| | |
United Parcel Service, Inc., Class B(c) | | |
| | | |
|
| | |
| | |
| | | |
Apparel, Accessories & Luxury Goods–0.63% |
lululemon athletica, inc.(b)(c) | | |
| | |
| | |
| | | |
Application Software–2.54% |
| | |
| | |
| | |
Cadence Design Systems, Inc.(b) | | |
| | |
| | |
Palantir Technologies, Inc., Class A(b) | | |
| | |
| | |
| | |
| | |
Application Software–(continued) |
| | |
Tyler Technologies, Inc.(b) | | |
Workday, Inc., Class A(b) | | |
| | | |
Asset Management & Custody Banks–1.97% |
Ameriprise Financial, Inc.(c) | | |
Bank of New York Mellon Corp. (The)(c) | | |
| | |
Blackstone, Inc., Class A | | |
| | |
| | |
| | |
| | |
| | |
T. Rowe Price Group, Inc. | | |
| | | |
Automobile Manufacturers–0.61% |
| | |
| | |
| | |
| | | |
Automotive Parts & Equipment–0.40% |
| | |
| | |
| | | |
|
| | |
| | |
O’Reilly Automotive, Inc.(b) | | |
| | | |
|
| | |
| | |
| | |
| | |
| | |
| | |
Regeneron Pharmaceuticals, Inc.(b) | | |
Vertex Pharmaceuticals, Inc.(b) | | |
| | | |
|
Molson Coors Beverage Co., Class B(c) | | |
|
| | |
| | |
Paramount Global, Class B | | |
| | | |
|
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Equally-Weighted S&P 500 Fund
| | |
Broadline Retail–(continued) |
| | |
| | | |
|
| | |
| | |
Builders FirstSource, Inc.(b)(c) | | |
| | |
Johnson Controls International PLC | | |
Lennox International, Inc.(c) | | |
| | |
| | |
| | | |
|
Charter Communications, Inc., Class A(b) | | |
| | |
| | | |
Cargo Ground Transportation–0.37% |
J.B. Hunt Transport Services, Inc. | | |
Old Dominion Freight Line, Inc.(c) | | |
| | | |
|
Caesars Entertainment, Inc.(b) | | |
| | |
MGM Resorts International(b)(c) | | |
| | |
| | | |
Commodity Chemicals–0.40% |
| | |
LyondellBasell Industries N.V., Class A | | |
| | | |
Communications Equipment–1.03% |
| | |
| | |
| | |
| | |
| | |
| | | |
Computer & Electronics Retail–0.20% |
| | |
Construction & Engineering–0.20% |
| | |
Construction Machinery & Heavy Transportation Equipment– 0.77% |
| | |
| | |
| | |
| | |
| | | |
Construction Materials–0.38% |
Martin Marietta Materials, Inc.(c) | | |
| | |
| | | |
| | |
Consumer Electronics–0.19% |
| | |
|
| | |
Capital One Financial Corp. | | |
Discover Financial Services | | |
| | |
| | | |
Consumer Staples Merchandise Retail–1.01% |
| | |
| | |
| | |
| | |
| | |
| | | |
|
| | |
|
Digital Realty Trust, Inc.(c) | | |
| | |
| | | |
Data Processing & Outsourced Services–0.20% |
Broadridge Financial Solutions, Inc.(c) | | |
Distillers & Vintners–0.37% |
Brown-Forman Corp., Class B(c) | | |
Constellation Brands, Inc., Class A | | |
| | | |
|
| | |
| | |
| | |
| | | |
|
| | |
| | |
| | |
| | |
| | |
PNC Financial Services Group, Inc. (The) | | |
| | |
| | |
| | | |
Diversified Financial Services–0.19% |
Apollo Global Management, Inc.(c) | | |
Diversified Support Services–0.37% |
| | |
| | |
| | | |
|
Walgreens Boots Alliance, Inc.(c) | | |
|
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Equally-Weighted S&P 500 Fund
| | |
Electric Utilities–(continued) |
American Electric Power Co., Inc.(c) | | |
Constellation Energy Corp. | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Pinnacle West Capital Corp.(c) | | |
| | |
| | |
| | |
| | | |
Electrical Components & Equipment–1.16% |
| | |
| | |
| | |
Generac Holdings, Inc.(b)(c) | | |
| | |
Rockwell Automation, Inc. | | |
| | | |
Electronic Components–0.40% |
Amphenol Corp., Class A(c) | | |
| | |
| | | |
Electronic Equipment & Instruments–0.80% |
Keysight Technologies, Inc.(b) | | |
Teledyne Technologies, Inc.(b) | | |
| | |
Zebra Technologies Corp., Class A(b)(c) | | |
| | | |
Electronic Manufacturing Services–0.42% |
| | |
TE Connectivity PLC (Switzerland) | | |
| | | |
Environmental & Facilities Services–0.79% |
| | |
| | |
| | |
| | |
| | | |
Fertilizers & Agricultural Chemicals–0.76% |
CF Industries Holdings, Inc. | | |
| | |
| | |
| | |
| | | |
Financial Exchanges & Data–1.80% |
Cboe Global Markets, Inc. | | |
| | |
| | |
Financial Exchanges & Data–(continued) |
FactSet Research Systems, Inc. | | |
Intercontinental Exchange, Inc. | | |
MarketAxess Holdings, Inc. | | |
| | |
| | |
| | |
| | |
| | | |
|
| | |
|
| | |
|
| | |
| | |
| | | |
|
| | |
|
| | |
Health Care Distributors–0.80% |
| | |
| | |
| | |
| | |
| | | |
Health Care Equipment–3.42% |
| | |
Baxter International, Inc.(c) | | |
Becton, Dickinson and Co.(c) | | |
Boston Scientific Corp.(b) | | |
| | |
Edwards Lifesciences Corp.(b) | | |
GE HealthCare Technologies, Inc. | | |
| | |
IDEXX Laboratories, Inc.(b) | | |
| | |
Intuitive Surgical, Inc.(b) | | |
| | |
| | |
| | |
| | |
| | |
Zimmer Biomet Holdings, Inc. | | |
| | | |
Health Care Facilities–0.39% |
| | |
Universal Health Services, Inc., Class B | | |
| | | |
|
Alexandria Real Estate Equities, Inc.(c) | | |
Healthpeak Properties, Inc. | | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Equally-Weighted S&P 500 Fund
| | |
Health Care REITs–(continued) |
| | |
| | | |
Health Care Services–0.98% |
| | |
| | |
| | |
| | |
| | |
| | | |
Health Care Supplies–0.57% |
Align Technology, Inc.(b) | | |
Cooper Cos., Inc. (The)(b) | | |
| | |
| | | |
Heavy Electrical Equipment–0.20% |
| | |
|
Mohawk Industries, Inc.(b) | | |
Home Improvement Retail–0.38% |
| | |
| | |
| | | |
|
| | |
| | |
| | |
| | |
| | | |
Hotel & Resort REITs–0.19% |
Host Hotels & Resorts, Inc.(c) | | |
Hotels, Resorts & Cruise Lines–1.58% |
| | |
| | |
| | |
Expedia Group, Inc.(b)(c) | | |
Hilton Worldwide Holdings, Inc. | | |
Marriott International, Inc., Class A | | |
Norwegian Cruise Line Holdings Ltd.(b)(c) | | |
Royal Caribbean Cruises Ltd. | | |
| | | |
|
Church & Dwight Co., Inc.(c) | | |
| | |
| | |
| | |
Procter & Gamble Co. (The)(c) | | |
| | | |
Human Resource & Employment Services–0.78% |
Automatic Data Processing, Inc.(c) | | |
| | |
| | |
| | |
Human Resource & Employment Services–(continued) |
| | |
| | | |
Independent Power Producers & Energy Traders–0.39% |
| | |
| | |
| | | |
Industrial Conglomerates–0.41% |
| | |
Honeywell International, Inc.(c) | | |
| | | |
|
Air Products and Chemicals, Inc. | | |
| | |
| | | |
Industrial Machinery & Supplies & Components–2.31% |
| | |
| | |
| | |
Illinois Tool Works, Inc.(c) | | |
| | |
| | |
| | |
| | |
| | |
| | |
Stanley Black & Decker, Inc.(c) | | |
| | |
| | | |
|
| | |
|
| | |
Arthur J. Gallagher & Co. | | |
| | |
Marsh & McLennan Cos., Inc. | | |
| | |
| | | |
Integrated Oil & Gas–0.60% |
| | |
| | |
Occidental Petroleum Corp.(c) | | |
| | | |
Integrated Telecommunication Services–0.40% |
| | |
Verizon Communications, Inc. | | |
| | | |
Interactive Home Entertainment–0.39% |
| | |
Take-Two Interactive Software, Inc.(b)(c) | | |
| | | |
Interactive Media & Services–0.61% |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Equally-Weighted S&P 500 Fund
| | |
Interactive Media & Services–(continued) |
Alphabet, Inc., Class C(c) | | |
| | |
Meta Platforms, Inc., Class A | | |
| | | |
Internet Services & Infrastructure–0.61% |
Akamai Technologies, Inc.(b)(c) | | |
GoDaddy, Inc., Class A(b)(c) | | |
| | |
| | | |
Investment Banking & Brokerage–0.79% |
Charles Schwab Corp. (The) | | |
Goldman Sachs Group, Inc. (The) | | |
| | |
Raymond James Financial, Inc. | | |
| | | |
IT Consulting & Other Services–0.98% |
Accenture PLC, Class A (Ireland) | | |
Cognizant Technology Solutions Corp., Class A | | |
| | |
| | |
International Business Machines Corp. | | |
| | | |
|
| | |
Life & Health Insurance–1.04% |
| | |
| | |
| | |
Principal Financial Group, Inc.(c) | | |
Prudential Financial, Inc. | | |
| | | |
Life Sciences Tools & Services–2.01% |
Agilent Technologies, Inc.(c) | | |
| | |
Charles River Laboratories International, | | |
| | |
| | |
Mettler-Toledo International, Inc.(b) | | |
| | |
Thermo Fisher Scientific, Inc. | | |
| | |
West Pharmaceutical Services, Inc. | | |
| | | |
Managed Health Care–1.01% |
| | |
| | |
| | |
Molina Healthcare, Inc.(b)(c) | | |
| | |
| | | |
Metal, Glass & Plastic Containers–0.20% |
| | |
| | |
Movies & Entertainment–0.80% |
Live Nation Entertainment, Inc.(b) | | |
| | |
| | |
Warner Bros. Discovery, Inc.(b) | | |
| | | |
Multi-Family Residential REITs–1.21% |
AvalonBay Communities, Inc.(c) | | |
| | |
| | |
Essex Property Trust, Inc. | | |
Mid-America Apartment Communities, | | |
| | |
| | | |
Multi-line Insurance–0.21% |
American International Group, Inc. | | |
Multi-Sector Holdings–0.20% |
Berkshire Hathaway, Inc., Class B(b)(c) | | |
|
| | |
CenterPoint Energy, Inc.(c) | | |
| | |
Consolidated Edison, Inc.(c) | | |
| | |
| | |
| | |
Public Service Enterprise Group, Inc. | | |
| | |
WEC Energy Group, Inc.(c) | | |
| | | |
|
| | |
Oil & Gas Equipment & Services–0.58% |
Baker Hughes Co., Class A(c) | | |
| | |
| | |
| | | |
Oil & Gas Exploration & Production–1.82% |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Texas Pacific Land Corp.(c) | | |
| | | |
Oil & Gas Refining & Marketing–0.57% |
| | |
| | |
| | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Equally-Weighted S&P 500 Fund
| | |
Oil & Gas Storage & Transportation–0.81% |
| | |
| | |
| | |
Williams Cos., Inc. (The) | | |
| | | |
Other Specialized REITs–0.39% |
| | |
| | |
| | | |
Other Specialty Retail–0.40% |
| | |
| | |
| | | |
Packaged Foods & Meats–2.39% |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Lamb Weston Holdings, Inc.(c) | | |
| | |
Mondelez International, Inc., Class A(c) | | |
Tyson Foods, Inc., Class A | | |
| | | |
Paper & Plastic Packaging Products & Materials–1.00% |
| | |
| | |
International Paper Co.(c) | | |
Packaging Corp. of America | | |
| | |
| | | |
|
| | |
| | |
United Airlines Holdings, Inc.(b) | | |
| | | |
Passenger Ground Transportation–0.21% |
Uber Technologies, Inc.(b) | | |
Personal Care Products–0.39% |
Estee Lauder Cos., Inc. (The), Class A | | |
| | |
| | | |
|
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Pharmaceuticals–(continued) |
| | |
| | | |
Property & Casualty Insurance–2.25% |
| | |
| | |
| | |
| | |
Cincinnati Financial Corp. | | |
Erie Indemnity Co., Class A(c) | | |
Hartford Financial Services Group, Inc. (The) | | |
| | |
| | |
Travelers Cos., Inc. (The) | | |
| | |
| | | |
|
| | |
| | |
| | | |
Rail Transportation–0.60% |
| | |
| | |
| | |
| | | |
Real Estate Services–0.39% |
CBRE Group, Inc., Class A(b) | | |
| | |
| | | |
|
Citizens Financial Group, Inc. | | |
Huntington Bancshares, Inc.(c) | | |
| | |
Regions Financial Corp.(c) | | |
| | |
| | | |
|
| | |
Research & Consulting Services–0.80% |
| | |
Jacobs Solutions, Inc.(c) | | |
| | |
| | |
| | | |
|
Chipotle Mexican Grill, Inc.(b) | | |
Darden Restaurants, Inc.(c) | | |
| | |
| | |
| | |
| | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Equally-Weighted S&P 500 Fund
| | |
|
Federal Realty Investment Trust(c) | | |
| | |
| | |
| | |
Simon Property Group, Inc.(c) | | |
| | | |
|
Extra Space Storage, Inc. | | |
| | |
| | | |
Semiconductor Materials & Equipment–1.00% |
| | |
| | |
| | |
| | |
| | |
| | | |
|
Advanced Micro Devices, Inc.(b)(c) | | |
| | |
| | |
| | |
| | |
Microchip Technology, Inc. | | |
| | |
Monolithic Power Systems, Inc. | | |
| | |
NXP Semiconductors N.V. (China) | | |
ON Semiconductor Corp.(b) | | |
| | |
Skyworks Solutions, Inc.(c) | | |
| | |
| | | |
Single-Family Residential REITs–0.20% |
| | |
Soft Drinks & Non-alcoholic Beverages–0.82% |
| | |
| | |
Monster Beverage Corp.(b) | | |
| | |
| | | |
Specialty Chemicals–1.56% |
| | |
| | |
DuPont de Nemours, Inc.(c) | | |
| | |
| | |
International Flavors & Fragrances, Inc. | | |
| | |
Sherwin-Williams Co. (The) | | |
| | | |
|
| | |
| | |
|
| | |
| | | |
|
CrowdStrike Holdings, Inc., Class A(b) | | |
| | |
| | |
| | |
| | |
Palo Alto Networks, Inc.(b)(c) | | |
| | |
| | | |
Technology Distributors–0.20% |
| | |
Technology Hardware, Storage & Peripherals–1.53% |
| | |
Dell Technologies, Inc., Class C(c) | | |
Hewlett Packard Enterprise Co.(c) | | |
| | |
| | |
Seagate Technology Holdings PLC | | |
Super Micro Computer, Inc.(b) | | |
| | |
| | | |
Telecom Tower REITs–0.58% |
| | |
| | |
SBA Communications Corp., Class A(c) | | |
| | | |
|
| | |
|
| | |
Philip Morris International, Inc. | | |
| | | |
Trading Companies & Distributors–0.56% |
| | |
| | |
| | |
| | | |
Transaction & Payment Processing Services–1.61% |
| | |
Fidelity National Information Services, Inc. | | |
| | |
| | |
Jack Henry & Associates, Inc.(c) | | |
Mastercard, Inc., Class A | | |
PayPal Holdings, Inc.(b)(c) | | |
| | |
| | | |
|
American Water Works Co., Inc. | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8
Invesco V.I. Equally-Weighted S&P 500 Fund
| | |
Wireless Telecommunication Services–0.20% |
| | |
Total Common Stocks & Other Equity Interests (Cost $254,922,026) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(f) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $3,169,911) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.99% (Cost $258,091,937) | | | |
| | |
Investments Purchased with Cash Collateral from Securities on Loan |
Money Market Funds–27.96% |
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(f)(g) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $134,476,179) | |
TOTAL INVESTMENTS IN SECURITIES–127.95% (Cost $392,568,116) | |
OTHER ASSETS LESS LIABILITIES—(27.95)% | |
| |
Investment Abbreviations:
| – Real Estate Investment Trust |
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
| | | | | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1K. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
|
| | | | | Unrealized Appreciation (Depreciation) |
|
E-mini S&P 500 Equal Weight | | | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9
Invesco V.I. Equally-Weighted S&P 500 Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $254,240,743)* | |
Investments in affiliates, at value
(Cost $138,327,373) | |
| |
Variation margin receivable — futures contracts | |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $119,739,974 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $2,338) | |
Dividends from affiliates (includes net securities lending income of $150,792) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10
Invesco V.I. Equally-Weighted S&P 500 Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11
Invesco V.I. Equally-Weighted S&P 500 Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended December 31, 2022, the portfolio turnover calculation excludes the value of securities purchased of $20,974,156 and sold of $41,844,757 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco V.I. S&P 500 Index Fund into the Fund. |
| Amount includes the effect of the Adviser pay-in for an economic loss as a result of delay in rebalancing to the index that occurred on April 24, 2020. Had the pay-in not been made, the total return would have been 11.35% and 10.98% for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12
Invesco V.I. Equally-Weighted S&P 500 Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Equally-Weighted S&P 500 Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to achieve a high level of total return on its assets through a combination of capital appreciation and current income.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
13
Invesco V.I. Equally-Weighted S&P 500 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. 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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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
14
Invesco V.I. Equally-Weighted S&P 500 Fund
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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $15,879 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
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.
M.
Collateral —To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. This practice does not apply to securities pledged as collateral for securities lending transactions.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.12%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least June 30, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $4,619.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $69,544 for accounting and fund administrative services and was reimbursed $736,355 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
15
Invesco V.I. Equally-Weighted S&P 500 Fund
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| Unrealized appreciation (depreciation). |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2024:
| |
| |
Unrealized depreciation on futures contracts —Exchange-Traded(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
| |
16
Invesco V.I. Equally-Weighted S&P 500 Fund
| Location of Gain (Loss) on Statement of Operations |
| |
Change in Net Unrealized Appreciation (Depreciation): | |
| |
| |
The table below summarizes the average notional value of derivatives held during the period.
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.
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.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
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 year ended December 31, 2024 was $125,318,400 and $155,442,357, respectively. As of December 31, 2024, the aggregate cost of
17
Invesco V.I. Equally-Weighted S&P 500 Fund
investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $398,615,063.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of federal taxes, REITs and return of capital, on December 31, 2024, undistributed net investment income was increased by $2,069, undistributed net realized gain was decreased by $750 and shares of beneficial interest was decreased by $1,319. This reclassification had no effect on the net assets of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 85% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
18
Invesco V.I. Equally-Weighted S&P 500 Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Equally-Weighted S&P 500 Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Equally-Weighted S&P 500 Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
19
Invesco V.I. Equally-Weighted S&P 500 Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
20
Invesco V.I. Equally-Weighted S&P 500 Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
21
Invesco V.I. Equally-Weighted S&P 500 Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Equity and Income Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VK-VIEQI-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–62.69% |
Aerospace & Defense–1.49% |
| | |
| | |
| | | |
Air Freight & Logistics–0.88% |
| | |
Application Software–0.78% |
| | |
Asset Management & Custody Banks–0.89% |
| | |
Automobile Manufacturers–0.94% |
| | |
|
| | |
|
Johnson Controls International PLC | | |
Cargo Ground Transportation–0.55% |
J.B. Hunt Transport Services, Inc. | | |
Communications Equipment–0.75% |
| | |
|
| | |
|
| | |
|
| | |
PNC Financial Services Group, Inc. (The) | | |
| | |
| | | |
|
American Electric Power Co., Inc. | | |
| | |
| | |
| | | |
Electrical Components & Equipment–1.08% |
| | |
Electronic Components–0.73% |
| | |
Electronic Equipment & Instruments–0.73% |
Zebra Technologies Corp., Class A(b) | | |
Fertilizers & Agricultural Chemicals–0.52% |
| | |
| | |
|
| | |
US Foods Holding Corp.(b) | | |
| | | |
Health Care Equipment–1.39% |
GE HealthCare Technologies, Inc. | | |
| | |
| | | |
Health Care Services–0.60% |
| | |
Industrial Machinery & Supplies & Components–1.77% |
| | |
Stanley Black & Decker, Inc. | | |
| | | |
|
| | |
Integrated Oil & Gas–3.53% |
| | |
| | |
Shell PLC (United Kingdom) | | |
Suncor Energy, Inc. (Canada) | | |
| | | |
Interactive Media & Services–2.66% |
| | |
Meta Platforms, Inc., Class A | | |
| | | |
Investment Banking & Brokerage–1.95% |
Charles Schwab Corp. (The) | | |
Goldman Sachs Group, Inc. (The) | | |
| | | |
IT Consulting & Other Services–0.64% |
Cognizant Technology Solutions Corp., Class A | | |
Managed Health Care–2.57% |
| | |
| | |
| | |
| | |
| | | |
Movies & Entertainment–1.18% |
| | |
Multi-line Insurance–0.74% |
American International Group, Inc. | | |
Oil & Gas Exploration & Production–1.51% |
| | |
| | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Equity and Income Fund
| | |
|
| | |
| | |
| | |
| | |
| | | |
Property & Casualty Insurance–0.64% |
| | |
Rail Transportation–1.64% |
| | |
| | |
| | | |
Real Estate Services–1.22% |
CBRE Group, Inc., Class A(b) | | |
|
Citizens Financial Group, Inc. | | |
|
| | |
Semiconductor Materials & Equipment–0.44% |
| | |
|
| | |
Microchip Technology, Inc. | | |
| | |
NXP Semiconductors N.V. (China) | | |
| | | |
Specialty Chemicals–1.07% |
| | |
| | |
| | | |
|
| | |
| | |
| | | |
|
Philip Morris International, Inc. | | |
Trading Companies & Distributors–0.78% |
Ferguson Enterprises, Inc. | | |
Transaction & Payment Processing Services–1.84% |
Fidelity National Information Services, Inc. | | |
| | |
| | | |
Wireless Telecommunication Services–0.90% |
| | |
Total Common Stocks & Other Equity Interests (Cost $592,781,266) | |
| | |
U.S. Dollar Denominated Bonds & Notes–22.11% |
|
Omnicom Group, Inc./Omnicom Capital, Inc., 3.60%, 04/15/2026 | | | |
Aerospace & Defense–0.44% |
BAE Systems Holdings, Inc. (United Kingdom), 3.85%, | | | |
BAE Systems PLC (United Kingdom), | | |
| | | |
| | | |
| | | |
| | | |
Boeing Co. (The), 5.81%, 05/01/2050 | | | |
L3Harris Technologies, Inc., | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Northrop Grumman Corp., 4.95%, 03/15/2053 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Agricultural & Farm Machinery–0.01% |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
CNH Industrial Capital LLC, 5.45%, 10/14/2025 | | | |
John Deere Capital Corp., 4.70%, 06/10/2030 | | | |
| | | |
Agricultural Products & Services–0.02% |
Ingredion, Inc., 6.63%, 04/15/2037 | | | |
Air Freight & Logistics–0.04% |
FedEx Corp., 4.90%, 01/15/2034 | | | |
United Parcel Service, Inc., 3.40%, 11/15/2046 | | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Equity and Income Fund
| | |
Alternative Carriers–0.21% |
Match Group Financeco 2, Inc., Conv., 0.88%, 06/15/2026(d) | | | |
Match Group Financeco 3, Inc., Conv., 2.00%, 01/15/2030(d) | | | |
| | | |
Application Software–0.93% |
BILL Holdings, Inc., Conv., 0.00%, | | | |
Dropbox, Inc., Conv., 0.00%, | | | |
Envestnet, Inc., Conv., 2.63%, 12/01/2027 | | | |
| | |
| | | |
| | | |
Salesforce, Inc., 2.70%, 07/15/2041 | | | |
| | |
| | | |
| | | |
| | | |
Asset Management & Custody Banks–0.30% |
Ameriprise Financial, Inc., | | |
| | | |
| | | |
| | | |
Ares Capital Corp., 5.88%, 03/01/2029 | | | |
Bank of New York Mellon Corp. (The), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Series J, 4.97%, 04/26/2034(f) | | | |
| | | |
BlackRock, Inc., 4.75%, 05/25/2033 | | | |
Blackstone Secured Lending Fund, 2.13%, 02/15/2027 | | | |
Brookfield Corp. (Canada), 4.00%, 01/15/2025 | | | |
KKR Group Finance Co. III LLC, | | | |
KKR Group Finance Co. XII LLC, | | | |
Northern Trust Corp., 6.13%, 11/02/2032 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Automobile Manufacturers–0.52% |
American Honda Finance Corp., | | |
| | | |
| | | |
| | | |
| | | |
Daimler Truck Finance North America LLC (Germany), 5.15%, | | | |
Ford Motor Credit Co. LLC, 6.80%, 11/07/2028 | | | |
General Motors Co., 6.60%, 04/01/2036 | | | |
Honda Motor Co. Ltd. (Japan), | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Mercedes-Benz Finance North America LLC (Germany), | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
Toyota Motor Credit Corp., | | |
| | | |
| | | |
Volkswagen Group of America Finance LLC (Germany), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Automotive Parts & Equipment–0.01% |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Equity and Income Fund
| | |
|
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Alnylam Pharmaceuticals, Inc., Conv., 1.00%, 09/15/2027 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
Halozyme Therapeutics, Inc., Conv., 0.25%, 03/01/2027 | | | |
| | |
| | | |
| | | |
| | | |
|
Anheuser-Busch Cos. LLC/Anheuser- Busch InBev Worldwide, Inc. (Belgium), | | |
| | | |
| | | |
Anheuser-Busch InBev Worldwide, Inc. (Belgium), 8.20%, 01/15/2039 | | | |
Heineken N.V. (Netherlands), | | | |
Molson Coors Beverage Co., 4.20%, 07/15/2046 | | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
|
Carrier Global Corp., 5.90%, 03/15/2034 | | | |
Johnson Controls International PLC/Tyco Fire & Security Finance S.C.A., 2.00%, 09/16/2031 | | | |
| | | |
|
| | |
| | | |
| | | |
| | |
Cable & Satellite–(continued) |
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Cox Communications, Inc., | | |
| | | |
| | | |
| | | |
Liberty Broadband Corp., Conv., | | | |
| | | |
Cargo Ground Transportation–0.01% |
Penske Truck Leasing Co. L.P./PTL Finance Corp., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Ryder System, Inc., 6.60%, 12/01/2033 | | | |
| | | |
Commercial & Residential Mortgage Finance–0.09% |
Aviation Capital Group LLC, | | |
| | | |
| | | |
| | | |
Nationwide Building Society (United Kingdom), | | |
| | | |
| | | |
Radian Group, Inc., 6.20%, 05/15/2029 | | | |
| | | |
Commodity Chemicals–0.03% |
LYB Finance Co. B.V. (Netherlands), | | | |
Communications Equipment–0.03% |
Cisco Systems, Inc., 5.30%, | | | |
Motorola Solutions, Inc., 4.60%, 02/23/2028 | | | |
| | | |
Computer & Electronics Retail–0.00% |
Dell International LLC/EMC Corp., 8.35%, 07/15/2046 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Equity and Income Fund
| | |
Computer & Electronics Retail–(continued) |
Leidos, Inc., 2.30%, 02/15/2031 | | | |
| | | |
Construction Machinery & Heavy Transportation Equipment– 0.02% |
| | |
| | | |
| | | |
| | | |
Komatsu Finance America, Inc., | | | |
| | | |
|
Capital One Financial Corp., | | |
| | | |
| | | |
| | | |
| | | |
General Motors Financial Co., Inc., | | |
| | | |
| | | |
| | | |
Synchrony Financial, 3.95%, 12/01/2027 | | | |
| | | |
Consumer Staples Merchandise Retail–0.00% |
Dollar General Corp., 5.50%, 11/01/2052 | | | |
| | |
| | | |
| | | |
Walmart, Inc., 4.50%, 04/15/2053 | | | |
| | | |
Data Processing & Outsourced Services–0.28% |
CSG Systems International, Inc., Conv., 3.88%, 09/15/2028 | | | |
Distillers & Vintners–0.00% |
Brown-Forman Corp., 4.75%, 04/15/2033 | | | |
Constellation Brands, Inc., 4.90%, 05/01/2033 | | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
|
Australia and New Zealand Banking Group Ltd. (Australia), | | |
| | | |
| | | |
| | | |
Banco Santander S.A. (Spain), | | |
| | | |
| | | |
| | | |
| | |
Diversified Banks–(continued) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Bank of America N.A., 5.53%, 08/18/2026 | | | |
Bank of Montreal (Canada), | | |
| | | |
| | | |
Bank of Nova Scotia (The) (Canada), | | |
| | | |
| | | |
Barclays PLC (United Kingdom), | | | |
BBVA Bancomer S.A. (Mexico), | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Commonwealth Bank of Australia (Australia), 3.31%, | | | |
Credit Agricole S.A. (France), | | |
| | | |
| | | |
| | | |
Danske Bank A/S (Denmark), 1.55%, | | | |
Discover Bank, 4.65%, 09/13/2028 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Equity and Income Fund
| | |
Diversified Banks–(continued) |
Federation des caisses Desjardins du Quebec (Canada), 4.55%, | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
HSBC Holdings PLC (United Kingdom), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
ING Groep N.V. (Netherlands), | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
JPMorgan Chase Bank N.A., 5.11%, 12/08/2026 | | | |
KeyCorp, 5.69% (SOFR + 1.25%), | | | |
Manufacturers & Traders Trust Co., | | |
| | | |
| | | |
Mitsubishi UFJ Financial Group, Inc. (Japan), 5.02%, 07/20/2028(f) | | | |
Mizuho Financial Group, Inc. (Japan), | | | |
Morgan Stanley Bank N.A., | | |
| | | |
| | | |
National Securities Clearing Corp., | | | |
PNC Financial Services Group, Inc. (The), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Diversified Banks–(continued) |
Royal Bank of Canada (Canada), | | |
| | | |
| | | |
| | | |
Societe Generale S.A. (France), | | |
| | | |
| | | |
Standard Chartered PLC (United Kingdom), | | |
| | | |
| | | |
Sumitomo Mitsui Financial Group, Inc. (Japan), | | |
| | | |
| | | |
Sumitomo Mitsui Trust Bank Ltd. (Japan), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Synovus Bank, 5.63%, 02/15/2028 | | | |
Toronto-Dominion Bank (The) (Canada), 8.13%, 10/31/2082(f) | | | |
| | |
Series W, 3.10%, 04/27/2026 | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
UBS AG (Switzerland), 5.65%, 09/11/2028 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
Westpac Banking Corp. (Australia), 6.82%, 11/17/2033 | | | |
| | | |
Diversified Capital Markets–0.15% |
Blackstone Private Credit Fund, 6.25%, 01/25/2031 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Equity and Income Fund
| | |
Diversified Capital Markets–(continued) |
SMBC Aviation Capital Finance DAC (Ireland), 5.30%, | | | |
UBS Group AG (Switzerland), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Diversified Financial Services–0.08% |
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland), 3.85%, 10/29/2041 | | | |
Apollo Debt Solutions BDC, 6.90%, | | | |
Apollo Global Management, Inc., 6.38%, 11/15/2033 | | | |
Avolon Holdings Funding Ltd. (Ireland), | | |
| | | |
| | | |
Blue Owl Technology Finance Corp. | | | |
Corebridge Financial, Inc., | | |
| | | |
| | | |
Macquarie Airfinance Holdings Ltd. (United Kingdom), | | |
| | | |
| | | |
| | | |
Diversified Metals & Mining–0.04% |
BHP Billiton Finance (USA) Ltd. (Australia), | | |
| | | |
| | | |
| | | |
| | | |
Glencore Funding LLC (Australia), | | |
| | | |
| | | |
| | | |
Rio Tinto Finance (USA) Ltd. (Australia), 7.13%, 07/15/2028 | | | |
| | | |
|
Brixmor Operating Partnership L.P., 5.50%, 02/15/2034 | | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | |
Diversified Support Services–0.00% |
Element Fleet Management Corp. (Canada), 6.32%, | | | |
|
CVS Pass-Through Trust, 6.04%, 12/10/2028 | | | |
Walgreens Boots Alliance, Inc., 4.50%, 11/18/2034 | | | |
| | | |
|
| | | |
Alabama Power Co., 5.85%, 11/15/2033 | | | |
American Electric Power Co., Inc., | | |
| | | |
| | | |
Connecticut Light and Power Co. (The), 5.25%, 01/15/2053 | | | |
Consolidated Edison Co. of New York, Inc., | | |
| | | |
| | | |
Constellation Energy Generation LLC, | | |
| | | |
| | | |
| | | |
Dominion Energy South Carolina, Inc., 6.25%, 10/15/2053 | | | |
Duke Energy Carolinas LLC, 5.35%, 01/15/2053 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
Duke Energy Indiana LLC, 5.40%, 04/01/2053 | | | |
Electricite de France S.A. (France), | | | |
Enel Finance America LLC (Italy), | | | |
Enel Finance International N.V. (Italy), 7.05%, 10/14/2025(d) | | | |
Evergy Metro, Inc., 4.95%, 04/15/2033 | | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
FirstEnergy Corp., Conv., 4.00%, 05/01/2026 | | | |
FirstEnergy Pennsylvania Electric Co., 5.20%, 04/01/2028(d) | | | |
Florida Power & Light Co., 4.80%, 05/15/2033 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8
Invesco V.I. Equity and Income Fund
| | |
Electric Utilities–(continued) |
| | |
| | | |
| | | |
Series B, 3.70%, 01/30/2050 | | | |
| | |
| | | |
| | | |
| | | |
National Rural Utilities Cooperative Finance Corp., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
NextEra Energy Capital Holdings, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Niagara Mohawk Power Corp., | | |
| | | |
| | | |
Oklahoma Gas and Electric Co., 5.60%, 04/01/2053 | | | |
Oncor Electric Delivery Co. LLC, 5.65%, 11/15/2033 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
PECO Energy Co., 4.90%, 06/15/2033 | | | |
PPL Capital Funding, Inc., Conv., 2.88%, 03/15/2028 | | | |
PPL Electric Utilities Corp., 6.25%, 05/15/2039 | | | |
Public Service Co. of Colorado, 5.25%, 04/01/2053 | | | |
Public Service Co. of New Hampshire, 5.35%, 10/01/2033 | | | |
Public Service Electric and Gas Co., 5.13%, 03/15/2053 | | | |
San Diego Gas & Electric Co., | | |
| | | |
| | | |
Sierra Pacific Power Co., 5.90%, 03/15/2054 | | | |
Southern Co. (The), 5.70%, 10/15/2032 | | | |
Southwestern Electric Power Co., 5.30%, 04/01/2033 | | | |
Union Electric Co., 5.20%, 04/01/2034 | | | |
| | |
Electric Utilities–(continued) |
Virginia Electric & Power Co., | | |
| | | |
| | | |
Vistra Operations Co. LLC, 6.95%, | | | |
| | |
| | | |
| | | |
| | | |
Electrical Components & Equipment–0.02% |
Regal Rexnord Corp., 6.30%, 02/15/2030 | | | |
Rockwell Automation, Inc., 1.75%, 08/15/2031 | | | |
| | | |
Environmental & Facilities Services–0.01% |
| | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
Financial Exchanges & Data–0.01% |
Intercontinental Exchange, Inc., | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
|
Sysco Corp., 3.75%, 10/01/2025 | | | |
|
Alimentation Couche-Tard, Inc. (Canada), 5.27%, | | | |
|
| | |
| | | |
| | | |
Piedmont Natural Gas Co., Inc., 5.40%, 06/15/2033 | | | |
Southwest Gas Corp., 5.45%, 03/23/2028 | | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9
Invesco V.I. Equity and Income Fund
| | |
Health Care Distributors–0.01% |
Cardinal Health, Inc., 5.45%, 02/15/2034 | | | |
Cencora, Inc., 5.13%, 02/15/2034 | | | |
McKesson Corp., 5.10%, 07/15/2033 | | | |
| | | |
Health Care Equipment–0.48% |
Alcon Finance Corp., 5.38%, | | | |
Becton, Dickinson and Co., 4.88%, 05/15/2044 | | | |
Boston Scientific Corp., 1.90%, | | | |
Integra LifeSciences Holdings Corp., Conv., 0.50%, 08/15/2025 | | | |
Medtronic, Inc., 4.38%, 03/15/2035 | | | |
Smith & Nephew PLC (United Kingdom), | | |
| | | |
| | | |
| | | |
Health Care Facilities–0.00% |
HCA, Inc., 5.90%, 06/01/2053 | | | |
| | |
| | | |
| | | |
| | | |
|
Alexandria Real Estate Equities, Inc., | | |
| | | |
| | | |
| | | |
Healthcare Realty Holdings L.P., | | |
| | | |
| | | |
| | | |
Health Care Services–0.10% |
Cigna Group (The), 4.80%, 08/15/2038 | | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
Fresenius Medical Care US Finance III, Inc. (Germany), 1.88%, | | | |
NXP B.V./NXP Funding LLC (China), 5.35%, 03/01/2026 | | | |
Piedmont Healthcare, Inc., 2.86%, 01/01/2052 | | | |
Providence St. Joseph Health Obligated Group, Series 21-A, 2.70%, 10/01/2051 | | | |
| | |
Health Care Services–(continued) |
Quest Diagnostics, Inc., 6.40%, 11/30/2033 | | | |
| | | |
Health Care Supplies–0.38% |
Haemonetics Corp., Conv., 2.50%, | | | |
Medtronic Global Holdings S.C.A., 4.50%, 03/30/2033 | | | |
Merit Medical Systems, Inc., Conv., | | | |
| | |
| | | |
| | | |
| | | |
| | | |
Home Improvement Retail–0.19% |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Hotels, Resorts & Cruise Lines–0.52% |
Airbnb, Inc., Conv., 0.00%, | | | |
Marriott International, Inc., | | |
| | | |
| | | |
| | | |
Industrial Conglomerates–0.13% |
Honeywell International, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Industrial Machinery & Supplies & Components–0.28% |
Caterpillar Financial Services Corp., 5.15%, 08/11/2025 | | | |
| | |
| | | |
| | | |
JBT Marel Corp., Conv., 0.25%, 05/15/2026 | | | |
| | |
| | | |
| | | |
nVent Finance S.a.r.l. (United Kingdom), 5.65%, 05/15/2033 | | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10
Invesco V.I. Equity and Income Fund
| | |
|
| | |
| | | |
| | | |
| | | |
|
Arthur J. Gallagher & Co., 6.75%, 02/15/2054 | | | |
Marsh & McLennan Cos., Inc., | | |
| | | |
| | | |
| | | |
| | | |
Integrated Oil & Gas–0.32% |
BP Capital Markets America, Inc., 2.94%, 06/04/2051 | | | |
| | | |
| | |
| | | |
| | | |
Gray Oak Pipeline LLC, 2.60%, | | | |
Occidental Petroleum Corp., | | |
| | | |
| | | |
Shell International Finance B.V., 3.25%, 05/11/2025 | | | |
| | | |
Integrated Telecommunication Services–0.23% |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
Telefonica Emisiones S.A. (Spain), 5.21%, 03/08/2047 | | | |
| | |
| | | |
| | | |
Verizon Communications, Inc., | | |
| | | |
| | | |
| | | |
| | | |
Interactive Home Entertainment–0.12% |
| | |
| | | |
| | | |
Take-Two Interactive Software, Inc., 3.70%, 04/14/2027 | | | |
| | | |
Interactive Media & Services–0.25% |
| | |
| | | |
| | | |
| | |
Interactive Media & Services–(continued) |
Snap, Inc., Conv., 0.50%, | | | |
| | | |
Internet Services & Infrastructure–0.26% |
Shopify, Inc. (Canada), Conv., 0.13%, 11/01/2025 | | | |
Investment Banking & Brokerage–1.93% |
Brookfield Finance, Inc. (Canada), 5.97%, 03/04/2054 | | | |
Charles Schwab Corp. (The), | | |
| | | |
| | | |
| | | |
| | | |
Goldman Sachs Group, Inc. (The), | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Brunswick Corp., 5.85%, 03/18/2029 | | | |
Life & Health Insurance–0.71% |
American National Group, Inc., 5.00%, 06/15/2027 | | | |
| | |
| | | |
| | | |
Athene Holding Ltd., 6.25%, 04/01/2054 | | | |
Brighthouse Financial, Inc., 3.85%, 12/22/2051 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11
Invesco V.I. Equity and Income Fund
| | |
Life & Health Insurance–(continued) |
Corebridge Global Funding, | | |
| | | |
| | | |
| | | |
Delaware Life Global Funding, Series 21-1, 2.66%, | | | |
F&G Annuities & Life, Inc., 7.40%, 01/13/2028 | | | |
GA Global Funding Trust, 5.50%, | | | |
MAG Mutual Holding Co., 4.75%, | | | |
Manulife Financial Corp. (Canada), | | | |
| | |
| | | |
| | | |
Nationwide Financial Services, Inc., | | | |
New York Life Global Funding, | | | |
Northwestern Mutual Global Funding, | | |
| | | |
| | | |
| | | |
Pacific Life Global Funding II, | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Principal Life Global Funding II, | | |
| | | |
| | | |
Prudential Financial, Inc., 3.91%, 12/07/2047 | | | |
Reliance Standard Life Global Funding II, 2.75%, | | | |
Sumitomo Life Insurance Co. | | | |
| | | |
Managed Health Care–0.04% |
Humana, Inc., 5.75%, 12/01/2028 | | | |
UnitedHealth Group, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Marine Transportation–0.00% |
A.P. Moller - Maersk A/S (Denmark), | | | |
Movies & Entertainment–0.46% |
Discovery Communications LLC, | | | |
Liberty Media Corp.-Liberty Formula One, Conv., 2.25%, 08/15/2027 | | | |
TWDC Enterprises 18 Corp., 3.00%, 02/13/2026 | | | |
