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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
| Investment Company Act file number |
811-09913 |
| AIM Counselor Series Trust (Invesco Counselor Series Trust) | ||
| (Exact name of registrant as specified in charter) | ||
| 11 Greenway Plaza, Suite 1000 Houston, Texas 77046 | ||
| (Address of principal executive offices) (Zip code) | ||
| Sheri Morris 11 Greenway Plaza, Suite 1000 Houston, Texas 77046 | ||
| (Name and address of agent for service) | ||
| Registrant’s telephone number, including area code: (713) 626-1919 | ||||
| Date of fiscal year end: 8/31 | ||||
| Date of reporting period: 2/29/16 | ||||
Item 1. Report to Stockholders.
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Semiannual Report to Shareholders
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February 29, 2016 | ||
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Invesco American Franchise Fund | ||||
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Nasdaq: |
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| A: VAFAX ¡ B: VAFBX ¡ C: VAFCX ¡ R: VAFRX ¡ Y: VAFIX ¡ R5: VAFNX ¡ R6: VAFFX | ||||
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2 |
Fund Performance | ||||
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4 |
Letters to Shareholders | ||||
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5 |
Schedule of Investments | ||||
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8 |
Financial Statements | ||||
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10 |
Notes to Financial Statements | ||||
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17 |
Financial Highlights | ||||
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18 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
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NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco American Franchise Fund
3 Invesco American Franchise Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco American Franchise Fund
Schedule of Investments(a)
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco American Franchise Fund
Investment Abbreviations:
| ADR | – American Depositary Receipt | |
| REIT | – Real Estate Investment Trust |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at February 29, 2016. |
| (d) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
| (e) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco American Franchise Fund
Portfolio Composition
By sector, based on Net Assets as of February 29, 2016
| Information Technology |
32.3 | % | ||
| Consumer Discretionary |
20.8 | |||
| Health Care |
19.2 | |||
| Consumer Staples |
9.2 | |||
| Industrials |
6.3 | |||
| Financials |
4.1 | |||
| Materials |
1.9 | |||
| Energy |
1.3 | |||
| Telecommunication Services |
1.0 | |||
| Money Market Funds Plus Other Assets Less Liabilities |
3.9 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco American Franchise Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco American Franchise Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $43,619) |
$ | 45,911,604 | ||
| Dividends from affiliated money market funds (includes securities lending income of $181,738) |
425,127 | |||
| Total investment income |
46,336,731 | |||
| Expenses: |
||||
| Advisory fees |
26,752,573 | |||
| Administrative services fees |
374,495 | |||
| Custodian fees |
139,673 | |||
| Distribution fees: |
||||
| Class A |
10,261,018 | |||
| Class B |
190,441 | |||
| Class C |
1,876,173 | |||
| Class R |
77,012 | |||
| Transfer agent fees — A, B, C, R and Y |
9,742,444 | |||
| Transfer agent fees — R5 |
23,363 | |||
| Transfer agent fees — R6 |
1,769 | |||
| Trustees’ and officers’ fees and benefits |
200,127 | |||
| Other |
854,454 | |||
| Total expenses |
50,493,542 | |||
| Less: Fees waived and expense offset arrangement(s) |
(147,481 | ) | ||
| Net expenses |
50,346,061 | |||
| Net investment income (loss) |
(4,009,330 | ) | ||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
101,553,794 | |||
| Foreign currencies |
(26,889 | ) | ||
| 101,526,905 | ||||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(593,920,941 | ) | ||
| Foreign currencies |
(69,032 | ) | ||
| (593,989,973 | ) | |||
| Net realized and unrealized gain (loss) |
(492,463,068 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (496,472,398 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco American Franchise Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
||||||||
| Net investment income (loss) |
$ | (4,009,330 | ) | $ | (29,804,126 | ) | ||
| Net realized gain |
101,526,905 | 664,686,802 | ||||||
| Change in net unrealized appreciation (depreciation) |
(593,989,973 | ) | (586,176,125 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(496,472,398 | ) | 48,706,551 | |||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
(404,436,352 | ) | (784,832,614 | ) | ||||
| Class B |
(7,572,828 | ) | (20,473,568 | ) | ||||
| Class C |
(19,559,139 | ) | (37,732,374 | ) | ||||
| Class R |
(1,576,212 | ) | (2,796,858 | ) | ||||
| Class Y |
(7,356,908 | ) | (13,159,645 | ) | ||||
| Class R5 |
(2,447,999 | ) | (4,625,060 | ) | ||||
| Class R6 |
(3,991,543 | ) | (11,435,482 | ) | ||||
| Total distributions from net realized gains |
(446,940,981 | ) | (875,055,601 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
95,525,822 | 29,568,935 | ||||||
| Class B |
(24,564,282 | ) | (64,542,055 | ) | ||||
| Class C |
5,271,018 | 2,440,937 | ||||||
| Class R |
471,529 | 1,750,654 | ||||||
| Class Y |
(8,894,411 | ) | 23,546,565 | |||||
| Class R5 |
4,953,177 | 2,253,149 | ||||||
| Class R6 |
36,437,605 | (43,605,157 | ) | |||||
| Net increase (decrease) in net assets resulting from share transactions |
109,200,458 | (48,586,972 | ) | |||||
| Net increase (decrease) in net assets |
(834,212,921 | ) | (874,936,022 | ) | ||||
| Net assets: |
||||||||
| Beginning of period |
9,186,716,262 | 10,061,652,284 | ||||||
| End of period (includes undistributed net investment income (loss) of $(21,448,878) and $(17,439,548), respectively) |
$ | 8,352,503,341 | $ | 9,186,716,262 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco American Franchise Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is to seek long-term capital appreciation.
The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
10 Invesco American Franchise Fund
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from 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.
11 Invesco American Franchise Fund
| C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at 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 |
12 Invesco American Franchise Fund
| unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||||
| First $250 million |
0 | .695% | ||||
| Next $250 million |
0 | .67% | ||||
| Next $500 million |
0 | .645% | ||||
| Next $550 million |
0 | .62% | ||||
| Next $3.45 billion |
0 | .60% | ||||
| Next $250 million |
0 | .595% | ||||
| Next $2.25 billion |
0 | .57% | ||||
| Next $2.5 billion |
0 | .545% | ||||
| Over $10 billion |
0 | .52% | ||||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.59%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75%, 1.75% and 1.75%, respectively, of average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $98,526.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or
13 Invesco American Franchise Fund
networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A, Class B, Class C and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets, up to 1.00% each of Class B and Class C average daily net assets and up to 0.50% of Class R average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the six months ended February 29, 2016, expenses incurred under these arrangements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $254,946 in front-end sales commissions from the sale of Class A shares and $2,223, $6,846 and $2,597 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the six months ended February 29, 2016, the Fund incurred $33,385 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 or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of February 29, 2016. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equity Securities |
$ | 8,231,928,674 | $ | 107,861,027 | $ | — | $ | 8,339,789,701 | ||||||||
NOTE 4—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $48,955.
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 American Franchise Fund
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of August 31, 2015, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| August 31, 2017 |
$ | 188,402,611 | $ | — | $ | 188,402,611 | ||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $2,952,145,739 and $3,472,184,122, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 2,091,039,632 | ||
| Aggregate unrealized (depreciation) of investment securities |
(259,146,325 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 1,831,893,307 | ||
Cost of investments for tax purposes is $6,507,896,394.