Warnermedia Holdings, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Multi-Family Residential REITs–0.01% |
AvalonBay Communities, Inc., 5.30%, 12/07/2033 | | | |
Essex Portfolio L.P., 5.50%, 04/01/2034 | | | |
| | | |
Multi-line Insurance–0.06% |
Aon Corp./Aon Global Holdings PLC, 5.35%, 02/28/2033 | | | |
Liberty Mutual Group, Inc., 3.95%, | | | |
Metropolitan Life Global Funding I, | | | |
| | | |
|
Algonquin Power & Utilities Corp. (Canada), 5.37%, 06/15/2026 | | | |
Ameren Illinois Co., 4.95%, 06/01/2033 | | | |
Black Hills Corp., 6.15%, 05/15/2034 | | | |
Dominion Energy, Inc., 5.38%, 11/15/2032 | | | |
DTE Electric Co., 5.20%, 03/01/2034 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
Public Service Enterprise Group, Inc., | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12
Invesco V.I. Equity and Income Fund
| | |
|
Piedmont Operating Partnership L.P., 9.25%, 07/20/2028 | | | |
|
Patterson-UTI Energy, Inc., 7.15%, 10/01/2033 | | | |
Oil & Gas Equipment & Services–0.00% |
Northern Natural Gas Co., 5.63%, | | | |
Oil & Gas Exploration & Production–0.26% |
| | | |
Canadian Natural Resources Ltd. (Canada), 2.05%, 07/15/2025 | | | |
| | |
| | | |
| | | |
Diamondback Energy, Inc., 5.75%, 04/18/2054 | | | |
Northern Oil and Gas, Inc., Conv., 3.63%, 04/15/2029 | | | |
Pioneer Natural Resources Co., 5.10%, 03/29/2026 | | | |
| | | |
Oil & Gas Refining & Marketing–0.03% |
Phillips 66 Co., 5.30%, 06/30/2033 | | | |
Valero Energy Corp., 4.00%, | | | |
| | | |
Oil & Gas Storage & Transportation–0.46% |
Cheniere Energy Partners L.P., 5.95%, 06/30/2033 | | | |
Columbia Pipelines Holding Co. LLC, | | | |
Enbridge, Inc. (Canada), 5.70%, 03/08/2033 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Enterprise Products Operating LLC, | | |
| | | |
| | | |
GreenSaif Pipelines Bidco S.a.r.l. (Saudi Arabia), 6.51%, | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
Oil & Gas Storage & Transportation–(continued) |
| | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
Southern Co. Gas Capital Corp., 5.75%, 09/15/2033 | | | |
Spectra Energy Partners L.P., 4.50%, 03/15/2045 | | | |
Targa Resources Corp., 5.20%, 07/01/2027 | | | |
Texas Eastern Transmission L.P., 7.00%, 07/15/2032 | | | |
Western Midstream Operating L.P., 6.15%, 04/01/2033 | | | |
Williams Cos., Inc. (The), | | |
| | | |
| | | |
| | | |
| | | |
Other Specialized REITs–0.11% |
EPR Properties, 4.75%, 12/15/2026 | | | |
Other Specialty Retail–0.00% |
Tractor Supply Co., 5.25%, 05/15/2033 | | | |
Packaged Foods & Meats–0.02% |
| | |
| | | |
| | | |
Conagra Brands, Inc., 4.60%, 11/01/2025 | | | |
General Mills, Inc., 2.25%, 10/14/2031 | | | |
J.M. Smucker Co. (The), 6.20%, | | | |
Mars, Inc., 4.55%, 04/20/2028(d) | | | |
McCormick & Co., Inc., 4.95%, 04/15/2033 | | | |
Mead Johnson Nutrition Co. (United Kingdom), 4.13%, 11/15/2025 | | | |
| | |
| | | |
| | | |
| | | |
Paper & Plastic Packaging Products & Materials–0.04% |
International Paper Co., 6.00%, 11/15/2041 | | | |
Smurfit Kappa Treasury Unlimited Co. (Ireland), | | |
| | | |
| | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13
Invesco V.I. Equity and Income Fund
| | |
|
American Airlines Pass-Through Trust, | | |
Series 2014-1, Class A, 3.70%, 04/01/2028 | | | |
Series 2021-1, Class B, 3.95%, 07/11/2030 | | | |
Series 2021-1, Class A, 2.88%, 07/11/2034 | | | |
| | |
| | | |
| | | |
British Airways Pass-Through Trust (United Kingdom), Series 2021-1, Class A, 2.90%, 03/15/2035(d) | | | |
Delta Air Lines, Inc./SkyMiles IP Ltd., | | |
| | | |
| | | |
United Airlines Pass-Through Trust, | | |
Series 2014-2, Class A, 3.75%, 09/03/2026 | | | |
Series 2020-1, Class A, 5.88%, 10/15/2027 | | | |
Series 2018-1, Class AA, 3.50%, 03/01/2030 | | | |
| | | |
Personal Care Products–0.05% |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
AstraZeneca Finance LLC (United Kingdom), | | |
| | | |
| | | |
| | | |
Bayer US Finance II LLC (Germany), | | | |
Bayer US Finance LLC (Germany), | | |
| | | |
| | | |
| | | |
| | | |
Bristol-Myers Squibb Co., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Pharmaceuticals–(continued) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
GlaxoSmithKline Capital, Inc. (United Kingdom), 6.38%, 05/15/2038 | | | |
Haleon US Capital LLC, 4.00%, 03/24/2052 | | | |
| | |
| | | |
| | | |
| | | |
Pfizer Investment Enterprises Pte. Ltd., | | |
| | | |
| | | |
Takeda Pharmaceutical Co. Ltd. (Japan), 5.00%, 11/26/2028 | | | |
| | |
| | | |
| | | |
| | | |
Property & Casualty Insurance–0.12% |
Allstate Corp. (The), 3.28%, 12/15/2026 | | | |
Fairfax Financial Holdings Ltd. (Canada), 6.35%, 03/22/2054 | | | |
| | |
| | | |
| | | |
Travelers Cos., Inc. (The), | | |
| | | |
| | | |
| | | |
Rail Transportation–0.19% |
Canadian Pacific Railway Co. (Canada), 3.00%, 12/02/2041 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Real Estate Development–0.00% |
Essential Properties L.P., 2.95%, 07/15/2031 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14
Invesco V.I. Equity and Income Fund
| | |
|
Citizens Financial Group, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Santander UK Group Holdings PLC (United Kingdom), 6.83%, | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Berkshire Hathaway Finance Corp., 2.85%, 10/15/2050 | | | |
Global Atlantic (Fin) Co., 6.75%, | | | |
PartnerRe Finance B LLC, 3.70%, 07/02/2029 | | | |
Swiss Re Subordinated Finance PLC (United Kingdom), 5.70%, | | | |
| | | |
Renewable Electricity–0.04% |
NSTAR Electric Co., 4.55%, 06/01/2052 | | | |
Oglethorpe Power Corp., 4.55%, 06/01/2044 | | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
| | | |
Starbucks Corp., 3.55%, 08/15/2029 | | | |
| | | |
|
Agree L.P., 2.00%, 06/15/2028 | | | |
Kimco Realty OP LLC, 3.20%, 04/01/2032 | | | |
Kite Realty Group L.P., 5.50%, 03/01/2034 | | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | |
|
| | |
| | | |
| | | |
| | | |
| | | |
|
Extra Space Storage L.P., | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Public Storage Operating Co., | | |
| | | |
| | | |
| | | |
| | | |
Semiconductor Materials & Equipment–0.38% |
MKS Instruments, Inc., Conv., | | | |
|
| | | |
Foundry JV Holdco LLC, 5.88%, | | | |
Marvell Technology, Inc., 2.45%, 04/15/2028 | | | |
Microchip Technology, Inc., Conv., | | | |
| | |
| | | |
| | | |
| | | |
Skyworks Solutions, Inc., | | |
| | | |
| | | |
| | | |
Single-Family Residential REITs–0.06% |
Dell International LLC/EMC Corp., 6.02%, 06/15/2026 | | | |
Sun Communities Operating L.P., 2.70%, 07/15/2031 | | | |
| | | |
Specialized Finance–0.00% |
Blackstone Holdings Finance Co. LLC, | | | |
Specialty Chemicals–0.01% |
Sherwin-Williams Co. (The), 4.50%, 06/01/2047 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15
Invesco V.I. Equity and Income Fund
| | |
|
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
VMware LLC, 3.90%, 08/21/2027 | | | |
| | | |
Technology Distributors–0.05% |
Avnet, Inc., 4.63%, 04/15/2026 | | | |
Technology Hardware, Storage & Peripherals–0.08% |
Apple, Inc., 3.35%, 02/09/2027 | | | |
Hewlett Packard Enterprise Co., 4.90%, 10/15/2025 | | | |
Leidos, Inc., 5.75%, 03/15/2033 | | | |
| | | |
Telecom Tower REITs–0.15% |
American Tower Corp., 1.60%, 04/15/2026 | | | |
| | |
| | | |
| | | |
| | | |
|
Altria Group, Inc., 5.80%, | | | |
B.A.T Capital Corp. (United Kingdom), | | |
| | | |
| | | |
| | | |
| | | |
Philip Morris International, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Trading Companies & Distributors–0.13% |
Air Lease Corp., 2.30%, 02/01/2025 | | | |
Transaction & Payment Processing Services–0.89% |
Block, Inc., Conv., 0.13%, 03/01/2025 | | | |
| | |
| | | |
| | | |
| | | |
Global Payments, Inc., Conv., | | | |
| | |
Transaction & Payment Processing Services–(continued) |
Mastercard, Inc., 4.85%, 03/09/2033 | | | |
| | | |
Wireless Telecommunication Services–0.26% |
America Movil S.A.B. de C.V. (Mexico), 4.38%, 07/16/2042 | | | |
Rogers Communications, Inc. (Canada), | | |
| | | |
| | | |
Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC/Sprint Spectrum Co. III LLC, 4.74%, | | | |
| | |
| | | |
| | | |
| | | |
Total U.S. Dollar Denominated Bonds & Notes (Cost $308,465,352) | |
U.S. Treasury Securities–8.43% |
U.S. Treasury Bills–0.01% |
| | | |
U.S. Treasury Bonds–1.38% |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
U.S. Treasury Notes–7.04% |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Total U.S. Treasury Securities (Cost $116,778,077) | |
|
Asset-Backed Securities–1.10% |
AGL CLO 29 Ltd., Series 2024-29A, Class A1, 6.19% (3 mo. Term SOFR + 1.57%), | | | |
Alternative Loan Trust, Series 2005-29CB, Class A4, 5.00%, 07/25/2035 | | | |
AMSR Trust, Series 2021-SFR3, Class B, 1.73%, 10/17/2038(d) | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16
Invesco V.I. Equity and Income Fund
| | |
|
Angel Oak Mortgage Trust, | | |
Series 2020-1, Class A1, 2.16%, | | | |
Series 2020-3, Class A1, 1.69%, | | | |
Series 2021-3, Class A1, 1.07%, | | | |
Series 2021-7, Class A1, 1.98%, | | | |
Series 2022-1, Class A1, 2.88%, | | | |
Series 2023-6, Class A1, 6.50%, | | | |
Series 2024-2, Class A1, 5.99%, | | | |
Avis Budget Rental Car Funding (AESOP) LLC, | | |
Series 2022-1A, Class A, 3.83%, | | | |
Series 2023-1A, Class A, 5.25%, | | | |
Series 2023-4A, Class A, 5.49%, | | | |
Bain Capital Credit CLO Ltd., Series 2021-1A, Class A, 5.95% (3 mo. Term SOFR + 1.32%), | | | |
Banc of America Funding Trust, | | |
Series 2007-1, Class 1A3, 6.00%, 01/25/2037 | | | |
Series 2007-C, Class 1A4, | | | |
Banc of America Mortgage Trust, Series 2004-E, Class 2A6, | | | |
Bank, Series 2019-BNK16, Class XA, | | | |
Bayview MSR Opportunity Master Fund Trust, | | |
Series 2021-4, Class A3, 3.00%, | | | |
Series 2021-4, Class A4, 2.50%, | | | |
Series 2021-4, Class A8, 2.50%, | | | |
Series 2021-5, Class A1, 3.00%, | | | |
Series 2021-5, Class A2, 2.50%, | | | |
Bear Stearns Adjustable Rate Mortgage Trust, | | |
Series 2005-9, Class A1, 0.76% (1 yr. U.S. Treasury Yield Curve Rate + 2.30%), 10/25/2035(i) | | | |
Series 2006-1, Class A1, 0.65% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), 02/25/2036(i) | | | |
Benchmark Mortgage Trust, Series 2018-B1, Class XA, IO, | | | |
BRAVO Residential Funding Trust, Series 2021-NQM2, Class A1, | | | |
| | |
|
BX Commercial Mortgage Trust, | | |
Series 2021-ACNT, Class A, 5.36% (1 mo. Term SOFR + | | | |
Series 2021-VOLT, Class A, 5.21% (1 mo. Term SOFR + | | | |
Series 2021-VOLT, Class B, 5.46% (1 mo. Term SOFR + | | | |
| | |
Series 2022-CLS, Class A, | | | |
Series 2022-LBA6, Class A, 5.40% (1 mo. Term SOFR + | | | |
Series 2022-LBA6, Class B, 5.70% (1 mo. Term SOFR + | | | |
Series 2022-LBA6, Class C, 6.00% (1 mo. Term SOFR + | | | |
CD Mortgage Trust, Series 2017- CD6, Class XA, IO, 0.89%, | | | |
Chase Home Lending Mortgage Trust, Series 2019-ATR1, Class A15, | | | |
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, | | | |
Citigroup Commercial Mortgage Trust, Series 2017-C4, Class XA, | | | |
Citigroup Mortgage Loan Trust, Inc., | | |
Series 2006-AR1, Class 1A1, 7.20% (1 yr. U.S. Treasury Yield Curve Rate + 2.40%), | | | |
Series 2021-INV3, Class A3, | | | |
COLT Mortgage Loan Trust, | | |
Series 2021-5, Class A1, 1.73%, | | | |
Series 2022-1, Class A1, 2.28%, | | | |
Series 2022-2, Class A1, 2.99%, | | | |
Series 2022-3, Class A1, 3.90%, | | | |
Countrywide Home Loans Mortgage Pass-Through Trust, | | |
Series 2005-26, Class 1A8, 5.50%, 11/25/2035 | | | |
Series 2006-6, Class A3, 6.00%, 04/25/2036 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17
Invesco V.I. Equity and Income Fund
| | |
|
Credit Suisse Mortgage Capital Trust, | | |
Series 2021-NQM1, Class A1, | | | |
Series 2021-NQM2, Class A1, | | | |
Series 2022-ATH1, Class A1A, | | | |
Series 2022-ATH1, Class A1B, | | | |
Series 2022-ATH2, Class A1, | | | |
Cross Mortgage Trust, Series 2024-H2, Class A1, | | | |
CSAIL Commercial Mortgage Trust, Series 2020-C19, Class A3, 2.56%, 03/15/2053 | | | |
CSMC Mortgage-Backed Trust, Series 2006-6, Class 1A4, 6.00%, 07/25/2036 | | | |
DLLST LLC, Series 2024-1A, Class A3, 5.05%, | | | |
Ellington Financial Mortgage Trust, | | |
Series 2020-1, Class A1, 2.01%, | | | |
Series 2021-1, Class A1, 0.80%, | | | |
Series 2022-1, Class A1, 2.21%, | | | |
Series 2022-3, Class A1, 5.00%, | | | |
Empower CLO Ltd., Series 2024-1A, Class A1, 6.23% (3 mo. Term SOFR + 1.60%), | | | |
Extended Stay America Trust, Series 2021-ESH, Class B, 5.89% (1 mo. Term SOFR + 1.49%), | | | |
First Horizon Alternative Mortgage Securities Trust, Series 2005- FA8, Class 1A6, 5.10% (1 mo. Term SOFR + 0.76%), | | | |
| | |
Series 2021-11IN, Class A6, | | | |
Series 2021-8INV, Class A6, | | | |
Frontier Issuer LLC, Series 2023-1, Class A2, 6.60%, | | | |
Golub Capital Partners CLO 40(B) Ltd., Series 2019-40A, Class AR, 5.98% (3 mo. Term SOFR + | | | |
GS Mortgage Securities Trust, Series 2020-GC47, Class A5, 2.38%, 05/12/2053 | | | |
GS Mortgage-Backed Securities Trust, Series 2021-INV1, Class A6, 2.50%, | | | |
GSR Mortgage Loan Trust, Series 2005-AR4, Class 6A1, | | | |
| | |
|
Hertz Vehicle Financing III L.P., Series 2021-2A, Class A, 1.68%, | | | |
HPEFS Equipment Trust, Series 2023-2A, Class A2, | | | |
JP Morgan Chase Commercial Mortgage Securities Trust, Series 2013-LC11, Class AS, 3.22%, 04/15/2046 | | | |
JP Morgan Mortgage Trust, | | |
Series 2007-A1, Class 5A1, | | | |
Series 2021-LTV2, Class A1, | | | |
Series 2024-VIS1, Class A1, | | | |
JPMBB Commercial Mortgage Securities Trust, | | |
Series 2014-C24, Class B, | | | |
Series 2014-C25, Class AS, 4.07%, 11/15/2047 | | | |
Series 2015-C27, Class XA, IO, | | | |
| | |
Series 2021-BMR, Class A, 5.21% (1 mo. Term SOFR + | | | |
Series 2021-BMR, Class B, 5.39% (1 mo. Term SOFR + | | | |
Series 2021-BMR, Class C, 5.61% (1 mo. Term SOFR + | | | |
Madison Park Funding XLVIII Ltd., Series 2021-48A, Class A, 6.03% (3 mo. Term SOFR + | | | |
Madison Park Funding XXXIII Ltd., Series 2019-33A, Class AR, 5.95% (3 mo. Term SOFR + | | | |
MASTR Adjustable Rate Mortgages Trust, Series 2004-13, Class 2A2, 6.90%, | | | |
Mello Mortgage Capital Acceptance Trust, | | |
Series 2021-INV2, Class A4, | | | |
Series 2021-INV3, Class A4, | | | |
MFA Trust, Series 2021-INV2, Class A1, 1.91%, | | | |
MHP Commercial Mortgage Trust, | | |
Series 2021-STOR, Class A, 5.21% (1 mo. Term SOFR + | | | |
Series 2021-STOR, Class B, 5.41% (1 mo. Term SOFR + | | | |
Morgan Stanley Capital I Trust, Series 2017-HR2, Class XA, IO, | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18
Invesco V.I. Equity and Income Fund
| | |
|
Morgan Stanley Re-REMIC Trust, Series 2012-R3, Class 1B, | | | |
Neuberger Berman Loan Advisers CLO 40 Ltd., Series 2021-40A, Class A, 5.97% (3 mo. Term SOFR + 1.32%), 04/16/2033(d)(i) | | | |
New Residential Mortgage Loan Trust, Series 2022-NQM2, Class A1, 3.08%, | | | |
| | |
Series 2021-NQM4, Class A1, | | | |
Series 2022-NQM1, Class A1, | | | |
Series 2022-NQM2, Class A1B, | | | |
Series 2022-NQM8, Class A1, | | | |
Oceanview Mortgage Trust, Series 2021-3, Class A5, 2.50%, | | | |
PRKCM Trust, Series 2023-AFC4, Class A1, 7.23%, | | | |
Progress Residential Trust, | | |
Series 2021-SFR10, Class A, | | | |
Series 2022-SFR5, Class A, | | | |
Residential Accredit Loans, Inc. Trust, Series 2006-QS13, Class 1A8, 6.00%, 09/25/2036 | | | |
Residential Mortgage Loan Trust, Series 2020-1, Class A1, 2.38%, | | | |
RUN Trust, Series 2022-NQM1, Class A1, 4.00%, | | | |
SG Residential Mortgage Trust, | | |
Series 2022-1, Class A1, 3.17%, | | | |
Series 2022-1, Class A2, 3.58%, | | | |
| | |
Series 2021-1A, Class A2I, | | | |
Series 2021-1A, Class A2II, | | | |
STAR Trust, Series 2021-1, Class A1, 1.22%, | | | |
Starwood Mortgage Residential Trust, | | |
Series 2020-1, Class A1, 2.28%, | | | |
Series 2021-6, Class A1, 1.92%, | | | |
Series 2022-1, Class A1, 2.45%, | | | |
Textainer Marine Containers VII Ltd., Series 2021-2A, Class A, 2.23%, | | | |
Tricon American Homes Trust, Series 2020-SFR2, Class A, | | | |
| | |
|
UBS Commercial Mortgage Trust, Series 2017-C5, Class XA, IO, | | | |
Verus Securitization Trust, | | |
Series 2020-1, Class A1, 3.42%, | | | |
Series 2020-1, Class A2, 3.64%, | | | |
Series 2021-1, Class A1B, | | | |
Series 2021-7, Class A1, 1.83%, | | | |
Series 2021-R1, Class A1, | | | |
Series 2022-1, Class A1, 2.72%, | | | |
Series 2022-3, Class A1, 4.13%, | | | |
Series 2022-7, Class A1, 5.15%, | | | |
Series 2022-INV2, Class A1, | | | |
Visio Trust, Series 2020-1R, Class A1, 1.31%, 11/25/2055(d) | | | |
WaMu Mortgage Pass-Through Ctfs. Trust, | | |
Series 2003-AR10, Class A7, | | | |
Series 2005-AR14, Class 1A4, | | | |
Series 2005-AR16, Class 1A1, | | | |
Wells Fargo Commercial Mortgage Trust, Series 2017-C42, Class XA, IO, 0.86%, | | | |
WF Card Issuance Trust, Series 2024-A1, Class A, 4.94%, 02/15/2029 | | | |
WFRBS Commercial Mortgage Trust, Series 2013-C14, Class AS, 3.49%, 06/15/2046 | | | |
Total Asset-Backed Securities (Cost $16,289,471) | |
| | |
|
Asset Management & Custody Banks–0.18% |
AMG Capital Trust II, 5.15%, Conv. Pfd. | | |
Diversified Financial Services–0.02% |
Apollo Global Management, Inc., 7.63%, | | |
Oil & Gas Storage & Transportation–0.34% |
El Paso Energy Capital Trust I, 4.75%, Conv. Pfd. | | |
Total Preferred Stocks (Cost $5,976,676) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19
Invesco V.I. Equity and Income Fund
| | |
U.S. Government Sponsored Agency Mortgage-Backed Securities–0.16% |
Collateralized Mortgage Obligations–0.03% |
Fannie Mae Interest STRIPS, | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | |
2.42% (7.10% - (30 Day Average SOFR + 0.11%)), | | | |
3.22% (7.90% - (30 Day Average SOFR + 0.11%)), | | | |
3.27% (7.95% - (30 Day Average SOFR + 0.11%)), | | | |
3.42% (8.10% - (30 Day Average SOFR + 0.11%)), | | | |
3.32% (8.00% - (30 Day Average SOFR + 0.11%)), 04/25/2032 to | | | |
3.39% (8.10% - (30 Day Average SOFR + 0.11%)), | | | |
3.57% (8.25% - (30 Day Average SOFR + 0.11%)), 02/25/2033 to | | | |
2.87% (7.55% - (30 Day Average SOFR + 0.11%)), | | | |
1.37% (6.05% - (30 Day Average SOFR + 0.11%)), 03/25/2035 to | | | |
2.07% (6.75% - (30 Day Average SOFR + 0.11%)), | | | |
1.92% (6.60% - (30 Day Average SOFR + 0.11%)), | | | |
2.02% (6.70% - (30 Day Average SOFR + 0.11%)), | | | |
| | | |
1.42% (6.10% - (30 Day Average SOFR + 0.11%)), | | | |
1.86% (6.54% - (30 Day Average SOFR + 0.11%)), | | | |
1.87% (6.55% - (30 Day Average SOFR + 0.11%)), | | | |
| | |
Collateralized Mortgage Obligations–(continued) |
1.47% (6.15% - (30 Day Average SOFR + 0.11%)), | | | |
1.22% (5.90% - (30 Day Average SOFR + 0.11%)), | | | |
| | | |
| | | |
4.93% (30 Day Average SOFR + | | | |
7.39% (24.57% - (3.67 x (30 Day Average SOFR + | | | |
7.03% (24.20% - (3.67 x (30 Day Average SOFR + | | | |
7.03% (24.20% - (3.67 x (30 Day Average SOFR + | | | |
5.62% (30 Day Average SOFR + | | | |
| | | |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | |
Series K734, Class X1, IO,
| | | |
Series K735, Class X1, IO,
| | | |
Series K093, Class X1, IO,
| | | |
| | |
IO,
2.94% (7.65% - (30 Day Average SOFR + 0.11%)), 07/15/2026 to | | | |
| | | |
| | | |
1.99% (6.70% - (30 Day Average SOFR + 0.11%)), | | | |
2.04% (6.75% - (30 Day Average SOFR + 0.11%)), | | | |
2.01% (6.72% - (30 Day Average SOFR + 0.11%)), | | | |
2.29% (7.00% - (30 Day Average SOFR + 0.11%)), | | | |
1.29% (6.00% - (30 Day Average SOFR + 0.11%)), | | | |
1.36% (6.07% - (30 Day Average SOFR + 0.11%)), | | | |
1.54% (6.25% - (30 Day Average SOFR + 0.11%)), | | | |
1.39% (6.10% - (30 Day Average SOFR + 0.11%)), | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20
Invesco V.I. Equity and Income Fund
| | |
Collateralized Mortgage Obligations–(continued) |
| | | |
6.50%, 03/15/2032 to 06/15/2032 | | | |
| | | |
7.47% (24.75% - (3.67 x (30 Day Average SOFR + | | | |
5.11% (30 Day Average SOFR + | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Federal Home Loan Mortgage Corp. (FHLMC)–0.09% |
6.50%, 07/01/2028 to 04/01/2034 | | | |
| | | |
7.00%, 10/01/2031 to 10/01/2037 | | | |
| | | |
5.50%, 02/01/2037 to 06/01/2053 | | | |
| | | |
Federal National Mortgage Association (FNMA)–0.04% |
| | | |
| | | |
| | | |
| | | |
| | | |
Government National Mortgage Association (GNMA)–0.00% |
IO,
2.04% (6.55% - (1 mo. Term SOFR + 0.11%)), | | | |
2.14% (6.65% - (1 mo. Term SOFR + 0.11%)), | | | |
| | | |
1.69% (6.20% - (1 mo. Term SOFR + 0.11%)), | | | |
| | | |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities (Cost $2,813,574) | |
| | |
|
Agency Credit Risk Transfer Notes–0.04% |
Fannie Mae Connecticut Avenue Securities, | | |
Series 2022-R03, Class 1M1, 6.67% (30 Day Average SOFR + | | | |
Series 2022-R04, Class 1M1, 6.57% (30 Day Average SOFR + | | | |
Series 2023-R02, Class 1M1, 6.87% (30 Day Average SOFR + | | | |
| | |
Series 2022-DNA3, Class M1A, STACR®, 6.57% (30 Day Average SOFR + 2.00%), | | | |
Series 2022-DNA6, Class M1, STACR®, 6.72% (30 Day Average SOFR + 2.15%), | | | |
Series 2023-DNA1, Class M1, STACR®, 6.66% (30 Day Average SOFR + 2.10%), | | | |
Total Agency Credit Risk Transfer Notes (Cost $493,202) | |
|
Municipal Obligations–0.01% |
Texas (State of) Transportation Commission (Central Texas Turnpike System), Series 2020 C, Ref. RB, 3.03%, 08/15/2041
(Cost $265,000) | | | |
| | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(p)(q) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $63,996,228) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.76% (Cost $1,107,858,846) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $25,534,040) | |
TOTAL INVESTMENTS IN SECURITIES–101.63% (Cost $1,133,392,886) | |
OTHER ASSETS LESS LIABILITIES—(1.63)% | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21
Invesco V.I. Equity and Income Fund
Investment Abbreviations:
| |
| |
| |
| |
| |
| |
| |
| – Real Estate Investment Trust |
| – Real Estate Mortgage Investment Conduits |
| – Secured Overnight Financing Rate |
| – Structured Agency Credit Risk |
| – Separately Traded Registered Interest and Principal Security |
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| 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 December 31, 2024 was $112,326,684, which represented 8.22% of the Fund’s Net Assets. |
| Zero coupon bond issued at a discount. |
| Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| Perpetual bond with no specified maturity date. |
| Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
| Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2024. |
| Security valued using significant unobservable inputs (Level 3). See Note 3. |
| All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1M. |
| Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| 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 December 31, 2024. |
| 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 December 31, 2024. |
| Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
22
Invesco V.I. Equity and Income Fund
|
| | | | | |
|
U.S. Treasury 5 Year Notes | | | | | |
Open Forward Foreign Currency Contracts |
| | | Unrealized
Appreciation
(Depreciation) |
| |
| | | | | | |
| Bank of New York Mellon (The) | | | | | |
| Bank of New York Mellon (The) | | | | | |
| Bank of New York Mellon (The) | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| |
| | | | | | |
| Bank of New York Mellon (The) | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| |
Total Forward Foreign Currency Contracts | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
23
Invesco V.I. Equity and Income Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $1,043,862,618)* | |
Investments in affiliated money market funds, at value (Cost $89,530,268) | |
| |
Variation margin receivable — futures contracts | |
Unrealized appreciation on forward foreign currency contracts outstanding | |
Foreign currencies, at value (Cost $182,244) | |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $24,112,093 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
| |
Dividends (net of foreign withholding taxes of $169,545) | |
Dividends from affiliated money market funds (includes net securities lending income of $134,891) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
24
Invesco V.I. Equity and Income Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
25
Invesco V.I. Equity and Income Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended December 31, 2024, the portfolio turnover calculation excludes the value of securities purchased of $162,992,332 and sold of $58,503,043 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco V.I. Conservative Balanced Fund into the Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
26
Invesco V.I. Equity and Income Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Equity and Income Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objectives are both capital appreciation and current income.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
27
Invesco V.I. Equity and Income 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
28
Invesco V.I. Equity and Income 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $1,793 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
Leverage Risk — Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction.
O.
Collateral —To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. This practice does not apply to securities pledged as collateral for securities lending transactions.
P.
Other Risks - Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Fluctuations in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed income markets to heightened volatility, perhaps suddenly and to a significant degree, and to reduced liquidity for certain fixed income investments, particularly those with longer maturities, when rates increase. Such changes and resulting increased volatility may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult to predict the impact of interest rate changes on various markets. 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 and other governmental actions and political events within the U.S. and abroad
29
Invesco V.I. Equity and Income Fund
may also, among other things, affect investor and consumer expectations and confidence in the financial markets. This could result in higher than normal redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
Obligations of U.S. Government agencies and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. Government, which could affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.38%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $63,728.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $184,832 for accounting and fund administrative services and was reimbursed $1,965,637 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $64,539 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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.
30
Invesco V.I. Equity and Income Fund
The following is a summary of the tiered valuation input levels, as of December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
U.S. Dollar Denominated Bonds & Notes | | | | |
| | | | |
| | | | |
| | | | |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | | |
Agency Credit Risk Transfer Notes | | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Assets* | | | | |
| | | | |
Forward Foreign Currency Contracts | | | | |
| | | | |
Other Investments - Liabilities* | | | | |
Forward Foreign Currency Contracts | | | | |
| | | | |
| | | | |
| Unrealized appreciation (depreciation). |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2024:
| |
| | | |
Unrealized appreciation on futures contracts —Exchange-Traded(a) | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | |
| | | |
Derivatives not subject to master netting agreements | | | |
Total Derivative Assets subject to master netting agreements | | | |
| |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
31
Invesco V.I. Equity and Income Fund
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2024.
| Financial
Derivative
Assets | Financial
Derivative
Liabilities | | Collateral
(Received)/Pledged | |
| Forward Foreign
Currency Contracts | Forward Foreign
Currency Contracts | | | | |
Bank of New York Mellon (The) | | | | | | |
State Street Bank & Trust Co. | | | | | | |
| | | | | | |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| | | |
| | | |
Forward foreign currency contracts | | | |
| | | |
Change in Net Unrealized Appreciation: | | | |
Forward foreign currency contracts | | | |
| | | |
| | | |
The table below summarizes the average notional value of derivatives held during the period.
| Forward
Foreign Currency
Contracts | |
| | |
| | |
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.
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.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
32
Invesco V.I. Equity and Income Fund
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales,convertible securities and equity securities.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
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 year ended December 31, 2024 was $342,566,994 and $364,808,565, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $1,146,927,311.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of tax deferrals acquired in the reorganization of Invesco V.I. Conservative Balanced Fund into the Fund, undistributed net investment income was decreased by $59,460, undistributed net realized gain was decreased by $4,435,792 and shares of beneficial interest was increased by $4,495,252. These reclassifications had no effect on the net assets of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
Issued in connection with acquisitions:(b) | | | | |
| | | | |
| | | | |
33
Invesco V.I. Equity and Income Fund
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 56% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
| After the close of business on April 26, 2024, the Fund acquired all the net assets of Invesco V.I. Conservative Balanced Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Board of Trustees of the Fund on September 20, 2023 and by the shareholders of the Target Fund on January 18, 2024. The reorganization was executed in order to reduce overlap and increase efficiencies in the Adviser’s product line. The acquisition was accomplished by a tax-free exchange of 11,235,138 shares of the Fund for 12,654,705 shares outstanding of the Target Fund as of the close of business on April 26, 2024. Shares of the Target Fund were exchanged for the like class of shares of the Fund, based on the relative net asset value of the Target Fund to the net asset value of the Fund on the close of business, April 26, 2024. The Target Fund’s net assets as of the close of business on April 26, 2024 of $192,693,864, including $24,397,837 of unrealized appreciation (depreciation), were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $1,162,768,272 and $1,355,462,136 immediately after the acquisition. |
| The pro forma results of operations for the year ended December 31, 2024 assuming the reorganization had been completed on January 1, 2024, the beginning of the annual reporting period are as follows: |
| |
Net realized/unrealized gains | |
Change in net assets resulting from operations | |
As the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Target Fund that has been included in the Fund’s Statement of Operations since April 27, 2024.
34
Invesco V.I. Equity and Income Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Equity and Income Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Equity and Income Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
35
Invesco V.I. Equity and Income Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
36
Invesco V.I. Equity and Income Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
37
Invesco V.I. Equity and Income Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. EQV International Equity Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VIIGR-NCSR
| | |
Common Stocks & Other Equity Interests–98.47% |
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|
Alimentation Couche-Tard, Inc. | | |
Canadian Pacific Kansas City Ltd. | | |
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|
Airtac International Group | | |
New Oriental Education & Technology Group, Inc. | | |
Shenzhen Inovance Technology Co. Ltd., A Shares | | |
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Wuliangye Yibin Co. Ltd., A Shares | | |
| | | |
|
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Novo Nordisk A/S, Class B | | |
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|
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LVMH Moet Hennessy Louis Vuitton SE | | |
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Techtronic Industries Co. Ltd. | | |
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|
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|
SBI Life Insurance Co. Ltd.(b) | | |
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|
Flutter Entertainment PLC(a) | | |
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|
Teva Pharmaceutical Industries Ltd., | | |
|
FinecoBank Banca Fineco S.p.A. | | |
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Asahi Group Holdings Ltd. | | |
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|
Wal-Mart de Mexico S.A.B. de C.V., Series V | | |
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|
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United Overseas Bank Ltd. | | |
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|
Samsung Electronics Co. Ltd. | | |
|
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Svenska Handelsbanken AB, Class A | | |
| | | |
|
Cie Financiere Richemont S.A. | | |
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|
Taiwan Semiconductor Manufacturing Co. Ltd., ADR | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. EQV International Equity Fund
| | |
|
Bangkok Dusit Medical Services PCL, Foreign Shares | | |
|
| | |
| | |
| | |
| | |
London Stock Exchange Group PLC | | |
| | |
| | |
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| | | |
|
| | |
| | |
| | |
United States–(continued) |
| | |
| | |
| | | |
Total Common Stocks & Other Equity Interests (Cost $806,327,945) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(c)(d) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $14,329,744) | |
TOTAL INVESTMENTS IN SECURITIES—99.73% (Cost $820,657,689) | |
OTHER ASSETS LESS LIABILITIES–0.27% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
Notes to Schedule of Investments:
| Non-income producing security. |
| 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 value of this security at December 31, 2024 represented less than 1% of the Fund’s Net Assets. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. EQV International Equity Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $806,327,945) | |
Investments in affiliated money market funds, at value (Cost $14,329,744) | |
| |
Foreign currencies, at value (Cost $2,117,976) | |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
| |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $2,216,334) | |
Dividends from affiliated money market funds (includes net securities lending income of $101,036) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities (net of foreign taxes of $69,843) | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities (net of foreign taxes of $140,847) | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. EQV International Equity Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. EQV International Equity Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| Net realized and unrealized gain (loss) on investments 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. EQV International Equity Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. EQV International Equity Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
7
Invesco V.I. EQV International Equity 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
8
Invesco V.I. EQV International Equity 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser fees for securities lending agent services, which were less than $500. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
Other Risks - Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertain 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. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information, including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country, protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Investments in companies located or operating in Greater China (normally considered to be the geographical area that includes mainland China, Hong Kong, Macau and Taiwan) involve risks and considerations not typically associated with investments in the U.S. and other Western nations, such as greater government control over the economy; political, legal and regulatory uncertainty; nationalization, expropriation, or confiscation of property; lack of willingness or ability of the Chinese government to support the economies and markets of the Greater China region; difficulty in obtaining information necessary for investigations into and/or litigation against Chinese companies, as well as in obtaining and/or enforcing judgments; lack of publicly available information; limited legal remedies for shareholders; alteration or discontinuation of economic reforms; military conflicts and the risk of war, either internal or with other countries; public health emergencies resulting in market closures, travel restrictions, quarantines or other interventions; inflation, currency fluctuations and fluctuations in inflation and interest rates that may have negative effects on the economy and securities markets of Greater China; and Greater China’s dependency on the economies of other Asian countries, many of which are developing countries. Events in any one country within Greater China may impact the other countries in the region or Greater China as a whole.