15 Invesco American Franchise Fund
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
6,383,668 | $ | 103,916,824 | 11,430,895 | $ | 198,025,073 | ||||||||||
| Class B |
49,102 | 770,364 | 114,963 | 1,953,963 | ||||||||||||
| Class C |
898,510 | 13,911,433 | 1,474,703 | 24,315,642 | ||||||||||||
| Class R |
220,198 | 3,506,021 | 422,057 | 7,207,296 | ||||||||||||
| Class Y |
1,108,994 | 18,101,607 | 2,828,241 | 49,644,068 | ||||||||||||
| Class R5 |
576,908 | 9,337,730 | 925,325 | 16,123,386 | ||||||||||||
| Class R6 |
2,671,424 | 40,879,004 | 340,306 | 5,918,560 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
23,357,169 | 381,889,684 | 45,566,849 | 740,461,291 | ||||||||||||
| Class B |
468,373 | 7,456,502 | 1,268,110 | 20,099,547 | ||||||||||||
| Class C |
1,189,373 | 18,352,020 | 2,276,570 | 35,286,826 | ||||||||||||
| Class R |
97,598 | 1,576,212 | 173,586 | 2,796,462 | ||||||||||||
| Class Y |
382,605 | 6,339,768 | 691,278 | 11,350,786 | ||||||||||||
| Class R5 |
147,701 | 2,447,403 | 281,944 | 4,623,889 | ||||||||||||
| Class R6 |
240,309 | 3,991,543 | 696,013 | 11,435,482 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
1,499,305 | 24,399,303 | 3,624,145 | 63,022,397 | ||||||||||||
| Class B |
(1,538,546 | ) | (24,399,303 | ) | (3,714,455 | ) | (63,022,397 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(25,521,574 | ) | (414,679,989 | ) | (56,061,210 | ) | (971,939,826 | ) | ||||||||
| Class B |
(532,882 | ) | (8,391,845 | ) | (1,391,879 | ) | (23,573,168 | ) | ||||||||
| Class C |
(1,763,033 | ) | (26,992,435 | ) | (3,461,721 | ) | (57,161,531 | ) | ||||||||
| Class R |
(289,439 | ) | (4,610,704 | ) | (483,878 | ) | (8,253,104 | ) | ||||||||
| Class Y |
(2,015,923 | ) | (33,335,786 | ) | (2,143,896 | ) | (37,448,289 | ) | ||||||||
| Class R5 |
(409,407 | ) | (6,831,956 | ) | (1,073,189 | ) | (18,494,126 | ) | ||||||||
| Class R6 |
(483,193 | ) | (8,432,942 | ) | (3,413,210 | ) | (60,959,199 | ) | ||||||||
| Net increase (decrease) in share activity |
6,737,240 | $ | 109,200,458 | 371,547 | $ | (48,586,972 | ) | |||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 20% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
16 Invesco American Franchise Fund
NOTE 10—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 investment income (loss)(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income (loss) to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 16.49 | $ | (0.00 | ) | $ | (0.86 | ) | $ | (0.86 | ) | $ | — | $ | (0.82 | ) | $ | (0.82 | ) | $ | 14.81 | (5.70 | )% | $ | 7,560,423 | 1.09 | %(d) | 1.09 | %(d) | (0.07 | )%(d) | 33 | % | |||||||||||||||||||||||
| Year ended 08/31/15 |
18.07 | (0.05 | ) | 0.08 | 0.03 | — | (1.61 | ) | (1.61 | ) | 16.49 | 0.27 | 8,320,796 | 1.05 | 1.05 | (0.28 | ) | 74 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
14.82 | (0.04 | ) | 3.99 | 3.95 | (0.02 | ) | (0.68 | ) | (0.70 | ) | 18.07 | 27.22 | 9,034,217 | 1.08 | 1.08 | (0.27 | ) | 77 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
12.47 | 0.02 | 2.33 | 2.35 | (0.00 | ) | — | (0.00 | ) | 14.82 | 18.89 | 5,428,321 | 1.06 | 1.14 | 0.17 | 80 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
11.72 | (0.01 | ) | 0.88 | 0.87 | — | (0.12 | ) | (0.12 | ) | 12.47 | 7.55 | 4,728,364 | 1.05 | 1.18 | (0.05 | ) | 96 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
9.79 | (0.05 | ) | 1.98 | 1.93 | — | — | — | 11.72 | 19.71 | 4,894,163 | 1.06 | 1.17 | (0.43 | ) | 179 | ||||||||||||||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
16.08 | (0.00 | ) | (0.83 | ) | (0.83 | ) | — | (0.82 | ) | (0.82 | ) | 14.43 | (5.66 | ) | 125,870 | 1.09 | (d)(e) | 1.09 | (d)(e) | (0.07 | )(d)(e) | 33 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
17.66 | (0.05 | ) | 0.08 | 0.03 | — | (1.61 | ) | (1.61 | ) | 16.08 | 0.27 | (e) | 165,265 | 1.05 | (e) | 1.05 | (e) | (0.28 | )(e) | 74 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
14.50 | (0.04 | ) | 3.90 | 3.86 | (0.02 | ) | (0.68 | ) | (0.70 | ) | 17.66 | 27.20 | (e) | 247,220 | 1.08 | (e) | 1.08 | (e) | (0.27 | )(e) | 77 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
12.20 | 0.02 | 2.28 | 2.30 | (0.00 | ) | — | (0.00 | ) | 14.50 | 18.90 | (e) | 226,796 | 1.06 | (e) | 1.14 | (e) | 0.17 | (e) | 80 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
11.47 | (0.01 | ) | 0.86 | 0.85 | — | (0.12 | ) | (0.12 | ) | 12.20 | 7.54 | (e) | 273,177 | 1.05 | (e) | 1.18 | (e) | (0.05 | )(e) | 96 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
9.64 | (0.08 | ) | 1.91 | 1.83 | — | — | — | 11.47 | 18.98 | (e) | 373,157 | 1.28 | (e) | 1.65 | (e) | (0.64 | )(e) | 179 | |||||||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
15.64 | (0.06 | ) | (0.80 | ) | (0.86 | ) | — | (0.82 | ) | (0.82 | ) | 13.96 | (6.02 | ) | 344,835 | 1.84 | (d) | 1.84 | (d) | (0.82 | )(d) | 33 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
17.34 | (0.17 | ) | 0.08 | (0.09 | ) | — | (1.61 | ) | (1.61 | ) | 15.64 | (0.46 | ) | 381,264 | 1.80 | 1.80 | (1.03 | ) | 74 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
14.34 | (0.16 | ) | 3.84 | 3.68 | — | (0.68 | ) | (0.68 | ) | 17.34 | 26.23 | 417,687 | 1.83 | 1.83 | (1.02 | ) | 77 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
12.16 | (0.08 | ) | 2.26 | 2.18 | — | — | — | 14.34 | 17.93 | 271,960 | 1.81 | 1.89 | (0.58 | ) | 80 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
11.51 | (0.09 | ) | 0.86 | 0.77 | — | (0.12 | ) | (0.12 | ) | 12.16 | 6.82 | 252,685 | 1.80 | 1.93 | (0.80 | ) | 96 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
9.68 | (0.11 | ) | 1.94 | 1.83 | — | — | — | 11.51 | 18.90 | (f) | 266,990 | 1.60 | (f) | 1.71 | (f) | (0.97 | )(f) | 179 | |||||||||||||||||||||||||||||||||||||
| Class R |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
16.31 | (0.02 | ) | (0.84 | ) | (0.86 | ) | — | (0.82 | ) | (0.82 | ) | 14.63 | (5.76 | ) | 27,960 | 1.34 | (d) | 1.34 | (d) | (0.32 | )(d) | 33 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
17.93 | (0.09 | ) | 0.08 | (0.01 | ) | — | (1.61 | ) | (1.61 | ) | 16.31 | 0.03 | 30,716 | 1.30 | 1.30 | (0.53 | ) | 74 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
14.74 | (0.09 | ) | 3.96 | 3.87 | — | (0.68 | ) | (0.68 | ) | 17.93 | 26.83 | 31,760 | 1.33 | 1.33 | (0.52 | ) | 77 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
12.43 | (0.01 | ) | 2.32 | 2.31 | — | — | — | 14.74 | 18.58 | 19,576 | 1.31 | 1.39 | (0.08 | ) | 80 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
11.71 | (0.04 | ) | 0.88 | 0.84 | — | (0.12 | ) | (0.12 | ) | 12.43 | 7.30 | 18,746 | 1.30 | 1.43 | (0.30 | ) | 96 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11(g) |
12.81 | (0.02 | ) | (1.08 | ) | (1.10 | ) | — | — | — | 11.71 | (8.59 | ) | 17,698 | 1.30 | (h) | 1.42 | (h) | (0.66 | )(h) | 179 | |||||||||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
16.69 | 0.02 | (0.87 | ) | (0.85 | ) | — | (0.82 | ) | (0.82 | ) | 15.02 | (5.57 | ) | 129,103 | 0.84 | (d) | 0.84 | (d) | 0.18 | (d) | 33 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
18.22 | (0.01 | ) | 0.09 | 0.08 | — | (1.61 | ) | (1.61 | ) | 16.69 | 0.56 | 152,179 | 0.80 | 0.80 | (0.03 | ) | 74 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
14.93 | (0.00 | ) | 4.01 | 4.01 | (0.04 | ) | (0.68 | ) | (0.72 | ) | 18.22 | 27.48 | 141,094 | 0.83 | 0.83 | (0.02 | ) | 77 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
12.57 | 0.06 | 2.34 | 2.40 | (0.04 | ) | — | (0.04 | ) | 14.93 | 19.13 | 92,418 | 0.81 | 0.89 | 0.42 | 80 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
11.78 | 0.02 | 0.89 | 0.91 | — | (0.12 | ) | (0.12 | ) | 12.57 | 7.86 | 99,758 | 0.80 | 0.93 | 0.20 | 96 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
9.83 | (0.02 | ) | 1.97 | 1.95 | — | — | — | 11.78 | 19.84 | 117,471 | 0.81 | 0.92 | (0.18 | ) | 179 | ||||||||||||||||||||||||||||||||||||||||
| Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
16.68 | 0.03 | (0.86 | ) | (0.83 | ) | — | (0.82 | ) | (0.82 | ) | 15.03 | (5.45 | ) | 49,817 | 0.72 | (d) | 0.72 | (d) | 0.30 | (d) | 33 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
18.20 | 0.01 | 0.08 | 0.09 | — | (1.61 | ) | (1.61 | ) | 16.68 | 0.62 | 50,052 | 0.71 | 0.71 | 0.06 | 74 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
14.90 | 0.02 | 4.01 | 4.03 | (0.05 | ) | (0.68 | ) | (0.73 | ) | 18.20 | 27.65 | 52,164 | 0.70 | 0.70 | 0.11 | 77 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
12.55 | 0.06 | 2.34 | 2.40 | (0.05 | ) | — | (0.05 | ) | 14.90 | 19.22 | 151,535 | 0.75 | 0.75 | 0.48 | 80 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
11.75 | 0.04 | 0.88 | 0.92 | — | (0.12 | ) | (0.12 | ) | 12.55 | 7.96 | 301,283 | 0.69 | 0.69 | 0.31 | 96 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11(g) |
12.07 | (0.00 | ) | (0.32 | ) | (0.32 | ) | — | — | — | 11.75 | (2.65 | ) | 197,097 | 0.66 | (h) | 0.66 | (h) | (0.03 | )(h) | 179 | |||||||||||||||||||||||||||||||||||
| Class R6 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
16.72 | 0.03 | (0.86 | ) | (0.83 | ) | — | (0.82 | ) | (0.82 | ) | 15.07 | (5.44 | ) | 114,495 | 0.63 | (d) | 0.63 | (d) | 0.39 | (d) | 33 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
18.22 | 0.03 | 0.08 | 0.11 | — | (1.61 | ) | (1.61 | ) | 16.72 | 0.73 | 86,444 | 0.62 | 0.62 | 0.15 | 74 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
14.92 | 0.03 | 4.01 | 4.04 | (0.06 | ) | (0.68 | ) | (0.74 | ) | 18.22 | 27.69 | 137,509 | 0.63 | 0.63 | 0.18 | 77 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13(g) |
13.03 | 0.07 | 1.87 | 1.94 | (0.05 | ) | — | (0.05 | ) | 14.92 | 14.98 | 113,955 | 0.65 | (h) | 0.65 | (h) | 0.58 | (h) | 80 | |||||||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended August 31, 2014, the portfolio turnover calculation excludes the value of securities purchased of $1,921,954,452 and sales of $1,568,687,370 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Constellation Fund into the Fund. For the year ended August 31, 2013, the portfolio turnover calculation excludes the value of securities purchased of $279,161,573 and sales of $299,305,234 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Leisure Fund into the Fund. For the year ended August 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $4,947,460,310 and sales of $2,251,028,915 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Large Cap Growth Fund, Invesco Van Kampen Capital Growth Fund and Invesco Van Kampen Enterprise Fund into the Fund. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $8,253,918, $153,190, $377,296, $30,974, $148,169, $50,891 and $89,072 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
| (e) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.25%, 0.25%, 0.25%, 0.25%, 0.25% and 0.47% for the six months ended February 29, 2016 and years ended August 31, 2015, 2014, 2013, 2012 and 2011, respectively. |
| (f) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.79% for the year ended August 31, 2011. |
| (g) | Commencement date of May 23, 2011 for Class R shares, December 22, 2010 for Class R5 shares and September 24, 2012 for Class R6 shares. |
| (h) | Annualized. |
17 Invesco American Franchise Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 943.00 | $ | 5.28 | $ | 1,019.50 | $ | 5.49 | 1.09 | % | ||||||||||||
| B | 1,000.00 | 943.40 | 5.28 | 1,019.50 | 5.49 | 1.09 | ||||||||||||||||||
| C | 1,000.00 | 939.80 | 8.90 | 1,015.76 | 9.25 | 1.84 | ||||||||||||||||||
| R | 1,000.00 | 942.40 | 6.49 | 1,018.25 | 6.74 | 1.34 | ||||||||||||||||||
| Y | 1,000.00 | 944.30 | 4.07 | 1,020.74 | 4.23 | 0.84 | ||||||||||||||||||
| R5 | 1,000.00 | 945.50 | 3.49 | 1,021.34 | 3.63 | 0.72 | ||||||||||||||||||
| R6 | 1,000.00 | 945.60 | 3.06 | 1,021.79 | 3.18 | 0.63 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
18 Invesco American Franchise Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 VK-AMFR-SAR-1 Invesco Distributors, Inc.