The level of development of the economies of countries in the Asia Pacific region varies greatly. Furthermore, since the economies of the countries in the region are largely intertwined, if an economic recession is experienced by any of these countries, it will likely adversely impact the economic performance of other countries in the region. In addition, export growth continues to be a major driver of China’s rapid economic growth. As a result, a reduction in spending on Chinese products and services, the institution of tariffs, sanctions, capital controls, embargoes, trade wars or other trade barriers, or a downturn in any of the economies
9
Invesco V.I. EQV International Equity Fund
of China’s key trading partners may have an adverse impact on the Chinese economy. The current political climate has intensified concerns about a potential trade war between China and the U.S., as each country has recently imposed tariffs on the other country’s products. Further, actions by the U.S. government, such as delisting of certain Chinese companies from U.S. securities exchanges or otherwise restricting their operations in the U.S., may negatively impact the value of such securities held by the Fund.
Certain securities issued by companies located or operating in Greater China, such as China A-shares, are subject to trading restrictions and suspensions, quota limitations and sudden changes in those limitations, and operational, clearing and settlement risks. Significant portions of the Chinese securities markets may become rapidly illiquid, as Chinese issuers have the ability to suspend the trading of their equity securities, and have shown a willingness to exercise that option in response to market volatility and other events. The liquidity of Chinese securities may shrink or disappear suddenly and without warning as a result of adverse economic, market or political events, or adverse investor perceptions, whether or not accurate.
The Fund’s Japanese investments may be adversely affected by protectionist trade policies, slow economic activity worldwide, dependence on exports and international trade, increasing competition from Asia’s other low-cost emerging economies, political and social instability, regional and global conflicts and natural disasters, as well as by commodity markets fluctuations related to Japan’s limited natural resource supply. The Japanese economy also faces several other concerns, including a financial system with large levels of nonperforming loans, over-leveraged corporate balance sheets, extensive cross-ownership by major corporations, a changing corporate governance structure, and large government deficits.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.71%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.25% and Series II shares to 2.50% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $25,066.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $177,853 for accounting and fund administrative services and was reimbursed $1,847,068 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $1,320 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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.
10
Invesco V.I. EQV International Equity Fund
Level 2 – Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
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NOTE 4—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.
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.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
11
Invesco V.I. EQV International Equity Fund
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and passive foreign investment companies.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $378,310,295 and $524,897,122, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $859,510,167.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of passive foreign investment companies, on December 31, 2024, undistributed net investment income was increased by $3,204,547 and undistributed net realized gain was decreased by $3,204,547. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
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Issued as reinvestment of dividends: | | | | |
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Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 42% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco V.I. EQV International Equity Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. EQV International Equity Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. EQV International Equity Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco V.I. EQV International Equity Fund
Distribution Information
Shareholders were sent a notice from the Fund that set forth an estimate on a per share basis of the source or sources from which the distribution was paid in October of 2024. Subsequently, certain of these estimates have been corrected. Listed below is a written statement of the sources of this distribution, as corrected, on a generally accepted accounting principles (“GAAP”) basis.
| | | Gain from
Sale of Securities | | |
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Please note that the information in the preceding chart is for financial accounting purposes only. Shareholders should be aware that the tax treatment of distributions likely differs from GAAP treatment. Form 1099-DIV for the calendar year will report distributions for U.S. federal income tax purposes. This notice is sent to comply with certain U.S. Securities and Exchange Commission requirements.
14
Invesco V.I. EQV International Equity Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | | |
Long-Term Capital Gain Distributions | | |
Qualified Dividend Income* | | |
Corporate Dividends Received Deduction* | | |
U.S. Treasury Obligations* | | |
Qualified Business Income* | | |
Business Interest Income* | | |
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| | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco V.I. EQV International Equity Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco V.I. EQV International Equity Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Global Core Equity Fund
| |
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| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
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| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VIGCE-NCSR
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Common Stocks & Other Equity Interests–94.78% |
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Canadian Pacific Kansas City Ltd. | | |
Constellation Software, Inc. | | |
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Hermes International S.C.A. | | |
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LVMH Moet Hennessy Louis Vuitton SE | | |
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Recordati Industria Chimica e Farmaceutica S.p.A. | | |
Ryanair Holdings PLC, ADR | | |
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Samsung Electronics Co. Ltd. | | |
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Taiwan Semiconductor Manufacturing Co. Ltd. | | |
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Berkeley Group Holdings PLC (The) | | |
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United States–(continued) |
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Berkshire Hathaway, Inc., Class B(a) | | |
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Ferguson Enterprises, Inc. | | |
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Marsh & McLennan Cos., Inc. | | |
Martin Marietta Materials, Inc. | | |
Mastercard, Inc., Class A | | |
Medpace Holdings, Inc.(a) | | |
Meta Platforms, Inc., Class A | | |
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Old Dominion Freight Line, Inc.(b) | | |
O’Reilly Automotive, Inc.(a) | | |
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Thermo Fisher Scientific, Inc. | | |
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Total Common Stocks & Other Equity Interests (Cost $56,364,551) | |
Exchange-Traded Funds–1.61% |
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iShares MSCI Japan ETF(b) (Cost $1,215,599) | | |
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Invesco Government & Agency Portfolio, Institutional Class, 4.42%(c)(d) | | |
Invesco Treasury Portfolio, Institutional Class, | | |
Total Money Market Funds (Cost $2,532,938) | |
TOTAL INVESTMENTS IN SECURITIES (excluding Investments purchased with cash collateral from securities on loan)-99.85% (Cost $60,113,088) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
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Invesco Private Government Fund, | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Global Core Equity Fund
| | |
Money Market Funds–(continued) |
Invesco Private Prime Fund, 4.53%(c)(d)(e) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $2,580,150) | |
TOTAL INVESTMENTS IN SECURITIES—103.38% (Cost $62,693,238) | |
OTHER ASSETS LESS LIABILITIES–(3.38)% | |
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Investment Abbreviations:
| – American Depositary Receipt |
| |
Notes to Schedule of Investments:
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
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| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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 1K. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Global Core Equity Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $57,580,150)* | |
Investments in affiliated money market funds, at value (Cost $5,113,088) | |
Foreign currencies, at value (Cost $66,824) | |
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Investment for trustee deferred compensation and retirement plans | |
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Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
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Net assets applicable to shares outstanding | |
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Shares of beneficial interest | |
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Shares outstanding, no par value, with an unlimited number of shares authorized: |
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Net asset value per share | |
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Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $2,206,553 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
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Dividends (net of foreign withholding taxes of $25,646) | |
Dividends from affiliated money market funds (includes net securities lending income of $3,322) | |
Foreign withholding tax claims | |
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Administrative services fees | |
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Distribution fees - Series II | |
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Trustees’ and officers’ fees and benefits | |
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Professional services fees | |
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Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
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Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
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Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Global Core Equity Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
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Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
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Total distributions from distributable earnings | | |
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Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
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See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Global Core Equity Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
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| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Global Core Equity Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Global Core Equity Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term capital appreciation by investing primarily in equity securities of issuers throughout the world, including U.S. issuers.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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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Invesco V.I. Global Core Equity 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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.
Foreign Withholding Taxes – The Fund is subject to foreign withholding tax imposed by certain foreign countries in which the Fund may invest. Withholding taxes are incurred on certain foreign dividends and are accrued at the time the dividend is recognized based on applicable foreign tax laws. The Fund may file withholding tax refunds in certain jurisdictions to seek to recover a portion of amounts previously withheld. The Fund will record a receivable for such tax refunds based on several factors including; an assessment of a jurisdiction’s legal obligation to pay reclaims, administrative practices and payment history. Any receivables recorded will be shown under receivables for Foreign withholding tax claims on the Statement of Assets and Liabilities. There is no guarantee that the Fund will receive refunds applied for in a timely manner or at all.
As a result of recent court rulings in certain countries across the European Union, tax refunds for previously withheld taxes on dividends earned in those countries have been received by investment companies. Any tax refund payments are reflected as Foreign withholding tax claims in the Statement of Operations, and any related interest is included in Interest income. The Fund may incur fees paid to third party providers that assist in the recovery of the tax reclaims. These fees are reflected on the Statement of Operations as Professional services fees, if any.
G.
Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets.
H.
Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
I.
Indemnifications – Under the 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.
J.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
K.
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
8
Invesco V.I. Global Core Equity Fund
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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser fees for securities lending agent services, which were less than $500. Fees paid to the Adviser for securities lending agent services, if any, are included in Dividends from affiliated money market funds on the Statement of Operations.
L.
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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
M.
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 the 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.
N.
Other Risks - Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertain 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. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information, including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country, protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
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Invesco V.I. Global Core Equity 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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.67%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.25% and Series II shares to 2.50% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $1,951.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $9,459 for accounting and fund administrative services and was reimbursed $99,956 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $341 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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.
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Invesco V.I. Global Core Equity Fund
The following is a summary of the tiered valuation input levels, as of December 31, 2024. 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.
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NOTE 4—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.
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.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
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| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
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Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
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The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and passive foreign investment companies.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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.
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Invesco V.I. Global Core Equity Fund
The Fund does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $36,497,582 and $36,829,204, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $63,687,514.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of passive foreign investment companies, on December 31, 2024, undistributed net investment income was increased by $192,508 and undistributed net realized gain was decreased by $192,508. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 86% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco V.I. Global Core Equity Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Global Core Equity Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Global Core Equity Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco V.I. Global Core Equity Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco V.I. Global Core Equity Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco V.I. Global Core Equity Fund
Annual Financial Statements and Other InformationDecember 31, 2024
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
O-VIGLBL-NCSR
| | |
Common Stocks & Other Equity Interests–100.38% |
|
Canadian Pacific Kansas City Ltd. | | |
|
| | |
| | |
| | | |
|
Novo Nordisk A/S, Class B | | |
|
| | |
| | |
| | |
LVMH Moet Hennessy Louis Vuitton SE | | |
| | | |
|
| | |
| | |
| | | |
|
| | |
| | |
| | |
| | | |
|
| | |
|
Brunello Cucinelli S.p.A. | | |
| | |
| | |
| | | |
|
| | |
| | |
| | |
| | |
| | | |
|
| | |
| | |
BE Semiconductor Industries N.V. | | |
Universal Music Group N.V. | | |
| | | |
|
| | |
|
| | |
| | |
| | | |
| | |
|
| | |
|
Taiwan Semiconductor Manufacturing Co. Ltd., ADR | | |
|
| | |
| | |
| | |
| | |
Boston Scientific Corp.(a) | | |
| | |
| | |
| | |
| | |
| | |
IDEXX Laboratories, Inc.(a) | | |
| | |
Intuitive Surgical, Inc.(a) | | |
| | |
| | |
| | |
Marriott International, Inc., Class A | | |
| | |
Meta Platforms, Inc., Class A | | |
| | |
| | |
| | |
Phathom Pharmaceuticals, Inc.(a)(c) | | |
| | |
| | |
| | |
Thermo Fisher Scientific, Inc. | | |
| | |
| | |
| | |
| | | |
Total Common Stocks & Other Equity Interests (Cost $770,646,635) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $422,916) | |
TOTAL INVESTMENTS IN SECURITIES (excluding Investments purchased with cash collateral from securities on loan)-100.40% (Cost $771,069,551) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Global Fund
| | |
Money Market Funds–(continued) |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $1,601,970) | |
TOTAL INVESTMENTS IN SECURITIES—100.48% (Cost $772,671,521) | |
OTHER ASSETS LESS LIABILITIES–(0.48)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
Notes to Schedule of Investments:
| Non-income producing security. |
| 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 value of this security at December 31, 2024 represented less than 1% of the Fund’s Net Assets. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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 1K. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Global Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $770,646,635)* | |
Investments in affiliated money market funds, at value (Cost $2,024,886) | |
| |
Foreign currencies, at value (Cost $146,246) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, security with a value of $1,576,725 was on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
| |
Dividends (net of foreign withholding taxes of $1,728,234) | |
Dividends from affiliated money market funds (includes net securities lending income of $192,783) | |
Foreign withholding tax claims | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities (net of foreign taxes of $2,123,654) | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities (net of foreign taxes of $2,193,106) | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Global Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Global Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Global Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Global Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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.
7
Invesco V.I. Global 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. 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.
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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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.
Foreign Withholding Taxes – The Fund is subject to foreign withholding tax imposed by certain foreign countries in which the Fund may invest. Withholding taxes are incurred on certain foreign dividends and are accrued at the time the dividend is recognized based on applicable foreign tax laws. The Fund may file withholding tax refunds in certain jurisdictions to seek to recover a portion of amounts previously withheld. The Fund will record a receivable for such tax refunds based on several factors including; an assessment of a jurisdiction’s legal obligation to pay reclaims, administrative practices and payment history. Any receivables recorded will be shown under receivables for Foreign withholding tax claims on the Statement of Assets and Liabilities. There is no guarantee that the Fund will receive refunds applied for in a timely manner or at all.
As a result of recent court rulings in certain countries across the European Union, tax refunds for previously withheld taxes on dividends earned in those countries have been received by investment companies. Any tax refund payments are reflected as Foreign withholding tax claims in the Statement of Operations, and any related interest is included in Interest income. The Fund may incur fees paid to third party providers that assist in the recovery of the tax reclaims. These fees are reflected on the Statement of Operations as Professional services fees, if any.
G.
Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets.
H.
Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
I.
Indemnifications – Under the 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.
J.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
K.
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
8
Invesco V.I. Global Fund
(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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $13,524 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, are included in Dividends from affiliated money market funds on the Statement of Operations.
L.
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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
M.
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 the 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.
N.
Other Risks - Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertain 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. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information, including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country, protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
9
Invesco V.I. Global 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:
| 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 year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.63%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.25% and Series II shares to 2.50% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $5,140.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $305,041 for accounting and fund administrative services and was reimbursed $3,184,912 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
10
Invesco V.I. Global Fund
| | | | |
Investments in Securities | | | | |
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NOTE 4—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.
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.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
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| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
11
Invesco V.I. Global Fund
NOTE 7—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 year ended December 31, 2024 was $213,126,862 and $504,479,003, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $788,690,152.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign capital gains taxes and net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $1,516,145, undistributed net realized gain was increased by $2,180,721 and shares of beneficial interest was decreased by $3,696,866. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
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Issued as reinvestment of dividends: | | | | |
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Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 56% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco V.I. Global Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Global Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Global Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco V.I. Global Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco V.I. Global Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco V.I. Global Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Global Real Estate Fund
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| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
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| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VIGRE-NCSR
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Common Stocks & Other Equity Interests–99.21% |
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Canadian Apartment Properties REIT | | |
Chartwell Retirement Residences | | |
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Unibail-Rodamco-Westfield SE | | |
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Hongkong Land Holdings Ltd. | | |
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Sun Hung Kai Properties Ltd. | | |
Wharf Real Estate Investment Co. Ltd. | | |
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Advance Residence Investment Corp. | | |
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Invincible Investment Corp. | | |
Japan Hotel REIT Investment Corp. | | |
Japan Metropolitan Fund Investment Corp. | | |
Japan Real Estate Investment Corp. | | |
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Nippon Accommodations Fund, Inc. | | |
Nippon Prologis REIT, Inc. | | |
Sumitomo Realty & Development Co. Ltd. | | |
Tokyu Fudosan Holdings Corp. | | |
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CapitaLand Integrated Commercial Trust | | |
CapitaLand Investment Ltd. | | |
Mapletree Industrial Trust | | |
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Mapletree Logistics Trust | | |
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Fastighets AB Balder, Class B(b)(c) | | |
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British Land Co. PLC (The) | | |
LondonMetric Property PLC | | |
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American Homes 4 Rent, Class A | | |
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Americold Realty Trust, Inc.(c) | | |
Brixmor Property Group, Inc. | | |
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Digital Realty Trust, Inc. | | |
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Equity LifeStyle Properties, Inc. | | |
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Extra Space Storage, Inc. | | |
First Industrial Realty Trust, Inc.(c) | | |
Healthpeak Properties, Inc. | | |
Hilton Worldwide Holdings, Inc. | | |
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Rexford Industrial Realty, Inc.(c) | | |
Simon Property Group, Inc. | | |
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Total Common Stocks & Other Equity Interests (Cost $91,811,599) | |
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Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) (Cost $1) | | |
TOTAL INVESTMENTS IN SECURITIES (excluding Investments purchased with cash collateral from securities on loan)-99.21% (Cost $91,811,600) | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Global Real Estate Fund
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Investments Purchased with Cash Collateral from Securities on Loan |
Money Market Funds–12.33% |
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $11,892,977) | |
TOTAL INVESTMENTS IN SECURITIES—111.54% (Cost $103,704,577) | |
OTHER ASSETS LESS LIABILITIES–(11.54)% | |
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Investment Abbreviations:
| – Real Estate Investment Trust |
Notes to Schedule of Investments:
| 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 December 31, 2024 was $1,377,473, which represented 1.43% of the Fund’s Net Assets. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
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| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Global Real Estate Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $91,811,599)* | |
Investments in affiliated money market funds, at value (Cost $11,892,978) | |
Foreign currencies, at value (Cost $94,701) | |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
Distributable earnings (loss) | |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $11,726,127 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $105,428) | |
Dividends from affiliated money market funds (includes net securities lending income of $3,183) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain (loss) | |
Net increase (decrease) in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Global Real Estate Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase (decrease) in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Global Real Estate Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Global Real Estate Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Global Real Estate Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is total return through growth of capital and current income.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
7
Invesco V.I. Global 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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
8
Invesco V.I. Global Real Estate Fund
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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser fees for securities lending agent services, which were less than $500. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
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, uncertain 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. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information, including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country, protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
9
Invesco V.I. Global Real Estate 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:
For the year ended December 31, 2024, 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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $1,058.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $15,517 for accounting and fund administrative services and was reimbursed $161,360 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $1,470 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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.
10
Invesco V.I. Global Real Estate Fund
The following is a summary of the tiered valuation input levels, as of December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
NOTE 4—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.
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.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Capital loss carryforward | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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.
11
Invesco V.I. Global Real Estate Fund
The Fund has a capital loss carryforward as of December 31, 2024, as follows:
Capital Loss Carryforward* |
| | | |
Not subject to expiration | | | |
*
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 7—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 year ended December 31, 2024 was $108,716,762 and $124,532,156, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $104,579,620.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of REITs, partnerships and passive foreign investment companies, on December 31, 2024, undistributed net investment income was decreased by $59,614, undistributed net realized gain (loss) was increased by $62,366 and shares of beneficial interest was decreased by $2,752. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 58% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco V.I. Global Real Estate Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Global Real Estate Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Global Real Estate Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco V.I. Global Real Estate Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco V.I. Global Real Estate Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco V.I. Global Real Estate Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Global Strategic Income Fund
| Consolidated Schedule of Investments |
| Consolidated Financial Statements |
| Consolidated Financial Highlights |
| Notes to Consolidated Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
O-VIGLSI-NCSR
Consolidated Schedule of Investments
| | |
U.S. Government Sponsored Agency Mortgage-Backed Securities–51.70% |
Fannie Mae Interest STRIPS, | | |
| | | |
| | | |
| | | |
| | |
IO,
2.02% (6.70% - (30 Day Average SOFR + 0.11%)), 10/25/2031 - | | | |
3.19% (7.90% - (30 Day Average SOFR + 0.11%)), 11/18/2031 - | | | |
3.22% (7.90% - (30 Day Average SOFR + 0.11%)), | | | |
3.27% (7.95% - (30 Day Average SOFR + 0.11%)), | | | |
3.42% (8.10% - (30 Day Average SOFR + 0.11%)), | | | |
2.32% (7.00% - (30 Day Average SOFR + 0.11%)), | | | |
3.12% (7.80% - (30 Day Average SOFR + 0.11%)), | | | |
3.32% (8.00% - (30 Day Average SOFR + 0.11%)), 07/25/2032 - | | | |
3.39% (8.10% - (30 Day Average SOFR + 0.11%)), | | | |
3.57% (8.25% - (30 Day Average SOFR + 0.11%)), 02/25/2033 - | | | |
| | | |
2.87% (7.55% - (30 Day Average SOFR + 0.11%)), | | | |
1.37% (6.05% - (30 Day Average SOFR + 0.11%)), 03/25/2035 - | | | |
2.07% (6.75% - (30 Day Average SOFR + 0.11%)), 03/25/2035 - | | | |
1.92% (6.60% - (30 Day Average SOFR + 0.11%)), | | | |
| | |
2.55% (7.23% - (30 Day Average SOFR + 0.11%)), | | | |
1.86% (6.54% - (30 Day Average SOFR + 0.11%)), | | | |
| | | |
1.87% (6.55% - (30 Day Average SOFR + 0.11%)), | | | |
1.47% (6.15% - (30 Day Average SOFR + 0.11%)), | | | |
| | | |
5.68% (30 Day Average SOFR + 1.11%), 04/25/2032 - | | | |
5.18% (30 Day Average SOFR + 0.61%), | | | |
5.21% (30 Day Average SOFR + 0.61%), | | | |
5.08% (30 Day Average SOFR + 0.51%), | | | |
7.39% (24.57% - (3.67 x (30 Day Average SOFR + | | | |
7.03% (24.20% - (3.67 x (30 Day Average SOFR + | | | |
5.62% (30 Day Average SOFR + 1.05%), | | | |
| | | |
Federal Home Loan Mortgage Corp., | | |
| | | |
| | | |
| | | |
| | | |
Federal National Mortgage Association, | | |
7.50%, 10/01/2029 - 03/01/2033 | | | |
7.00%, 07/01/2032 - 04/01/2033 | | | |
| | | |
| | | |
| | | |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | |
Series K734, Class X1, IO, | | | |
Series K735, Class X1, IO, | | | |
Series K093, Class X1, IO, | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Global Strategic Income Fund
| | |
| | |
| | | |
5.16% (30 Day Average SOFR + 0.56%), 12/15/2028 - | | | |
| | | |
6.50%, 10/15/2029 - 06/15/2032 | | | |
5.26% (30 Day Average SOFR + 0.66%), 06/15/2031 - | | | |
5.71% (30 Day Average SOFR + 1.11%), 02/15/2032 - | | | |
| | | |
7.47% (24.75% - (3.67 x (30 Day Average SOFR + | | | |
| | | |
IO,
3.24% (7.95% - (30 Day Average SOFR + 0.11%)), | | | |
3.99% (8.70% - (30 Day Average SOFR + 0.11%)), | | | |
2.94% (7.65% - (30 Day Average SOFR + 0.11%)), | | | |
3.39% (8.10% - (30 Day Average SOFR + 0.11%)), | | | |
3.29% (8.00% - (30 Day Average SOFR + 0.11%)), | | | |
2.34% (7.05% - (30 Day Average SOFR + 0.11%)), | | | |
1.99% (6.70% - (30 Day Average SOFR + 0.11%)), | | | |
2.04% (6.75% - (30 Day Average SOFR + 0.11%)), | | | |
2.01% (6.72% - (30 Day Average SOFR + 0.11%)), | | | |
2.29% (7.00% - (30 Day Average SOFR + 0.11%)), | | | |
1.29% (6.00% - (30 Day Average SOFR + 0.11%)), | | | |
1.36% (6.07% - (30 Day Average SOFR + 0.11%)), | | | |
1.54% (6.25% - (30 Day Average SOFR + 0.11%)), | | | |
| | |
| | |
| | | |
| | | |
| | | |
Government National Mortgage Association, | | |
ARM, 3.75% (1 yr. U.S. Treasury Yield Curve Rate + 1.50%), | | | |
| | | |
7.00%, 04/15/2028 - 07/15/2028 | | | |
IO,
2.04% (6.55% - (1 mo. Term SOFR + 0.11%)), | | | |
2.14% (6.65% - (1 mo. Term SOFR + 0.11%)), | | | |
| | | |
| | | |
Uniform Mortgage-Backed Securities, TBA, 6.00%, | | | |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities (Cost $354,601,792) | |
| | |
U.S. Dollar Denominated Bonds & Notes–34.21% |
|
Angolan Government International Bond, | | | |
|
Argentine Republic Government International Bond, | | |
| | | |
| | | |
Vista Energy Argentina S.A.U., | | | |
| | | |
| | | |
|
Telenet Finance Luxembourg Notes S.a.r.l., 5.50%, | | | |
|
Sitios Latinoamerica S.A.B. de C.V., 5.38%, | | | |
Suzano Austria GmbH, 2.50%, 09/15/2028 | | | |
| | | |
|
| | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Global Strategic Income Fund
| | |
|
Brookfield Finance, Inc., 5.97%, 03/04/2054 | | | |
Brookfield Infrastructure Finance ULC, 6.75%, | | | |
Constellation Software, Inc., | | | |
Element Fleet Management Corp., | | |
| | | |
| | | |
| | | |
| | | |
Kronos Acquisition Holdings, Inc., 8.25%, | | | |
| | | |
Northriver Midstream Finance L.P., 6.75%, | | | |
Ritchie Bros. Holdings, Inc., | | | |
South Bow Canadian Infrastructure Holdings Ltd., 7.63%, | | | |
Transcanada Trust, Series 16-A, 5.88%, | | | |
| | | |
| | | |
|
| | | |
Banco de Credito e Inversiones S.A., | | | |
Banco del Estado de Chile, | | | |
Chile Electricity Lux MPC II S.a.r.l., 5.58%, | | | |
Mercury Chile Holdco LLC, | | | |
Sociedad Quimica y Minera de Chile S.A., 5.50%, | | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
|
Aeropuertos Dominicanos Siglo XXI S.A., 7.00%, | | | |
| | |
Dominican Republic–(continued) |
Dominican Republic International Bond, | | |
| | | |
| | | |
| | | |
|
Ecuador Government International Bond, | | | |
|
Electricite de France S.A., | | | |
| | |
| | | |
| | | |
| | | |
| | | |
|
| | |
| | | |
| | | |
ZF North America Capital, Inc., | | |
| | | |
| | | |
| | | |
|
Ghana Government International Bond, | | | |
|
Melco Resorts Finance Ltd., | | |
| | | |
| | | |
| | | |
|
Adani Ports & Special Economic Zone Ltd., | | | |
| | | |
| | |
| | | |
| | | |
Network i2i Ltd., 5.65%(f)(h)(j) | | | |
| | | |
|
PT Bank Tabungan Negara (Persero) Tbk, 4.20%, | | | |
PT Perusahaan Perseroan (Persero) Perusahaan Listrik Negara, 4.13%, | | | |
| | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Global Strategic Income Fund
| | |
|
| | | |
|
AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 6.95%, | | | |
BB Blue Financing DAC, Series A1, 4.40%, 09/20/2037 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
GGAM Finance Ltd., 6.88%, | | | |
| | | |
|
Israel Government International Bond, 4.50%, 01/17/2033 | | | |
|
Telecom Italia Capital S.A., | | |
| | | |
| | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
Studio City Finance Ltd., | | | |
| | | |
| | | |
|
Banco Mercantil del Norte S.A., | | |
| | | |
| | | |
| | | |
CEMEX Materials LLC, 7.70%, | | | |
| | | |
| | |
|
FIEMEX Energia - Banco Actinver S.A. Institucion de Banca Multiple, 7.25%, | | | |
Nemak S.A.B. de C.V., 3.63%, | | | |
| | |
| | | |
| | | |
| | | |
|
| | | |
|
| | | |
|
Telecomunicaciones Digitales S.A., 4.50%, | | | |
|
Senegal Government International Bond, | | |
| | | |
| | | |
| | | |
|
Telecommunications Co. Telekom Srbija Akcionarsko drustvo, Belgrade, 7.00%, | | | |
|
Republic of South Africa Government International Bond, 4.85%, 09/30/2029 | | | |
|
European Bank for Reconstruction & Development, 6.40%, 08/27/2025 | | | |
|
Stena International S.A., | | | |
|
Argentum Netherlands B.V. for Swiss Re Ltd., 5.63%, | | | |
| | | |
UBS Group AG, 6.88%(f)(h)(j) | | | |
Willow No 2 Ireland PLC for Zurich Insurance Co. Ltd., | | | |
| | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Global Strategic Income Fund
| | |
|
Turkcell Iletisim Hizmetleri A.S., 5.80%, | | | |
Zorlu Enerji Elektrik Uretim A.S., 11.00%, | | | |
| | | |
|
| | | |
B.A.T Capital Corp., 6.00%, | | | |
British Telecommunications PLC, 4.25%, | | | |
California Buyer Ltd./Atlantica Sustainable Infrastructure PLC, 6.38%, | | | |
| | | |
Macquarie Airfinance Holdings Ltd., 6.50%, | | | |
| | | |
| | | |
Virgin Media Secured Finance PLC, 5.50%, | | | |
| | |
| | | |
| | | |
Zegona Finance PLC, 8.63%, | | | |
| | | |
|
Acrisure LLC/Acrisure Finance, Inc., 7.50%, | | | |
| | | |
Aethon United BR L.P./Aethon United Finance Corp., | | | |
| | |
| | | |
| | | |
| | | |
Aircastle Ltd., 5.25%(f)(h)(j) | | | |
Alcoa Nederland Holding B.V., | | | |
Alliant Holdings Intermediate LLC/ Alliant Holdings Co-Issuer, | | |
| | | |
| | | |
Allison Transmission, Inc., | | | |
| | |
United States–(continued) |
American Airlines, Inc./AAdvantage Loyalty IP Ltd., | | |
| | | |
| | | |
| | | |
Ares Capital Corp., 5.88%, 03/01/2029 | | | |
Ashton Woods USA LLC/Ashton Woods Finance Co., | | | |
| | |
| | | |
| | | |
Bausch Health Cos., Inc., | | |
| | | |
| | | |
Becton, Dickinson and Co., | | | |
Berry Global, Inc., 5.65%, | | | |
| | | |
| | | |
Brink’s Co. (The), 6.75%, | | | |
Cardinal Health, Inc., 5.13%, 02/15/2029 | | | |
| | | |
| | | |
CCO Holdings LLC/CCO Holdings Capital Corp., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
CD&R Smokey Buyer, Inc./Radio Systems Corp., | | | |
Celanese US Holdings LLC, | | |
| | | |
| | | |
CenterPoint Energy, Inc., | | | |
Charles Schwab Corp. (The), | | | |
| | | |
Citigroup, Inc., Series CC, | | | |
| | |
| | | |
| | | |
Cloud Software Group, Inc., | | |
| | | |
| | | |
Clydesdale Acquisition Holdings, Inc., 6.63%, | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Global Strategic Income Fund
| | |
United States–(continued) |
Community Health Systems, Inc., | | |
| | | |
| | | |
| | | |
| | | |
Cougar JV Subsidiary LLC, | | | |
Cox Communications, Inc., | | | |
| | | |
| | |
| | | |
| | | |
| | | |
Delek Logistics Partners L.P./Delek Logistics Finance Corp., 7.13%, | | | |
Dell International LLC/EMC Corp., 6.20%, 07/15/2030 | | | |
Diversified Healthcare Trust, | | | |
Duke Energy Corp., 6.45%, | | | |
Dun & Bradstreet Corp. (The), | | | |
| | |
| | | |
| | | |
EMRLD Borrower L.P./Emerald Co-Issuer, Inc., 6.63%, | | | |
Endo Finance Holdings, Inc., | | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
Enpro, Inc., 5.75%, 10/15/2026 | | | |
| | | |
| | | |
| | | |
Ford Motor Credit Co. LLC, 5.13%, 06/16/2025 | | | |
Fortress Transportation and Infrastructure Investors LLC, | | |
| | | |
| | | |
| | | |
| | | |
Freeport-McMoRan, Inc., 4.63%, 08/01/2030 | | | |
| | |
United States–(continued) |
General Motors Co., 6.80%, 10/01/2027 | | | |
Genesis Energy L.P./Genesis Energy Finance Corp., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Global Atlantic (Fin) Co., | | | |
Goldman Sachs Group, Inc. (The), Series X, 7.50%(h)(j) | | | |
Golub Capital Private Credit Fund, 5.80%, | | | |
| | | |
Greystar Real Estate Partners LLC, 7.75%, | | | |
Group 1 Automotive, Inc., | | | |
Harley-Davidson Financial Services, Inc., 3.35%, | | | |
Hilcorp Energy I L.P./Hilcorp Finance Co., | | |
| | | |
| | | |
| | | |
Hilton Domestic Operating Co., Inc., 6.13%, | | | |
HLF Financing S.a.r.l. LLC/Herbalife International, Inc., 12.25%, | | | |
Howard Midstream Energy Partners LLC, 7.38%, | | | |
| | | |
Icahn Enterprises L.P./Icahn Enterprises Finance Corp., | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
J.M. Smucker Co. (The), 5.90%, 11/15/2028 | | | |
Jabil, Inc., 3.00%, 01/15/2031 | | | |
Jane Street Group/JSG Finance, Inc., | | |
| | | |
| | | |
Jefferson Capital Holdings LLC, 9.50%, | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Global Strategic Income Fund
| | |
United States–(continued) |
KB Home, 4.80%, 11/15/2029 | | | |
Kinder Morgan, Inc., 5.00%, 02/01/2029 | | | |
Kohl’s Corp., 4.63%, 05/01/2031 | | | |
L3Harris Technologies, Inc., 5.40%, 01/15/2027 | | | |
| | | |
Lamar Media Corp., 4.88%, 01/15/2029 | | | |
LCM Investments Holdings II LLC, 8.25%, | | | |
| | |
| | | |
| | | |
| | | |
Lions Gate Capital Holdings 1, Inc., 5.50%, | | | |
Lithia Motors, Inc., 3.88%, | | | |
Macy’s Retail Holdings LLC, | | | |
Marriott International, Inc., Series EE, 5.75%, 05/01/2025 | | | |
Match Group Holdings II LLC, | | | |
Mativ Holdings, Inc., 8.00%, | | | |
| | | |
| | | |
MPT Operating Partnership L.P./MPT Finance Corp., 3.50%, 03/15/2031 | | | |
Nationstar Mortgage Holdings, Inc., 7.13%, | | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
New Fortress Energy, Inc., | | | |
Newell Brands, Inc., 6.63%, 05/15/2032 | | | |
NextEra Energy Capital Holdings, Inc., 6.75%, | | | |
NGL Energy Operating LLC/NGL Energy Finance Corp., | | |
| | | |
| | | |
| | |
United States–(continued) |
Office Properties Income Trust, 9.00%, | | | |
| | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
Owens-Brockway Glass Container, Inc., 7.25%, | | | |
| | |
| | | |
| | | |
Penske Truck Leasing Co. L.P./PTL Finance Corp., | | | |
PetSmart, Inc./PetSmart Finance Corp., 7.75%, | | | |
Pfizer Investment Enterprises Pte. Ltd., 5.30%, 05/19/2053 | | | |
| | |
| | | |
| | | |
Plains All American Pipeline L.P./PAA Finance Corp., 3.80%, 09/15/2030 | | | |
PNC Financial Services Group, Inc. (The), 6.62%, | | | |
Prairie Acquiror L.P., 9.00%, | | | |
Provident Funding Associates L.P./PFG Finance Corp., | | | |
RHP Hotel Properties L.P./RHP Finance Corp., 6.50%, | | | |
| | | |
Roller Bearing Co. of America, Inc., 4.38%, | | | |
Royal Caribbean Cruises Ltd., | | | |
Saks Global Enterprises LLC, | | | |
| | |
| | | |
| | | |
Select Medical Corp., 6.25%, | | | |
| | | |
Sensata Technologies, Inc., | | |
| | | |
| | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
8
Invesco V.I. Global Strategic Income Fund
| | |
United States–(continued) |
Service Properties Trust, | | |
| | | |
| | | |
| | | |
Sinclair Television Group, Inc., | | | |
Six Flags Entertainment Corp./Six Flags Theme Parks, Inc., 6.63%, | | | |
Sixth Street Lending Partners, | | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
State Street Corp., Series I, | | | |
Summit Midstream Holdings LLC, 8.63%, | | | |
Tallgrass Energy Partners L.P./Tallgrass Energy Finance Corp., 7.38%, | | | |
Taylor Morrison Communities, Inc., 5.13%, | | | |
Tenet Healthcare Corp., 6.75%, 05/15/2031 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
Transocean Titan Financing Ltd., 8.38%, | | | |
| | | |
U.S. International Development Finance Corp., Series 4, 3.13%, 04/15/2028 | | | |
United AirLines, Inc., 4.38%, | | | |
Uniti Group L.P./Uniti Group Finance, Inc./CSL Capital LLC, 10.50%, | | | |
Univision Communications, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
United States–(continued) |
Velocity Vehicle Group LLC, | | | |
Venture Global LNG, Inc., | | |
| | | |
| | | |
| | | |
| | | |
Vertiv Group Corp., 4.13%, | | | |
Viatris, Inc., 3.85%, 06/22/2040 | | | |
| | | |
| | |
| | | |
| | | |
| | |
| | | |
| | | |
Vistra Operations Co. LLC, | | |
| | | |
| | | |
Windstream Services LLC/ Windstream Escrow Finance Corp., 8.25%, | | | |
Yum! Brands, Inc., 5.38%, 04/01/2032 | | | |
| | | |
|
National Bank of Uzbekistan, | | | |
Navoi Mining & Metallurgical Combinat, 6.70%, | | | |
| | | |
|
First Quantum Minerals Ltd., | | | |
Total U.S. Dollar Denominated Bonds & Notes (Cost $237,881,541) | |
| | |
Non-U.S. Dollar Denominated Bonds & Notes–22.11%(o) |
|
Argentina Promissory Notes, | | |
Series 1, Class C, 12.00%, | | |
Series 2, Class C, 12.00%, | | |
Series 3, Class C, 12.00%, | | |
Series 4, Class C, 12.00%, | | |
| | | |
|
Treasury Corporation of Victoria, 5.50%, 11/17/2026 | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
9
Invesco V.I. Global Strategic Income Fund
| | |
|
KBC Group N.V., 6.25%(f)(h)(j) | | | |
|
Brazil Notas do Tesouro Nacional, | | |
Series B, 6.00%, 05/15/2055 | | | |
Series F, 10.00%, 01/01/2027 | | | |
| | | |
|
Province of Ontario, 5.85%, 03/08/2033 | | | |
|
China Government Bond, 3.32%, 04/15/2052 | | | |
|
| | |
Series B, 6.00%, 04/28/2028 | | | |
Series B, 7.75%, 09/18/2030 | | | |
Series B, 7.00%, 06/30/2032 | | | |
Series B, 9.25%, 05/28/2042 | | | |
| | | |
|
| | | |
|
| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
|
| | | |
| | | |
Electricite de France S.A., | | | |
| | | |
|
| | | |
Volkswagen International Finance N.V., 4.63%(f)(h)(j) | | | |
| | | |
| | |
|
| | | |
Hellenic Republic Government Bond, 0.00%, | | | |
| | | |
|
India Government Bond, 7.09%, 08/05/2054 | | | |
|
| | | |
UniCredit S.p.A., 5.38%(f)(h)(j) | | | |
| | | |
|
Ivory Coast Government International Bond, | | | |
|
Malaysia Government Bond, Series 115, 3.96%, 09/15/2025 | | | |
|
| | |
Series M, 7.75%, 05/29/2031 | | | |
Series M, 8.00%, 07/31/2053 | | | |
| | | |
|
| | | |
|
Romanian Government International Bond, | | | |
|
Republic of South Africa Government Bond, | | |
Series 2032, 8.25%, 03/31/2032 | | | |
Series 2040, 9.00%, 01/31/2040 | | | |
| | | |
|
| | | |
| | | |
| | | |
|
African Development Bank, | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
10
Invesco V.I. Global Strategic Income Fund
| | |
Supranational–(continued) |
International Finance Corp., | | | |
| | | |
|
HSBC Holdings PLC, 8.20%, | | | |
Lloyds Banking Group PLC, | | | |
Nationwide Building Society, | | | |
| | | |
| | | |
| | | |
|
| | | |
MPT Operating Partnership L.P./MPT Finance Corp., 3.33%, 03/24/2025 | | | |
| | | |
|
Uruguay Government International Bond, 9.75%, 07/20/2033 | | | |
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost $164,199,455) | |
|
Asset-Backed Securities–8.34% |
Angel Oak Mortgage Trust, | | |
| | | |
Series 2024-12, Class A2, | | | |
Series 2024-12, Class A3, | | | |
Ares XXXVII CLO Ltd., Series 2015-4A, Class DR, 11.07% (3 mo. Term SOFR + 6.41%), | | | |
Bear Stearns Adjustable Rate Mortgage Trust, Series 2006-1, Class A1, 0.65% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), | | | |
Benchmark Mortgage Trust, Series 2018-B1, Class XA, IO, 0.53%, | | | |
CD Mortgage Trust, Series 2017-CD6, Class XA, IO, 0.89%, | | | |
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, 4.84%, | | | |
| | |
|
Citigroup Commercial Mortgage Trust, Series 2017-C4, Class XA, | | | |
Citigroup Mortgage Loan Trust, Inc., | | |
Series 2005-2, Class 1A3, | | | |
Series 2006-AR1, Class 1A1, 7.20% (1 yr. U.S. Treasury Yield Curve Rate + 2.40%), | | | |
COLT Mortgage Loan Trust, Series 2024-INV1, Class A3, 6.48%, | | | |
COMM Mortgage Trust, Series 2019-GC44, Class AM, 3.26%, 08/15/2057 | | | |
Countrywide Home Loans Mortgage Pass-Through Trust, | | |
Series 2005-17, Class 1A8, 5.50%, 09/25/2035 | | | |
Series 2005-J4, Class A7, 5.50%, 11/25/2035 | | | |
CWHEQ Revolving Home Equity Loan Trust, Series 2006-H, Class 2A1A, 26.43% (1 mo. Term SOFR + 0.26%), | | | |
Deutsche Alt-B Securities, Inc. Mortgage Loan Trust, Series 2006-AB2, Class A1, 5.89%, | | | |
Fideicomiso Dorrego Y Libertador, 2.00%, | | | |
| | |
Series 2017-K62, Class B, | | | |
Series 2016-K54, Class C, | | | |
Frontier Issuer LLC, Series 2023-1, Class A2, | | | |
GCAT 2024-INV3 Trust, Series 2024-INV3, Class A17, 6.50%, | | | |
GSR Mortgage Loan Trust, Series 2005-AR4, Class 6A1, 5.52%, | | | |
JP Morgan Chase Commercial Mortgage Securities Trust, Series 2013-LC11, Class AS, 3.22%, 04/15/2046 | | | |
JP Morgan Mortgage Trust, Series 2007-A1, Class 5A1, 5.04%, | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
11
Invesco V.I. Global Strategic Income Fund
| | |
|
JPMBB Commercial Mortgage Securities Trust, Series 2014-C24, Class B, | | | |
MASTR Asset Backed Securities Trust, Series 2006-WMC3, Class A3, 4.65% (1 mo. Term SOFR + 0.31%), | | | |
Morgan Stanley Capital I Trust, Series 2017-HR2, Class XA, IO, 0.85%, | | | |
Morgan Stanley Residential Mortgage Loan Trust, Series 2024-NQM5, Class A3, 6.00%, | | | |
Obx 2024-Nqm18 Trust, Series 2024-NQM18, Class A3, 5.87%, | | | |
| | |
Series 2022-NQM7, Class A3, 5.70%, | | | |
Series 2022-NQM7, Class A2, 5.70%, | | | |
Series 2024-NQM12, Class A1, 5.48%, | | | |
Series 2024-NQM12, Class A2, 5.78%, | | | |
Series 2024-NQM12, Class A3, 5.83%, | | | |
Series 2024-NQM12, Class M1, 5.93%, | | | |
Rate Mortgage Trust, Series 2024-J3, Class A2, | | | |
Residential Accredit Loans, Inc. Trust, Series 2006- QS13, Class 1A8, 6.00%, 09/25/2036 | | | |
UBS Commercial Mortgage Trust, Series 2017-C5, Class XA, IO, 1.13%, | | | |
Verus Securitization Trust, Series 2022-7, Class A3, | | | |
WaMu Mortgage Pass-Through Ctfs. Trust, | | |
Series 2005-AR16, Class 1A1, 4.76%, | | | |
Series 2003-AR10, Class A7, 6.55%, | | | |
| | |
|
Wells Fargo Commercial Mortgage Trust, Series 2017-C42, Class XA, IO, 0.86%, | | | |
WFRBS Commercial Mortgage Trust, Series 2013-C14, Class AS, 3.49%, 06/15/2046 | | | |
| | |
Series 2007-1, Class F, 8.10% (SONIA + 3.37%), | | | |
Series 2007-1, Class E, 6.05% (SONIA + 1.32%), | | | |
Series 2006-2, Class F, 8.10% (SONIA + 3.37%), | | | |
| | |
Series E, 6.71% (SONIA + 2.00%), | | | |
Series F, 7.21% (SONIA + 2.50%), | | | |
| | |
Series 2006-2X, Class E1C, 8.10% (SONIA + 3.37%), | | | |
Series 2006-4X, Class E1C, 7.85% (SONIA + 3.12%), | | | |
Series 2006-2X, Class D1A, 3.69% (3 mo. EURIBOR + 0.80%), | | | |
Eurosail-UK NC PLC, Series 2007-1X, Class D1C, 5.74% (SONIA + 1.01%), | | | |
Eurosail-UK NP PLC, Series 2007-2X, Class D1A, 3.69% (3 mo. EURIBOR + 0.80%), | | | |
Great Hall Mortgages No. 1 PLC, Series 2007-2X, Class EB, 6.61% (3 mo. EURIBOR + 3.75%), | | | |
| | |
Series 2007-1, Class MA, 5.09% (SONIA + 0.36%), | | | |
Series 2006-1X, Class A2A, 5.04% (SONIA + 0.31%), | | | |
Mortgage Funding PLC, Series 2008-1, Class B2, 8.05% (SONIA + 3.32%), | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
12
Invesco V.I. Global Strategic Income Fund
| | |
|
Towd Point Mortgage Funding 2024 - Granite 6 PLC, Series 2024-GR6X, Class F, 9.29% (SONIA + 4.50%), | | | |
Prosil Acquisition S.A., Series 2019-1, Class A, 5.06% (3 mo. EURIBOR + 2.00%), | | | |
SC Germany S.A. Compartment Consumer, Series 2021-1, Class E, 5.70% (1 mo. EURIBOR + 2.80%), | | | |
Alhambra SME Funding DAC, Series 2019-1, Class D, 12.11% (1 mo. EURIBOR + 9.25%), | | | |
| | |
Series 2024-1A, Class B, 0.00% (SONIA + 2.95%), | | | |
Series 2024-1A, Class C, 0.00% (SONIA + 3.75%), | | | |
Series 2024-1A, Class A, 0.00% (SONIA + 1.90%), | | | |
Lusitano Mortgages No. 5 PLC, Series D, 4.14% (3 mo. EURIBOR + 0.96%), | | | |
Fideicomiso Dorrego Y Libertador, 0.00%, | | | |
Fideicomiso Financiero Invernea Proteina 2, Serie II, 0.00%, | | | |
Total Asset-Backed Securities (Cost $60,643,626) | |
| | |
Agency Credit Risk Transfer Notes–4.89% |
|
Fannie Mae Connecticut Avenue Securities, | | |
Series 2022-R04, Class 1M2, 7.67% (30 Day Average SOFR + 3.10%), | | | |
Series 2022-R05, Class 2M1, 6.47% (30 Day Average SOFR + 1.90%), | | | |
Series 2022-R08, Class 1M2, 8.17% (30 Day Average SOFR + 3.60%), | | | |
Series 2023-R02, Class 1M1, 6.87% (30 Day Average SOFR + 2.30%), | | | |
Series 2023-R03, Class 2M1, 7.07% (30 Day Average SOFR + 2.50%), | | | |
Series 2023-R04, Class 1M1, 6.86% (30 Day Average SOFR + 2.30%), | | | |
Series 2023-R06, Class 1M1, 6.27% (30 Day Average SOFR + 1.70%), | | | |
Series 2023-R06, Class 1M2, 7.27% (30 Day Average SOFR + 2.70%), | | | |
Series 2023-R06, Class 1B1, 8.47% (30 Day Average SOFR + 3.90%), | | | |
Series 2023-R08, Class 1M2, 7.07% (30 Day Average SOFR + 2.50%), | | | |
Series 2023-R08, Class 1M1, 6.07% (30 Day Average SOFR + 1.50%), | | | |
Series 2024-R03, Class 2M2, 6.51% (30 Day Average SOFR + 1.95%), | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
13
Invesco V.I. Global Strategic Income Fund
| | |
United States–(continued) |
| | |
Series 2022-DNA2, Class M1B, STACR®, 6.97% (30 Day Average SOFR + | | | |
Series 2022-DNA3, Class M1B, STACR®, 7.47% (30 Day Average SOFR + | | | |
Series 2022-DNA3, Class M1A, STACR®, 6.57% (30 Day Average SOFR + | | | |
Series 2022-HQA2, Class M1, STACR®, 8.57% (30 Day Average SOFR + | | | |
Series 2022-HQA3, Class M1, STACR®, 8.12% (30 Day Average SOFR + | | | |
Series 2022-HQA3, Class M2, STACR®, 9.92% (30 Day Average SOFR + | | | |
Series 2023-DNA1, Class M1, STACR®, 6.66% (30 Day Average SOFR + | | | |
Series 2023-HQA1, Class M1, STACR®, 8.07% (30 Day Average SOFR + | | | |
Series 2023-HQA2, Class M1, STACR®, 6.57% (30 Day Average SOFR + | | | |
Series 2023-HQA2, Class M1, STACR®, 7.92% (30 Day Average SOFR + | | | |
Series 2023-HQA3, Class M2, STACR®, 7.92% (30 Day Average SOFR + | | | |
Series 2024-DNA1, Class M2, STACR®, 6.52% (30 Day Average SOFR + | | | |
Series 2024-HQA1, Class M2, STACR®, 6.57% (30 Day Average SOFR + | | | |
Series 2024-DNA2, Class M2, STACR®, 6.27% (30 Day Average SOFR + | | | |
Series 2024-HQA2, Class M2, STACR®, 6.37% (30 Day Average SOFR + | | | |
Total Agency Credit Risk Transfer Notes (Cost $32,334,510) | |
| | |
U.S. Treasury Securities–2.90% |
U.S. Treasury Bills–2.90% |
| | | |
4.40%, 05/01/2025(d)(p)(r) | | | |
Total U.S. Treasury Securities (Cost $19,711,338) | |
| | |
Common Stocks & Other Equity Interests–2.47% |
|
Banco BBVA Argentina S.A. | | |
Banco Macro S.A., Class B | | |
Grupo Financiero Galicia S.A., Class B | | |
| | |
| | |
| | |
| | | |
|
Claire’s Holdings LLC, Class S | | |
| | |
McDermott International Ltd., Series A, Wts., expiring | | |
McDermott International Ltd., Series B, Wts., expiring | | |
McDermott International, Inc.(s) | | |
| | |
Sabine Oil & Gas Holdings, Inc.(m)(s) | | |
Windstream Services LLC, Wts. | | |
| | | |
Total Common Stocks & Other Equity Interests (Cost $9,664,710) | |
Exchange-Traded Funds–2.28% |
|
Invesco Senior Loan ETF(i)(t) (Cost $15,516,730) | | |
| | |
Variable Rate Senior Loan Interests–0.46%(u)(v) |
|
Camelot US Acquisition LLC, Term Loan, 7.11% (1 mo. Term SOFR + 2.75%), 01/31/2031 | | | |
Carnival Corp., Term Loan B, 7.11% (1 mo. Term SOFR + 2.75%), 10/18/2028 | | | |
Claire’s Stores, Inc., Term Loan, 10.96% (1 mo. Term SOFR + 6.50%), 12/18/2026 | | | |
Clear Channel Outdoor Holdings, Inc., Term Loan B, 8.47% (1 mo. Term SOFR + 4.00%), 08/23/2028 | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
14
Invesco V.I. Global Strategic Income Fund
| | |
United States–(continued) |
Cloud Software Group, Inc., Term Loan, 7.83% (3 mo. Term SOFR + 3.50%), 03/29/2029 | | | |
Concentra Health Services, Inc., Term Loan B, 6.61% (1 mo. Term SOFR + | | | |
Cushman & Wakefield U.S. Borrower LLC, Term Loan, 7.61% (1 mo. Term SOFR + 3.25%), | | | |
Greystar Real Estate Partners LLC, Term Loan B, 7.09% (3 mo. Term SOFR + | | | |
Mativ Holdings, Inc., Term Loan B, 8.22% (1 mo. Term SOFR + 3.75%), 04/20/2028 | | | |
Medline Borrower L.P., Incremental Term Loan B, 6.61% (1 mo. Term SOFR + 2.25%), 10/23/2028 | | | |
PetSmart, Inc., Term Loan, -% (1 mo. Term SOFR + 3.75%), 02/11/2028 | | | |
Prairie ECI Acquiror L.P., Term Loan B-2, 8.61% (1 mo. Term SOFR + 4.75%), 08/01/2029 | | | |
Scientific Games Holdings L.P., Term Loan B, 7.59% (3 mo. Term SOFR + 3.00%), 04/04/2029 | | | |
Syneos Health, Inc., Term Loan, 8.33% (3 mo. Term SOFR + 4.00%), 09/27/2030 | | | |
TransDigm, Inc., Term Loan L, 6.83% (3 mo. Term SOFR + 2.50%), 01/19/2032 | | | |
Total Variable Rate Senior Loan Interests (Cost $3,105,992) | |
| | |
|
|
Claire’s Holdings LLC, Series A, Pfd.
(Cost $36,875) | | |
|
Invesco Government & Agency Portfolio, Institutional Class, | | |
Invesco Treasury Portfolio, Institutional Class, 4.38%(t)(w) | | |
Total Money Market Funds (Cost $65,693,319) | |
|
|
| |
TOTAL INVESTMENTS IN SECURITIES (excluding Investments purchased with cash collateral from securities on loan)-141.03% (Cost $979,561,034) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $42,439,749) | |
TOTAL INVESTMENTS IN SECURITIES—147.28% (Cost $1,022,000,783) | |
OTHER ASSETS LESS LIABILITIES–(47.28)% | |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
15
Invesco V.I. Global Strategic Income Fund
Investment Abbreviations:
| – American Depositary Receipt |
| – Adjustable Rate Mortgage |
| |
| |
| |
| |
| – Collateralized Loan Obligation |
| |
| |
| |
| |
| |
| |
| – Euro Interbank Offered Rate |
| |
| |
| |
| |
| |
| |
| |
| – Real Estate Mortgage Investment Conduits |
| – Secured Overnight Financing Rate |
| – Sterling Overnight Index Average |
| – Structured Agency Credit Risk |
| – Separately Traded Registered Interest and Principal Security |
| |
| |
| |
| |
| |
Notes to Consolidated Schedule of Investments:
| Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
| 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 December 31, 2024. |
| Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2024. |
| All or a portion of the value was designated as collateral to cover margin requirements for swap agreements. See Note 1Q. |
| Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1R. |
| 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 December 31, 2024 was $254,085,248, which represented 37.41% of the Fund’s Net Assets. |
| Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Perpetual bond with no specified maturity date. |
| Zero coupon bond issued at a discount. |
| Defaulted security. Currently, the issuer is in default with respect to principal and/or interest payments. The value of this security at December 31, 2024 represented less than 1% of the Fund’s Net Assets. |
| Security valued using significant unobservable inputs (Level 3). See Note 3. |
| All or a portion of this security is Pay-in-Kind. Pay-in-Kind securities pay interest income in the form of securities. |
| Foreign denominated security. Principal amount is denominated in the currency indicated. |
| Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| 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 December 31, 2024. |
| All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1N. |
| Non-income producing security. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
| | | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
16
Invesco V.I. Global Strategic Income Fund
| | | | Change in Unrealized Appreciation (Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Consolidated Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| 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. |
| 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 Secured Overnight Financing Rate ("SOFR"), 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| The table below details options purchased. |
| 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 1K. |
Open Over-The-Counter Foreign Currency Options Purchased(a) |
| | | | | | |
|
| | Goldman Sachs International | | | | | | |
| | Goldman Sachs International | | | | | | |
| | Merrill Lynch International | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
| | Merrill Lynch International | | | | | | |
| | Goldman Sachs International | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
Subtotal — Foreign Currency Call Options Purchased | |
|
| | | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
| | Morgan Stanley and Co. International PLC | | | | | | |
| | Goldman Sachs International | | | | | | |
| | Goldman Sachs International | | | | | | |
| | Goldman Sachs International | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
| | Goldman Sachs International | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
| | Merrill Lynch International | | | | | | |
| | Goldman Sachs International | | | | | | |
| | Goldman Sachs International | | | | | | |
| | Goldman Sachs International | | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
17
Invesco V.I. Global Strategic Income Fund
Open Over-The-Counter Foreign Currency Options Purchased(a)—(continued) |
| | | | | | |
| | Goldman Sachs International | | | | | | |
| | Goldman Sachs International | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
| | Merrill Lynch International | | | | | | |
| | Goldman Sachs International | | | | | | |
| | Goldman Sachs International | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | |
Subtotal — Foreign Currency Put Options Purchased | |
Total Foreign Currency Options Purchased | |
| Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $18,770,000. |
Open Over-The-Counter Interest Rate Swaptions Purchased(a) |
| | | | | | | | | |
|
10 Year Interest Rate Swap | | J.P. Morgan Chase Bank, N.A. | | | | | | | | |
15 Year Interest Rate Swap | | J.P. Morgan Chase Bank, N.A. | | | | | | | | |
30 Year Interest Rate Swap | | | | | | | | | | |
Total Interest Rate Swaptions Purchased | | | | | | | | |
| Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $18,770,000. |
Open Exchange-Traded Futures Options Written |
| | | | | | |
|
| | | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Over-The-Counter Credit Default Swaptions Written(a) |
| | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Markit CDX North America High Yield Index, Series 43, Version 1 | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | | Markit CDX North America High Yield Index, Series 43, Version 1 | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | | Markit CDX North America High Yield Index, Series 43, Version 1 | | | | | | | | | |
Total Credit Default Swaptions Written | | | | | | | | | | | |
| Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $18,770,000. |
| Implied credit spreads represent the current level, as of December 31, 2024, 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. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
18
Invesco V.I. Global Strategic Income Fund
Open Over-The-Counter Foreign Currency Options Written(a) |
| | | | | | | | |
|
| | Merrill Lynch International | | | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Merrill Lynch International | | | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Morgan Stanley and Co. International PLC | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Merrill Lynch International | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
Subtotal — Foreign Currency Call Options Written | | | | | | | |
|
| | Merrill Lynch International | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | J.P. Morgan Chase Bank, N.A. | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
| | Goldman Sachs International | | | | | | | | |
Subtotal — Foreign Currency Put Options Written | | | | | | | |
Total Foreign Currency Options Written | | | | | | | |
| Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $18,770,000. |
Open Over-The-Counter Interest Rate Swaptions Written(a) |
| | | | | | | | | | | |
|
30 Year Interest Rate Swap | | Goldman Sachs International | | | | | | | | | | |
30 Year Interest Rate Swap | | J.P. Morgan Chase Bank, N.A. | | | | | | | | | | |
10 Year Interest Rate Swap | | J.P. Morgan Chase Bank, N.A. | | | | | | | | | | |
30 Year Interest Rate Swap | | J.P. Morgan Chase Bank, N.A. | | | | | | | | | | |
5 Year Interest Rate Swap | | Morgan Stanley and Co. International PLC | | | | | | | | | | |
10 Year Interest Rate Swap | | Morgan Stanley and Co. International PLC | | | | | | | | | | |
Subtotal—Interest Rate Call Swaptions Written | | | | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
19
Invesco V.I. Global Strategic Income Fund
Open Over-The-Counter Interest Rate Swaptions Written(a)—(continued) |
| | | | | | | | | | | |
|
2 Year Interest Rate Swap | | | | | | | | | | | | |
10 Year Interest Rate Swap | | | | | | | | | | | | |
10 Year Interest Rate Swap | | | | | | | | | | | | |
2 Year Interest Rate Swap | | | | | | | | | | | | |
2 Year Interest Rate Swap | | J.P. Morgan Chase Bank, N.A. | | | | | | | | | | |
30 Year Interest Rate Swap | | J.P. Morgan Chase Bank, N.A. | | | | | | | | | | |
10 Year Interest Rate Swap | | J.P. Morgan Chase Bank, N.A. | | | | | | | | | | |
30 Year Interest Rate Swap | | J.P. Morgan Chase Bank, N.A. | | | | | | | | | | |
2 Year Interest Rate Swap | | J.P. Morgan Chase Bank, N.A. | | | | | | | | | | |
2 Year Interest Rate Swap | | Morgan Stanley and Co. International PLC | | | | | | | | | | |
10 Year Interest Rate Swap | | Morgan Stanley and Co. International PLC | | | | | | | | | | |
10 Year Interest Rate Swap | | Morgan Stanley and Co. International PLC | | | | | | | | | | |
5 Year Interest Rate Swap | | Morgan Stanley and Co. International PLC | | | | | | | | | | |
Subtotal—Interest Rate Put Swaptions Written | | | | | | | | |
Total Interest Rate Swaptions Written | | | | | | | | |
| Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $18,770,000. |
|
| | | | | Unrealized Appreciation (Depreciation) |
|
U.S. Treasury 2 Year Notes | | | | | |
U.S. Treasury 10 Year Notes | | | | | |
Subtotal—Long Futures Contracts | | |
| | | | | |
|
| | | | | |
| | | | | |
| | | | | |
U.S. Treasury 5 Year Notes | | | | | |
U.S. Treasury 10 Year Ultra Notes | | | | | |
| | | | | |
U.S. Treasury Ultra Bonds | | | | | |
Subtotal—Short Futures Contracts | | |
| | |
Open Forward Foreign Currency Contracts |
| | | Unrealized
Appreciation
(Depreciation) |
| |
| | | | | | |
| | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
20
Invesco V.I. Global Strategic Income Fund
Open Forward Foreign Currency Contracts—(continued) |
| | | Unrealized Appreciation (Depreciation) |
| |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| J.P. Morgan Chase Bank, N.A. | | | | | |
| J.P. Morgan Chase Bank, N.A. | | | | | |
| J.P. Morgan Chase Bank, N.A. | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Morgan Stanley and Co. International PLC | | | | | |
| Standard Chartered Bank PLC | | | | | |
| Standard Chartered Bank PLC | | | | | |
| | | | | | |
| | | | | | |
| |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
21
Invesco V.I. Global Strategic Income Fund
Open Forward Foreign Currency Contracts—(continued) |
| | | Unrealized Appreciation (Depreciation) |
| |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| Goldman Sachs International | | | | | |
| J.P. Morgan Chase Bank, N.A. | | | | | |
| J.P. Morgan Chase Bank, N.A. | | | | | |
| J.P. Morgan Chase Bank, N.A. | | | | | |
| J.P. Morgan Chase Bank, N.A. | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Merrill Lynch International | | | | | |
| Morgan Stanley and Co. International PLC | | | | | |
| | | | | | |
| Standard Chartered Bank PLC | | | | | |
| Standard Chartered Bank PLC | | | | | |
| | | | | | |
| | | | | | |
| |
Total Forward Foreign Currency Contracts | |
Open Centrally Cleared Credit Default Swap Agreements(a) |
| | | | | | | Upfront
Payments Paid
(Received) | | Unrealized
Appreciation
(Depreciation) |
|
Brazil Government International Bonds | | | | | | | | | | |
Markit iTraxx Europe Crossover Index, Series 42, Version 1 | | | | | | | | | | |
Markit CDX Emerging Markets Index, Series 42, Version 1 | | | | | | | | | | |
Brazil Government International Bonds | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | |
|
Brazil Government International Bonds | | | | | | | | | | |
Columbia Government International Bonds | | | | | | | | | | |
| | | | | | | | | | |
South Africa Government International Bonds | | | | | | | | | | |
| | | | | | | | |
Total Centrally Cleared Credit Default Swap Agreements | | | | | | |
| Centrally cleared swap agreements collateralized by $1,205,032 cash held with Counterparties. |
| Implied credit spreads represent the current level, as of December 31, 2024, 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. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
22
Invesco V.I. Global Strategic Income Fund
Open Centrally Cleared Interest Rate Swap Agreements(a) |
| | | | | | | Upfront
Payments
Paid
(Received) | | Unrealized
Appreciation
(Depreciation) |
|
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | |
|
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
23
Invesco V.I. Global Strategic Income Fund
Open Centrally Cleared Interest Rate Swap Agreements(a)—(continued) |
| | | | | | | Upfront Payments Paid (Received) | | Unrealized Appreciation (Depreciation) |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | |
Total Centrally Cleared Interest Rate Swap Agreements | | | | | | |
| Centrally cleared swap agreements collateralized by $1,205,032 cash held with Counterparties. |
Open Over-The-Counter Credit Default Swap Agreements(a) |
| | | | | | | | Upfront
Payments Paid
(Received) | | Unrealized
Appreciation
(Depreciation) |
|
Goldman Sachs International | Markit CDX North America High Yield Index, Series 37, Version 1 | | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | Markit CDX North America High Yield Index, Series 39, Version 1 | | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | Markit iTraxx Europe CrossoverIndex, Series 42, Version 1 | | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | Markit iTraxx Europe CrossoverIndex, Series 42, Version 1 | | | | | | | | | | |
Total Over-The-Counter Credit Default Swap Agreements | | | | | | | |
| Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $18,770,000. |
| Implied credit spreads represent the current level, as of December 31, 2024, 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. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
24
Invesco V.I. Global Strategic Income Fund
|
| |
| |
| |
| —Brazil Ceptip DI Interbank Deposit Rate |
| |
| |
| |
| |
| |
| —Colombia IBR Overnight Nominal Interbank Reference Rate |
| |
| —Canadian Overnight Repo Rate Average |
| |
| |
| —Euro Interbank Offered Rate |
| —Financial Benchmarks India Private Ltd. |
| |
| |
| |
| |
| —Johannesburg Interbank Average Rate |
| |
| |
| —Mumbai Interbank Offered Rate |
| |
| |
| |
| |
| |
| —Prague Interbank Offerred Rate |
| |
| —Secured Overnight Financing Rate |
| —Sterling Overnight Index Average |
| —Singapore Overnight Rate Average |
| |
| —Interbank Equilibrium Interest Rate |
| —Tokyo Overnight Average Rate |
| |
| |
| —Warsaw Interbank Offered Rate |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
25
Invesco V.I. Global Strategic Income Fund
Consolidated Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $898,350,985)* | |
Investments in affiliates, at value
(Cost $123,649,798) | |
| |
Variation margin receivable—centrally cleared swap agreements | |
| |
Premiums paid on swap agreements — OTC | |
Unrealized appreciation on forward foreign currency contracts outstanding | |
| |
Cash collateral — centrally cleared swap agreements | |
Cash collateral — OTC Derivatives | |
Cash collateral — TBA commitments | |
| |
Foreign currencies, at value (Cost $8,243,770) | |
| |
| |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Options written, at value (premiums received $21,889,584) | |
Variation margin payable — futures and options contracts | |
Unrealized depreciation on forward foreign currency contracts outstanding | |
| |
Unrealized depreciation on swap agreements—OTC | |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
Collateral due to broker - OTC Derivatives | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
Distributable earnings (loss) | |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $41,014,266 were on loan to brokers. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
26
Invesco V.I. Global Strategic Income Fund
Consolidated Statement of Operations
For the year ended December 31, 2024
| |
Interest (net of foreign withholding taxes of $301,354) | |
Dividends (net of foreign withholding taxes of $27,927) | |
Dividends from affiliates (includes net securities lending income of $50,998) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities (net of foreign taxes of $11,335) | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
| |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities (net of foreign taxes of $32,895) | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
| |
| |
| |
Net realized and unrealized gain (loss) | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
27
Invesco V.I. Global Strategic Income Fund
Consolidated Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
28
Invesco V.I. Global Strategic Income Fund
Consolidated Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
29
Invesco V.I. Global Strategic Income Fund
Notes to Consolidated Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Global Strategic Income Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. Information presented in these consolidated financial statements pertains only to the Fund and the Invesco V.I. Global Strategic Income Fund (Cayman) Ltd. (the “Subsidiary”), a wholly-owned and controlled subsidiary by the Fund organized under the laws of the Cayman Islands. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund will seek to gain exposure to Regulation S securities primarily through investments in the Subsidiary. The Subsidiary was organized by the Fund to invest in Regulation S securities. The Fund may invest up to 25% of its total assets in the Subsidiary.
The Fund’s investment objective is to seek total return.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 consolidated 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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
30
Invesco V.I. Global Strategic Income Fund
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 consolidated 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 Consolidated 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 Consolidated Statement of Operations and the Consolidated Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Consolidated 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 Consolidated Statement of Operations and the Consolidated 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 Consolidated Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C.
Country Determination — For the purposes of making investment selection decisions and presentation in the Consolidated 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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 consolidated 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 Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
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 and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets.
G.
Accounting Estimates – The financial statements are prepared on a consolidated basis in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which 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. The accompanying financial statements reflect the financial position of the Fund and its Subsidiary and the results of operations on a consolidated basis. All inter-company accounts and transactions have been eliminated in consolidation.
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 consolidated financial statements are released to print.
H.
Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust, and under the Subsidiary’s organizational documents, the directors and officers of the Subsidiary, are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund and/or the Subsidiary, respectively. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial
31
Invesco V.I. Global Strategic Income Fund
statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Securities Purchased on a When-Issued and Delayed Delivery Basis — The Fund may purchase and sell interests in corporate loans and corporate debt securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date.
K.
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 Consolidated 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 Consolidated Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Consolidated Statement of Assets and Liabilities.
The Adviser serves as an affiliated securities lending agent for the Fund. The Bank of New York Mellon also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser fees for securities lending agent services, which were less than $500. Fees paid to the Adviser for securities lending agent services, if any, are included in Dividends from affiliates on the Consolidated Statement of Operations.
L.
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 Consolidated 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 Consolidated Statement of Operations.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Consolidated Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. Because of the inherent uncertainties of valuation, the values reflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.
M.
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 the 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 Consolidated 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 Consolidated Statement of Assets and Liabilities.
N.
Futures Contracts — The Fund may enter into futures contracts to equitize the Fund’s cash holdings or to manage exposure to interest rate, equity, commodity 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
32
Invesco V.I. Global Strategic Income Fund
(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 Consolidated 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 Consolidated 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 Consolidated Statement of Assets and Liabilities.
O.
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.
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 Consolidated 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 Consolidated 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 Consolidated 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 Consolidated 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.
P.
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, 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 Consolidated Statement of Assets and Liabilities. Realized and unrealized gains and losses on put options purchased and put options written are included in the Consolidated 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.
Q.
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, commodity 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 Consolidated Schedule of Investments and cash deposited is recorded on the Consolidated 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 Consolidated 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
33
Invesco V.I. Global Strategic Income Fund
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.
A total return swap is an agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income generated and capital gains, if any. The unrealized appreciation (depreciation) on total return swaps includes dividends on the underlying securities and financing rate payable from the Counterparty. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event of a negative total return.
Changes in the value of centrally cleared and OTC swap agreements are recognized as unrealized gains (losses) in the Consolidated 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 Consolidated 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 Consolidated Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Consolidated Statement of Operations. Cash held as collateral is recorded as deposits with brokers on the Consolidated 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 Consolidated 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, which could result in the Fund accruing additional expenses. 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 Agreements, 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 December 31, 2024, 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.
R.
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.
S.
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.
T.
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.
U.
Other Risks - Investments in high yield debt securities (“junk bonds”) and other lower-rated securities will subject the Fund to substantial risk of loss. These securities are considered to be speculative with respect to the issuer’s ability to pay interest and principal when due, are more susceptible to default or decline in market value and are less liquid than investment grade debt securities. Prices of high yield debt securities tend to be very volatile.
The Fund will seek to gain exposure to commodity markets primarily through an investment in the Subsidiary and through investments in exchange-traded funds and commodity-linked derivatives. The Subsidiary, unlike the Fund, may invest without limitation in commodity-linked derivatives and other securities, such as exchange-traded and commodity-linked notes, that may provide leveraged and non-leveraged exposure to commodity markets. The Fund is indirectly exposed to the risks associated with the Subsidiary’s investments.
Obligations of U.S. Government agencies and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. Government, which could affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.
Fluctuations in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed income markets to heightened volatility, perhaps suddenly and to a significant degree, and to reduced liquidity for certain fixed income investments, particularly those with longer maturities, when rates increase. Such changes and resulting increased volatility may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult to predict the impact of interest rate changes on various markets. In addition, decreases in fixed income
34
Invesco V.I. Global Strategic Income Fund
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 and other governmental actions and political events within the U.S. and abroad may also, among other things, affect investor and consumer expectations and confidence in the financial markets. This could result in higher than normal redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
By investing in the Subsidiary, the Fund is indirectly exposed to risks associated with the Subsidiary’s investments. The Subsidiary is not registered under the 1940 Act, and, except as otherwise noted in the Fund’s prospectus, is not subject to the investor protections of the 1940 Act. Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary, respectively, are organized, could result in the inability of the Fund and/or the Subsidiary to operate as intended, and could negatively affect the Fund and its shareholders.
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.
Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertain 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. Such countries’ economies may be more dependent on relatively few industries or investors that may be highly vulnerable to local and global changes. Companies in emerging market countries generally may be subject to less stringent regulatory, disclosure, financial reporting, accounting, auditing and recordkeeping standards than companies in more developed countries. As a result, information, including financial information, about such companies may be less available and reliable, which can impede the Fund’s ability to evaluate such companies. Securities law and the enforcement of systems of taxation in many emerging market countries may change quickly and unpredictably, and the ability to bring and enforce actions (including bankruptcy, confiscatory taxation, expropriation, nationalization of a company’s assets, restrictions on foreign ownership of local companies, restrictions on withdrawing assets from the country, protectionist measures and practices such as share blocking), or to obtain information needed to pursue or enforce such actions, may be limited. In addition, the ability of foreign entities to participate in privatization programs of certain developing or emerging market countries may be limited by local law. Investments in emerging market securities may be subject to additional transaction costs, delays in settlement procedures, unexpected market closures, and lack of timely information.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
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:
| 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 year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.70%.
The Subsidiary has entered into a separate contract with the Adviser whereby the Adviser provides investment advisory and other services to the Subsidiary. In consideration of these services, the Subsidiary pays an advisory fee to the Adviser based on the annual rate of the Subsidiary’s average daily net assets as set forth in the table above. To the extent the Fund invests in the Subsidiary, the Adviser shall not collect the portion of the advisory fee that the Adviser would otherwise be entitled to collect from the Fund, in an amount equal to 100% of the advisory fee that the Adviser receives from the Subsidiary.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets (the “boundary 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. Acquired Fund Fees and Expenses are not operating expenses of the Fund directly, but are fees and expenses, including management fees, of the investment companies in which the Fund invests. As a result, the total annual fund operating expenses after fee waiver and/or expense reimbursement may exceed the boundary limits above. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $67,617.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide
35
Invesco V.I. Global Strategic Income Fund
certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $100,859 for accounting and fund administrative services and was reimbursed $1,051,991 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Consolidated Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Consolidated Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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 consolidated financial statements may materially differ from the value received upon actual sale of those investments.
| | | | |
Investments in Securities | | | | |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | | |
U.S. Dollar Denominated Bonds & Notes | | | | |
Non-U.S. Dollar Denominated Bonds & Notes | | | | |
| | | | |
Agency Credit Risk Transfer Notes | | | | |
| | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
Variable Rate Senior Loan Interests | | | | |
| | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Assets* | | | | |
| | | | |
Forward Foreign Currency Contracts | | | | |
| | | | |
| | | | |
36
Invesco V.I. Global Strategic Income Fund
| | | | |
Other Investments - Liabilities* | | | | |
| | | | |
Forward Foreign Currency Contracts | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Forward foreign currency contracts, futures contracts and swap agreements 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 Consolidated 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 December 31, 2024:
| |
| | | | |
Unrealized appreciation on futures contracts —Exchange-Traded(a) | | | | |
Unrealized appreciation on swap agreements — Centrally Cleared(a) | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | | |
Options purchased, at value — OTC(b) | | | | |
| | | | |
Derivatives not subject to master netting agreements | | | | |
Total Derivative Assets subject to master netting agreements | | | | |
| |
| | | | |
Unrealized depreciation on futures contracts —Exchange-Traded(a) | | | | |
Unrealized depreciation on swap agreements — Centrally Cleared(a) | | | | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | | |
Unrealized depreciation on swap agreements — OTC | | | | |
Options written, at value — OTC | | | | |
Options written, at value — Exchange-Traded(a) | | | | |
Total Derivative Liabilities | | | | |
Derivatives not subject to master netting agreements | | | | |
Total Derivative Liabilities subject to master netting agreements | | | | |
| The daily variation margin receivable (payable) at period-end is recorded in the Consolidated Statement of Assets and Liabilities. |
| Options purchased, at value as reported in the Consolidated Schedule of Investments. |
37
Invesco V.I. Global Strategic Income Fund
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2024.
| Financial Derivative Assets | Financial Derivative Liabilities | | Collateral
(Received)/Pledged | |
| Forward
Foreign
Currency
Contracts | | | | Forward
Foreign
Currency
Contracts | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Goldman Sachs International | | | | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | | | | | | | | | | | |
Merrill Lynch International | | | | | | | | | | | | |
Morgan Stanley and Co. International PLC | | | | | | | | | | | | |
| | | | | | | | | | | | |
Standard Chartered Bank PLC | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Effect of Derivative Investments for the year ended December 31, 2024
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
Consolidated Statement of Operations |
| | | | |
| | | | |
Forward foreign currency contracts | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Change in Net Unrealized Appreciation (Depreciation): | | | | |
Forward foreign currency contracts | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Options purchased are included in the net realized gain (loss) from investment securities and the change in net unrealized appreciation (depreciation) on investment securities. |
The table below summarizes the average notional value of derivatives held during the period.
| Forward
Foreign Currency
Contracts | | | Foreign
Currency
Options
Purchased | | | Foreign
Currency
Options
Written | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
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
38
Invesco V.I. Global Strategic Income Fund
such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
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 Consolidated 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—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Net unrealized appreciation (depreciation) — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Capital loss carryforward | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to amortization and accretion on debt securities, convertible securities, derivative instruments, partnerships and straddles.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 has a capital loss carryforward as of December 31, 2024, as follows:
Capital Loss Carryforward* |
| | | |
Not subject to expiration | | | |
*
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 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 year ended December 31, 2024 was $424,397,679 and $448,633,718, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $1,009,540,395.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of income from the Subsidiary, elimination entry, derivative instruments and dollar rolls, on December 31, 2024, undistributed net investment income was decreased by $3,894,964 and undistributed net realized gain (loss) was increased by $3,894,964. This reclassification had no effect on the net assets or the distributable earnings (loss) of the Fund.