|
| ||||
|
|
Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco California Tax-Free Income Fund | ||||
|
Nasdaq: |
||||
| A: CLFAX ¡ B: CLFBX ¡ C: CLFCX ¡ Y: CLFDX | ||||
|
| |||||
|
2 |
Fund Performance | ||||
|
4 |
Letters to Shareholders | ||||
|
5 |
Schedule of Investments | ||||
|
13 |
Financial Statements | ||||
|
15 |
Notes to Financial Statements | ||||
|
21 |
Financial Highlights | ||||
|
22 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco California Tax-Free Income Fund
3 Invesco California Tax-Free Income Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco California Tax-Free Income Fund
Schedule of Investments
February 29, 2016
(Unaudited)
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| Municipal Obligations–107.00% |
||||||||||||||||
| California–102.64% | ||||||||||||||||
| ABAG Finance Authority For Nonprofit Corps. (Sharp HealthCare); Series 2014 A, RB |
5.00 | % | 08/01/2043 | $ | 500 | $ | 570,010 | |||||||||
| Alhambra (City of) (Atherton Baptist Homes); Series 2010 A, RB |
7.63 | % | 01/01/2040 | 1,575 | 1,720,798 | |||||||||||
| Alhambra Elementary School District (Election of 1999); Series 1999 A, Unlimited Tax CAB GO Bonds (INS–AGM)(a)(b) |
0.00 | % | 09/01/2020 | 1,925 | 1,800,318 | |||||||||||
| Anaheim (City of) Public Financing Authority (Anaheim Public Improvements); Series 1997 C, Sub. Lease RB (INS–AGM)(a) |
6.00 | % | 09/01/2016 | 2,110 | 2,168,447 | |||||||||||
| Anaheim (City of) Public Financing Authority (Electric System Distribution Facilities); |
5.38 | % | 10/01/2036 | 2,500 | 2,939,700 | |||||||||||
| Arcadia Unified School District (Election of 2006); Series 2007 A, Unlimited Tax GO Bonds (INS–AGM)(a) |
5.00 | % | 08/01/2037 | 1,500 | 1,557,090 | |||||||||||
| Bakersfield (City of); Series 2007 A, Wastewater RB(c)(d) |
5.00 | % | 09/15/2017 | 2,215 | 2,369,673 | |||||||||||
| Bay Area Governments Association (California Capital); Series 2001 A, Lease RB |
5.25 | % | 07/01/2017 | 1,040 | 1,060,478 | |||||||||||
| Bay Area Toll Authority (San Francisco Bay Area); |
||||||||||||||||
| Series 2008 F-1, Toll Bridge RB(c)(d)(e) |
5.00 | % | 04/01/2018 | 1,250 | 1,364,275 | |||||||||||
| Series 2008 F-1, Toll Bridge RB(c)(d) |
5.00 | % | 04/01/2018 | 2,500 | 2,728,550 | |||||||||||
| Series 2009 F-1, Toll Bridge RB(c)(d)(e) |
5.13 | % | 04/01/2019 | 1,500 | 1,701,480 | |||||||||||
| Series 2009 F-1, Toll Bridge RB(c)(d)(e) |
5.25 | % | 04/01/2019 | 4,685 | 5,332,139 | |||||||||||
| Series 2009 F-1, Toll Bridge RB(c)(d)(e) |
5.25 | % | 04/01/2019 | 5,205 | 5,923,967 | |||||||||||
| Bay Area Water Supply & Conservation Agency; Series 2013 A, RB |
5.00 | % | 10/01/2034 | 1,950 | 2,298,133 | |||||||||||
| Beverly Hills Unified School District (Election of 2008); |
||||||||||||||||
| Series 2009, Unlimited Tax CAB GO Bonds(b) |
0.00 | % | 08/01/2026 | 1,465 | 1,165,085 | |||||||||||
| Series 2009, Unlimited Tax CAB GO Bonds(b) |
0.00 | % | 08/01/2032 | 3,045 | 1,899,288 | |||||||||||
| Brea Olinda Unified School District; Series 2002 A, Ref. COP (INS–AGM)(a) |
5.50 | % | 08/01/2018 | 1,090 | 1,094,992 | |||||||||||
| California (State of) (Green Bonds); Series 2014, Various Purpose Unlimited Tax GO Bonds |
5.00 | % | 10/01/2037 | 3,245 | 3,838,218 | |||||||||||
| California (State of) Educational Facilities Authority (Claremont McKenna College); Series 2007, RB(e) |
5.00 | % | 01/01/2038 | 2,100 | 2,245,068 | |||||||||||
| California (State of) Educational Facilities Authority (Pitzer College); Series 2009, RB |
6.00 | % | 04/01/2040 | 2,000 | 2,360,200 | |||||||||||
| California (State of) Educational Facilities Authority (Stanford University); Series 2007 T-1, RB |
5.00 | % | 03/15/2039 | 3,190 | 4,258,618 | |||||||||||
| California (State of) Educational Facilities Authority (University of Southern California); Series 2009 B, RB(e) |
5.25 | % | 10/01/2039 | 1,800 | 2,000,034 | |||||||||||
| California (State of) Health Facilities Financing Authority (Adventist Health System West); Series 2009 A, RB |
5.75 | % | 09/01/2039 | 500 | 570,645 | |||||||||||
| California (State of) Health Facilities Financing Authority (Catholic Healthcare West); |
||||||||||||||||
| Series 2009 A, RB |
6.00 | % | 07/01/2039 | 500 | 572,470 | |||||||||||
| Series 2011 A, RB |
5.25 | % | 03/01/2041 | 2,500 | 2,797,225 | |||||||||||
| California (State of) Health Facilities Financing Authority (Cedars Sinai Medical Center); |
||||||||||||||||
| Series 2015, Ref. RB |
5.00 | % | 11/15/2031 | 1,300 | 1,601,327 | |||||||||||
| Series 2015, Ref. RB |
5.00 | % | 11/15/2032 | 1,250 | 1,532,425 | |||||||||||
| Series 2015, Ref. RB |
5.00 | % | 11/15/2033 | 1,000 | 1,219,150 | |||||||||||
| California (State of) Health Facilities Financing Authority (Cedars–Sinai Medical Center); Series 2009, RB |
5.00 | % | 08/15/2039 | 1,050 | 1,163,736 | |||||||||||
| California (State of) Health Facilities Financing Authority (Children’s Hospital Los Angeles); Series 2010, RB (INS–AGM)(a) |
5.25 | % | 07/01/2038 | 2,950 | 3,296,979 | |||||||||||
| California (State of) Health Facilities Financing Authority (Kaiser Permanente); |
5.25 | % | 04/01/2039 | 2,000 | 2,009,100 | |||||||||||
| California (State of) Health Facilities Financing Authority (Providence Health & Services); |
||||||||||||||||
| Series 2008, RB(c)(d) |
6.50 | % | 10/01/2018 | 20 | 22,965 | |||||||||||
| Series 2008, RB(c)(d) |
6.50 | % | 10/01/2018 | 980 | 1,125,285 | |||||||||||
| California (State of) Health Facilities Financing Authority (Scripps Health); Series 2010 A, RB |
5.00 | % | 11/15/2036 | 4,000 | 4,506,520 | |||||||||||
| California (State of) Health Facilities Financing Authority (St. Joseph Health System); |
5.00 | % | 07/01/2037 | 1,000 | 1,157,930 | |||||||||||
| California (State of) Health Facilities Financing Authority (Stanford Hospital); |
5.25 | % | 11/15/2040 | 2,000 | 2,371,640 | |||||||||||
| California (State of) Health Facilities Financing Authority (Sutter Health); |
5.50 | % | 08/15/2026 | 1,000 | 1,192,680 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco California Tax-Free Income Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| California–(continued) | ||||||||||||||||
| California (State of) Municipal Finance Authority (American Heritage Education Foundation); Series 2006 A, Education RB |
5.25 | % | 06/01/2026 | $ | 1,000 | $ | 1,003,930 | |||||||||
| California (State of) Municipal Finance Authority (Caritas Affordable Housing, Inc.); |