39
Invesco V.I. Global Strategic Income Fund
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 74% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
40
Invesco V.I. Global Strategic Income Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Global Strategic Income Fund
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, of Invesco V.I. Global Strategic Income Fund and its subsidiary (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related consolidated statement of operations for the year ended December 31, 2024, the consolidated statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the consolidated financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These consolidated financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent, brokers, portfolio company investees and agent banks; when replies were not received from brokers, portfolio company investees or agent banks, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
41
Invesco V.I. Global Strategic Income Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
42
Invesco V.I. Global Strategic Income Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
43
Invesco V.I. Global Strategic Income Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Government Money Market Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VIGMKT-NCSR
Schedule of Investments
| | | | |
U.S. Treasury Securities-17.70% |
U.S. Treasury Bills-16.11%(a) |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
U.S. Treasury Floating Rate Notes-1.59% |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + | | | | | |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + | | | | | |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + | | | | | |
| | | | | |
Total U.S. Treasury Securities (Cost $166,586,455) | | |
U.S. Government Sponsored Agency Securities-16.72% |
Federal Farm Credit Bank (FFCB)-9.08% |
Federal Farm Credit Bank (SOFR + 0.12%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.15%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.16%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.09%)(b) | | | | | |
Federal Farm Credit Bank (1 mo. EFFR + 0.12%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.11%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.11%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.09%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.09%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.10%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.10%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.10%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.10%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.13%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.13%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
| | | | |
Federal Farm Credit Bank (FFCB)-(continued) |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
| | | | | |
Federal Home Loan Bank (FHLB)-6.93% |
Federal Home Loan Bank(a) | | | | | |
Federal Home Loan Bank (SOFR + 0.00%)(b) | | | | | |
Federal Home Loan Bank(a) | | | | | |
Federal Home Loan Bank (SOFR + 0.14%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.16%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.16%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.19%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.13%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.10%)(b) | | | | | |
| | | | | |
U.S. International Development Finance Corp. (DFC)-0.71% |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | | | |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | | | |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | | | |
| | | | | |
Total U.S. Government Sponsored Agency Securities (Cost $157,366,709) | | |
U.S. Government Sponsored Agency Mortgage-Backed Securities-4.15% |
Federal Home Loan Mortgage Corp. (FHLMC)-2.55% |
Federal Home Loan Mortgage Corp. (SOFR + 0.10%)(b) | | | | | |
Federal Home Loan Mortgage Corp. (SOFR + 0.14%)(b) | | | | | |
Federal Home Loan Mortgage Corp. (SOFR + 0.14%)(b) | | | | | |
Federal Home Loan Mortgage Corp. (SOFR + 0.14%)(b) | | | | | |
| | | | | |
Federal National Mortgage Association (FNMA)-1.60% |
Federal National Mortgage Association (SOFR + 0.14%)(b) | | | | | |
Federal National Mortgage Association (SOFR + 0.14%)(b) | | | | | |
Federal National Mortgage Association (SOFR + 0.14%)(b) | | | | | |
Federal National Mortgage Association (SOFR + 0.14%)(b) | | | | | |
| | | | | |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities (Cost $39,000,000) | | |
TOTAL INVESTMENTS IN SECURITIES (excluding Repurchase Agreements)-38.57%
(Cost $362,953,164) | | |
| | | | |
Repurchase Agreements-65.20%(d) |
Bank of Nova Scotia, joint agreement dated 12/31/2024, aggregate maturing value of $1,500,373,333 (collateralized by agency mortgage-backed securities valued at $1,530,000,000; 2.50% - 7.50%; 12/01/2041 - 01/01/2055) | | | | | |
Bank of Nova Scotia, joint agreement dated 12/31/2024, aggregate maturing value of $500,123,889 (collateralized by U.S. Treasury obligations valued at $510,000,001; 0.00% - 6.25%; 01/21/2025 - 11/15/2054) | | | | | |
BMO Capital Markets Corp., joint term agreement dated 12/19/2024, aggregate maturing value of $1,002,520,000 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,020,000,000; 0.00% - 6.61%; 01/21/2025 - 12/20/2064)(Canada)(e) | | | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
| | | | |
BMO Capital Markets Corp., joint term agreement dated 12/19/2024, aggregate maturing value of $904,525,500 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $918,000,000; 0.00% - 7.00%; 01/21/2025 - 12/20/2064)(Canada)(e) | | | | | |
BNP Paribas Securities Corp., joint term agreement dated 02/08/2024, aggregate maturing value of $1,400,000,000 (collateralized by U.S. Treasury obligations valued at $1,428,000,199; 0.00% - 4.75%; 01/31/2025 - 05/15/2053)(e)(f) | | | | | |
BNP Paribas Securities Corp., joint term agreement dated 10/28/2024, aggregate maturing value of $2,000,000,000 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $2,040,000,000; 0.00% - 9.21%; 07/25/2025 - 08/20/2064)(e)(f) | | | | | |
BNP Paribas Securities Corp., joint term agreement dated 10/30/2024, aggregate maturing value of $4,000,000,000 (collateralized by U.S. Treasury obligations valued at $4,080,000,165; 0.00% - 6.38%; 01/15/2025 - 02/15/2053)(e)(f) | | | | | |
BofA Securities, Inc., joint term agreement dated 10/02/2024, aggregate maturing value of $1,012,815,000 (collateralized by U.S. Treasury obligations valued at $1,020,000,134; 0.38% - 4.75%; 05/31/2025 - 11/15/2054)(e) | | | | | |
Citigroup Global Markets, Inc., joint term agreement dated 12/26/2024, aggregate maturing value of $1,201,061,667 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,224,000,070; 0.00% - 6.50%; 06/15/2027 - 05/25/2054)(e) | | | | | |
Fixed Income Clearing Corp. - Bank of New York Mellon (The), joint agreement dated 12/31/2024, aggregate maturing value of $3,700,914,722 (collateralized by U.S. Treasury obligations valued at $3,774,000,342; 0.13% - 4.88%; 04/30/2026 - 07/15/2032) | | | | | |
Fixed Income Clearing Corp. - Wells Fargo Bank, N.A., joint agreement dated 12/31/2024, aggregate maturing value of $7,151,775,583 (collateralized by U.S. Treasury obligations valued at $7,293,000,047; 0.38% - 5.00%; 03/15/2025 - 11/15/2054) | | | | | |
J.P. Morgan Securities LLC, joint open agreement dated 09/17/2024 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,020,000,001; 0.00% - 9.00%; 01/15/2025 - 06/16/2063)(g) | | | | | |
Metropolitan Life Insurance Co., joint term agreement dated 12/26/2024, aggregate maturing value of $350,312,087 (collateralized by U.S. Treasury obligations valued at $362,951,759; 0.00%; 05/15/2040 - 08/15/2046)(e) | | | | | |
Mitsubishi UFJ Trust & Banking Corp., joint term agreement dated 12/26/2024, aggregate maturing value of $857,445,430 (collateralized by U.S. Treasury obligations valued at $885,688,600; 1.13% - 3.88%; 05/31/2029 - | | | | | |
RBC Dominion Securities Inc., joint term agreement dated 08/13/2024, aggregate maturing value of $2,863,761,658 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $2,908,138,210; 0.00% - 7.00%; 01/23/2025 - 12/20/2054)(e) | | | | | |
RBC Dominion Securities Inc., joint term agreement dated 12/06/2024, aggregate maturing value of $1,004,026,667 (collateralized by U.S. Treasury obligations valued at $1,023,465,489; 0.13% - 4.63%; 03/31/2025 - 05/15/2054)(e) | | | | | |
Royal Bank of Canada, joint term agreement dated 03/21/2024, aggregate maturing value of $1,575,429,947 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,537,272,233; 0.88% - 7.00%; 04/30/2026 | | | | | |
Royal Bank of Canada, joint term agreement dated 06/13/2024, aggregate maturing value of $3,692,889,960 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $3,586,795,026; 0.75% - 7.50%; 03/31/2026 | | | | | |
Standard Chartered Bank, joint agreement dated 12/31/2024, aggregate maturing value of $1,000,250,000 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,020,255,004; 0.13% - 7.50%; 07/31/2025 - 07/01/2060) | | | | | |
Standard Chartered Bank, joint agreement dated 12/31/2024, aggregate maturing value of $2,000,496,667 (collateralized by U.S. Treasury obligations valued at $2,040,506,600; 0.00% - 5.00%; 01/15/2025 - 08/15/2054) | | | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
| | | | |
Sumitomo Mitsui Banking Corp., joint agreement dated 12/31/2024, aggregate maturing value of $4,301,072,611 (collateralized by agency mortgage-backed securities valued at $4,394,965,212; 3.00% - 6.50%; 10/20/2042 - 11/20/2054) | | | | | |
Wells Fargo Securities, LLC, joint term agreement dated 09/10/2024, aggregate maturing value of $914,317,500 (collateralized by agency mortgage-backed securities valued at $918,000,001; 1.50% - 7.00%; 07/01/2025 - | | | | | |
Wells Fargo Securities, LLC, joint term agreement dated 11/08/2024, aggregate maturing value of $2,204,232,856 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $2,228,700,001; 0.00% - 7.25%; 01/07/2025 - 01/01/2057) | | | | | |
Total Repurchase Agreements (Cost $613,637,560) | | |
TOTAL INVESTMENTS IN SECURITIES(h)-103.77% (Cost $976,590,724) | | |
OTHER ASSETS LESS LIABILITIES-(3.77)% | | |
| | |
Investment Abbreviations:
| -Effective Federal Funds Rate |
| -Secured Overnight Financing Rate |
| |
Notes to Schedule of Investments:
| Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2024. |
| Demand security payable upon demand by the Fund at specified time intervals no greater than thirteen months. Interest rate is redetermined periodically by the issuer or agent based on current market conditions. Rate shown is the rate in effect on December 31, 2024. |
| Principal amount equals value at period end. See Note 1I. |
| The Fund may demand payment of the term repurchase agreement upon one to seven business days’ notice depending on the timing of the demand. |
| Interest rate is redetermined periodically. The Maturity Date represents the next reset date, and the Repurchase Amount is calculated based on the next reset date. |
| 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. |
| Also represents cost for federal income tax purposes. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, excluding repurchase agreements, at value and cost | |
Repurchase agreements, at value and cost | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
| |
| |
Accrued fees to affiliates | |
Accrued operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
Distributable earnings (loss) | |
| |
|
| |
| |
Shares outstanding, no par value,
unlimited number of shares authorized: |
| |
| |
| |
Net asset value and offering price per share | |
| |
Net asset value and offering price per share | |
Statement of Operations
For the year ended December 31, 2024
| |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
Net realized gain from unaffiliated investment securities | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Government Money Market Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Government Money Market Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(realized) | Total from
investment
operations | Dividends
from net
investment
income | Net asset
value, end
of period | | 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 |
|
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
|
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Calculated using average shares outstanding. |
| Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns are not annualized for periods less than one year, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8
Invesco V.I. Government Money Market Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Government Money Market Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to provide current income consistent with preservation of capital and liquidity.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 (the "Rule") 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 liquidity fee requirements at this time, as permitted by the Rule.
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 the Rule. 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.
Securities for which market quotations are not readily available 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. Issuer specific events, market trends, bid/ask 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.
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. 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.
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 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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 to separate accounts of participating insurance companies. Distributions from net realized 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 and which are directly attributable to that class are charged to the operations of 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 settled shares.
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
9
Invesco V.I. Government Money Market Fund
statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print.
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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
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 typically 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.
K.
Other Risks - Obligations of U.S. Government agencies and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. Government, which could affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.
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 pays 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. and a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waivers and/or expense reimbursements (excluding certain items discussed below) of Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $401,281 for accounting and fund administrative services and was reimbursed $1,245,342 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc., (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. 12b-1 fees before fee waivers are shown as Distribution fees in the Statement of Operations.
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
10
Invesco V.I. Government Money Market Fund
market prices are not readily available. 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.
As of December 31, 2024, 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—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.
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 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2024 and December 31, 2023: |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Temporary book/tax differences | |
Capital loss carryforward | |
Shares of beneficial interest | |
| |
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 has a capital loss carryforward as of December 31, 2024 as follows:
Capital Loss Carryforward* |
| | | |
Not subject to expiration | | | |
| 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. |
| Summary of Share Activity |
| |
| | |
| | | | |
| | | | |
| | | | |
| | | | |
11
Invesco V.I. Government Money Market Fund
| Summary of Share Activity |
| |
| | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 86% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco V.I. Government Money Market Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Government Money Market Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Government Money Market Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco V.I. Government Money Market Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Business Income* | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
Business Interest Income* | |
U.S. Treasury Obligations* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco V.I. Government Money Market Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco V.I. Government Money Market Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Government Securities Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VIGOV-NCSR
| | |
U.S. Government Sponsored Agency Mortgage-Backed Securities–66.63% |
Collateralized Mortgage Obligations–7.58% |
Fannie Mae ACES, Series 2019-M5, Class A2,
3.27%, 02/25/2029 | | | |
| | |
| | | |
| | | |
| | | |
| | | |
4.98% (30 Day Average SOFR + | | | |
5.13% (30 Day Average SOFR + | | | |
| | | |
| | | |
5.23% (30 Day Average SOFR + | | | |
5.18% (30 Day Average SOFR + | | | |
5.20% (30 Day Average SOFR + | | | |
5.29% (30 Day Average SOFR + | | | |
5.45% (30 Day Average SOFR + | | | |
5.39% (30 Day Average SOFR + | | | |
| | | |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | |
Series KS11, Class AFX1,
2.15%, 12/25/2028 | | | |
Series K092, Class AM,
3.02%, 04/25/2029 | | | |
| | |
5.21% (30 Day Average SOFR + | | | |
5.01% (30 Day Average SOFR + 0.41%), 03/15/2036 to | | | |
5.32% (30 Day Average SOFR + | | | |
5.08% (30 Day Average SOFR + | | | |
5.11% (30 Day Average SOFR + | | | |
5.57% (30 Day Average SOFR + | | | |
5.16% (30 Day Average SOFR + 0.56%), 03/15/2040 to | | | |
Freddie Mac STRIPS,
5.32%(30 Day Average SOFR + | | | |
| | | |
| | |
Federal Home Loan Mortgage Corp. (FHLMC)–12.80% |
8.00%, 12/01/2025 to 02/01/2035 | | | |
7.00%, 01/01/2026 to 11/01/2035 | | | |
8.50%, 12/01/2026 to 08/01/2031 | | | |
| | | |
6.50%, 08/01/2028 to 12/01/2035 | | | |
6.00%, 09/01/2029 to 12/01/2053 | | | |
7.50%, 09/01/2030 to 06/01/2035 | | | |
| | | |
3.00%, 02/01/2032 to 01/01/2050 | | | |
2.50%, 09/01/2034 to 12/01/2050 | | | |
5.00%, 01/01/2037 to 01/01/2040 | | | |
4.50%, 01/01/2040 to 08/01/2041 | | | |
5.50%, 11/01/2052 to 05/01/2053 | | | |
ARM,
7.03% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.88%), | | | |
7.23% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.87%), | | | |
7.13% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.91%), | | | |
7.15% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.51%), | | | |
6.87% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.95%), | | | |
6.45% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + | | | |
7.07% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.85%), | | | |
6.97% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.78%), | | | |
2.88% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.64%), | | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Government Securities Fund
| | |
Federal National Mortgage Association (FNMA)–18.22% |
4.50%, 02/01/2025 to 08/01/2041 | | | |
| | | |
6.50%, 07/01/2026 to 11/01/2037 | | | |
8.00%, 09/01/2026 to 10/01/2037 | | | |
8.50%, 10/01/2026 to 12/01/2036 | | | |
7.50%, 12/01/2026 to 08/01/2037 | | | |
3.50%, 05/01/2027 to 08/01/2027 | | | |
6.00%, 06/01/2027 to 10/01/2053 | | | |
| | | |
7.00%, 01/01/2028 to 02/01/2036 | | | |
3.00%, 12/01/2031 to 03/01/2050 | | | |
5.00%, 08/01/2033 to 04/01/2053 | | | |
2.50%, 12/01/2034 to 07/01/2035 | | | |
5.50%, 04/01/2035 to 05/01/2035 | | | |
2.00%, 09/01/2035 to 03/01/2051 | | | |
4.00%, 09/01/2043 to 12/01/2048 | | | |
ARM,
6.80% (1 yr. U.S. Treasury Yield Curve Rate + 2.36%), | | | |
6.93% (1 yr. U.S. Treasury Yield Curve Rate + 2.21%), | | | |
6.63% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.72%), | | | |
6.76% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.77%), | | | |
7.27% (1 yr. Refinitiv USD IBOR Consumer Cash Fallbacks + 1.52%), | | | |
6.88% (1 yr. U.S. Treasury Yield Curve Rate + 1.88%), | | | |
| | | |
| | | |
| | |
Government National Mortgage Association (GNMA)–21.12% |
6.50%, 04/15/2025 to 09/15/2034 | | | |
7.50%, 12/20/2025 to 10/15/2035 | | | |
8.00%, 07/15/2026 to 01/15/2037 | | | |
| | | |
7.00%, 11/15/2027 to 12/15/2036 | | | |
6.00%, 09/15/2029 to 08/15/2033 | | | |
| | | |
| | | |
8.50%, 10/15/2036 to 01/15/2037 | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
3.50%, 10/20/2042 to 06/20/2050 | | | |
| | | |
3.00%, 10/20/2048 to 11/20/2049 | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Series 2020-137, Class A,
1.50%, 04/16/2062 | | | |
| | | |
Uniform Mortgage-Backed Securities–6.91% |
| | | |
| | | |
| | | |
| | | |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities (Cost $225,700,854) | |
U.S. Treasury Securities–22.24% |
U.S. Treasury Bills–0.74% |
4.41% - 4.82%, 01/30/2025(e)(f) | | | |
U.S. Treasury Bonds–1.04% |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Government Securities Fund
| | |
U.S. Treasury Notes–20.46% |
| | | |
| | | |
0.38% - 2.88%, 11/30/2025 | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Total U.S. Treasury Securities (Cost $75,129,663) | |
|
|
Bank of Nova Scotia (The) (Canada), 4.97% (SOFR + 0.34%), | | | |
Canadian Imperial Bank of Commerce (Canada), 4.66% (SOFR + 0.35%), | | | |
Swedbank AB (Sweden), 4.74% (SOFR + 0.36%), 06/25/2025(a)(g) | | | |
UBS AG (Switzerland), 4.97% (SOFR + | | | |
| | | |
Diversified Financial Services–5.61% |
BofA Securities, Inc., 4.74% (SOFR + | | | |
JP Morgan Securities LLC, | | |
| | | |
| | | |
| | | |
Total Commercial Paper (Cost $41,000,000) | |
Certificates of Deposit–10.89% |
|
Barclays Bank PLC (United Kingdom), 4.85% (SOFR + 0.40%), | | | |
Credit Industriel et Commercial (France), 4.77% (SOFR + 0.38%), | | | |
Mitsubishi UFJ Trust & Banking Corp. (Japan), 4.65% (SOFR + 0.34%), | | | |
Mizuho Bank Ltd. (Japan), 4.80% (SOFR + 0.35%), 01/31/2025(a) | | | |
Sumitomo Mitsui Banking Corp. (Japan), 4.75% (SOFR + 0.34%), | | | |
| | | |
| | |
|
Standard Chartered Bank (United Kingdom), 4.67% (SOFR + 0.36%), | | | |
Total Certificates of Deposit (Cost $35,000,039) | |
|
Asset-Backed Securities–5.84%(h) |
Banc of America Commercial Mortgage Trust, Series 2015-UBS7, Class XA, | | | |
Bank, Series 2017-BNK5, Class AS, 3.62%, 06/15/2060 | | | |
Bear Stearns Adjustable Rate Mortgage Trust, Series 2004-10, Class 12A1, | | | |
Chase Mortgage Finance Corp., | | |
Series 2016-SH1, Class M3, | | | |
Series 2016-SH2, Class M3, | | | |
CHNGE Mortgage Trust, Series 2023-3, Class A1, 7.10%, | | | |
FRESB Mortgage Trust, Series 2019- SB63, Class A5, 5.42% (30 Day Average SOFR + 0.81%), | | | |
GCAT Trust, Series 2020-NQM1, Class A3, 3.55%, 01/25/2060(b)(g) | | | |
New Residential Mortgage Loan Trust, Series 2018-4A, Class A1S, 5.20% (1 mo. Term SOFR + 0.86%), | | | |
SMB Private Education Loan Trust, Series 2021-D, Class A1A, 1.34%, | | | |
Textainer Marine Containers VII Ltd. (China), | | |
Series 2020-3A, Class A, 2.11%, | | | |
Series 2021-2A, Class B, 2.82%, | | | |
Verus Securitization Trust, Series 2023-INV3, Class A3, | | | |
Total Asset-Backed Securities (Cost $19,535,683) | |
U.S. Government Sponsored Agency Securities–4.46% |
Federal Home Loan Bank (FHLB)–4.46% |
Federal Home Loan Bank, 0.50%, 04/14/2025
(Cost $14,501,581) | | | |
|
Agency Credit Risk Transfer Notes–1.07% |
Freddie Mac, Series 2022-HQA3, Class M1, STACR®, 6.87% (30 Day Average SOFR + 2.30%), 08/25/2042
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Government Securities Fund
| | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(k)(l) (Cost $2,935,626) | | |
TOTAL INVESTMENTS IN SECURITIES–124.81% (Cost $417,170,962) | |
OTHER ASSETS LESS LIABILITIES—(24.81)% | |
| |
Investment Abbreviations:
| – Automatically Convertible Extendable Security |
| – Adjustable Rate Mortgage |
| |
| |
| |
| – Real Estate Mortgage Investment Conduits |
| – Secured Overnight Financing Rate |
| – Structured Agency Credit Risk |
| – Separately Traded Registered Interest and Principal Security |
| |
| |
Notes to Schedule of Investments:
| Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2024. |
| 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 December 31, 2024. |
| Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
| Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1M. |
| All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1L. |
| Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| 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 December 31, 2024 was $51,036,507, which represented 15.88% of the Fund’s Net Assets. |
| Non-U.S. government sponsored securities. |
| 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 December 31, 2024. |
| Zero coupon bond issued at a discount. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Government Securities Fund
|
| | | | | Unrealized Appreciation (Depreciation) |
|
U.S. Treasury 2 Year Notes | | | | | |
U.S. Treasury 5 Year Notes | | | | | |
U.S. Treasury 10 Year Notes | | | | | |
U.S. Treasury 10 Year Ultra Notes | | | | | |
Subtotal—Long Futures Contracts | | |
| | | | | |
|
| | | | | |
U.S. Treasury Ultra Bonds | | | | | |
Subtotal—Short Futures Contracts | | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Government Securities Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $414,235,336) | |
Investments in affiliated money market funds, at value (Cost $2,935,626) | |
| |
Cash collateral — TBA commitments | |
| |
| |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Variation margin payable — futures contracts | |
| |
| |
| |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
Distributable earnings (loss) | |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
Statement of Operations
For the year ended December 31, 2024
| |
| |
Dividends from affiliated money market funds (includes net securities lending income of $121) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
| |
| |
Net realized and unrealized gain (loss) | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Government Securities Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8
Invesco V.I. Government Securities Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9
Invesco V.I. Government Securities Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Government Securities Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is total return, comprised of current income and capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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.
10
Invesco V.I. Government Securities Fund
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 income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C.
Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
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.
K.
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
11
Invesco V.I. Government Securities Fund
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 also serves as a securities 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 year ended December 31, 2024, there were no securities lending transactions with the Adviser. Fees paid to the Adviser for securities lending agent services, if any, are included in Dividends from affiliated money market funds on the Statement of Operations.
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.
Leverage Risk — Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction.
O.
Collateral —To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. This practice does not apply to securities pledged as collateral for securities lending transactions.
P.
Other Risks - Obligations of U.S. Government agencies and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. Government, which could affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Fluctuations in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed income markets to heightened volatility, perhaps suddenly and to a significant degree, and to reduced liquidity for certain fixed income investments, particularly those with longer maturities, when rates increase. Such changes and resulting increased volatility may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult to predict the impact of interest rate changes on various markets. 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 and other governmental actions and political events within the U.S. and abroad may also, among other things, affect investor and consumer expectations and confidence in the financial markets. This could result in higher than normal redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.49%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 1.50% and Series II shares to
12
Invesco V.I. Government Securities Fund
1.75% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $3,331.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $48,130 for accounting and fund administrative services and was reimbursed $497,411 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
U.S. Government Sponsored Agency Securities | | | | |
Agency Credit Risk Transfer Notes | | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Assets | | | | |
| | | | |
13
Invesco V.I. Government Securities Fund
| | | | |
Other Investments - Liabilities | | | | |
| | | | |
| | | | |
| | | | |
| Unrealized appreciation (depreciation). |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2024:
| |
| |
Unrealized appreciation on futures contracts —Exchange-Traded(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Unrealized depreciation on futures contracts —Exchange-Traded(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
| |
Change in Net Unrealized Appreciation (Depreciation): | |
| |
| |
The table below summarizes the average notional value of derivatives held during the period.
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.
14
Invesco V.I. Government Securities 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.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Net unrealized appreciation (depreciation) — investments | |
Temporary book/tax differences | |
Capital loss carryforward | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to derivative instruments and straddles.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 has a capital loss carryforward as of December 31, 2024, as follows:
Capital Loss Carryforward* |
| | | |
Not subject to expiration | | | |
*
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 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 year ended December 31, 2024 was $5,986,484 and $15,899,292, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $416,752,632.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of dollar rolls and paydowns, on December 31, 2024, undistributed net investment income was increased by $735,162 and undistributed net realized gain (loss) was decreased by $735,162. This reclassification had no effect on the net assets or the distributable earnings (loss) of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
15
Invesco V.I. Government Securities Fund
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 81% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
16
Invesco V.I. Government Securities Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Government Securities Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Government Securities Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
17
Invesco V.I. Government Securities Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
18
Invesco V.I. Government Securities Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
19
Invesco V.I. Government Securities Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Growth and Income Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VK-VIGRI-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–98.59% |
Aerospace & Defense–2.45% |
| | |
| | |
| | | |
Air Freight & Logistics–1.43% |
| | |
Application Software–1.28% |
| | |
Asset Management & Custody Banks–1.39% |
| | |
Automobile Manufacturers–1.45% |
| | |
|
| | |
|
Johnson Controls International PLC | | |
Cargo Ground Transportation–0.87% |
J.B. Hunt Transport Services, Inc. | | |
Communications Equipment–1.24% |
| | |
|
| | |
|
| | |
|
| | |
PNC Financial Services Group, Inc. (The) | | |
| | |
| | | |
|
American Electric Power Co., Inc. | | |
| | |
| | |
| | | |
Electrical Components & Equipment–1.55% |
| | |
Electronic Components–1.14% |
| | |
Electronic Equipment & Instruments–1.17% |
Zebra Technologies Corp., Class A(b) | | |
Fertilizers & Agricultural Chemicals–0.76% |
| | |
|
| | |
| | |
Food Distributors–(continued) |
US Foods Holding Corp.(b) | | |
| | | |
Health Care Equipment–2.45% |
GE HealthCare Technologies, Inc. | | |
| | |
| | | |
Health Care Services–0.95% |
| | |
Industrial Machinery & Supplies & Components–2.82% |
| | |
Stanley Black & Decker, Inc. | | |
| | | |
|
| | |
Integrated Oil & Gas–5.57% |
| | |
| | |
Shell PLC (United Kingdom) | | |
Suncor Energy, Inc. (Canada) | | |
| | | |
Interactive Media & Services–3.36% |
| | |
Meta Platforms, Inc., Class A | | |
| | | |
Investment Banking & Brokerage–3.04% |
Charles Schwab Corp. (The) | | |
Goldman Sachs Group, Inc. (The) | | |
| | | |
IT Consulting & Other Services–0.98% |
Cognizant Technology Solutions Corp., Class A | | |
Managed Health Care–4.09% |
| | |
| | |
| | |
| | |
| | | |
Movies & Entertainment–1.86% |
| | |
Multi-line Insurance–1.21% |
American International Group, Inc. | | |
Oil & Gas Exploration & Production–2.44% |
| | |
| | |
| | | |
|
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Growth and Income Fund
| | |
Pharmaceuticals–(continued) |
| | |
| | |
| | |
| | | |
Property & Casualty Insurance–1.02% |
| | |
Rail Transportation–2.67% |
| | |
| | |
| | | |
Real Estate Services–1.95% |
CBRE Group, Inc., Class A(b) | | |
|
Citizens Financial Group, Inc. | | |
|
| | |
Semiconductor Materials & Equipment–0.75% |
| | |
|
| | |
Microchip Technology, Inc. | | |
| | |
NXP Semiconductors N.V. (China) | | |
| | | |
Specialty Chemicals–1.66% |
| | |
| | |
| | | |
|
| | |
| | |
| | | |
| | |
|
Philip Morris International, Inc. | | |
Trading Companies & Distributors–1.43% |
Ferguson Enterprises, Inc. | | |
Transaction & Payment Processing Services–2.98% |
Fidelity National Information Services, Inc. | | |
| | |
| | | |
Wireless Telecommunication Services–1.45% |
| | |
Total Common Stocks & Other Equity Interests (Cost $891,003,772) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $21,134,254) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.21% (Cost $912,138,026) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $13,858,740) | |
TOTAL INVESTMENTS IN SECURITIES–101.27% (Cost $925,996,766) | |
OTHER ASSETS LESS LIABILITIES—(1.27)% | |
| |
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Growth and Income Fund
| | | | Change in Unrealized Appreciation (Depreciation) | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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 Forward Foreign Currency Contracts |
| | | Unrealized
Appreciation
(Depreciation) |
| |
| | | | | | |
| Bank of New York Mellon (The) | | | | | |
| Bank of New York Mellon (The) | | | | | |
| Bank of New York Mellon (The) | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| |
| | | | | | |
| Bank of New York Mellon (The) | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| State Street Bank & Trust Co. | | | | | |
| |
Total Forward Foreign Currency Contracts | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Growth and Income Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $891,003,772)* | |
Investments in affiliated money market funds, at value (Cost $34,992,994) | |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | |
Foreign currencies, at value (Cost $275,211) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $13,647,484 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $275,759) | |
Dividends from affiliated money market funds (includes net securities lending income of $42,165) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Growth and Income Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Growth and Income Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Growth and Income Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Growth and Income Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek long-term growth of capital and income.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
8
Invesco V.I. Growth and Income 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
9
Invesco V.I. Growth and Income 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $2,651 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.57%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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.
10
Invesco V.I. Growth and Income Fund
For the year ended December 31, 2024, the Adviser waived advisory fees of $26,546.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $186,679 for accounting and fund administrative services and was reimbursed $2,007,783 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $51,805 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Assets* | | | | |
Forward Foreign Currency Contracts | | | | |
Other Investments - Liabilities* | | | | |
Forward Foreign Currency Contracts | | | | |
| | | | |
| | | | |
| 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.
11
Invesco V.I. Growth and Income 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 December 31, 2024:
| |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
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 December 31, 2024.
| Financial
Derivative
Assets | Financial
Derivative
Liabilities | | Collateral
(Received)/Pledged | |
| Forward Foreign
Currency Contracts | Forward Foreign
Currency Contracts | | | | |
Bank of New York Mellon (The) | | | | | | |
State Street Bank & Trust Co. | | | | | | |
| | | | | | |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
Forward foreign currency contracts | |
Change in Net Unrealized Appreciation: | |
Forward foreign currency contracts | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| Forward
Foreign Currency
Contracts |
| |
| |
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.
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.
12
Invesco V.I. Growth and Income Fund
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
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 year ended December 31, 2024 was $297,368,994 and $476,449,556, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $962,218,284.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, on December 31, 2024, undistributed net investment income was increased by $87,315 and undistributed net realized gain was decreased by $87,315. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
13
Invesco V.I. Growth and Income Fund
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 75% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
14
Invesco V.I. Growth and Income Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Growth and Income Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Growth and Income Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
15
Invesco V.I. Growth and Income Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
16
Invesco V.I. Growth and Income Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
17
Invesco V.I. Growth and Income Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Health Care Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
I-VIGHC-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–95.19% |
|
| | |
| | |
Alnylam Pharmaceuticals, Inc.(b) | | |
| | |
argenx SE, ADR (Netherlands)(b) | | |
Ascendis Pharma A/S, ADR (Denmark)(b) | | |
Blueprint Medicines Corp.(b) | | |
| | |
Crinetics Pharmaceuticals, Inc.(b) | | |
| | |
| | |
| | |
Halozyme Therapeutics, Inc.(b) | | |
| | |
Janux Therapeutics, Inc.(b) | | |
Krystal Biotech, Inc.(b)(c) | | |
Merus N.V. (Netherlands)(b) | | |
| | |
Nuvalent, Inc., Class A(b) | | |
Protagonist Therapeutics, Inc.(b) | | |
Regeneron Pharmaceuticals, Inc.(b) | | |
SpringWorks Therapeutics, Inc.(b) | | |
Twist Bioscience Corp.(b) | | |
Ultragenyx Pharmaceutical, Inc.(b) | | |
United Therapeutics Corp.(b) | | |
| | |
| | |
Vertex Pharmaceuticals, Inc.(b) | | |
Viking Therapeutics, Inc.(b)(c) | | |
| | | |
Health Care Distributors–2.51% |
| | |
Health Care Equipment–24.47% |
| | |
Boston Scientific Corp.(b) | | |
| | |
Globus Medical, Inc., Class A(b)(c) | | |
Inspire Medical Systems, Inc.(b)(c) | | |
| | |
Integer Holdings Corp.(b)(c) | | |
Intuitive Surgical, Inc.(b) | | |
LeMaitre Vascular, Inc.(c) | | |
PROCEPT BioRobotics Corp.(b)(c) | | |
| | |
| | |
| | | |
Health Care Facilities–6.07% |
Brookdale Senior Living, Inc.(b) | | |
Concentra Group Holdings Parent, | | |
| | |
| | |
| | |
Health Care Facilities–(continued) |
Select Medical Holdings Corp. | | |
Tenet Healthcare Corp.(b) | | |
| | | |
|
| | |
Health Care Services–2.08% |
BrightSpring Health Services, Inc.(b)(c) | | |
| | |
| | |
| | |
| | |
| | | |
Health Care Supplies–2.79% |
| | |
Cooper Cos., Inc. (The)(b) | | |
Lantheus Holdings, Inc.(b) | | |
Merit Medical Systems, Inc.(b) | | |
| | |
| | | |
Life Sciences Tools & Services–7.77% |
| | |
| | |
Lonza Group AG (Switzerland) | | |
Mettler-Toledo International, Inc.(b) | | |
| | |
Thermo Fisher Scientific, Inc. | | |
| | | |
Managed Health Care–7.88% |
| | |
| | |
| | | |
|
AstraZeneca PLC, ADR (United Kingdom) | | |
Axsome Therapeutics, Inc.(b) | | |
Collegium Pharmaceutical, Inc.(b) | | |
| | |
Intra-Cellular Therapies, Inc.(b) | | |
| | |
Phathom Pharmaceuticals, Inc.(b) | | |
| | |
Tarsus Pharmaceuticals, Inc.(b)(c) | | |
| | |
| | |
| | | |
Total Common Stocks & Other Equity Interests (Cost $104,954,003) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Health Care Fund
| | |
Money Market Funds–(continued) |
Invesco Treasury Portfolio, Institutional Class, | | |
Total Money Market Funds (Cost $7,629,217) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.82% (Cost $112,583,220) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
| | |
Money Market Funds–(continued) |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $6,267,731) | |
TOTAL INVESTMENTS IN SECURITIES–103.63% (Cost $118,850,951) | |
OTHER ASSETS LESS LIABILITIES—(3.63)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
| – Real Estate Investment Trust |
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Health Care Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $104,954,003)* | |
Investments in affiliated money market funds, at value (Cost $13,896,948) | |
Foreign currencies, at value (Cost $16,711) | |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $6,112,918 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $9,472) | |
Dividends from affiliated money market funds (includes net securities lending income of $16,516) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Health Care Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Health Care Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| Amount represents less than $(0.005) per share. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Health Care Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Health Care Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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.
7
Invesco V.I. Health Care 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. 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.
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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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
8
Invesco V.I. Health Care Fund
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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $1,652 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
Other Risks - The Fund’s performance is vulnerable to factors affecting the health care industry, including government regulation, obsolescence caused by scientific advances and technological innovations.
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:
For the year ended December 31, 2024, 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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the
9
Invesco V.I. Health Care Fund
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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $6,002.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $26,719 for accounting and fund administrative services and was reimbursed $276,751 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $9,689 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
NOTE 4—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.
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
10
Invesco V.I. Health Care 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 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Components of Net Assets at Period-End: |
| |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $102,046,787 and $123,151,251, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $119,209,416.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $490,139, undistributed net realized gain was decreased by $3,941 and shares of beneficial interest was decreased by $486,198. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 43% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
11
Invesco V.I. Health Care Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Health Care Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Health Care Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
12
Invesco V.I. Health Care Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
13
Invesco V.I. Health Care Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
14
Invesco V.I. Health Care Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. High Yield Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VIHYI-NCSR
Schedule of Investments(a)
| | |
U.S. Dollar Denominated Bonds & Notes–89.50% |
|
Clear Channel Outdoor Holdings, Inc., | | |
| | | |
| | | |
| | | |
Aerospace & Defense–1.04% |
| | |
| | | |
| | | |
| | | |
Alternative Carriers–0.57% |
Lumen Technologies, Inc., | | |
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| | | |
| | | |
| | | |
Series P, 7.60%, 09/15/2039 | | | |
Series U, 7.65%, 03/15/2042 | | | |
Windstream Services LLC/Windstream Escrow Finance Corp., 8.25%, | | | |
Zayo Group Holdings, Inc., | | |
| | | |
| | | |
| | | |
|
Victoria’s Secret & Co., 4.63%, | | | |
Application Software–1.26% |
Cloud Software Group, Inc., | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
Automobile Manufacturers–1.42% |
Allison Transmission, Inc., 3.75%, | | | |
Automotive Parts & Equipment–3.09% |
Cougar JV Subsidiary LLC, 8.00%, | | | |
NESCO Holdings II, Inc., 5.50%, | | | |
| | |
| | | |
| | | |
ZF North America Capital, Inc. (Germany), | | |
| | | |
| | | |
| | | |
| | |
|
| | |
12.00% PIK Rate, 9.00% Cash Rate, | | | |
13.00% PIK Rate, 11.00% Cash | | | |
14.00% PIK Rate, 9.00% Cash Rate, | | | |
Group 1 Automotive, Inc., 6.38%, | | | |
LCM Investments Holdings II LLC, | | | |
| | |
| | | |
| | | |
Velocity Vehicle Group LLC, 8.00%, | | | |
| | | |
|
| | |
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| | | |
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| | | |
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Sinclair Television Group, Inc., 4.13%, | | | |
Univision Communications, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Kohl’s Corp., 4.63%, 05/01/2031 | | | |
Rakuten Group, Inc. (Japan), | | |
| | | |
| | | |
| | | |
|
Cornerstone Building Brands, Inc., | | | |
Park River Holdings, Inc., 6.75%, | | | |
| | | |
|
Altice Financing S.A. (Luxembourg), | | | |
CCO Holdings LLC/CCO Holdings Capital Corp., | | |
| | | |
| | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. High Yield Fund
| | |
Cable & Satellite–(continued) |
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| | |
| | | |
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| | | |
DISH Network Corp., 11.75%, | | | |
| | |
| | | |
6.75% PIK Rate, 2.00% Cash Rate, | | | |
Scripps Escrow, Inc., 5.88%, | | | |
| | | |
|
Melco Resorts Finance Ltd. (Hong Kong), 5.38%, | | | |
Mohegan Tribal Gaming Authority, | | | |
Premier Entertainment Sub LLC/ Premier Entertainment Finance Corp., 5.63%, 09/01/2029(b) | | | |
Studio City Finance Ltd. (Macau), | | | |
| | |
| | | |
| | | |
| | | |
Commodity Chemicals–0.89% |
Mativ Holdings, Inc., 8.00%, | | | |
Construction Machinery & Heavy Transportation Equipment– 0.77% |
Northriver Midstream Finance L.P. (Canada), 6.75%, 07/15/2032(b) | | | |
|
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| | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
|
First Quantum Minerals Ltd. (Zambia), | | | |
| | |
|
Citigroup, Inc., Series CC, 7.13%(d)(e) | | | |
Freedom Mortgage Corp., 12.00%, | | | |
| | | |
Diversified Capital Markets–1.03% |
Icahn Enterprises L.P./Icahn Enterprises Finance Corp., | | |
| | | |
| | | |
| | | |
Diversified Financial Services–4.38% |
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland), | | | |
Freedom Mortgage Holdings LLC, | | |
| | | |
| | | |
GGAM Finance Ltd. (Ireland), 6.88%, | | | |
Jane Street Group/JSG Finance, Inc., | | |
| | | |
| | | |
Nationstar Mortgage Holdings, Inc., | | | |
Provident Funding Associates L.P./PFG Finance Corp., 9.75%, | | | |
VistaJet Malta Finance PLC/Vista Management Holding, Inc. (Switzerland), 6.38%, | | | |
| | | |
Diversified Metals & Mining–0.51% |
Hudbay Minerals, Inc. (Canada), | | | |
|
Uniti Group L.P./Uniti Fiber Holdings, Inc./CSL Capital LLC, 6.00%, | | | |
Uniti Group L.P./Uniti Group Finance, Inc./CSL Capital LLC, | | |
| | | |
| | | |
| | | |
Diversified Support Services–1.11% |
Hertz Corp. (The), 12.63%, | | | |
Neptune Bidco US, Inc., 9.29%, | | | |
Ritchie Bros. Holdings, Inc. (Canada), | | | |
Stena International S.A. (Sweden), | | |
| | | |
| | | |
TKC Holdings, Inc., 10.50%, | | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. High Yield Fund
| | |
|
Brookfield Infrastructure Finance ULC (Canada), 6.75%, 03/15/2055(d) | | | |
California Buyer Ltd./Atlantica Sustainable Infrastructure PLC (United Kingdom), 6.38%, | | | |
Duke Energy Corp., 6.45%, | | | |
Entergy Corp., 7.13%, 12/01/2054(d) | | | |
Vistra Operations Co. LLC, | | |
| | | |
| | | |
| | | |
Electrical Components & Equipment–0.98% |
EnerSys, 6.63%, 01/15/2032(b) | | | |
Sensata Technologies, Inc., | | |
| | | |
| | | |
| | | |
Electronic Manufacturing Services–0.97% |
EMRLD Borrower L.P./Emerald Co-Issuer, Inc., 6.63%, | | | |
Environmental & Facilities Services–0.77% |
GFL Environmental, Inc., 3.50%, | | | |
Wrangler Holdco Corp. (Canada), | | | |
| | | |
|
PetSmart, Inc./PetSmart Finance Corp., | | | |
|
New Gold, Inc. (Canada), 7.50%, | | | |
Health Care Facilities–1.02% |
LifePoint Health, Inc., 5.38%, | | | |
Select Medical Corp., 6.25%, | | | |
Tenet Healthcare Corp., 6.75%, 05/15/2031 | | | |
| | | |
|
Diversified Healthcare Trust, 0.00%, | | | |
MPT Operating Partnership L.P./MPT Finance Corp., 3.50%, 03/15/2031 | | | |
| | | |
Health Care Services–2.00% |
Community Health Systems, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | |
Health Care Services–(continued) |
| | |
| | | |
| | | |
DaVita, Inc., 6.88%, 09/01/2032(b) | | | |
| | | |
Health Care Technology–0.14% |
athenahealth Group, Inc., 6.50%, | | | |
Home Improvement Retail–0.05% |
LBM Acquisition LLC, 6.25%, | | | |
Hotel & Resort REITs–3.02% |
RHP Hotel Properties L.P./RHP Finance Corp., 6.50%, 04/01/2032(b) | | | |
RLJ Lodging Trust L.P., 4.00%, | | | |
Service Properties Trust, | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Hotels, Resorts & Cruise Lines–0.16% |
| | | |
|
Kronos Acquisition Holdings, Inc. (Canada), 8.25%, 06/30/2031(b) | | | |
Housewares & Specialties–0.53% |
Newell Brands, Inc., 6.63%, 05/15/2032 | | | |
Independent Power Producers & Energy Traders–1.34% |
| | |
| | | |
| | | |
| | | |
Industrial Machinery & Supplies & Components–1.65% |
Enpro, Inc., 5.75%, 10/15/2026 | | | |
ESAB Corp., 6.25%, 04/15/2029(b) | | | |
Roller Bearing Co. of America, Inc., | | | |
| | | |
|
Alliant Holdings Intermediate LLC/Alliant Holdings Co-Issuer, | | |
| | | |
| | | |
HUB International Ltd., 7.38%, | | | |
USI, Inc., 7.50%, 01/15/2032(b) | | | |
| | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. High Yield Fund
| | |
Integrated Telecommunication Services–4.14% |
Altice France Holding S.A. (Luxembourg), 6.00%, | | | |
Altice France S.A. (France), | | |
| | | |
| | | |
| | | |
| | | |
Consolidated Communications, Inc., | | | |
Embarq LLC, 8.00%, 06/01/2036 | | | |
Iliad Holding S.A.S. (France), | | |
| | | |
| | | |
| | | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Sable International Finance Ltd. (Panama), 7.13%, 10/15/2032(b) | | | |
Telecom Italia Capital S.A. (Italy), 7.72%, 06/04/2038 | | | |
Zegona Finance PLC (United Kingdom), | | | |
| | | |
Investment Banking & Brokerage–0.78% |
Goldman Sachs Group, Inc. (The), | | | |
Saks Global Enterprises LLC, 11.00%, | | | |
| | | |
|
| | |
| | | |
| | | |
Six Flags Entertainment Corp./Six Flags Theme Parks, Inc., 6.63%, | | | |
| | | |
Metal, Glass & Plastic Containers–1.40% |
Iris Holding, Inc., 10.00%, | | | |
| | |
| | | |
| | | |
Owens-Brockway Glass Container, Inc., | | | |
| | | |
| | |
Movies & Entertainment–0.58% |
AMC Entertainment Holdings, Inc., | | | |
Lions Gate Capital Holdings 1, Inc., | | | |
Lions Gate Capital Holdings LLC, | | | |
| | | |
Multi-line Insurance–0.77% |
Acrisure LLC/Acrisure Finance, Inc., | | |
| | | |
| | | |
| | | |
|
CenterPoint Energy, Inc., 6.70%, | | | |
|
Office Properties Income Trust, 9.00%, | | | |
|
Delek Logistics Partners L.P./Delek Logistics Finance Corp., 7.13%, | | | |
Summit Midstream Holdings LLC, | | | |
| | |
| | | |
| | | |
| | | |
Valaris Ltd., 8.38%, 04/30/2030(b) | | | |
| | | |
Oil & Gas Exploration & Production–1.52% |
Aethon United BR L.P./Aethon United Finance Corp., 7.50%, | | | |
Hilcorp Energy I L.P./Hilcorp Finance Co., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Oil & Gas Refining & Marketing–0.10% |
| | | |
Oil & Gas Storage & Transportation–6.52% |
Genesis Energy L.P./Genesis Energy Finance Corp., | | |
| | | |
| | | |
| | | |
| | | |
Howard Midstream Energy Partners LLC, 7.38%, | | | |
Martin Midstream Partners L.P./Martin Midstream Finance Corp., 11.50%, | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. High Yield Fund
| | |
Oil & Gas Storage & Transportation–(continued) |
New Fortress Energy, Inc., 6.50%, | | | |
NGL Energy Operating LLC/NGL Energy Finance Corp., | | |
| | | |
| | | |
Prairie Acquiror L.P., 9.00%, | | | |
Tallgrass Energy Partners L.P./Tallgrass Energy Finance Corp., | | | |
Venture Global LNG, Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Other Specialized REITs–0.78% |
| | |
| | | |
| | | |
| | | |
| | | |
Other Specialty Retail–1.43% |
| | |
| | | |
| | | |
Macy’s Retail Holdings LLC, 6.70%, | | | |
Staples, Inc., 10.75%, 09/01/2029(b) | | | |
| | | |
Paper & Plastic Packaging Products & Materials–0.53% |
Clydesdale Acquisition Holdings, Inc., | | | |
|
American Airlines, Inc./AAdvantage Loyalty IP Ltd., 5.75%, | | | |
JetBlue Airways Corp./JetBlue Loyalty L.P., 9.88%, 09/20/2031(b) | | | |
| | | |
|
Bausch Health Americas, Inc., 9.25%, | | | |
Bausch Health Cos., Inc., | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Endo Finance Holdings, Inc., 8.50%, | | | |
HLF Financing S.a.r.l. LLC/Herbalife International, Inc., 12.25%, | | | |
Par Pharmaceutical, Inc., 0.00%, | | | |
| | | |
| | |
Real Estate Development–0.18% |
Greystar Real Estate Partners LLC, | | | |
Real Estate Services–0.05% |
Anywhere Real Estate Group LLC/ Anywhere Co-Issuer Corp., 7.00%, | | | |
|
Global Atlantic (Fin) Co., 4.70%, | | | |
Research & Consulting Services–0.86% |
Dun & Bradstreet Corp. (The), 5.00%, | | | |
Security & Alarm Services–0.21% |
Allied Universal Holdco LLC/Allied Universal Finance Corp., 6.00%, | | | |
Single-Family Residential REITs–0.43% |
Ashton Woods USA LLC/Ashton Woods Finance Co., 6.63%, | | | |
Specialized Consumer Services–1.51% |
Carriage Services, Inc., 4.25%, | | | |
Specialized Finance–0.79% |
CD&R Smokey Buyer, Inc./Radio Systems Corp., 9.50%, | | | |
Jefferson Capital Holdings LLC, | | |
| | | |
| | | |
| | | |
Specialty Chemicals–0.56% |
Celanese US Holdings LLC, | | |
| | | |
| | | |
Cerdia Finanz GmbH (Germany), | | | |
| | | |
|
| | |
| | | |
| | | |
| | | |
|
McAfee Corp., 7.38%, 02/15/2030(b) | | | |
Technology Hardware, Storage & Peripherals–0.51% |
Seagate HDD Cayman, 9.63%, 12/01/2032 | | | |
Xerox Holdings Corp., 5.50%, | | | |
| | | |
|
FXI Holdings, Inc., 12.25%, | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. High Yield Fund
| | |
Trading Companies & Distributors–5.24% |
| | |
| | | |
| | | |
| | | |
Aircastle Ltd., 5.25%(b)(d)(e) | | | |
BlueLinx Holdings, Inc., 6.00%, | | | |
Fortress Transportation and Infrastructure Investors LLC, | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Wireless Telecommunication Services–1.24% |
VMED O2 UK Financing I PLC (United Kingdom), 4.75%, 07/15/2031(b) | | | |
Vodafone Group PLC (United Kingdom), | | | |
| | | |
Total U.S. Dollar Denominated Bonds & Notes (Cost $134,389,779) | |
Variable Rate Senior Loan Interests–5.87%(h)(i) |
|
Clear Channel Outdoor Holdings, Inc., Term Loan B, 8.47% (1 mo. Term SOFR + 4.00%), 08/23/2028 | | | |
Aerospace & Defense–0.26% |
TransDigm, Inc., Term Loan L, 6.83% (3 mo. Term SOFR + 2.50%), 01/19/2032 | | | |
Application Software–0.26% |
Cloud Software Group, Inc., Term Loan, 7.83% (3 mo. Term SOFR + 3.50%), 03/29/2029 | | | |
|
CSC Holdings LLC, Term Loan, 7.17% (6 mo. SOFR + 2.50%), 04/15/2027 | | | |
|
Scientific Games Holdings L.P., Term Loan B, 7.59% (3 mo. Term SOFR + 3.00%), 04/04/2029 | | | |
Commodity Chemicals–0.13% |
Mativ Holdings, Inc., Term Loan B, 8.22% (1 mo. Term SOFR + 3.86%), 04/20/2028 | | | |
Communications Equipment–0.11% |
CommScope, Inc., Term Loan, 0.00%, 12/17/2029 | | | |
|
Cushman & Wakefield U.S. Borrower LLC, Term Loan, 7.61% (1 mo. Term SOFR + 3.25%), 01/31/2030(g) | | | |
| | |
Health Care Services–0.15% |
Concentra Health Services, Inc., Term Loan B, 6.61% (1 mo. Term SOFR + | | | |
Health Care Supplies–0.40% |
Medline Borrower L.P., Incremental Term Loan B, 6.61% (1 mo. Term SOFR + 2.25%), 10/23/2028 | | | |
Hotels, Resorts & Cruise Lines–0.36% |
Carnival Corp., Term Loan B, 7.11% (1 mo. Term SOFR + 2.75%), 10/18/2028 | | | |
Interactive Media & Services–0.43% |
Camelot US Acquisition LLC, Term Loan, 7.11% (1 mo. Term SOFR + 2.75%), 01/31/2031 | | | |
Life Sciences Tools & Services–0.44% |
Syneos Health, Inc., Term Loan, 8.33% (3 mo. SOFR + 3.75%), 09/27/2030 | | | |
Oil & Gas Exploration & Production–0.49% |
Prairie ECI Acquiror L.P., Term Loan B-2, 8.61% (1 mo. Term SOFR + 4.75%), 08/01/2029 | | | |
Other Specialty Retail–0.26% |
Petco Animal Supplies, Inc., First Lien Term loan, 0.00%, 03/06/2028 | | | |
Packaged Foods & Meats–0.25% |
PetSmart, Inc., Term Loan, 0.00% (1 mo. Term SOFR + 3.75%), 02/11/2028 | | | |
|
Endo Finance Holdings, Inc., Term Loan B, 8.34% (3 mo. Term SOFR + 4.50%), 04/23/2031 | | | |
Real Estate Development–0.31% |
Greystar Real Estate Partners LLC, Term Loan B, 7.09% (1 mo. Term SOFR + 2.75%), 08/21/2030(g) | | | |
Total Variable Rate Senior Loan Interests (Cost $8,840,122) | |
Non-U.S. Dollar Denominated Bonds & Notes–0.93%(j) |
|
Americanas S.A. (Brazil), 8.35%, | | | |
Diversified Financial Services–0.07% |
Codere New Topco S.A. (Spain), | | |
| | |
| | |
| | | |
|
MPT Operating Partnership L.P./MPT Finance Corp., 3.33%, 03/24/2025 | | | |
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost $1,585,184) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. High Yield Fund
| | |
Common Stocks & Other Equity Interests–0.19% |
|
Americanas S.A. (Brazil)(k) | | |
Americanas S.A., Wts., expiring | | |
| | | |
|
Casino Guichard-Perrachon S.A. (France)(k)(l) | | |
Casino Guichard-Perrachon S.A., Wts., expiring 04/27/2029 (France)(k) | | |
| | | |
|
| | |
Total Common Stocks & Other Equity Interests (Cost $274,496) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(m)(n) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $3,536,506) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-98.81% (Cost $148,626,087) | | | |
| | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(m)(n)(o) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $3,797) | |
TOTAL INVESTMENTS IN SECURITIES–98.81% (Cost $148,629,884) | |
OTHER ASSETS LESS LIABILITIES—1.19% | |
| |
Investment Abbreviations:
| |
| |
| |
| – Real Estate Investment Trust |
| – Secured Overnight Financing Rate |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8
Invesco V.I. High Yield Fund
Notes to Schedule of Investments:
| 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. |
| 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 December 31, 2024 was $110,486,183, which represented 72.62% of the Fund’s Net Assets. |
| All or a portion of this security is Pay-in-Kind. Pay-in-Kind securities pay interest income in the form of securities. |
| Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| Perpetual bond with no specified maturity date. |
| Zero coupon bond issued at a discount. |
| Security valued using significant unobservable inputs (Level 3). See Note 3. |
| 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. |
| 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 Secured Overnight Financing Rate ("SOFR"), 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. |
| Foreign denominated security. Principal amount is denominated in the currency indicated. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Invesco AT1 Capital Bond UCITS ETF | | | | | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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 1L. |
Open Forward Foreign Currency Contracts |
| | | Unrealized
Appreciation
(Depreciation) |
| |
| | | | | | |
| State Street Bank & Trust Co. | | | | | |
| | | | | | |
| Canadian Imperial Bank of Commerce | | | | | |
| State Street Bank & Trust Co. | | | | | |
| |
Total Forward Foreign Currency Contracts | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9
Invesco V.I. High Yield Fund
Open Centrally Cleared Credit Default Swap Agreements(a) |
| | | | | | | Upfront
Payments Paid
(Received) | | Unrealized
Appreciation
(Depreciation) |
|
Markit CDX North America High Yield Index, Series 43, Version 1 | | | | | | | | | | |
| Centrally cleared swap agreements collateralized by $237,106 cash held with Bank of America. |
| Implied credit spreads represent the current level, as of December 31, 2024, 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. |
Open Over-The-Counter Total Return Swap Agreements(a) |
| | | | | | | | Upfront
Payments
Paid
(Received) | | Unrealized
Appreciation
(Depreciation) |
| | | | | | | | | | | |
Goldman Sachs International | | Markit iBoxx USD Liquid Leveraged Loans | | | | | | | | | |
| The Fund receives or pays payments based on any positive or negative return on the Reference Entity, respectively. |
|
| |
| —Secured Overnight Financing Rate |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10
Invesco V.I. High Yield Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $145,089,581)* | |
Investments in affiliated money market funds, at value (Cost $3,540,303) | |
| |
Variation margin receivable—centrally cleared swap agreements | |
Unrealized appreciation on forward foreign currency contracts outstanding | |
| |
Cash collateral — centrally cleared swap agreements | |
| |
Foreign currencies, at value (Cost $3,844) | |
| |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | |
| |
Unrealized depreciation on swap agreements—OTC | |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
Distributable earnings (loss) | |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, security with a value of $3,781 was on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11
Invesco V.I. High Yield Fund
Statement of Operations
For the year ended December 31, 2024
| |
Interest (net of foreign withholding taxes of $2) | |
| |
Dividends from affiliated money market funds (includes net securities lending income of $14,969) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Forward foreign currency contracts | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12
Invesco V.I. High Yield Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13
Invesco V.I. High Yield Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
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| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
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Invesco V.I. High Yield Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. High Yield Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is total return, comprised of current income and capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or
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Invesco V.I. High Yield Fund
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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Securities Purchased on a When-Issued and Delayed Delivery Basis — The Fund may purchase and sell interests in corporate loans and corporate debt securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date.
K.
Lower-Rated Securities – The Fund normally invests at least 80% of its net assets in lower-quality debt securities, i.e., “junk bonds”. Investments in
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Invesco V.I. High Yield Fund
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.
L.
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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser fees for securities lending agent services, which were less than $500. Fees paid to the Adviser for securities lending agent services, if any, are included in Dividends from affiliated money market funds on the Statement of Operations.
M.
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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
N.
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 the 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.
O.
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
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Invesco V.I. High Yield Fund
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.
A total return swap is an agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income generated and capital gains, if any. The unrealized appreciation (depreciation) on total return swaps includes dividends on the underlying securities and financing rate payable from the Counterparty. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event of a negative total return.
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, which could result in the Fund accruing additional expenses. 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 Agreements, which would cause the Fund to accelerate payment of any net liability owed to the Counterparty. 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 December 31, 2024, 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.
P.
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 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.
The Fund invests in corporate loans from U.S. or non-U.S. companies (the “Borrowers”). The investment of the Fund in a corporate loan may take the form of participation interests or assignments. If the Fund purchases a participation interest from a syndicate of lenders (“Lenders”) or one of the participants in the syndicate (“Participant”), one or more of which administers the loan on behalf of all the Lenders (the “Agent Bank”), the Fund would be required to rely on the Lender that sold the participation interest not only for the enforcement of the Fund’s rights against the Borrower but also for the receipt and processing of
18
Invesco V.I. High Yield Fund
payments due to the Fund under the corporate loans. As such, the Fund is subject to the credit risk of the Borrower and the Participant. Lenders and Participants interposed between the Fund and a Borrower, together with Agent Banks, are referred to as “Intermediate Participants”.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
Fluctuations in the federal funds and equivalent foreign rates or other changes to monetary policy or regulatory actions may expose fixed income markets to heightened volatility, perhaps suddenly and to a significant degree, and to reduced liquidity for certain fixed income investments, particularly those with longer maturities, when rates increase. Such changes and resulting increased volatility may adversely impact the Fund, including its operations, universe of potential investment options, and return potential. It is difficult to predict the impact of interest rate changes on various markets. 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 and other governmental actions and political events within the U.S. and abroad may also, among other things, affect investor and consumer expectations and confidence in the financial markets. This could result in higher than normal redemptions by shareholders, which could potentially increase the Fund’s portfolio turnover rate and transaction costs.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.63%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $3,857.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $21,550 for accounting and fund administrative services and was reimbursed $226,018 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
19
Invesco V.I. High Yield Fund
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
U.S. Dollar Denominated Bonds & Notes | | | | |
Variable Rate Senior Loan Interests | | | | |
Non-U.S. Dollar Denominated Bonds & Notes | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Assets* | | | | |
Forward Foreign Currency Contracts | | | | |
Other Investments - Liabilities* | | | | |
Forward Foreign Currency Contracts | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Unrealized appreciation (depreciation). |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2024:
| |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| | | | |
Unrealized depreciation on swap agreements — Centrally Cleared(a) | | | | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | | |
Unrealized depreciation on swap agreements — OTC | | | | |
Total Derivative Liabilities | | | | |
Derivatives not subject to master netting agreements | | | | |
Total Derivative Liabilities subject to master netting agreements | | | | |
| The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
20
Invesco V.I. High Yield Fund
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2024.
| Financial
Derivative
Assets | Financial Derivative Liabilities | | Collateral
(Received)/Pledged | |
| Forward Foreign
Currency Contracts | Forward
Foreign
Currency
Contracts | | | | |
Canadian Imperial Bank of Commerce | | | | | | |
State Street Bank & Trust Co. | | | | | | |
| | | | | | |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| | | | |
| | | | |
Forward foreign currency contracts | | | | |
| | | | |
| | | | |
Change in Net Unrealized Appreciation (Depreciation): | | | | |
Forward foreign currency contracts | | | | |
| | | | |
| | | | |
The table below summarizes the average notional value of derivatives held during the period.
| Forward
Foreign Currency
Contracts | | |
| | | |
| | | |
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.
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.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
21
Invesco V.I. High Yield Fund
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Capital loss carryforward | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales, amortization and accretion on debt securities and derivative instruments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 has a capital loss carryforward as of December 31, 2024, as follows:
Capital Loss Carryforward* |
| | | |
Not subject to expiration | | | |
*
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 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 year ended December 31, 2024 was $201,496,537 and $193,486,225, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $148,883,851.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of passive foreign investment companies, foreign currency transactions, amortization and accretion on debt securities and derivative instruments, on December 31, 2024, undistributed net investment income was increased by $425,989, undistributed net realized gain (loss) was decreased by $425,992 and shares of beneficial interest was increased by $3. This reclassification had no effect on the net assets of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
22
Invesco V.I. High Yield Fund
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 74% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
23
Invesco V.I. High Yield Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. High Yield Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. High Yield Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent, brokers, portfolio company investees and agent banks; when replies were not received from brokers or agent banks, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
24
Invesco V.I. High Yield Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
25
Invesco V.I. High Yield Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
26
Invesco V.I. High Yield Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Main Street Fund®
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
O-VIMST-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–99.06% |
Aerospace & Defense–0.50% |
| | |
Application Software–2.78% |
| | |
Tyler Technologies, Inc.(b) | | |
| | | |
Asset Management & Custody Banks–0.39% |
Ares Management Corp., Class A | | |
Automobile Manufacturers–0.83% |
| | |
|
| | |
|
| | |
|
| | |
|
| | |
Construction Materials–1.21% |
| | |
|
| | |
Discover Financial Services | | |
| | | |
Consumer Staples Merchandise Retail–2.04% |
| | |
Distillers & Vintners–1.44% |
Constellation Brands, Inc., Class A | | |
|
| | |
| | |
| | | |
Diversified Financial Services–1.36% |
| | |
|
Constellation Energy Corp. | | |
| | |
| | |
| | | |
Electrical Components & Equipment–3.27% |
| | |
| | |
Rockwell Automation, Inc. | | |
| | | |
| | |
|
| | |
Health Care Equipment–3.98% |
Becton, Dickinson and Co. | | |
Boston Scientific Corp.(b) | | |
| | |
Zimmer Biomet Holdings, Inc. | | |
| | | |
Health Care Facilities–1.15% |
| | |
Tenet Healthcare Corp.(b) | | |
| | | |
Health Care Supplies–0.84% |
Cooper Cos., Inc. (The)(b) | | |
Hotels, Resorts & Cruise Lines–1.04% |
Royal Caribbean Cruises Ltd. | | |
|
Procter & Gamble Co. (The) | | |
Human Resource & Employment Services–0.62% |
Paylocity Holding Corp.(b) | | |
Industrial Machinery & Supplies & Components–0.93% |
| | |
| | |
| | | |
|
| | |
|
Arthur J. Gallagher & Co. | | |
Integrated Oil & Gas–3.40% |
| | |
| | |
Suncor Energy, Inc. (Canada) | | |
| | | |
Integrated Telecommunication Services–1.04% |
| | |
Interactive Media & Services–6.61% |
| | |
Meta Platforms, Inc., Class A | | |
| | | |
Internet Services & Infrastructure–1.02% |
| | |
Snowflake, Inc., Class A(b) | | |
| | | |
Investment Banking & Brokerage–1.72% |
Charles Schwab Corp. (The) | | |
IT Consulting & Other Services–0.09% |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Main Street Fund®
| | |
Life Sciences Tools & Services–1.11% |
Lonza Group AG (Switzerland) | | |
Managed Health Care–1.72% |
| | |
Multi-line Insurance–1.24% |
American International Group, Inc. | | |
|
| | |
Oil & Gas Storage & Transportation–0.26% |
| | |
Passenger Ground Transportation–1.27% |
Uber Technologies, Inc.(b) | | |
Personal Care Products–0.22% |
Estee Lauder Cos., Inc. (The), Class A | | |
|
| | |
| | |
| | | |
Research & Consulting Services–0.27% |
| | |
|
| | |
Semiconductor Materials & Equipment–0.72% |
| | |
|
| | |
| | |
| | |
| | | |
Specialty Chemicals–0.88% |
| | |
|
| | |
| | |
| | | |
| | |
Technology Hardware, Storage & Peripherals–6.22% |
| | |
|
Philip Morris International, Inc. | | |
Trading Companies & Distributors–0.50% |
AerCap Holdings N.V. (Ireland) | | |
Transaction & Payment Processing Services–3.36% |
| | |
Mastercard, Inc., Class A | | |
| | | |
Wireless Telecommunication Services–0.71% |
| | |
Total Common Stocks & Other Equity Interests (Cost $498,596,630) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional Class, | | |
Total Money Market Funds (Cost $4,606,890) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.65% (Cost $503,203,520) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $3,431,213) | |
TOTAL INVESTMENTS IN SECURITIES–100.09% (Cost $506,634,733) | |
OTHER ASSETS LESS LIABILITIES—(0.09)% | |
| |
Investment Abbreviations:
| – Real Estate Investment Trust |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Main Street Fund®
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Main Street Fund®
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $498,596,630)* | |
Investments in affiliated money market funds, at value (Cost $8,038,103) | |
| |
Foreign currencies, at value (Cost $419) | |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $3,351,607 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $30,571) | |
Dividends from affiliated money market funds (includes net securities lending income of $44,434) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Main Street Fund®
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Main Street Fund®
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns are not annualized for periods less than one year, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Main Street Fund®
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Main Street Fund® (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
8
Invesco V.I. Main Street 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
9
Invesco V.I. Main Street 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $3,197 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
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:
| 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 year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.69%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 0.80% and
10
Invesco V.I. Main Street Fund®
Series II shares to 1.05% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $533,594.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $106,793 for accounting and fund administrative services and was reimbursed $974,960 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $23,080 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
NOTE 4—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.
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
11
Invesco V.I. Main Street 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 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $371,491,363 and $398,844,719, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $512,341,603.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of partnerships and net operating losses, on December 31, 2024, undistributed net investment income was increased by $233,603, undistributed net realized gain was decreased by $232,920 and shares of beneficial interest was decreased by $683. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
12
Invesco V.I. Main Street Fund®
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 73% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
13
Invesco V.I. Main Street Fund®
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Main Street Fund®
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Main Street Fund® (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco V.I. Main Street Fund®
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco V.I. Main Street Fund®
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco V.I. Main Street Fund®
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Main Street Mid Cap Fund®
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VIMCCE-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–99.30% |
|
Trade Desk, Inc. (The), Class A(b) | | |
Aerospace & Defense–2.82% |
| | |
| | |
| | | |
|
Burlington Stores, Inc.(b) | | |
Application Software–6.65% |
| | |
Informatica, Inc., Class A(b) | | |
Manhattan Associates, Inc.(b)(c) | | |
| | |
Tyler Technologies, Inc.(b) | | |
Unity Software, Inc.(b)(c) | | |
| | | |
Asset Management & Custody Banks–1.04% |
| | |
Automotive Parts & Equipment–0.64% |
| | |
|
Ascendis Pharma A/S, ADR (Denmark)(b) | | |
| | |
| | | |
|
| | |
Fortune Brands Innovations, Inc. | | |
Johnson Controls International PLC | | |
| | | |
Cargo Ground Transportation–0.85% |
J.B. Hunt Transport Services, Inc. | | |
Communications Equipment–1.53% |
| | |
Construction & Engineering–0.72% |
WillScot Holdings Corp.(b)(c) | | |
Construction Machinery & Heavy Transportation Equipment– 1.36% |
Allison Transmission Holdings, Inc.(c) | | |
|
Discover Financial Services | | |
Consumer Staples Merchandise Retail–1.28% |
BJ’s Wholesale Club Holdings, Inc.(b)(c) | | |
Distillers & Vintners–0.74% |
Constellation Brands, Inc., Class A | | |
Diversified Financial Services–1.32% |
Equitable Holdings, Inc.(c) | | |
| | |
|
| | |
Electrical Components & Equipment–4.17% |
| | |
| | |
Rockwell Automation, Inc.(c) | | |
Vertiv Holdings Co., Class A | | |
| | | |
Electronic Equipment & Instruments–0.97% |
Keysight Technologies, Inc.(b) | | |
Environmental & Facilities Services–0.71% |
Casella Waste Systems, Inc., Class A(b)(c) | | |
Fertilizers & Agricultural Chemicals–1.09% |
| | |
Financial Exchanges & Data–0.90% |
Cboe Global Markets, Inc. | | |
|
| | |
|
| | |
Health Care Distributors–0.83% |
| | |
Health Care Equipment–1.00% |
Zimmer Biomet Holdings, Inc. | | |
Health Care Facilities–2.14% |
Encompass Health Corp.(c) | | |
Tenet Healthcare Corp.(b)(c) | | |
| | | |
Health Care Supplies–0.98% |
Cooper Cos., Inc. (The)(b) | | |
|
| | |
| | |
| | | |
Hotels, Resorts & Cruise Lines–3.50% |
Royal Caribbean Cruises Ltd. | | |
Wyndham Hotels & Resorts, Inc.(c) | | |
| | | |
Human Resource & Employment Services–2.29% |
| | |
Paylocity Holding Corp.(b)(c) | | |
| | | |
Independent Power Producers & Energy Traders–0.99% |
| | |
Industrial Machinery & Supplies & Components–2.22% |
Lincoln Electric Holdings, Inc.(c) | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Main Street Mid Cap Fund®
| | |
Industrial Machinery & Supplies & Components–(continued) |
| | |
| | | |
|
First Industrial Realty Trust, Inc. | | |
|
Arthur J. Gallagher & Co. | | |
Interactive Media & Services–0.84% |
Pinterest, Inc., Class A(b) | | |
Internet Services & Infrastructure–1.83% |
| | |
Snowflake, Inc., Class A(b) | | |
| | | |
Investment Banking & Brokerage–1.73% |
Raymond James Financial, Inc. | | |
Life Sciences Tools & Services–1.54% |
| | |
Lonza Group AG (Switzerland) | | |
| | | |
Metal, Glass & Plastic Containers–0.85% |
| | |
Multi-Family Residential REITs–0.95% |
Mid-America Apartment Communities, Inc.(c) | | |
Multi-line Insurance–1.40% |
American International Group, Inc. | | |
|
| | |
| | |
| | | |
Oil & Gas Exploration & Production–3.21% |
| | |
| | |
Permian Resources Corp.(c) | | |
| | | |
Oil & Gas Storage & Transportation–1.62% |
| | |
Other Specialized REITs–1.20% |
Lamar Advertising Co., Class A(c) | | |
Paper & Plastic Packaging Products & Materials–1.03% |
| | |
Personal Care Products–1.78% |
| | |
Estee Lauder Cos., Inc. (The), Class A(c) | | |
| | | |
|
Intra-Cellular Therapies, Inc.(b)(c) | | |
Property & Casualty Insurance–1.32% |
Hartford Financial Services Group, Inc. (The) | | |
| | |
|
Citizens Financial Group, Inc. | | |
| | |
Wintrust Financial Corp.(c) | | |
| | | |
|
Reinsurance Group of America, Inc. | | |
Research & Consulting Services–2.00% |
CACI International, Inc., Class A(b)(c) | | |
| | |
| | | |
|
Dutch Bros, Inc., Class A(b) | | |
| | |
| | | |
|
| | |
Semiconductor Materials & Equipment–0.69% |
| | |
|
| | |
| | |
Microchip Technology, Inc. | | |
| | | |
Single-Family Residential REITs–1.12% |
American Homes 4 Rent, Class A(c) | | |
Specialty Chemicals–1.56% |
| | |
| | |
| | | |
|
| | |
|
GitLab, Inc., Class A(b)(c) | | |
Telecom Tower REITs–0.62% |
SBA Communications Corp., Class A | | |
Trading Companies & Distributors–0.48% |
Air Lease Corp., Class A(c) | | |
Total Common Stocks & Other Equity Interests (Cost $155,037,116) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $1,805,534) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.14% (Cost $156,842,650) | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Main Street Mid Cap Fund®
| | |
Investments Purchased with Cash Collateral from Securities on Loan |
Money Market Funds–16.59% |
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $35,413,847) | |
TOTAL INVESTMENTS IN SECURITIES–116.73% (Cost $192,256,497) | |
OTHER ASSETS LESS LIABILITIES—(16.73)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
| – Real Estate Investment Trust |
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Main Street Mid Cap Fund®
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $155,037,116)* | |
Investments in affiliated money market funds, at value (Cost $37,219,381) | |
Foreign currencies, at value and cost | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $32,467,944 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $948) | |
Dividends from affiliated money market funds (includes net securities lending income of $71,892) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Main Street Mid Cap Fund®
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Main Street Mid Cap Fund®
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Main Street Mid Cap Fund®
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Main Street Mid Cap Fund® (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
8
Invesco V.I. Main Street Mid Cap 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. 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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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
9
Invesco V.I. Main Street Mid Cap Fund®
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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $7,558 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.73%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to
10
Invesco V.I. Main Street Mid Cap Fund®
2.25% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $2,347.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $29,073 for accounting and fund administrative services and was reimbursed $311,911 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $4,705 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
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Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
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NOTE 4—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.