||||||||||||||||
| Series 2014 A, Sr. Mobile Home Park RB |
5.25 | % | 08/15/2039 | 1,200 | 1,355,436 | |||||||||||
| Series 2014 A, Sr. Mobile Home Park RB |
5.25 | % | 08/15/2049 | 1,420 | 1,598,721 | |||||||||||
| California (State of) Municipal Finance Authority (Caritas Projects); Series 2012 A, Sr. Mobile Home Park RB |
5.50 | % | 08/15/2047 | 1,500 | 1,680,405 | |||||||||||
| California (State of) Municipal Finance Authority (Community Hospitals of Central California Obligated Group); |
||||||||||||||||
| Series 2007, COP(c)(d) |
5.00 | % | 02/01/2017 | 985 | 1,026,537 | |||||||||||
| Series 2007, COP(c)(d) |
5.25 | % | 02/01/2017 | 205 | 214,116 | |||||||||||
| Series 2007, COP |
5.00 | % | 02/01/2020 | 1,400 | 1,450,316 | |||||||||||
| Series 2007, COP |
5.25 | % | 02/01/2037 | 295 | 302,850 | |||||||||||
| California (State of) Municipal Finance Authority (Eisenhower Medical Center); |
||||||||||||||||
| Series 2010 A, RB |
5.50 | % | 07/01/2030 | 1,000 | 1,100,320 | |||||||||||
| Series 2010 A, RB |
5.75 | % | 07/01/2040 | 1,500 | 1,652,775 | |||||||||||
| California (State of) Municipal Finance Authority (Emerson College); Series 2011, RB |
5.75 | % | 01/01/2033 | 1,315 | 1,530,265 | |||||||||||
| California (State of) Municipal Finance Authority (Touro College and University System); Series 2014 A, RB |
5.25 | % | 01/01/2034 | 620 | 682,539 | |||||||||||
| California (State of) Municipal Finance Authority (University of La Verne); Series 2010 A, RB |
6.13 | % | 06/01/2030 | 1,000 | 1,151,980 | |||||||||||
| California (State of) Pollution Control Finance Authority; Series 2012, Water Furnishing RB(f)(g) |
5.00 | % | 07/01/2037 | 3,000 | 3,289,440 | |||||||||||
| California (State of) Pollution Control Financing Authority (Waste Management Inc.); |
3.00 | % | 11/01/2025 | 1,500 | 1,556,850 | |||||||||||
| California (State of) Public Works Board (Various Capital); Series 2011 A, Lease RB |
5.13 | % | 10/01/2031 | 2,000 | 2,376,620 | |||||||||||
| California (State of) Public Works Board (Various Correctional Facilities); Series 2014 A, Lease RB |
5.00 | % | 09/01/2039 | 3,000 | 3,501,390 | |||||||||||
| California (State of) Public Works Board (Various State Universities); Series 2013 H, Lease RB |
5.00 | % | 09/01/2038 | 1,000 | 1,145,080 | |||||||||||
| California (State of) School Finance Authority (Alliance for College–Ready Public Schools); Series 2013 A, School Facility RB |
6.30 | % | 07/01/2043 | 840 | 957,071 | |||||||||||
| California (State of) School Finance Authority (Alliance For College-Ready Public Schools); Series 2015, School Facility RB(g) |
5.00 | % | 07/01/2045 | 615 | 661,014 | |||||||||||
| California (State of) School Finance Authority (Aspire Public Schools); |
||||||||||||||||
| Series 2015 A, Ref. Charter School RB(g) |
5.00 | % | 08/01/2045 | 1,000 | 1,110,140 | |||||||||||
| Series 2016, Ref. Charter School RB(g) |
5.00 | % | 08/01/2046 | 750 | 832,095 | |||||||||||
| California (State of) School Finance Authority (Green Dot Public Schools); Series 2015 A, School Facility RB(g) |
5.00 | % | 08/01/2045 | 1,500 | 1,608,435 | |||||||||||
| California (State of) School Finance Authority (KIPP LA); Series 2015 A, Facilities RB(g) |
5.00 | % | 07/01/2045 | 500 | 541,945 | |||||||||||
| California (State of) Statewide Communities Development Authority (Adventist Health System); |
||||||||||||||||
| Series 2015, Ref. RB |
5.00 | % | 03/01/2033 | 775 | 923,258 | |||||||||||
| Series 2015, Ref. RB |
5.00 | % | 03/01/2045 | 2,315 | 2,661,880 | |||||||||||
| California (State of) Statewide Communities Development Authority (Alliance for College–Ready Public Schools); Series 2012, School Facility RB |
6.10 | % | 07/01/2032 | 820 | 893,357 | |||||||||||
| California (State of) Statewide Communities Development Authority (American Baptist Homes of the West); Series 2010, RB |
6.25 | % | 10/01/2039 | 2,000 | 2,214,860 | |||||||||||
| California (State of) Statewide Communities Development Authority (Birchcrest Apartments); Series 2001 S, VRD RB (LOC–U.S. Bank, N.A.)(f)(h)(i) |
0.03 | % | 08/01/2032 | 1,500 | 1,500,000 | |||||||||||
| California (State of) Statewide Communities Development Authority (California Baptist University); |
||||||||||||||||
| Series 2007 A, RB |
5.40 | % | 11/01/2027 | 1,785 | 1,856,150 | |||||||||||
| Series 2014 A, RB |
5.13 | % | 11/01/2023 | 715 | 774,774 | |||||||||||
| California (State of) Statewide Communities Development Authority (Cottage Health System Obligated Group); Series 2010, RB |
5.25 | % | 11/01/2030 | 1,675 | 1,916,619 | |||||||||||
| California (State of) Statewide Communities Development Authority (Henry Mayo Newhall Memorial Hospital); Series 2014 A, RB (INS–AGM)(a) |
5.25 | % | 10/01/2043 | 600 | 692,448 | |||||||||||
| California (State of) Statewide Communities Development Authority (Huntington Memorial Hospital); Series 2014 B, Ref. RB |
5.00 | % | 07/01/2044 | 750 | 849,555 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco California Tax-Free Income Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| California–(continued) | ||||||||||||||||
| California (State of) Statewide Communities Development Authority (Loma Linda University Medical Center); Series 2014, RB |
5.50 | % | 12/01/2054 | $ | 1,500 | $ | 1,643,280 | |||||||||
| California (State of) Statewide Communities Development Authority (Methodist Hospital); Series 2009, RB(c)(d) |
6.75 | % | 08/01/2019 | 445 | 535,237 | |||||||||||
| California (State of) Statewide Communities Development Authority (Southern California Presbyterian Homes); |
||||||||||||||||
| Series 2009, Senior Living RB(g) |
6.25 | % | 11/15/2019 | 1,650 | 1,803,235 | |||||||||||
| Series 2009, Senior Living RB(g) |
7.25 | % | 11/15/2041 | 500 | 581,235 | |||||||||||
| California (State of) Statewide Communities Development Authority (Terraces at San Joaquin Garden); Series 2012, RB |
5.63 | % | 10/01/2032 | 1,000 | 1,073,950 | |||||||||||
| California (State of) Statewide Communities Development Authority (University of California–Irvine East Campus Apartments); Series 2012, Ref. Student Housing RB |
5.38 | % | 05/15/2038 | 2,000 | 2,265,120 | |||||||||||
| California (State of) Statewide Finance Authority (Pooled Tobacco Securitization); Series 2006 A, Tobacco Settlement CAB Turbo RB(b) |
0.00 | % | 06/01/2046 | 8,000 | 866,000 | |||||||||||
| California (State of); |
||||||||||||||||
| Series 2003 B-4, VRD Unlimited Tax GO Bonds (LOC-JPMorgan Chase Bank, N.A.)(h)(i) |
0.01 | % | 05/01/2033 | 1,800 | 1,800,000 | |||||||||||
| Series 2009, Various Purpose Unlimited Tax GO Bonds |
5.75 | % | 04/01/2031 | 5,000 | 5,686,150 | |||||||||||
| Series 2009, Various Purpose Unlimited Tax GO Bonds |
6.00 | % | 11/01/2035 | 1,750 | 2,061,920 | |||||||||||
| Series 2009, Various Purpose Unlimited Tax GO Bonds |
6.00 | % | 04/01/2038 | 1,250 | 1,436,325 | |||||||||||
| Series 2010, Unlimited Tax GO Bonds |
5.25 | % | 11/01/2040 | 3,000 | 3,502,770 | |||||||||||
| Series 2011, Various Purpose Unlimited Tax GO Bonds |
5.00 | % | 09/01/2032 | 2,450 | 2,868,999 | |||||||||||
| Series 2011, Various Purpose Unlimited Tax GO Bonds |
5.00 | % | 10/01/2041 | 2,500 | 2,886,100 | |||||||||||
| Series 2012, Ref. Unlimited Tax GO Bonds |
5.25 | % | 02/01/2030 | 1,000 | 1,190,490 | |||||||||||
| Series 2015, Unlimited Tax GO Bonds |
5.00 | % | 08/01/2045 | 1,000 | 1,172,930 | |||||||||||
| California County Tobacco Securitization Agency (Gold Country Settlement Funding Corp.); Series 2006, Tobacco Settlement Asset-Backed CAB RB(b) |
0.00 | % | 06/01/2033 | 1,710 | 582,443 | |||||||||||
| California Infrastructure & Economic Development Bank (Academy Motion Picture Arts and Sciences Obligated Group); |
||||||||||||||||
| Series 2015, Ref. RB |
5.00 | % | 11/01/2035 | 1,000 | 1,170,470 | |||||||||||
| Series 2015, Ref. RB |
5.00 | % | 11/01/2041 | 4,265 | 4,908,631 | |||||||||||
| California Infrastructure & Economic Development Bank (Broad Museum); Series 2011 A, RB |
5.00 | % | 06/01/2021 | 2,000 | 2,408,940 | |||||||||||
| California Infrastructure & Economic Development Bank (Traditional Baking Inc.); Series 2003, VRD Industrial Development RB (LOC–U.S. Bank, N.A.)(f)(h)(i) |
0.10 | % | 08/01/2028 | 1,020 | 1,020,000 | |||||||||||
| California State University; |
||||||||||||||||
| Series 2009 A, Systemwide RB (INS–AGC)(a) |
5.25 | % | 11/01/2038 | 1,000 | 1,130,040 | |||||||||||
| Series 2012 A, Systemwide RB(e) |
5.00 | % | 11/01/2037 | 6,750 | 7,903,643 | |||||||||||
| Chino Basin Regional Financing Authority (Inland Empire Utilities Agency); Series 2008 A, RB
|
5.00 | % | 11/01/2033 | 725 | 771,523 | |||||||||||
| Clovis Unified School District (Election of 2004); Series 2004 A, Unlimited Tax CAB GO Bonds
|
0.00 | % | 08/01/2029 | 735 | 491,215 | |||||||||||
| Desert Community College District (Election of 2004); Series 2007 C, Unlimited Tax GO Bonds(c)(d) |
5.00 | % | 08/01/2017 | 2,500 | 2,661,800 | |||||||||||
| East Bay Municipal Utility District; Series 2010 A, Ref. Sub. Water System RB |
5.00 | % | 06/01/2036 | 2,000 | 2,291,720 | |||||||||||
| Eastern Municipal Water District; |
||||||||||||||||
| Series 2016 A, Ref. Water and Wastewater RB |
5.00 | % | 07/01/2028 | 1,025 | 1,296,471 | |||||||||||
| Series 2016 A, Ref. Water and Wastewater RB |
5.00 | % | 07/01/2033 | 1,005 | 1,227,638 | |||||||||||
| Series 2016 A, Ref. Water and Wastewater RB |
5.00 | % | 07/01/2045 | 1,000 | 1,180,950 | |||||||||||
| Eden (Township of) Healthcare District; Series 2010, COP |
6.13 | % | 06/01/2034 | 1,000 | 1,138,710 | |||||||||||
| El Monte Union High School District (Election of 2008); Series 2009 A, Unlimited Tax GO Bonds (INS–AGC)(a) |
5.50 | % | 06/01/2034 | 1,000 | 1,124,750 | |||||||||||
| El Segundo Unified School District (Election of 2008); Series 2009 A, Unlimited Tax CAB GO |
0.00 | % | 08/01/2033 | 4,430 | 2,344,888 | |||||||||||
| Emeryville (City of) Public Financing Authority (Alameda County); |
||||||||||||||||
| Series 2014 A, Ref. Tax Allocation RB (INS–AGM)(a) |
5.00 | % | 09/01/2032 | 445 | 520,841 | |||||||||||
| Series 2014 A, Ref. Tax Allocation RB (INS–AGM)(a) |
5.00 | % | 09/01/2033 | 385 | 449,029 | |||||||||||
| Series 2014 A, Ref. Tax Allocation RB (INS–AGM)(a) |
5.00 | % | 09/01/2034 | 500 | 581,920 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco California Tax-Free Income Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| California–(continued) | ||||||||||||||||
| Fairfield (City of) Community Facilities District No. 3 (North Cordelia General Improvements); Series 2008, Special Tax RB |
6.00 | % | 09/01/2032 | $ | 1,800 | $ | 1,977,408 | |||||||||
| Fontana (City of) Public Financing Authority (North Fontana Redevelopment); Series 2003 A, Tax Allocation RB (INS–AMBAC)(a) |
5.38 | % | 09/01/2025 | 1,500 | 1,506,345 | |||||||||||
| Fontana (City of) Redevelopment Agency (Downtown Redevelopment); Series 2000, Ref. Tax Allocation RB (INS–NATL)(a) |
5.00 | % | 09/01/2021 | 1,480 | 1,483,493 | |||||||||||
| Foothill-Eastern Transportation Corridor Agency; Series 2015, Ref. CAB Toll Road RB |
0.00 | % | 01/15/2035 | 2,745 | 1,310,545 | |||||||||||
| Fremont Community Facilities District No. 1 (Pacific Commons); |
||||||||||||||||
| Series 2015, Ref. Special Tax RB |
5.00 | % | 09/01/2035 | 815 | 931,301 | |||||||||||
| Series 2015, Ref. Special Tax RB |
5.00 | % | 09/01/2045 | 905 | 1,008,025 | |||||||||||
| Fullerton (City of) Community Facilities District No. 1 (Amerige Heights); |
||||||||||||||||
| Series 2012, Ref. Special Tax RB |
5.00 | % | 09/01/2026 | 1,960 | 2,258,430 | |||||||||||
| Series 2012, Ref. Special Tax RB |
5.00 | % | 09/01/2032 | 1,090 | 1,215,928 | |||||||||||
| Gilroy Unified School District (Election of 2008); |
||||||||||||||||
| Series 2009 A, Unlimited Tax CAB GO Bonds(b)(d) |
0.00 | % | 08/01/2029 | 615 | 453,150 | |||||||||||
| Series 2009 A, Unlimited Tax CAB GO Bonds(b)(d) |
0.00 | % | 08/01/2031 | 2,235 | 1,548,162 | |||||||||||
| Series 2009 A, Unlimited Tax CAB GO Bonds (INS–AGC)(a)(b) |
0.00 | % | 08/01/2029 | 4,735 | 3,110,611 | |||||||||||
| Series 2009 A, Unlimited Tax CAB GO Bonds (INS–AGC)(a)(b) |
0.00 | % | 08/01/2031 | 1,415 | 836,831 | |||||||||||
| Glendora (City of) Public Finance Authority; Series 2003 A, Project No. One Tax Allocation RB (INS–NATL)(a) |
5.00 | % | 09/01/2024 | 2,425 | 2,435,064 | |||||||||||
| Golden State Tobacco Securitization Corp.; |
||||||||||||||||
| Series 2007 A-1, Sr. Tobacco Settlement Asset-Backed RB |
4.50 | % | 06/01/2027 | 2,740 | 2,750,138 | |||||||||||
| Series 2007 A-1, Sr. Tobacco Settlement Asset-Backed RB |
5.00 | % | 06/01/2033 | 3,440 | 3,265,042 | |||||||||||
| Series 2007 A-1, Sr. Tobacco Settlement Asset-Backed RB |
5.13 | % | 06/01/2047 | 2,000 | 1,795,460 | |||||||||||
| Series 2013 A, Enhanced Tobacco Settlement Asset-Backed RB |
5.00 | % | 06/01/2030 | 2,000 | 2,336,460 | |||||||||||