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
11
Invesco V.I. Main Street Mid Cap 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 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $83,995,805 and $101,961,952, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $192,597,106.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of federal taxes and REITs, on December 31, 2024, undistributed net investment income was increased by $649, undistributed net realized gain was increased by $3,290 and shares of beneficial interest was decreased by $3,939. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
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Issued as reinvestment of dividends: | | | | |
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| | | | |
12
Invesco V.I. Main Street Mid Cap Fund®
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 55% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
13
Invesco V.I. Main Street Mid Cap Fund®
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Main Street Mid Cap Fund®
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Main Street Mid Cap Fund® (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
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Invesco V.I. Main Street Mid Cap Fund®
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco V.I. Main Street Mid Cap Fund®
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco V.I. Main Street Mid Cap Fund®
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Main Street Small Cap Fund®
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| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
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| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
O-VIMSS-NCSR
Schedule of Investments(a)
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Common Stocks & Other Equity Interests–98.13% |
Aerospace & Defense–0.92% |
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Air Freight & Logistics–1.42% |
Hub Group, Inc., Class A(c) | | |
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Century Aluminum Co.(b)(c) | | |
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Application Software–2.67% |
Informatica, Inc., Class A(b) | | |
MARA Holdings, Inc.(b)(c) | | |
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Unity Software, Inc.(b)(c) | | |
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Asset Management & Custody Banks–1.88% |
DigitalBridge Group, Inc.(c) | | |
Federated Hermes, Inc., Class B | | |
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Automotive Parts & Equipment–2.48% |
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Ascendis Pharma A/S, ADR (Denmark)(b) | | |
BridgeBio Pharma, Inc.(b)(c) | | |
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Merus N.V. (Netherlands)(b) | | |
Twist Bioscience Corp.(b)(c) | | |
Ultragenyx Pharmaceutical, Inc.(b) | | |
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Hayward Holdings, Inc.(b) | | |
Zurn Elkay Water Solutions Corp.(c) | | |
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Commercial & Residential Mortgage Finance–1.57% |
PennyMac Financial Services, Inc.(c) | | |
Construction & Engineering–0.75% |
WillScot Holdings Corp.(b)(c) | | |
Construction Machinery & Heavy Transportation Equipment– 3.25% |
Allison Transmission Holdings, Inc. | | |
Atmus Filtration Technologies, Inc. | | |
| | |
| | | |
| | |
Construction Materials–1.77% |
Summit Materials, Inc., Class A(b) | | |
|
Bank of N.T. Butterfield & Son Ltd. (The) (Bermuda) | | |
|
Essential Properties Realty Trust, Inc.(c) | | |
|
| | |
|
Portland General Electric Co.(c) | | |
Electrical Components & Equipment–1.53% |
| | |
| | |
| | | |
Electronic Components–2.01% |
| | |
Vishay Intertechnology, Inc.(c) | | |
| | | |
Electronic Equipment & Instruments–1.56% |
| | |
Environmental & Facilities Services–2.63% |
| | |
Casella Waste Systems, Inc., Class A(b)(c) | | |
| | | |
|
| | |
|
Chesapeake Utilities Corp. | | |
Health Care Equipment–2.33% |
Inspire Medical Systems, Inc.(b)(c) | | |
Integer Holdings Corp.(b)(c) | | |
TransMedics Group, Inc.(b)(c) | | |
| | | |
Health Care Facilities–1.42% |
| | |
Surgery Partners, Inc.(b)(c) | | |
| | | |
Health Care Services–2.12% |
Addus HomeCare Corp.(b)(c) | | |
BrightSpring Health Services, Inc.(b)(c) | | |
Guardant Health, Inc.(b)(c) | | |
| | | |
|
| | |
Hotel & Resort REITs–1.53% |
DiamondRock Hospitality Co. | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Main Street Small Cap Fund®
| | |
Human Resource & Employment Services–3.20% |
| | |
| | |
| | |
| | | |
Industrial Machinery & Supplies & Components–4.04% |
| | |
| | |
Gates Industrial Corp. PLC(b) | | |
| | | |
|
| | |
Investment Banking & Brokerage–1.37% |
| | |
Stifel Financial Corp.(c) | | |
| | | |
IT Consulting & Other Services–1.03% |
| | |
Life Sciences Tools & Services–1.61% |
BioLife Solutions, Inc.(b)(c) | | |
| | |
| | | |
Metal, Glass & Plastic Containers–1.23% |
| | |
|
| | |
Oil & Gas Exploration & Production–3.59% |
Civitas Resources, Inc.(c) | | |
CNX Resources Corp.(b)(c) | | |
Northern Oil and Gas, Inc.(c) | | |
| | | |
Other Specialized REITs–2.79% |
Four Corners Property Trust, Inc.(c) | | |
| | |
| | | |
Personal Care Products–1.31% |
| | |
|
Collegium Pharmaceutical, Inc.(b)(c) | | |
Intra-Cellular Therapies, Inc.(b) | | |
Structure Therapeutics, Inc., ADR(b)(c) | | |
| | | |
Property & Casualty Insurance–1.77% |
Definity Financial Corp. (Canada) | | |
Skyward Specialty Insurance Group, | | |
| | | |
|
Berkshire Hills Bancorp, Inc. | | |
| | |
Columbia Banking System, Inc.(c) | | |
| | |
Regional Banks–(continued) |
OceanFirst Financial Corp. | | |
Pacific Premier Bancorp, Inc. | | |
United Community Banks, Inc.(c) | | |
| | |
| | |
| | |
| | | |
Research & Consulting Services–0.77% |
CACI International, Inc., Class A(b) | | |
|
Dutch Bros, Inc., Class A(b) | | |
| | |
| | | |
Semiconductor Materials & Equipment–0.99% |
| | |
|
Allegro MicroSystems, Inc.(b)(c) | | |
Lattice Semiconductor Corp.(b)(c) | | |
MACOM Technology Solutions Holdings, | | |
Silicon Laboratories, Inc.(b)(c) | | |
| | | |
|
| | |
| | |
| | | |
|
GitLab, Inc., Class A(b)(c) | | |
Progress Software Corp.(c) | | |
| | | |
Trading Companies & Distributors–0.93% |
Air Lease Corp., Class A(c) | | |
Transaction & Payment Processing Services–0.41% |
Marqeta, Inc., Class A(b) | | |
Total Common Stocks & Other Equity Interests (Cost $706,055,627) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $16,618,908) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.84% (Cost $722,674,535) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
Money Market Funds–28.56% |
Invesco Private Government Fund, | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Main Street Small Cap Fund®
| | |
Money Market Funds–(continued) |
Invesco Private Prime Fund, | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $276,888,860) | |
TOTAL INVESTMENTS IN SECURITIES–128.40% (Cost $999,563,395) | |
OTHER ASSETS LESS LIABILITIES—(28.40)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
| – Real Estate Investment Trust |
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Main Street Small Cap Fund®
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $706,055,627)* | |
Investments in affiliated money market funds, at value (Cost $293,507,768) | |
| |
Foreign currencies, at value (Cost $27,242) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $267,652,928 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $18,813) | |
Dividends from affiliated money market funds (includes net securities lending income of $250,221) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
| |
Realized and unrealized gain (loss) from: | |
| |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Main Street Small Cap Fund®
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
| | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Main Street Small Cap Fund®
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Main Street Small Cap Fund®
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Main Street Small Cap Fund® (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
8
Invesco V.I. Main Street Small Cap 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. 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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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
9
Invesco V.I. Main Street Small Cap Fund®
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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $21,158 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
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:
| 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 year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.68%.
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 a separate
10
Invesco V.I. Main Street Small Cap Fund®
sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $16,970.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $129,837 for accounting and fund administrative services and was reimbursed $1,355,422 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $28,784 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
NOTE 4—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
11
Invesco V.I. Main Street Small Cap Fund®
such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
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.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $397,991,479 and $377,967,557, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $1,003,359,271.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of ordinary income, partnerships and net operating losses, on December 31, 2024, undistributed net investment income was increased by $2,979, undistributed net realized gain was decreased by $817,187 and shares of beneficial interest was increased by $814,208. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
12
Invesco V.I. Main Street Small Cap Fund®
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 52% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
13
Invesco V.I. Main Street Small Cap Fund®
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Main Street Small Cap Fund®
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Main Street Small Cap Fund® (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco V.I. Main Street Small Cap Fund®
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco V.I. Main Street Small Cap Fund®
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco V.I. Main Street Small Cap Fund®
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco® V.I. Nasdaq 100 Buffer Fund - December
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VINDQD-NCSR
| | |
|
Invesco Government & Agency Portfolio, Institutional Class, | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $1,083,918) | |
| | |
|
Options Purchased–104.58% |
| |
TOTAL INVESTMENTS IN SECURITIES–112.63% (Cost $15,088,771) | |
OTHER ASSETS LESS LIABILITIES—(12.63)% | |
| |
Notes to Schedule of Investments:
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
| | | | | | | |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| The table below details options purchased. |
Open Equity Options Purchased |
| | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
Total Open Equity Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Index Options Purchased |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Equity Options Written |
| | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
Total Open Equity Options Written | | | | |
| 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.
2
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Open Index Options Written |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Written | | | | |
| 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.
3
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $14,004,853) | |
Investments in affiliated money market funds, at value (Cost $1,083,918) | |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Options written, at value (premiums received $896,047) | |
| |
| |
| |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends from affiliated money market funds | |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
| |
Professional services fees | |
| |
| |
Less: Fees waived and/or expenses reimbursed | |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Distributions
from net
realized
gains | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| Commencement date of December 31, 2021. |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco® V.I. Nasdaq 100 Buffer Fund - December (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund seeks, over a specified annual outcome period, to provide investors with returns that match those of the Nasdaq 100 Index® (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the Underlying Index or options that reference the Invesco QQQ Trust, which is an affiliated exchange-traded unit investment trust that seeks to track the Underlying Index.
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
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Invesco® V.I. Nasdaq 100 Buffer Fund - December
Securities for which market quotations are not readily available 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/ask 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 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial
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Invesco® V.I. Nasdaq 100 Buffer Fund - December
statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Flex Options Purchased and Written - The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by two parties ("Counterparties") to certain derivatives contracts and protection from Counterparty risk that is associated with Over-the-counter trading.
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
K.
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.
L.
Buffered Loss Risk - The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Fund will be successful in implementing its stated Buffer strategy in an Outcome Period or that the Buffer will effectively protect against any or all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). If an investor purchases shares of the Fund during an Outcome Period after the Underlying Index’s value has decreased, the investor may receive less, or none, of the intended benefit of the Buffer. The Fund does not provide principal protection or protection of gains and shareholders could experience significant losses, including loss of their entire investment.
M.
Capped Return Risk - If the Underlying Index experiences returns over the Outcome Period in excess of the Cap, the Fund will not participate in such returns beyond the Cap. In this way, the Fund is unlike other investment companies that seek to replicate the performance of the Underlying Index in all cases. If shares are purchased after the beginning of the Outcome Period, and the Fund’s net asset value has already achieved returns at or near the Cap, there may be no ability to experience any return on investment, but such purchaser remains vulnerable to risk of loss. Additionally, the Fund’s Defined Outcome strategy may not be successful in replicating the returns (before Fund fees and expenses) of the Underlying Index up to the level of the Cap.
N.
Cap Level Change Risk - At the end of the trading day immediately preceding the first day of each Outcome Period, a new Cap is established, depending on the market conditions and the prices for options contracts on the Underlying Index at the time. Therefore, the level of the Cap may rise or fall for subsequent Outcome Periods and is unlikely to remain the same. If the Caps for future Outcome Periods of the Fund were to decrease, shareholders in the Fund would have less opportunity to participate in any future positive returns of the Underlying Index.
O.
Non-Diversification Risk - Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.42%.
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Invesco® V.I. Nasdaq 100 Buffer Fund - December
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 0.70% and Series II shares to 0.95% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $45,767 and reimbursed fund level expenses of $29,899.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $1,547 for accounting and fund administrative services and was reimbursed $13,825 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| Options written are shown at value. |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and
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Invesco® V.I. Nasdaq 100 Buffer Fund - December
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 December 31, 2024:
| |
| |
Options purchased, at value(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Options written, at value | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| Options purchased, at value as reported in the Schedule of Investments. |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
| |
| |
Change in Net Unrealized Appreciation (Depreciation): | |
| |
| |
| |
| 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.
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. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
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.
11
Invesco® V.I. Nasdaq 100 Buffer Fund - December
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Net unrealized appreciation (depreciation) — investments | |
Temporary book/tax differences | |
Capital loss carryforward | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to straddles.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 has a capital loss carryforward as of December 31, 2024, as follows:
Capital Loss Carryforward* |
| | | |
Not subject to expiration | | | |
*
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
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the year ended December 31, 2024. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $14,236,150.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $76,410 and undistributed net realized gain was decreased by $76,410. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
12
Invesco® V.I. Nasdaq 100 Buffer Fund - December
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 94% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
| In addition, 6% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser. |
At a meeting held December 11, 2024, the Board of Trustees approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
13
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco® V.I. Nasdaq 100 Buffer Fund - December
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco® V.I. Nasdaq 100 Buffer Fund - December (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2024 and for the period December 31, 2021 (commencement date) through December 31, 2021 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the three years in the period ended December 31, 2024 and for the period December 31, 2021 (commencement date) through December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco® V.I. Nasdaq 100 Buffer Fund - June
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VINDQJ-NCSR
| | |
|
Invesco Government & Agency Portfolio, Institutional Class, | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $638,253) | |
| | |
|
|
| |
TOTAL INVESTMENTS IN SECURITIES–103.78% (Cost $14,006,381) | |
OTHER ASSETS LESS LIABILITIES—(3.78)% | |
| |
Notes to Schedule of Investments:
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
| | | | | | | |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| The table below details options purchased. |
Open Equity Options Purchased |
| | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
Total Open Equity Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Index Options Purchased |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Equity Options Written |
| | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
Total Open Equity Options Written | | | | |
| 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.
2
Invesco® V.I. Nasdaq 100 Buffer Fund - June
Open Index Options Written |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Written | | | | |
| 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.
3
Invesco® V.I. Nasdaq 100 Buffer Fund - June
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $13,368,128) | |
Investments in affiliated money market funds, at value (Cost $638,253) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Options written, at value (premiums received $776,167) | |
| |
| |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends from affiliated money market funds | |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
| |
Professional services fees | |
| |
| |
Less: Fees waived and/or expenses reimbursed | |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco® V.I. Nasdaq 100 Buffer Fund - June
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco® V.I. Nasdaq 100 Buffer Fund - June
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Distributions
from net
realized
gains | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| Commencement date of June 30, 2022. |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco® V.I. Nasdaq 100 Buffer Fund - June
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco® V.I. Nasdaq 100 Buffer Fund - June (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund seeks, over a specified annual outcome period, to provide investors with returns that match those of the Nasdaq 100 Index® (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the Underlying Index or options that reference the Invesco QQQ Trust, which is an affiliated exchange-traded unit investment trust that seeks to track the Underlying Index.
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
7
Invesco® V.I. Nasdaq 100 Buffer Fund - June
Securities for which market quotations are not readily available 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/ask 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 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial
8
Invesco® V.I. Nasdaq 100 Buffer Fund - June
statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Flex Options Purchased and Written - The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by two parties ("Counterparties") to certain derivatives contracts and protection from Counterparty risk that is associated with Over-the-counter trading.
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
K.
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.
L.
Buffered Loss Risk - The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Fund will be successful in implementing its stated Buffer strategy in an Outcome Period or that the Buffer will effectively protect against any or all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). If an investor purchases shares of the Fund during an Outcome Period after the Underlying Index’s value has decreased, the investor may receive less, or none, of the intended benefit of the Buffer. The Fund does not provide principal protection or protection of gains and shareholders could experience significant losses, including loss of their entire investment.
M.
Capped Return Risk - If the Underlying Index experiences returns over the Outcome Period in excess of the Cap, the Fund will not participate in such returns beyond the Cap. In this way, the Fund is unlike other investment companies that seek to replicate the performance of the Underlying Index in all cases. If shares are purchased after the beginning of the Outcome Period, and the Fund’s net asset value has already achieved returns at or near the Cap, there may be no ability to experience any return on investment, but such purchaser remains vulnerable to risk of loss. Additionally, the Fund’s Defined Outcome strategy may not be successful in replicating the returns (before Fund fees and expenses) of the Underlying Index up to the level of the Cap.
N.
Cap Level Change Risk - At the end of the trading day immediately preceding the first day of each Outcome Period, a new Cap is established, depending on the market conditions and the prices for options contracts on the Underlying Index at the time. Therefore, the level of the Cap may rise or fall for subsequent Outcome Periods and is unlikely to remain the same. If the Caps for future Outcome Periods of the Fund were to decrease, shareholders in the Fund would have less opportunity to participate in any future positive returns of the Underlying Index.
O.
Non-Diversification Risk - Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.42%.
9
Invesco® V.I. Nasdaq 100 Buffer Fund - June
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 0.70% and Series II shares to 0.95% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $45,987 and reimbursed fund level expenses of $27,699.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $1,549 for accounting and fund administrative services and was reimbursed $11,651 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| Options written are shown at value. |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and
10
Invesco® V.I. Nasdaq 100 Buffer Fund - June
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 December 31, 2024:
| |
| |
Options purchased, at value(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Options written, at value | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| Options purchased, at value as reported in the Schedule of Investments. |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
| |
| |
Change in Net Unrealized Appreciation (Depreciation): | |
| |
| |
| |
| Options purchased are included in the net realized gain (loss) from investment securities and the change in net unrealized appreciation (depreciation) on investment securities. |
The table below summarizes the average notional value of derivatives held during the period.
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. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
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.
11
Invesco® V.I. Nasdaq 100 Buffer Fund - June
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to straddles.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 8—Investment Transactions
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the year ended December 31, 2024. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $14,053,777.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $73,683 and undistributed net realized gain (loss) was decreased by $73,683. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
12
Invesco® V.I. Nasdaq 100 Buffer Fund - June
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 86% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
| In addition, 9% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser. |
At a meeting held December 11, 2024, the Board of Trustees approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
13
Invesco® V.I. Nasdaq 100 Buffer Fund - June
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco® V.I. Nasdaq 100 Buffer Fund - June
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco® V.I. Nasdaq 100 Buffer Fund - June (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2024 and for the period June 30, 2022 (commencement date) through December 31, 2022 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the two years in the period ended December 31, 2024 and for the period June 30, 2022 (commencement date) through December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco® V.I. Nasdaq 100 Buffer Fund - June
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco® V.I. Nasdaq 100 Buffer Fund - June
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco® V.I. Nasdaq 100 Buffer Fund - June
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco® V.I. Nasdaq 100 Buffer Fund - March
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VINDQM-NCSR
| | |
|
Invesco Government & Agency Portfolio, Institutional Class, | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $300,036) | |
| | |
|
Options Purchased–100.89% |
| |
TOTAL INVESTMENTS IN SECURITIES–103.40% (Cost $11,218,240) | |
OTHER ASSETS LESS LIABILITIES—(3.40)% | |
| |
Notes to Schedule of Investments:
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
| | | | | | | |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| The table below details options purchased. |
Open Equity Options Purchased |
| | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
Total Open Equity Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Index Options Purchased |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Equity Options Written |
| | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
Total Open Equity Options Written | | | | |
| 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.
2
Invesco® V.I. Nasdaq 100 Buffer Fund - March
Open Index Options Written |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Written | | | | |
| 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.
3
Invesco® V.I. Nasdaq 100 Buffer Fund - March
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $10,918,204) | |
Investments in affiliated money market funds, at value (Cost $300,036) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Options written, at value (premiums received $636,510) | |
| |
| |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends from affiliated money market funds | |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
| |
Professional services fees | |
| |
Less: Fees waived and/or expenses reimbursed | |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco® V.I. Nasdaq 100 Buffer Fund - March
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco® V.I. Nasdaq 100 Buffer Fund - March
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Distributions
from net
realized
gains | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| Commencement date of March 31, 2022. |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco® V.I. Nasdaq 100 Buffer Fund - March
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco® V.I. Nasdaq 100 Buffer Fund - March (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund seeks, over a specified annual outcome period, to provide investors with returns that match those of the Nasdaq 100 Index® (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the Underlying Index or options that reference the Invesco QQQ Trust, which is an affiliated exchange-traded unit investment trust that seeks to track the Underlying Index.
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
7
Invesco® V.I. Nasdaq 100 Buffer Fund - March
Securities for which market quotations are not readily available 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/ask 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 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial
8
Invesco® V.I. Nasdaq 100 Buffer Fund - March
statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Flex Options Purchased and Written - The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by two parties ("Counterparties") to certain derivatives contracts and protection from Counterparty risk that is associated with Over-the-counter trading.
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
K.
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.
L.
Buffered Loss Risk - The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Fund will be successful in implementing its stated Buffer strategy in an Outcome Period or that the Buffer will effectively protect against any or all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). If an investor purchases shares of the Fund during an Outcome Period after the Underlying Index’s value has decreased, the investor may receive less, or none, of the intended benefit of the Buffer. The Fund does not provide principal protection or protection of gains and shareholders could experience significant losses, including loss of their entire investment.
M.
Capped Return Risk - If the Underlying Index experiences returns over the Outcome Period in excess of the Cap, the Fund will not participate in such returns beyond the Cap. In this way, the Fund is unlike other investment companies that seek to replicate the performance of the Underlying Index in all cases. If shares are purchased after the beginning of the Outcome Period, and the Fund’s net asset value has already achieved returns at or near the Cap, there may be no ability to experience any return on investment, but such purchaser remains vulnerable to risk of loss. Additionally, the Fund’s Defined Outcome strategy may not be successful in replicating the returns (before Fund fees and expenses) of the Underlying Index up to the level of the Cap.
N.
Cap Level Change Risk - At the end of the trading day immediately preceding the first day of each Outcome Period, a new Cap is established, depending on the market conditions and the prices for options contracts on the Underlying Index at the time. Therefore, the level of the Cap may rise or fall for subsequent Outcome Periods and is unlikely to remain the same. If the Caps for future Outcome Periods of the Fund were to decrease, shareholders in the Fund would have less opportunity to participate in any future positive returns of the Underlying Index.
O.
Non-Diversification Risk - Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.42%.
9
Invesco® V.I. Nasdaq 100 Buffer Fund - March
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 0.70% and Series II shares to 0.95% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $45,830 and reimbursed fund level expenses of $25,349.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $1,573 for accounting and fund administrative services and was reimbursed $13,319 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| Options written are shown at value. |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and
10
Invesco® V.I. Nasdaq 100 Buffer Fund - March
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 December 31, 2024:
| |
| |
Options purchased, at value(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Options written, at value | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| Options purchased, at value as reported in the Schedule of Investments. |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
| |
| |
Change in Net Unrealized Appreciation (Depreciation): | |
| |
| |
| |
| Options purchased are included in the net realized gain (loss) from investment securities and the change in net unrealized appreciation (depreciation) on investment securities. |
The table below summarizes the average notional value of derivatives held during the period.
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. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
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.
11
Invesco® V.I. Nasdaq 100 Buffer Fund - March
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to straddles.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 8—Investment Transactions
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the year ended December 31, 2024. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $11,995,692.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of equalization,expired capital loss carryforwards and net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $78,645, undistributed net realized gain (loss) was increased by $80,823 and shares of beneficial interest was decreased by $159,468. This reclassification had no effect on the net assets of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
12
Invesco® V.I. Nasdaq 100 Buffer Fund - March
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 91% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
| In addition, 9% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser. |
At a meeting held December 11, 2024, the Board of Trustees approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
13
Invesco® V.I. Nasdaq 100 Buffer Fund - March
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco® V.I. Nasdaq 100 Buffer Fund - March
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco® V.I. Nasdaq 100 Buffer Fund - March (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2024 and for the period March 31, 2022 (commencement date) through December 31, 2022 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the two years in the period ended December 31, 2024 and for the period March 31, 2022 (commencement date) through December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco® V.I. Nasdaq 100 Buffer Fund - March
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco® V.I. Nasdaq 100 Buffer Fund - March
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco® V.I. Nasdaq 100 Buffer Fund - March
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco® V.I. Nasdaq 100 Buffer Fund - September
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VINDQS-NCSR
| | |
|
Invesco Government & Agency Portfolio, Institutional Class, | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $570,133) | |
| | |
|
Options Purchased–102.31% |
| |
TOTAL INVESTMENTS IN SECURITIES–105.93% (Cost $16,321,982) | |
OTHER ASSETS LESS LIABILITIES—(5.93)% | |
| |
Notes to Schedule of Investments:
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
| | | | | | | |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| The table below details options purchased. |
Open Equity Options Purchased |
| | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
Total Open Equity Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Index Options Purchased |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Equity Options Written |
| | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
|
Invesco QQQ Trust, Series 1 | | | | | | | | |
Total Open Equity Options Written | | | | |
| 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.
2
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Open Index Options Written |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Written | | | | |
| 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.
3
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $15,751,849) | |
Investments in affiliated money market funds, at value (Cost $570,133) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Options written, at value (premiums received $1,040,726) | |
| |
| |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends from affiliated money market funds | |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
| |
Professional services fees | |
| |
Less: Fees waived and/or expenses reimbursed | |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Distributions
from net
realized
gains | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| Commencement date of September 30, 2021. |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco® V.I. Nasdaq 100 Buffer Fund - September (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund seeks, over a specified annual outcome period, to provide investors with returns that match those of the Nasdaq 100 Index® (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the Underlying Index or options that reference the Invesco QQQ Trust, which is an affiliated exchange-traded unit investment trust that seeks to track the Underlying Index.
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
7
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Securities for which market quotations are not readily available 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/ask 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 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial
8
Invesco® V.I. Nasdaq 100 Buffer Fund - September
statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Flex Options Purchased and Written - The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by two parties ("Counterparties") to certain derivatives contracts and protection from Counterparty risk that is associated with Over-the-counter trading.
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
K.
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.
L.
Buffered Loss Risk - The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Fund will be successful in implementing its stated Buffer strategy in an Outcome Period or that the Buffer will effectively protect against any or all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). If an investor purchases shares of the Fund during an Outcome Period after the Underlying Index’s value has decreased, the investor may receive less, or none, of the intended benefit of the Buffer. The Fund does not provide principal protection or protection of gains and shareholders could experience significant losses, including loss of their entire investment.
M.
Capped Return Risk - If the Underlying Index experiences returns over the Outcome Period in excess of the Cap, the Fund will not participate in such returns beyond the Cap. In this way, the Fund is unlike other investment companies that seek to replicate the performance of the Underlying Index in all cases. If shares are purchased after the beginning of the Outcome Period, and the Fund’s net asset value has already achieved returns at or near the Cap, there may be no ability to experience any return on investment, but such purchaser remains vulnerable to risk of loss. Additionally, the Fund’s Defined Outcome strategy may not be successful in replicating the returns (before Fund fees and expenses) of the Underlying Index up to the level of the Cap.
N.
Cap Level Change Risk - At the end of the trading day immediately preceding the first day of each Outcome Period, a new Cap is established, depending on the market conditions and the prices for options contracts on the Underlying Index at the time. Therefore, the level of the Cap may rise or fall for subsequent Outcome Periods and is unlikely to remain the same. If the Caps for future Outcome Periods of the Fund were to decrease, shareholders in the Fund would have less opportunity to participate in any future positive returns of the Underlying Index.
O.
Non-Diversification Risk - Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.42%.
9
Invesco® V.I. Nasdaq 100 Buffer Fund - September
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 0.70% and Series II shares to 0.95% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $46,089 and reimbursed fund level expenses of $23,835.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $1,530 for accounting and fund administrative services and was reimbursed $11,917 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| Options written are shown at value. |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and
10
Invesco® V.I. Nasdaq 100 Buffer Fund - September
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 December 31, 2024:
| |
| |
Options purchased, at value(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Options written, at value | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| Options purchased, at value as reported in the Schedule of Investments. |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
| |
| |
Change in Net Unrealized Appreciation (Depreciation): | |
| |
| |
| |
| 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.
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. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
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.
11
Invesco® V.I. Nasdaq 100 Buffer Fund - September
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to straddles.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 8—Investment Transactions
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the year ended December 31, 2024. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $15,785,689.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $73,965 and undistributed net realized gain was decreased by $73,965. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
12
Invesco® V.I. Nasdaq 100 Buffer Fund - September
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 79% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with the entity whereby the entity sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to the entity, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by the entity are also owned beneficially. |
| In addition, 21% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser. |
At a meeting held December 11, 2024, the Board of Trustees approved a Plan of Liquidation and Dissolution, which authorizes the termination, liquidation and dissolution of the Fund. In order to effect such liquidation, the Fund will be closed to investments by new accounts after the close of business on January 17, 2025. The Fund will be liquidated on or about April 30, 2025. There is no guarantee that the Fund will achieve its Defined Outcome prior to the liquidation date.
13
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco® V.I. Nasdaq 100 Buffer Fund - September
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco® V.I. Nasdaq 100 Buffer Fund - September (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2024 and for the period September 30, 2021 (commencement date) through December 31, 2021 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the three years in the period ended December 31, 2024 and for the period September 30, 2021 (commencement date) through December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco® V.I. S&P 500 Buffer Fund - December
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VISP500D-NCSR
| | |
|
Invesco Government & Agency Portfolio, Institutional Class, | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $2,839,042) | |
| | |
|
Options Purchased–100.79% |
| |
TOTAL INVESTMENTS IN SECURITIES–109.06% (Cost $37,331,084) | |
OTHER ASSETS LESS LIABILITIES—(9.06)% | |
| |
Notes to Schedule of Investments:
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
| | | | | | | |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| The table below details options purchased. |
Open Index Options Purchased |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Index Options Written |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Written | | | | |
| 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.
2
Invesco® V.I. S&P 500 Buffer Fund - December
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $34,492,042) | |
Investments in affiliated money market funds, at value (Cost $2,839,042) | |
| |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Options written, at value (premiums received $1,497,538) | |
| |
| |
| |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends from affiliated money market funds | |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
| |
Professional services fees | |
| |
| |
| |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco® V.I. S&P 500 Buffer Fund - December
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco® V.I. S&P 500 Buffer Fund - December
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Distributions
from net
realized
gains | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| Commencement date of December 31, 2021. |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco® V.I. S&P 500 Buffer Fund - December
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco® V.I. S&P 500 Buffer Fund - December (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund seeks, over a specified annual outcome period, to provide investors with returns that match those of the S&P 500® Index (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the Underlying Index or options that reference the SPDR® S&P 500® ETF Trust, which is an exchange-traded unit investment trust that seeks to track the Underlying Index.
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
6
Invesco® V.I. S&P 500 Buffer Fund - December
Securities for which market quotations are not readily available 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/ask 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 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial
7
Invesco® V.I. S&P 500 Buffer Fund - December
statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Flex Options Purchased and Written - The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by two parties ("Counterparties") to certain derivatives contracts and protection from Counterparty risk that is associated with Over-the-counter trading.
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
K.
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.
L.
Buffered Loss Risk - The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Fund will be successful in implementing its stated Buffer strategy in an Outcome Period or that the Buffer will effectively protect against any or all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). If an investor purchases shares of the Fund during an Outcome Period after the Underlying Index’s value has decreased, the investor may receive less, or none, of the intended benefit of the Buffer. The Fund does not provide principal protection or protection of gains and shareholders could experience significant losses, including loss of their entire investment.
M.
Capped Return Risk - If the Underlying Index experiences returns over the Outcome Period in excess of the Cap, the Fund will not participate in such returns beyond the Cap. In this way, the Fund is unlike other investment companies that seek to replicate the performance of the Underlying Index in all cases. If shares are purchased after the beginning of the Outcome Period, and the Fund’s net asset value has already achieved returns at or near the Cap, there may be no ability to experience any return on investment, but such purchaser remains vulnerable to risk of loss. Additionally, the Fund’s Defined Outcome strategy may not be successful in replicating the returns (before Fund fees and expenses) of the Underlying Index up to the level of the Cap.
N.
Cap Level Change Risk - At the end of the trading day immediately preceding the first day of each Outcome Period, a new Cap is established, depending on the market conditions and the prices for options contracts on the Underlying Index at the time. Therefore, the level of the Cap may rise or fall for subsequent Outcome Periods and is unlikely to remain the same. If the Caps for future Outcome Periods of the Fund were to decrease, shareholders in the Fund would have less opportunity to participate in any future positive returns of the Underlying Index.
O.
Non-Diversification Risk - Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.42%.
8
Invesco® V.I. S&P 500 Buffer Fund - December
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 0.70% and Series II shares to 0.95% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $69,507.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $4,509 for accounting and fund administrative services and was reimbursed $46,357 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| Options written are shown at value. |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and
9
Invesco® V.I. S&P 500 Buffer Fund - December
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 December 31, 2024:
| |
| |
Options purchased, at value(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Options written, at value | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| Options purchased, at value as reported in the Schedule of Investments. |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
| |
| |
Change in Net Unrealized Appreciation (Depreciation): | |
| |
| |
| |
| 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.
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. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
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.
10
Invesco® V.I. S&P 500 Buffer Fund - December
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to derivative instruments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
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 year ended December 31, 2024 was $0 and $0, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $35,893,076.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $230,196 and undistributed net realized gain was decreased by $230,196. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
11
Invesco® V.I. S&P 500 Buffer Fund - December
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 100% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco® V.I. S&P 500 Buffer Fund - December
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco® V.I. S&P 500 Buffer Fund - December
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco® V.I. S&P 500 Buffer Fund - December (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2024 and for the period December 31, 2021 (commencement date) through December 31, 2021 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the three years in the period ended December 31, 2024 and for the period December 31, 2021 (commencement date) through December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco® V.I. S&P 500 Buffer Fund - December
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco® V.I. S&P 500 Buffer Fund - December
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco® V.I. S&P 500 Buffer Fund - December
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco® V.I. S&P 500 Buffer Fund – June
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VISP500J-NCSR
| | |
|
Invesco Government & Agency Portfolio, Institutional Class, | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $1,895,050) | |
| | |
|
|
| |
TOTAL INVESTMENTS IN SECURITIES–102.86% (Cost $42,572,278) | |
OTHER ASSETS LESS LIABILITIES—(2.86)% | |
| |
Notes to Schedule of Investments:
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
| | | | | | | |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| The table below details options purchased. |
Open Index Options Purchased |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Index Options Written |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Written | | | | |
| 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.
2
Invesco® V.I. S&P 500 Buffer Fund – June
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $40,677,228) | |
Investments in affiliated money market funds, at value (Cost $1,895,050) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Options written, at value (premiums received $1,257,999) | |
| |
| |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends from affiliated money market funds | |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
| |
Professional services fees | |
| |
| |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco® V.I. S&P 500 Buffer Fund – June
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco® V.I. S&P 500 Buffer Fund – June
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Distributions
from net
realized
gains | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| Commencement date of June 30, 2022. |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco® V.I. S&P 500 Buffer Fund – June
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco® V.I. S&P 500 Buffer Fund – June (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund seeks, over a specified annual outcome period, to provide investors with returns that match those of the S&P 500® Index (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the Underlying Index or options that reference the SPDR® S&P 500® ETF Trust, which is an exchange-traded unit investment trust that seeks to track the Underlying Index.
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
6
Invesco® V.I. S&P 500 Buffer Fund – June
Securities for which market quotations are not readily available 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/ask 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 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial
7
Invesco® V.I. S&P 500 Buffer Fund – June
statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Flex Options Purchased and Written - The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by two parties ("Counterparties") to certain derivatives contracts and protection from Counterparty risk that is associated with Over-the-counter trading.
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
K.
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.
L.
Buffered Loss Risk - The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Fund will be successful in implementing its stated Buffer strategy in an Outcome Period or that the Buffer will effectively protect against any or all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). If an investor purchases shares of the Fund during an Outcome Period after the Underlying Index’s value has decreased, the investor may receive less, or none, of the intended benefit of the Buffer. The Fund does not provide principal protection or protection of gains and shareholders could experience significant losses, including loss of their entire investment.
M.
Capped Return Risk - If the Underlying Index experiences returns over the Outcome Period in excess of the Cap, the Fund will not participate in such returns beyond the Cap. In this way, the Fund is unlike other investment companies that seek to replicate the performance of the Underlying Index in all cases. If shares are purchased after the beginning of the Outcome Period, and the Fund’s net asset value has already achieved returns at or near the Cap, there may be no ability to experience any return on investment, but such purchaser remains vulnerable to risk of loss. Additionally, the Fund’s Defined Outcome strategy may not be successful in replicating the returns (before Fund fees and expenses) of the Underlying Index up to the level of the Cap.
N.
Cap Level Change Risk - At the end of the trading day immediately preceding the first day of each Outcome Period, a new Cap is established, depending on the market conditions and the prices for options contracts on the Underlying Index at the time. Therefore, the level of the Cap may rise or fall for subsequent Outcome Periods and is unlikely to remain the same. If the Caps for future Outcome Periods of the Fund were to decrease, shareholders in the Fund would have less opportunity to participate in any future positive returns of the Underlying Index.
O.
Non-Diversification Risk - Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.42%.
8
Invesco® V.I. S&P 500 Buffer Fund – June
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 0.70% and Series II shares to 0.95% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $68,981.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $4,843 for accounting and fund administrative services and was reimbursed $51,023 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| Options written are shown at value. |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and
9
Invesco® V.I. S&P 500 Buffer Fund – June
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 December 31, 2024:
| |
| |
Options purchased, at value(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Options written, at value | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| Options purchased, at value as reported in the Schedule of Investments. |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
| |
| |
Change in Net Unrealized Appreciation (Depreciation): | |
| |
| |
| |
| Options purchased are included in the net realized gain (loss) from investment securities and the change in net unrealized appreciation (depreciation) on investment securities. |
The table below summarizes the average notional value of derivatives held during the period.
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. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
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.
10
Invesco® V.I. S&P 500 Buffer Fund – June
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to derivative instruments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 8—Investment Transactions
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the year ended December 31, 2024. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $43,976,833.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $248,563 and undistributed net realized gain was decreased by $248,563. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
11
Invesco® V.I. S&P 500 Buffer Fund – June
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 100% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco® V.I. S&P 500 Buffer Fund – June
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco® V.I. S&P 500 Buffer Fund - June
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco® V.I. S&P 500 Buffer Fund - June (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2024 and for the period June 30, 2022 (commencement date) through December 31, 2022 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the two years in the period ended December 31, 2024 and for the period June 30, 2022 (commencement date) through December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco® V.I. S&P 500 Buffer Fund – June
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco® V.I. S&P 500 Buffer Fund – June
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco® V.I. S&P 500 Buffer Fund – June
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco® V.I. S&P 500 Buffer Fund - March
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| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
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| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VISP500M-NCSR
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Invesco Government & Agency Portfolio, Institutional Class, | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $756,209) | |
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TOTAL INVESTMENTS IN SECURITIES–101.94% (Cost $33,088,379) | |
OTHER ASSETS LESS LIABILITIES—(1.94)% | |
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Notes to Schedule of Investments:
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
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| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| The table below details options purchased. |
Open Index Options Purchased |
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Total Open Index Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Index Options Written |
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Total Open Index Options Written | | | | |
| 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.
2
Invesco® V.I. S&P 500 Buffer Fund - March
Statement of Assets and Liabilities
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Investments in unaffiliated securities, at value
(Cost $32,332,170) | |
Investments in affiliated money market funds, at value (Cost $756,209) | |
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Investment for trustee deferred compensation and retirement plans | |
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Options written, at value (premiums received $1,108,766) | |
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Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
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Net assets applicable to shares outstanding | |
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Shares of beneficial interest | |
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Shares outstanding, no par value, with an unlimited number of shares authorized: |
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Net asset value per share | |
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Net asset value per share | |
Statement of Operations
For the year ended December 31, 2024
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Dividends from affiliated money market funds | |
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Administrative services fees | |
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Distribution fees - Series II | |
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Trustees’ and officers’ fees and benefits | |
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Professional services fees | |
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Less: Fees waived and/or expenses reimbursed | |
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Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
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Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
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Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco® V.I. S&P 500 Buffer Fund - March
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
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Net investment income (loss) | | |
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Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
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Total distributions from distributable earnings | | |
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Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
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See accompanying Notes to Financial Statements which are an integral part of the financial statements.
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Invesco® V.I. S&P 500 Buffer Fund - March
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Distributions
from net
realized
gains | Net asset
value, end
of period | | 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 | |
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| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| Commencement date of March 31, 2022. |
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See accompanying Notes to Financial Statements which are an integral part of the financial statements.
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Invesco® V.I. S&P 500 Buffer Fund - March
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco® V.I. S&P 500 Buffer Fund - March (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund seeks, over a specified annual outcome period, to provide investors with returns that match those of the S&P 500® Index (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the Underlying Index or options that reference the SPDR® S&P 500® ETF Trust, which is an exchange-traded unit investment trust that seeks to track the Underlying Index.
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
6
Invesco® V.I. S&P 500 Buffer Fund - March
Securities for which market quotations are not readily available 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/ask 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 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial
7
Invesco® V.I. S&P 500 Buffer Fund - March
statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Flex Options Purchased and Written - The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by two parties ("Counterparties") to certain derivatives contracts and protection from Counterparty risk that is associated with Over-the-counter trading.
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
K.
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.
L.
Buffered Loss Risk - The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Fund will be successful in implementing its stated Buffer strategy in an Outcome Period or that the Buffer will effectively protect against any or all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). If an investor purchases shares of the Fund during an Outcome Period after the Underlying Index’s value has decreased, the investor may receive less, or none, of the intended benefit of the Buffer. The Fund does not provide principal protection or protection of gains and shareholders could experience significant losses, including loss of their entire investment.
M.
Capped Return Risk - If the Underlying Index experiences returns over the Outcome Period in excess of the Cap, the Fund will not participate in such returns beyond the Cap. In this way, the Fund is unlike other investment companies that seek to replicate the performance of the Underlying Index in all cases. If shares are purchased after the beginning of the Outcome Period, and the Fund’s net asset value has already achieved returns at or near the Cap, there may be no ability to experience any return on investment, but such purchaser remains vulnerable to risk of loss. Additionally, the Fund’s Defined Outcome strategy may not be successful in replicating the returns (before Fund fees and expenses) of the Underlying Index up to the level of the Cap.
N.
Cap Level Change Risk - At the end of the trading day immediately preceding the first day of each Outcome Period, a new Cap is established, depending on the market conditions and the prices for options contracts on the Underlying Index at the time. Therefore, the level of the Cap may rise or fall for subsequent Outcome Periods and is unlikely to remain the same. If the Caps for future Outcome Periods of the Fund were to decrease, shareholders in the Fund would have less opportunity to participate in any future positive returns of the Underlying Index.
O.
Non-Diversification Risk - Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.42%.
8
Invesco® V.I. S&P 500 Buffer Fund - March
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 0.70% and Series II shares to 0.95% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $70,858.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $4,151 for accounting and fund administrative services and was reimbursed $43,742 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| Options written are shown at value. |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and
9
Invesco® V.I. S&P 500 Buffer Fund - March
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 December 31, 2024:
| |
| |
Options purchased, at value(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Options written, at value | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| Options purchased, at value as reported in the Schedule of Investments. |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
| |
| |
Change in Net Unrealized Appreciation: | |
| |
| |
| |
| 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.
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. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
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.
10
Invesco® V.I. S&P 500 Buffer Fund - March
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation (depreciation) — investments | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to straddles.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 8—Investment Transactions
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the year ended December 31, 2024. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $35,502,105.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $221,070 and undistributed net realized gain was decreased by $221,070. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
11
Invesco® V.I. S&P 500 Buffer Fund - March
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 100% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco® V.I. S&P 500 Buffer Fund - March
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco® V.I. S&P 500 Buffer Fund - March
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco® V.I. S&P 500 Buffer Fund - March (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2024 and for the period March 31, 2022 (commencement date) through December 31, 2022 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the two years in the period ended December 31, 2024 and for the period March 31, 2022 (commencement date) through December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco® V.I. S&P 500 Buffer Fund - March
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco® V.I. S&P 500 Buffer Fund - March
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco® V.I. S&P 500 Buffer Fund - March
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco® V.I. S&P 500 Buffer Fund - September
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VISP500S-NCSR
| | |
|
Invesco Government & Agency Portfolio, Institutional Class, | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $2,414,057) | |
| | |
|
|
| |
TOTAL INVESTMENTS IN SECURITIES–103.61% (Cost $54,635,844) | |
OTHER ASSETS LESS LIABILITIES—(3.61)% | |
| |
Notes to Schedule of Investments:
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
| | | | | | | |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| The table below details options purchased. |
Open Index Options Purchased |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Purchased | | | | | | |
| Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Open Index Options Written |
| | | | | | |
|
| | | | | | | | |
|
| | | | | | | | |
Total Open Index Options Written | | | | |
| 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.
2
Invesco® V.I. S&P 500 Buffer Fund - September
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $52,221,787) | |
Investments in affiliated money market funds, at value (Cost $2,414,057) | |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
Options written, at value (premiums received $2,367,721) | |
| |
| |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends from affiliated money market funds | |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
| |
Professional services fees | |
| |
| |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco® V.I. S&P 500 Buffer Fund - September
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation (depreciation) | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco® V.I. S&P 500 Buffer Fund - September
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Distributions
from net
realized
gains | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| Commencement date of September 30, 2021. |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco® V.I. S&P 500 Buffer Fund - September
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco® V.I. S&P 500 Buffer Fund - September (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund seeks, over a specified annual outcome period, to provide investors with returns that match those of the S&P 500® Index (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the Underlying Index or options that reference the SPDR® S&P 500® ETF Trust, which is an exchange-traded unit investment trust that seeks to track the Underlying Index.
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
6
Invesco® V.I. S&P 500 Buffer Fund - September
Securities for which market quotations are not readily available 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/ask 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 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial
7
Invesco® V.I. S&P 500 Buffer Fund - September
statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
Flex Options Purchased and Written - The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by two parties ("Counterparties") to certain derivatives contracts and protection from Counterparty risk that is associated with Over-the-counter trading.
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
K.
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.
L.
Buffered Loss Risk - The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Fund will be successful in implementing its stated Buffer strategy in an Outcome Period or that the Buffer will effectively protect against any or all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). If an investor purchases shares of the Fund during an Outcome Period after the Underlying Index’s value has decreased, the investor may receive less, or none, of the intended benefit of the Buffer. The Fund does not provide principal protection or protection of gains and shareholders could experience significant losses, including loss of their entire investment.
M.
Capped Return Risk - If the Underlying Index experiences returns over the Outcome Period in excess of the Cap, the Fund will not participate in such returns beyond the Cap. In this way, the Fund is unlike other investment companies that seek to replicate the performance of the Underlying Index in all cases. If shares are purchased after the beginning of the Outcome Period, and the Fund’s net asset value has already achieved returns at or near the Cap, there may be no ability to experience any return on investment, but such purchaser remains vulnerable to risk of loss. Additionally, the Fund’s Defined Outcome strategy may not be successful in replicating the returns (before Fund fees and expenses) of the Underlying Index up to the level of the Cap.
N.
Cap Level Change Risk - At the end of the trading day immediately preceding the first day of each Outcome Period, a new Cap is established, depending on the market conditions and the prices for options contracts on the Underlying Index at the time. Therefore, the level of the Cap may rise or fall for subsequent Outcome Periods and is unlikely to remain the same. If the Caps for future Outcome Periods of the Fund were to decrease, shareholders in the Fund would have less opportunity to participate in any future positive returns of the Underlying Index.
O.
Non-Diversification Risk - Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value.
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:
For the year ended December 31, 2024, the effective advisory fee rate incurred by the Fund was 0.42%.
8
Invesco® V.I. S&P 500 Buffer Fund - September
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 April 30, 2026, 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 Series I shares to 0.70% and Series II shares to 0.95% 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 April 30, 2026. 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 August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $66,262.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $5,727 for accounting and fund administrative services and was reimbursed $58,945 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
| | | | |
| | | | |
Total Investments in Securities | | | | |
Other Investments - Liabilities* | | | | |
| | | | |
| | | | |
| Options written are shown at value. |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and
9
Invesco® V.I. S&P 500 Buffer Fund - September
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 December 31, 2024:
| |
| |
Options purchased, at value(a) | |
Derivatives not subject to master netting agreements | |
Total Derivative Assets subject to master netting agreements | |
| |
| |
Options written, at value | |
Derivatives not subject to master netting agreements | |
Total Derivative Liabilities subject to master netting agreements | |
| Options purchased, at value as reported in the Schedule of Investments. |
Effect of Derivative Investments for the year ended December 31, 2024
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 |
| |
| |
| |
| |
Change in Net Unrealized Appreciation (Depreciation): | |
| |
| |
| |
| Options purchased are included in the net realized gain (loss) from investment securities and the change in net unrealized appreciation (depreciation) on investment securities. |
The table below summarizes the average notional value of derivatives held during the period.
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. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
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.
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Invesco® V.I. S&P 500 Buffer Fund - September
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to derivative instruments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 8—Investment Transactions
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the year ended December 31, 2024. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation (depreciation) of investments | |
Cost of investments for tax purposes is $53,333,315.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $297,361 and undistributed net realized gain was decreased by $297,361. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10—Share Information
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
11
Invesco® V.I. S&P 500 Buffer Fund - September
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 95% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco® V.I. S&P 500 Buffer Fund - September
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco® V.I. S&P 500 Buffer Fund - September
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco® V.I. S&P 500 Buffer Fund - September (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2024 and for the period September 30, 2021 (commencement date) through December 31, 2021 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the three years in the period ended December 31, 2024 and for the period September 30, 2021 (commencement date) through December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco® V.I. S&P 500 Buffer Fund - September
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco® V.I. S&P 500 Buffer Fund - September
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco® V.I. S&P 500 Buffer Fund - September
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Small Cap Equity Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
VISCE-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–99.06% |
Aerospace & Defense–1.48% |
| | |
|
| | |
Apparel, Accessories & Luxury Goods–1.27% |
| | |
Application Software–5.35% |
AppFolio, Inc., Class A(b) | | |
Descartes Systems Group, Inc. (The) | | |
| | |
| | |
| | | |
Asset Management & Custody Banks–1.18% |
StepStone Group, Inc., Class A | | |
Automotive Parts & Equipment–2.12% |
Modine Manufacturing Co.(b) | | |
Patrick Industries, Inc.(c) | | |
| | | |
|
| | |
Ascendis Pharma A/S, ADR (Denmark)(b) | | |
| | |
| | |
| | |
Xenon Pharmaceuticals, Inc. | | |
| | | |
|
Ollie’s Bargain Outlet Holdings, Inc.(b)(c) | | |
|
| | |
Cargo Ground Transportation–2.37% |
Knight-Swift Transportation Holdings, | | |
| | |
| | | |
Commercial & Residential Mortgage Finance–2.28% |
| | |
Mr. Cooper Group, Inc.(b) | | |
| | | |
Communications Equipment–1.40% |
Lumentum Holdings, Inc.(b) | | |
Construction & Engineering–2.58% |
Comfort Systems USA, Inc. | | |
| | |
| | | |
| | |
Construction Machinery & Heavy Transportation Equipment– 1.15% |
| | |
Construction Materials–1.09% |
| | |
Electrical Components & Equipment–1.37% |
| | |
| | |
| | | |
Electronic Components–1.27% |
| | |
Electronic Manufacturing Services–2.20% |
| | |
| | |
| | | |
Environmental & Facilities Services–1.11% |
Casella Waste Systems, Inc., Class A(b) | | |
Financial Exchanges & Data–1.99% |
Donnelley Financial Solutions, Inc.(b) | | |
| | |
| | | |
|
Chefs’ Warehouse, Inc. (The)(b)(c) | | |
|
Sprouts Farmers Market, Inc.(b) | | |
Health Care Equipment–1.17% |
| | |
Health Care Facilities–2.22% |
| | |
Tenet Healthcare Corp.(b) | | |
| | | |
Health Care Services–1.10% |
BrightSpring Health Services, Inc.(b)(c) | | |
Health Care Supplies–0.90% |
Lantheus Holdings, Inc.(b) | | |
Health Care Technology–0.49% |
| | |
|
Taylor Morrison Home Corp., Class A(b) | | |
Homefurnishing Retail–0.56% |
| | |
Hotels, Resorts & Cruise Lines–1.20% |
| | |
Independent Power Producers & Energy Traders–1.60% |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Small Cap Equity Fund
| | |
Industrial Machinery & Supplies & Components–4.00% |
Gates Industrial Corp. PLC(b) | | |
| | |
SPX Technologies, Inc.(b) | | |
| | | |
|
EastGroup Properties, Inc. | | |
| | |
| | | |
Investment Banking & Brokerage–4.61% |
| | |
Jefferies Financial Group, Inc. | | |
| | |
| | | |
|
Acushnet Holdings Corp.(c) | | |
Life Sciences Tools & Services–1.01% |
| | |
Oil & Gas Equipment & Services–1.96% |
| | |
Weatherford International PLC | | |
| | | |
Oil & Gas Exploration & Production–2.80% |
Antero Resources Corp.(b) | | |
| | |
| | |
| | | |
Other Specialized REITs–1.12% |
Gaming and Leisure Properties, Inc. | | |
Paper & Plastic Packaging Products & Materials–1.13% |
Graphic Packaging Holding Co.(c) | | |
|
Axsome Therapeutics, Inc.(b) | | |
Intra-Cellular Therapies, Inc.(b) | | |
| | | |
Property & Casualty Insurance–1.39% |
Skyward Specialty Insurance Group, Inc.(b) | | |
Real Estate Services–0.81% |
Newmark Group, Inc., Class A | | |
|
Banc of California, Inc.(c) | | |
| | |
Cullen/Frost Bankers, Inc. | | |
First Financial Bankshares, Inc.(c) | | |
| | |
Pinnacle Financial Partners, Inc.(c) | | |
| | |
Western Alliance Bancorporation | | |
| | | |
| | |
Research & Consulting Services–1.13% |
Huron Consulting Group, Inc.(b) | | |
|
| | |
MACOM Technology Solutions Holdings, | | |
| | | |
Specialized Consumer Services–1.13% |
| | |
Specialty Chemicals–1.54% |
| | |
| | |
| | | |
|
| | |
|
Commvault Systems, Inc.(b) | | |
SentinelOne, Inc., Class A(b) | | |
| | | |
Trading Companies & Distributors–3.84% |
Applied Industrial Technologies, Inc. | | |
Core & Main, Inc., Class A(b) | | |
WESCO International, Inc. | | |
| | | |
Total Common Stocks & Other Equity Interests (Cost $164,591,497) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional | | |
Total Money Market Funds (Cost $2,258,365) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.02% (Cost $166,849,862) | | | |
Investments Purchased with Cash Collateral from Securities on Loan |
Money Market Funds–15.28% |
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $35,781,845) | |
TOTAL INVESTMENTS IN SECURITIES–115.30% (Cost $202,631,707) | |
OTHER ASSETS LESS LIABILITIES—(15.30)% | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Small Cap Equity Fund
Investment Abbreviations:
| – American Depositary Receipt |
| – Real Estate Investment Trust |
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Small Cap Equity Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $164,591,497)* | |
Investments in affiliated money market funds, at value (Cost $38,040,210) | |
| |
Foreign currencies, at value (Cost $9,645) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $34,123,273 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $8,979) | |
Dividends from affiliated money market funds (includes net securities lending income of $56,514) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
| |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Small Cap Equity Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Small Cap Equity Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Dividends
from net
investment
income | Distributions
from net
realized
gains | | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. Small Cap Equity Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Small Cap Equity Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
8
Invesco V.I. Small Cap Equity 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. 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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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
9
Invesco V.I. Small Cap Equity Fund
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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $5,880 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
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:
For the year ended December 31, 2024, 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 a separate sub-advisory agreement with Invesco Capital Management LLC (collectively, the "Affiliated Sub-Advisers") the Adviser, not the Fund, will pay 40% of the fees paid to
10
Invesco V.I. Small Cap Equity Fund
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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $4,701.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $31,426 for accounting and fund administrative services and was reimbursed $336,633 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $17,353 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
NOTE 4—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.
11
Invesco V.I. Small Cap Equity Fund
NOTE 5—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.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $110,726,799 and $125,848,766, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $202,828,422.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $112,992, undistributed net realized gain was decreased by $431 and shares of beneficial interest was decreased by $112,561. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
12
Invesco V.I. Small Cap Equity Fund
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 66% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
13
Invesco V.I. Small Cap Equity Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Small Cap Equity Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Small Cap Equity Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
14
Invesco V.I. Small Cap Equity Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
15
Invesco V.I. Small Cap Equity Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
16
Invesco V.I. Small Cap Equity Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. Technology Fund
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
I-VITEC-NCSR
Schedule of Investments(a)
| | |
Common Stocks & Other Equity Interests–99.20% |
|
Trade Desk, Inc. (The), Class A(b) | | |
Aerospace & Defense–1.26% |
| | |
Application Software–19.57% |
AppLovin Corp., Class A(b) | | |
Atlassian Corp., Class A(b) | | |
| | |
| | |
Datadog, Inc., Class A(b) | | |
Guidewire Software, Inc.(b) | | |
| | |
Manhattan Associates, Inc.(b) | | |
| | |
Procore Technologies, Inc.(b)(c) | | |
| | |
| | |
Samsara, Inc., Class A(b) | | |
| | |
Tyler Technologies, Inc.(b) | | |
| | | |
Asset Management & Custody Banks–1.29% |
| | |
Automobile Manufacturers–1.32% |
| | |
|
| | |
MercadoLibre, Inc. (Brazil)(b) | | |
| | | |
Communications Equipment–4.50% |
| | |
Lumentum Holdings, Inc.(b)(c) | | |
| | |
| | | |
Construction & Engineering–1.21% |
| | |
|
| | |
|
| | |
Electrical Components & Equipment–1.91% |
| | |
Vertiv Holdings Co., Class A | | |
| | | |
Electronic Components–2.54% |
| | |
| | |
| | | |
| | |
Electronic Equipment & Instruments–1.19% |
Zebra Technologies Corp., Class A(b) | | |
Electronic Manufacturing Services–1.25% |
| | |
Health Care Equipment–1.25% |
Intuitive Surgical, Inc.(b) | | |
|
| | |
Human Resource & Employment Services–0.95% |
Paylocity Holding Corp.(b) | | |
Industrial Machinery & Supplies & Components–1.14% |
| | |
Interactive Media & Services–7.84% |
| | |
Meta Platforms, Inc., Class A | | |
| | |
| | | |
Internet Services & Infrastructure–2.82% |
Cloudflare, Inc., Class A(b) | | |
Shopify, Inc., Class A (Canada)(b) | | |
Snowflake, Inc., Class A(b) | | |
| | | |
Investment Banking & Brokerage–1.87% |
Goldman Sachs Group, Inc. (The) | | |
Robinhood Markets, Inc., Class A(b) | | |
| | | |
IT Consulting & Other Services–0.72% |
| | |
Movies & Entertainment–3.58% |
| | |
Spotify Technology S.A. (Sweden)(b) | | |
| | | |
Real Estate Services–0.75% |
CBRE Group, Inc., Class A(b) | | |
|
DoorDash, Inc., Class A(b) | | |
|
| | |
| | |
MACOM Technology Solutions Holdings, Inc.(b) | | |
Monolithic Power Systems, Inc. | | |
| | |
| | |
Taiwan Semiconductor Manufacturing Co. Ltd., ADR (Taiwan) | | |
| | | |
|
Commvault Systems, Inc.(b) | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. Technology Fund
| | |
Systems Software–(continued) |
CyberArk Software Ltd.(b) | | |
| | |
| | |
Palo Alto Networks, Inc.(b)(c) | | |
SentinelOne, Inc., Class A(b) | | |
| | |
| | | |
Technology Hardware, Storage & Peripherals–2.28% |
| | |
Trading Companies & Distributors–0.93% |
| | |
Total Common Stocks & Other Equity Interests (Cost $130,761,562) | |
|
Invesco Government & Agency Portfolio, Institutional Class, 4.42%(d)(e) | | |
Invesco Treasury Portfolio, Institutional Class, | | |
Total Money Market Funds (Cost $1,999,327) | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.11% (Cost $132,760,889) | | | |
| | |
Investments Purchased with Cash Collateral from Securities on Loan |
|
Invesco Private Government Fund, | | |
Invesco Private Prime Fund, 4.53%(d)(e)(f) | | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $10,065,372) | |
TOTAL INVESTMENTS IN SECURITIES–104.67% (Cost $142,826,261) | |
OTHER ASSETS LESS LIABILITIES—(4.67)% | |
| |
Investment Abbreviations:
| – American Depositary Receipt |
| – Real Estate Investment Trust |
Notes to Schedule of Investments:
| 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. |
| Non-income producing security. |
| All or a portion of this security was out on loan at December 31, 2024. |
| Affiliated holding. Affiliated holdings are investments in entities which are under common ownership or control of Invesco Ltd. or are investments in entities in which the Fund owns 5% or more of the outstanding voting securities. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2024. |
| | | | Change in
Unrealized
Appreciation
(Depreciation) | | | |
Investments in Affiliated Money Market Funds: | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | |
Invesco Private Government Fund | | | | | | | |
Invesco Private Prime Fund | | | | | | | |
| | | | | | | |
| 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. |
| The rate shown is the 7-day SEC standardized yield as of December 31, 2024. |
| 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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. Technology Fund
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, at value
(Cost $130,761,562)* | |
Investments in affiliated money market funds, at value (Cost $12,064,699) | |
Foreign currencies, at value (Cost $302) | |
| |
| |
| |
Investment for trustee deferred compensation and retirement plans | |
| |
| |
| |
| |
| |
| |
Collateral upon return of securities loaned | |
Accrued fees to affiliates | |
Accrued other operating expenses | |
Trustee deferred compensation and retirement plans | |
| |
Net assets applicable to shares outstanding | |
| |
Shares of beneficial interest | |
| |
| |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |
| |
| |
Net asset value per share | |
| |
Net asset value per share | |
| At December 31, 2024, securities with an aggregate value of $9,805,300 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2024
| |
Dividends (net of foreign withholding taxes of $15,459) | |
Dividends from affiliated money market funds (includes net securities lending income of $23,545) | |
| |
| |
| |
Administrative services fees | |
| |
Distribution fees - Series II | |
| |
Trustees’ and officers’ fees and benefits | |
| |
Professional services fees | |
| |
| |
| |
| |
Net investment income (loss) | |
Realized and unrealized gain (loss) from: | |
Net realized gain (loss) from: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | |
Affiliated investment securities | |
| |
| |
Net realized and unrealized gain | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. Technology Fund
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
| | |
| | |
Net investment income (loss) | | |
| | |
Change in net unrealized appreciation | | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
| | |
| | |
Total distributions from distributable earnings | | |
| | |
| | |
| | |
Net increase (decrease) in net assets resulting from share transactions | | |
Net increase in net assets | | |
| | |
| | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. Technology Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(both
realized and
unrealized) | Total from
investment
operations | Distributions
from net
realized
gains | Net asset
value, end
of period | | 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 | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Calculated using average shares outstanding. |
| 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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. Technology Fund
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. Technology Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 or ask 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. Where a final settlement price exists, exchange-traded options are valued at the final settlement price from the exchange where the option principally trades. Where a final settlement price does not exist, exchange-traded options are valued at the mean between the last bid and ask price generally from the exchange where the option principally trades.
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.
Non-traded rights and warrants shall be valued at intrinsic value if the terms of the rights and warrants are available, specifically the subscription or exercise price and the ratio. Intrinsic value is calculated as the daily market closing price of the security to be received less the subscription price, which is then adjusted by the exercise ratio. In the case of warrants, an option pricing model supplied by an independent pricing service may be used based on market data such as volatility, stock price and interest rate from the independent pricing service and strike price and exercise period from verified terms.
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 mean between the last bid and ask prices may be used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available 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/ask 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
7
Invesco V.I. Technology 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. 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.
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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies 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 and which are directly attributable to that class are charged to the operations of such class. 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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
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.
8
Invesco V.I. Technology 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 also serves as a securities 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 year ended December 31, 2024, the Fund paid the Adviser $2,354 in fees for securities lending agent services. Fees paid to the Adviser for securities lending agent services, if any, 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.
The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar. Currency rates in foreign countries may fluctuate for a number of reasons, including changes in interest rates, political, economic, or social instability and development, and imposition of currency controls. Currency controls in certain foreign jurisdictions may cause the Fund to experience significant delays in its ability to repatriate its assets in U.S. dollars at quoted spot rates, and it is possible that the Fund’s ability to convert certain foreign currencies into U.S. dollars may be limited and may occur at discounts to quoted rates. As a result, the value of the Fund’s assets and liabilities denominated in such currencies that would ultimately be realized could differ from those reported on the Statement of Assets and Liabilities. Certain foreign companies may be subject to sanctions, embargoes, or other governmental actions that may limit the ability to invest in, receive, hold, or sell the securities of such companies, all of which affect the market and/or credit risk of the investments. 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.
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 the 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.
Other Risks - The Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile.
Many products and services offered in technology-related industries are subject to rapid obsolescence, which may lower the value of the issuers in this sector.
The Fund is non-diversified and may invest in securities of fewer issuers than if it were diversified. Thus, the value of the Fund’s shares may vary more widely and the Fund may be subject to greater market and credit risk than if the Fund invested more broadly.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
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:
For the year ended December 31, 2024, 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 a separate sub-advisory agreement with Invesco Capital Management LLC (collectively, the "Affiliated Sub-Advisers") the Adviser, not the Fund, will pay 40% of the fees paid to
9
Invesco V.I. Technology Fund
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 agreed, for an indefinite period, 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 Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
Further, the Adviser has contractually agreed, through at least August 31, 2026, 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 year ended December 31, 2024, the Adviser waived advisory fees of $3,204.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $26,443 for accounting and fund administrative services and was reimbursed $285,697 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2024, the Fund incurred $6,001 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available. 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. When significant events cause market movements to occur after the close of the relevant foreign securities markets, foreign securities may be fair valued utilizing an independent pricing service.
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 December 31, 2024. 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.
| | | | |
Investments in Securities | | | | |
Common Stocks & Other Equity Interests | | | | |
| | | | |
| | | | |
NOTE 4—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.
10
Invesco V.I. Technology Fund
NOTE 5—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.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2024 and 2023: |
| | |
| | |
Tax Components of Net Assets at Period-End: |
| |
Undistributed ordinary income | |
Undistributed long-term capital gain | |
Net unrealized appreciation — investments | |
Net unrealized appreciation (depreciation) — foreign currencies | |
Temporary book/tax differences | |
Shares of beneficial interest | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 does not have a capital loss carryforward as of December 31, 2024.
NOTE 7—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 year ended December 31, 2024 was $205,473,723 and $204,262,644, respectively. As of December 31, 2024, the aggregate cost of investments, including any derivatives, on a tax basis listed below 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 | |
Net unrealized appreciation of investments | |
Cost of investments for tax purposes is $143,024,099.
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2024, undistributed net investment income (loss) was increased by $1,113,860 and undistributed net realized gain was decreased by $1,113,860. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
| Summary of Share Activity |
| | Year ended
December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
11
Invesco V.I. Technology Fund
| Summary of Share Activity |
| Year ended December 31, 2024(a) | Year ended December 31, 2023 |
| | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 57% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
12
Invesco V.I. Technology Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Technology Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Technology Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
13
Invesco V.I. Technology Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for their fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Long-Term Capital Gain Distributions | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
U.S. Treasury Obligations* | |
Qualified Business Income* | |
Business Interest Income* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
14
Invesco V.I. Technology Fund
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
15
Invesco V.I. Technology Fund
Annual Financial Statements and Other InformationDecember 31, 2024
Invesco V.I. U.S. Government Money Portfolio
| |
| |
| |
| Notes to Financial Statements |
| Report of Independent Registered Public Accounting Firm |
| |
| Other Information Required in Form N-CSR (Items 8-11) |
Invesco Distributors, Inc.
O-VIGMKT-NCSR
Schedule of Investments
| | | | |
U.S. Treasury Securities-19.26% |
U.S. Treasury Bills-18.32%(a) |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
U.S. Treasury Notes-0.94% |
| | | | | |
Total U.S. Treasury Securities (Cost $59,621,250) | | |
U.S. Government Sponsored Agency Securities-17.59% |
Federal Farm Credit Bank (FFCB)-11.88% |
Federal Farm Credit Bank (SOFR + 0.09%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.12%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.12%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.05%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.13%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.17%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.13%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.16%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.15%)(b) | | | | | |
Federal Farm Credit Bank (1 mo. EFFR + 0.06%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.15%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.09%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.09%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.12%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.09%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.10%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.13%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
2
Invesco V.I. U.S. Government Money Portfolio
| | | | |
Federal Farm Credit Bank (FFCB)-(continued) |
Federal Farm Credit Bank (SOFR + 0.14%)(b) | | | | | |
| | | | | |
Federal Home Loan Bank (FHLB)-5.71% |
Federal Home Loan Bank (SOFR + 0.12%)(b) | | | | | |
Federal Home Loan Bank(a) | | | | | |
Federal Home Loan Bank (SOFR + 0.13%)(b) | | | | | |
Federal Home Loan Bank(a) | | | | | |
Federal Home Loan Bank (SOFR + 0.14%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.16%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.14%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.16%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.08%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.15%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.15%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.19%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.13%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.10%)(b) | | | | | |
Federal Home Loan Bank (SOFR + 0.14%)(b) | | | | | |
| | | | | |
Total U.S. Government Sponsored Agency Securities (Cost $54,478,105) | | |
U.S. Government Sponsored Agency Mortgage-Backed Securities-3.71% |
Federal Home Loan Mortgage Corp. (FHLMC)-0.81% |
Federal Home Loan Mortgage Corp. (SOFR + 0.10%)(b) | | | | | |
Federal Home Loan Mortgage Corp. (SOFR + 0.14%)(b) | | | | | |
Federal Home Loan Mortgage Corp. (SOFR + 0.14%)(b) | | | | | |
| | | | | |
Federal National Mortgage Association (FNMA)-2.90% |
Federal National Mortgage Association (SOFR + 0.10%)(b) | | | | | |
Federal National Mortgage Association (SOFR + 0.14%)(b) | | | | | |
Federal National Mortgage Association (SOFR + 0.14%)(b) | | | | | |
Federal National Mortgage Association (SOFR + 0.14%)(b) | | | | | |
Federal National Mortgage Association (SOFR + 0.14%)(b) | | | | | |
| | | | | |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities (Cost $11,500,000) | | |
TOTAL INVESTMENTS IN SECURITIES (excluding Repurchase Agreements)-40.56%
(Cost $125,599,355) | | |
| | | | |
Repurchase Agreements-59.79%(c) |
Banco Santander, joint agreement dated 12/31/2024, aggregate maturing value of $500,124,444 (collateralized by U.S. Treasury obligations valued at $510,126,995; 0.38% - 4.63%; 05/15/2025 - 11/15/2052) | | | | | |
Bank of Nova Scotia, joint agreement dated 12/31/2024, aggregate maturing value of $1,500,373,333 (collateralized by agency mortgage-backed securities valued at $1,530,000,000; 2.50% - 7.50%; 12/01/2041 - 01/01/2055) | | | | | |
BMO Capital Markets Corp., joint term agreement dated 12/19/2024, aggregate maturing value of $904,525,500 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $918,000,000; 0.00% - 7.00%; 01/21/2025 - 12/20/2064)(Canada)(d) | | | | | |
Citigroup Global Markets, Inc., joint term agreement dated 12/26/2024, aggregate maturing value of $1,201,061,667 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,224,000,070; 0.00% - 6.50%; 06/15/2027 - 05/25/2054)(d) | | | | | |
Mizuho Securities (USA) LLC, joint agreement dated 12/31/2024, aggregate maturing value of $500,124,722 (collateralized by agency mortgage-backed securities and U.S. government sponsored agency obligations valued at $510,000,000; 0.00% - 7.50%; 02/27/2025 - 01/01/2055) | | | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
3
Invesco V.I. U.S. Government Money Portfolio
| | | | |
RBC Dominion Securities Inc., joint term agreement dated 12/06/2024, aggregate maturing value of $1,004,026,667 (collateralized by U.S. Treasury obligations valued at $1,023,465,489; 0.13% - 4.63%; 03/31/2025 - 05/15/2054)(d) | | | | | |
Royal Bank of Canada, joint term agreement dated 03/21/2024, aggregate maturing value of $1,575,429,947 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,537,272,233; 0.88% - 7.00%; 04/30/2026 | | | | | |
Royal Bank of Canada, joint term agreement dated 06/13/2024, aggregate maturing value of $3,692,889,960 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $3,586,795,026; 0.75% - 7.50%; 03/31/2026 | | | | | |
Standard Chartered Bank, joint agreement dated 12/31/2024, aggregate maturing value of $1,000,250,000 (collateralized by agency mortgage-backed securities and U.S. Treasury obligations valued at $1,020,255,004; 0.13% - 7.50%; 07/31/2025 - 07/01/2060) | | | | | |
Standard Chartered Bank, joint agreement dated 12/31/2024, aggregate maturing value of $2,000,496,667 (collateralized by U.S. Treasury obligations valued at $2,040,506,600; 0.00% - 5.00%; 01/15/2025 - 08/15/2054) | | | | | |
Sumitomo Mitsui Banking Corp., joint agreement dated 12/31/2024, aggregate maturing value of $4,301,072,611 (collateralized by agency mortgage-backed securities valued at $4,394,965,212; 3.00% - 6.50%; 10/20/2042 - 11/20/2054) | | | | | |
TD Securities (USA) LLC, joint term agreement dated 12/26/2024, aggregate maturing value of $490,433,514 (collateralized by agency mortgage-backed securities valued at $499,800,001; 3.50% - 7.00%; 09/01/2045 - 11/20/2054)(d) | | | | | |
Total Repurchase Agreements (Cost $185,122,214) | | |
TOTAL INVESTMENTS IN SECURITIES(e)-100.35% (Cost $310,721,569) | | |
OTHER ASSETS LESS LIABILITIES-(0.35)% | | |
| | |
Investment Abbreviations:
| -Effective Federal Funds Rate |
| -Secured Overnight Financing Rate |
Notes to Schedule of Investments:
| Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2024. |
| Principal amount equals value at period end. See Note 1I. |
| The Fund may demand payment of the term repurchase agreement upon one to seven business days’ notice depending on the timing of the demand. |
| Also represents cost for federal income tax purposes. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4
Invesco V.I. U.S. Government Money Portfolio
Statement of Assets and Liabilities
| |
Investments in unaffiliated securities, excluding repurchase agreements, at value and cost | |
Repurchase agreements, at value and cost | |
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Investment for trustee deferred compensation and retirement plans | |
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Accrued fees to affiliates | |
Accrued operating expenses | |
Trustee deferred compensation and retirement plans | |
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Net assets applicable to shares outstanding | |
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Shares of beneficial interest | |
Distributable earnings (loss) | |
| |
|
| |
| |
Shares outstanding, no par value,
unlimited number of shares authorized: |
| |
| |
| |
Net asset value and offering price per share | |
| |
Net asset value and offering price per share | |
Statement of Operations
For the year ended December 31, 2024
| |
| |
| |
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Administrative services fees | |
| |
Distribution fees - Series II | |
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Trustees’ and officers’ fees and benefits | |
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Professional services fees | |
| |
| |
| |
Net realized gain from unaffiliated investment securities | |
Net increase in net assets resulting from operations | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5
Invesco V.I. U.S. Government Money Portfolio
Statement of Changes in Net Assets
For the years ended December 31, 2024 and 2023
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| | |
Net increase in net assets resulting from operations | | |
Distributions to shareholders from distributable earnings: | | |
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Total distributions from distributable earnings | | |
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Net increase (decrease) in net assets resulting from share transactions | | |
Net increase (decrease) in net assets | | |
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| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6
Invesco V.I. U.S. Government Money Portfolio
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| Net asset
value,
beginning
of period | | Net gains
(losses)
on securities
(realized) | Total from
investment
operations | Dividends
from net
investment
income | Net asset
value, end
of period | | 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 |
|
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| Calculated using average shares outstanding. |
| Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns are not annualized for periods less than one year, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7
Invesco V.I. U.S. Government Money Portfolio
Notes to Financial Statements
NOTE 1—Significant Accounting Policies
Invesco V.I. U.S. Government Money Portfolio (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance 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. 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. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek income consistent with stability of principal.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
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 (the "Rule") 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 liquidity fee requirements at this time, as permitted by the Rule.
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 the Rule. 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.
Securities for which market quotations are not readily available 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. Issuer specific events, market trends, bid/ask 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.
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. 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.
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 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, the country that has the primary market for the issuer’s securities and its "country of risk" as determined by a third party service provider, 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 to separate accounts of participating insurance companies. Distributions from net realized 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 and which are directly attributable to that class are charged to the operations of 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 settled shares.
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
8
Invesco V.I. U.S. Government Money Portfolio
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.
Segment Reporting — In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), with the intent of improving reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment’s profit or loss and assess potential future cash flows for each reportable segment and the entity as a whole thereby enabling better understanding of how an entity’s segments impact overall performance. The Fund represents a single operating segment. Subject to the oversight and, when applicable, approval of the Board of Trustees, the Fund’s Adviser acts as the Fund’s chief operating decision maker (“CODM”), assessing performance and making decisions about resource allocation within the Fund. The CODM monitors the operating results as a whole and the Fund’s long-term strategic asset allocation is determined in accordance with the terms of its prospectus based on a defined investment strategy. The financial information provided to and reviewed by the CODM is consistent with that presented in the Fund’s financial statements. Adoption of the new standard impacted the Fund’s financial statement note disclosures only and did not affect the Fund’s financial position or the results of its operations.
J.
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 typically 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.
K.
Other Risks - Obligations of U.S. Government agencies and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. Government, which could affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.
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:
*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 year ended December 31, 2024, the effective advisory fees incurred by the Fund was 0.44%.
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 a separate sub-advisory agreement with Invesco Capital Management LLC (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 agreed, for an indefinite period, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waivers and/or expense reimbursements (excluding certain items discussed below) of Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets (the “boundary 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. Invesco may amend and/or terminate these boundary limits at any time in its sole discretion and will inform the Board of Trustees of any such changes. The Adviser did not waive fees and/or reimburse expenses during the period under these boundary limits.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2024, Invesco was paid $127,998 for accounting and fund administrative services and was reimbursed $386,634 for fees paid to insurance companies. 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. For the year ended December 31, 2024, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc., (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the
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Invesco V.I. U.S. Government Money Portfolio
average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2024, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
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. 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.
As of December 31, 2024, 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—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.
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 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2024 and December 31, 2023: |
| | |
| | |
| Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End: |
| |
Temporary book/tax differences | |
Capital loss carryforward | |
Shares of beneficial interest | |
| |
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
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 has a capital loss carryforward as of December 31, 2024 as follows:
Capital Loss Carryforward* |
| | | |
Not subject to expiration | | | |
| 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. |
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Invesco V.I. U.S. Government Money Portfolio
NOTE 7—Reclassification of Permanent Differences
Primarily as a result of distributions, on December 31, 2024, undistributed net investment income was increased by $76 and shares of beneficial interest was decreased by $76. This reclassification had no effect on the net assets of the Fund.
| Summary of Share Activity |
| |
| | |
| | | | |
| | | | |
| | | | |
| | | | |
Issued as reinvestment of dividends: | | | | |
| | | | |
| | | | |
| | | | |
Net increase (decrease) in share activity | | | | |
| There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 88% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
11
Invesco V.I. U.S. Government Money Portfolio
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. U.S. Government Money Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. U.S. Government Money Portfolio (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the "Fund") as of December 31, 2024, the related statement of operations for the year ended December 31, 2024, the statement of changes in net assets for each of the two years in the period ended December 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2024 and the financial highlights for each of the five years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2024 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
February 14, 2025
We have served as the auditor of one or more of the investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
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Invesco V.I. U.S. Government Money Portfolio
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2024:
Federal and State Income Tax | |
Qualified Business Income* | |
Qualified Dividend Income* | |
Corporate Dividends Received Deduction* | |
Business Interest Income* | |
U.S. Treasury Obligations* | |
*
The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
13
Invesco V.I. U.S. Government Money Portfolio
Other Information Required in Form N-CSR (Items 8-11)
Changes in and Disagreements with Accountants for Open-End Management Investment Companies
Proxy Disclosures for Open-End Management Investment Companies
Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
The aggregate remuneration paid to directors, officers and others is disclosed within the financial statements.
Statement Regarding Basis for Approval of Investment Advisory Contracts
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Invesco V.I. U.S. Government Money Portfolio
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Item 10. Remuneration Paid to Directors, Officers, and Others for Open-End Management Investment Companies.
This information is filed under Item 7 of this Form N-CSR.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Item 15. Submission of Matters to a Vote of Security Holders.
Item 16. Controls and Procedures.
(a) As of a date within 90 days of the filing date of this report, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the PEO and PFO, to assess the effectiveness of the Registrant's disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Act. Based on that evaluation, the Registrant's officers, including the PEO and PFO, concluded that the Registrant's disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure.
(b) There have been no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 17. Disclosure of Securities Lending Activity for Closed-End Management Investment Companies.
Item 18. Recovery of Erroneously Awarded Compensation.
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 Variable Insurance Funds (Invesco Variable Insurance Funds)
By: /s/ Glenn Brightman .
Name: Glenn Brightman
Title:Principal Executive Officer
Date: February 21, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: /s/ Glenn Brightman ..
Name:Glenn Brightman
Title:Principal Executive Officer
Date: February 21, 2025
By: /s/ Adrien Deberghes ____
Name:Adrien Deberghes
Title:Principal Financial Officer
Date:February 21, 2025