| Series 2015 A, Ref. Tobacco Settlement Asset-Backed RB |
5.00 | % | 06/01/2040 | 695 | 798,701 | |||||||||||
| Inglewood (City of) Redevelopment Agency (Merged Redevelopment); Series 1998 A, Ref. Tax Allocation RB (INS–AMBAC)(a) |
5.25 | % | 05/01/2023 | 1,000 | 1,108,730 | |||||||||||
| Inland Empire Tobacco Securitization Authority; |
||||||||||||||||
| Series 2007 A, Tobacco Settlement RB |
4.63 | % | 06/01/2021 | 1,725 | 1,731,745 | |||||||||||
| Series 2007 C-1, Asset-Backed Tobacco Settlement CAB RB(b) |
0.00 | % | 06/01/2036 | 5,000 | 1,083,300 | |||||||||||
| Irvine (City of) Community Facilities District No. 2013-3 (Great Park Improvement Area No. 1) ; |
||||||||||||||||
| Series 2014, Special Tax RB |
5.00 | % | 09/01/2044 | 445 | 498,369 | |||||||||||
| Series 2014, Special Tax RB |
5.00 | % | 09/01/2049 | 445 | 497,906 | |||||||||||
| Irvine Unified School District (Community Facilities District No. 06-1- Portola Springs); Series 2010, Special Tax RB |
6.70 | % | 09/01/2035 | 515 | 598,435 | |||||||||||
| Irvine Unified School District; Series 2015, Ref. Special Tax RB |
5.00 | % | 09/01/2038 | 3,500 | 4,042,850 | |||||||||||
| Kern (County of) (Capital Improvments); Series 2009 A, COP (INS–AGC)(a) |
5.75 | % | 08/01/2035 | 1,000 | 1,123,030 | |||||||||||
| Kern (County of) Water Agency Improvement District No. 4; Series 2008 A, Water Revenue COP (INS–AGC)(a) |
5.00 | % | 05/01/2028 | 1,700 | 1,847,016 | |||||||||||
| Lodi (City of); Series 2007 A, Wastewater System Revenue COP (INS–AGM)(a) |
5.00 | % | 10/01/2037 | 1,000 | 1,058,350 | |||||||||||
| Long Beach (City of) Bond Finance Authority (Aquarium of the Pacific); Series 2012, Ref. RB |
5.00 | % | 11/01/2029 | 2,000 | 2,278,320 | |||||||||||
| Long Beach (City of) Bond Finance Authority (Natural Gas Purchase); Series 2007 A, RB |
5.50 | % | 11/15/2032 | 1,105 | 1,374,786 | |||||||||||
| Long Beach (City of) Financing Authority; Series 1992, RB (INS–AMBAC)(a) |
6.00 | % | 11/01/2017 | 6,570 | 6,781,751 | |||||||||||
| Long Beach (City of); |
||||||||||||||||
| Series 2010 A, Sr. Airport RB |
5.00 | % | 06/01/2040 | 2,500 | 2,812,875 | |||||||||||
| Series 2015, Marina System RB |
5.00 | % | 05/15/2045 | 1,615 | 1,778,858 | |||||||||||
| Los Angeles (City of) Community Facilities District No. 4 (Playa Vista — Phase 1); Series 2014, Ref. Special Tax RB |
5.00 | % | 09/01/2031 | 600 | 689,982 | |||||||||||
| Los Angeles (City of) Department of Airports (Los Angeles International Airport); |
||||||||||||||||
| Series 2010 A, Sr. RB |
5.00 | % | 05/15/2035 | 2,500 | 2,845,250 | |||||||||||
| Series 2010 B, Sub. RB |
5.00 | % | 05/15/2040 | 1,000 | 1,131,990 | |||||||||||
| Series 2013, RB(f) |
5.00 | % | 05/15/2043 | 3,000 | 3,361,560 | |||||||||||
| Los Angeles (City of) Department of Airports; Series 2015 C, Ref. Sub. RB |
5.00 | % | 05/15/2038 | 1,000 | 1,174,830 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco California Tax-Free Income Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| California–(continued) | ||||||||||||||||
| Los Angeles (City of) Department of Water & Power; |
||||||||||||||||
| Series 2011 A, Power System RB(e) |
5.00 | % | 07/01/2022 | $ | 1,800 | $ | 2,178,612 | |||||||||
| Series 2011 A, Water System RB |
5.25 | % | 07/01/2039 | 1,500 | 1,735,740 | |||||||||||
| Subseries 2006 A-1, Water System RB (INS–AMBAC)(a) |
5.00 | % | 07/01/2036 | 1,485 | 1,509,131 | |||||||||||
| Subseries 2007 A-1, Power System RB (INS–AMBAC)(a) |
5.00 | % | 07/01/2037 | 1,000 | 1,056,230 | |||||||||||
| Subseries 2008 A-1, Power System RB |
5.25 | % | 07/01/2038 | 2,000 | 2,191,840 | |||||||||||
| Los Angeles (City of) Harbor Department; Series 2014 A, Ref. RB(f) |
5.00 | % | 08/01/2036 | 1,000 | 1,152,680 | |||||||||||
| Los Angeles Community College District (Election of 2003); Series 2008 F-1, Unlimited Tax GO Bonds(c)(d)(e) |
5.00 | % | 08/01/2018 | 2,000 | 2,209,400 | |||||||||||
| Los Angeles County Schools Regionalized Business Services Corp. (Los Angeles County Schools Pooled Financing Program); Series 1999 A, CAB COP (INS–AMBAC)(a)(b) |
0.00 | % | 08/01/2024 | 1,265 | 1,019,350 | |||||||||||
| Los Angeles Unified School District (Election of 2004); |
||||||||||||||||
| Series 2007 H, Unlimited Tax GO Bonds (INS–AGM)(a) |
5.00 | % | 07/01/2032 | 1,000 | 1,053,540 | |||||||||||
| Series 2009 I, Unlimited Tax GO Bonds (INS–AGC)(a) |
5.00 | % | 01/01/2034 | 3,000 | 3,377,280 | |||||||||||
| M-S-R Energy Authority; Series 2009 B, Gas RB |
6.13 | % | 11/01/2029 | 1,600 | 2,073,504 | |||||||||||
| Menifee Union School District (Election of 2008); Series 2009 C, Unlimited Tax CAB GO Bonds (INS–AGC)(a)(b) |
0.00 | % | 08/01/2035 | 940 | 440,578 | |||||||||||
| Montclair (City of) Redevelopment Agency (Montclair Redevelopment Project No. V); Series 2001, Ref. Tax Allocation RB (INS–NATL)(a) |
5.00 | % | 10/01/2020 | 1,120 | 1,123,920 | |||||||||||
| Montebello Unified School District (Election of 2004); Series 2009 A-1, Unlimited Tax GO Bonds(c)(d) |
5.25 | % | 08/01/2019 | 1,000 | 1,151,450 | |||||||||||
| Moorpark Unified School District (Election of 2008); Series 2009 A, Unlimited Tax CAB GO Bonds (INS–AGC)(a)(b) |
0.00 | % | 08/01/2031 | 840 | 476,507 | |||||||||||
| Morongo Band of Mission Indians (The) (Enterprise Casino); Series 2008 B, RB(g) |
6.50 | % | 03/01/2028 | 1,000 | 1,092,880 | |||||||||||
| Napa Valley Unified School District; Series 2016 C, Ref. Unlimited Tax GO Bonds |
5.00 | % | 08/01/2041 | 2,000 | 2,378,480 | |||||||||||
| National City (City of) Community Development Commission (National City Redevelopment); Series 2011, Tax Allocation RB |
7.00 | % | 08/01/2032 | 1,500 | 1,881,135 | |||||||||||
| Norco (City of) Financing Authority; Series 2009, Ref. Enterprise RB (INS–AGM)(a) |
5.63 | % | 10/01/2034 | 1,000 | 1,130,670 | |||||||||||
| Northern California Transmission Agency (California-Oregon Transmission); Series 2016, Ref. RB |
5.00 | % | 05/01/2038 | 1,250 | 1,485,275 | |||||||||||
| Oakland Unified School District (County of Alameda, California); Series 2015 A, Unlimited Tax |
5.00 | % | 08/01/2040 | 1,070 | 1,201,503 | |||||||||||
| Orange (County of) Community Facilities District No. 2015-1 (Esencia Village); |
||||||||||||||||
| Series 2015 A, Special Tax RB |
5.00 | % | 08/15/2035 | 125 | 143,890 | |||||||||||
| Series 2015 A, Special Tax RB |
5.25 | % | 08/15/2045 | 615 | 707,656 | |||||||||||
| Palomar Pomerado Health; Series 2009, COP |
6.75 | % | 11/01/2039 | 2,000 | 2,242,200 | |||||||||||
| Panama-Buena Vista Union School District (School Construction); Series 2006, COP(c)(d) |
5.00 | % | 09/01/2016 | 1,045 | 1,070,279 | |||||||||||
| Paramount Unified School District (Election of 2006); Series 2007, Unlimited Tax GO Bonds(c)(d) |
5.25 | % | 08/01/2017 | 1,600 | 1,709,456 | |||||||||||
| Pittsburg Unified School District (Election of 2006); Series 2009 B, Unlimited Tax GO Bonds(c)(d) |
5.50 | % | 08/01/2018 | 1,000 | 1,116,700 | |||||||||||
| Pomona (City of) Public Financing Authority (Merged Redevelopment); Series 2007 AW, Sub. RB |
5.13 | % | 02/01/2033 | 1,075 | 1,076,129 | |||||||||||
| Port Hueneme (City of) (Capital Improvement Program); Series 1992, Ref. COP (INS–NATL)(a) |
6.00 | % | 04/01/2019 | 840 | 900,656 | |||||||||||
| Rancho Cordova (City of) Community Facilities District No. 2003-1 (Sunridge Anatolia); Series 2012, Ref. Special Tax RB |
5.00 | % | 09/01/2027 | 1,000 | 1,141,500 | |||||||||||
| Rancho Cucamonga (City of) Redevelopment Agency (Rancho Redevelopment Housing Set Aside) Series 2007 A, Tax Allocation RB (INS–NATL)(a) |
5.00 | % | 09/01/2034 | 1,000 | 1,054,520 | |||||||||||
| Redding (City of) Redevelopment Agency (Canby-Hilltop-Cypress Redevelopment); Series 2003 A, Tax Allocation RB (INS–NATL)(a) |
5.00 | % | 09/01/2023 | 1,400 | 1,405,474 | |||||||||||
| Regents of the University of California; |
||||||||||||||||
| Series 2009 E, Medical Center Pooled RB |
5.50 | % | 05/15/2027 | 2,500 | 2,671,100 | |||||||||||
| Series 2009 O, General RB(c)(d)(e) |
5.75 | % | 05/15/2019 | 705 | 817,180 | |||||||||||
| Series 2009 O, General RB(c)(d)(e) |
5.75 | % | 05/15/2019 | 1,050 | 1,217,076 | |||||||||||
| Series 2009 Q, General RB(e)(j) |
5.00 | % | 05/15/2034 | 920 | 973,112 | |||||||||||
| Riverside (City of); |
||||||||||||||||
| Series 2008 B, Water RB (INS–AGM)(a) |
5.00 | % | 10/01/2033 | 1,000 | 1,099,870 | |||||||||||
| Series 2008 D, Electric RB (INS–AGM)(a) |
5.00 | % | 10/01/2038 | 1,800 | 1,962,846 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco California Tax-Free Income Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| California–(continued) | ||||||||||||||||
| Riverside (County of) Community Facilities District No. 07-2 (Clinton Keith); Series 2015, Special Tax Bonds |
5.00 | % | 09/01/2044 | $ | 1,000 | $ | 1,053,470 | |||||||||
| Riverside (County of) Transportation Commission; Series 2010 A, Limited Sales Tax RB |
5.00 | % | 06/01/2032 | 1,500 | 1,721,460 | |||||||||||
| Romoland School District Community Facilities No. 2004-1; Series 2015, Ref. Special Tax Bonds |
5.00 | % | 09/01/2038 | 1,000 | 1,120,400 | |||||||||||
| Sacramento (County of) Sanitation Districts Financing Authority (Sacramento Regional County Sanitation District); Series 2006, RB(c)(d) |
5.00 | % | 06/01/2016 | 2,000 | 2,024,840 | |||||||||||
| Sacramento (County of); |
||||||||||||||||
| Series 2008 A, Sr. Airport System RB (INS–AGM)(a) |
5.00 | % | 07/01/2032 | 1,000 | 1,082,900 | |||||||||||
| Series 2008 A, Sr. Airport System RB (INS–AGM)(a) |
5.00 | % | 07/01/2041 | 1,015 | 1,099,144 | |||||||||||
| Series 2010, Sr. Airport System RB |
5.00 | % | 07/01/2040 | 2,200 | 2,483,206 | |||||||||||
| San Buenaventura (City of) (Community Memorial Health System); Series 2011, RB |
7.50 | % | 12/01/2041 | 2,000 | 2,451,600 | |||||||||||
| San Clemente (City of) (Community Facilities District 2006-1); Series 2015, Special Tax RB |
5.00 | % | 09/01/2040 | 315 | 357,928 | |||||||||||
| San Diego (City of) Public Facilities Financing Authority (Southcrest & Central Imperial Redevelopment); Series 2007 B, Pooled Financing Tax Allocation RB (INS–AGC)(a) |
5.25 | % | 10/01/2027 | 2,535 | 2,633,611 | |||||||||||
| San Diego (City of) Public Facilities Financing Authority; Subseries 2012 A, Ref. Water RB |
5.00 | % | 08/01/2032 | 2,215 | 2,637,999 | |||||||||||
| San Diego (City of) Regional Building Authority (County Operations Center); Series 2016 A, Ref. RB |
5.00 | % | 10/15/2034 | 1,500 | 1,798,875 | |||||||||||
| San Diego (County of) Regional Transportation Commission; Series 2014 A, Sales & Use Tax RB(e) |
5.00 | % | 04/01/2048 | 2,980 | 3,444,522 | |||||||||||
| San Diego Community College District (Election of 2002); Series 2009, Unlimited Tax GO Bonds(e) |
5.25 | % | 08/01/2033 | 1,500 | 1,709,325 | |||||||||||
| San Diego Community College District (Election of 2006); Series 2011, Unlimited Tax GO Bonds |
5.00 | % | 08/01/2031 | 2,500 | 2,910,425 | |||||||||||
| San Francisco (City & County of) Airport Commission (San Francisco International Airport); |
||||||||||||||||
| Series 2009 E, Second Series RB |
6.00 | % | 05/01/2039 | 1,000 | 1,154,390 | |||||||||||
| Series 2011 C, Ref. Second Series RB(f) |
5.00 | % | 05/01/2023 | 5,000 | 5,840,650 | |||||||||||
| Series 2011 G, Second Series RB |
5.25 | % | 05/01/2028 | 2,000 | 2,402,440 | |||||||||||
| San Francisco (City & County of) Public Utilities Commission (Water System Improvement Program); Subseries 2011 A, Water RB |
5.00 | % | 11/01/2036 | 4,000 | 4,683,640 | |||||||||||
| San Francisco (City & County of) Redevelopment Financing Authority (Mission Bay North Redevelopment); Series 2011 C, Tax Allocation RB |
6.75 | % | 08/01/2041 | 1,000 | 1,208,410 | |||||||||||
| San Francisco (City & County of) Redevelopment Financing Authority (Mission Bay South Redevelopment); Series 2011 D, Tax Allocation RB |
7.00 | % | 08/01/2033 | 500 | 603,985 | |||||||||||
| San Francisco (City & County of) Successor Agency to the Redevelopment Agency (Mission Bay South Redevelopment); Series 2014 A, Tax Allocation RB |
5.00 | % | 08/01/2043 | 1,060 | 1,175,900 | |||||||||||
| San Francisco (City & County of) Successor Agency to the Redevelopment Agency Community Facilities District No. 6 (Mission Bay South Public Improvements); Series 2013 A, Ref. Special Tax RB |
5.00 | % | 08/01/2033 | 500 | 558,165 | |||||||||||
| San Francisco (City of) Bay Area Rapid Transit District; |
||||||||||||||||
| Series 2012 A, RB |
5.00 | % | 07/01/2036 | 1,000 | 1,170,180 | |||||||||||
| Series 2015 A, Ref. RB |
5.00 | % | 07/01/2032 | 1,500 | 1,834,335 | |||||||||||
| San Joaquin Hills Transportation Corridor Agency; Series 2014 B, Ref. Jr. Toll Road RB |
5.25 | % | 01/15/2044 | 2,000 | 2,185,180 | |||||||||||
| San Jose Evergreen Community College District (Election of 2004); Series 2008 B, Unlimited Tax CAB GO Bonds (INS–AGM)(a)(b) |
0.00 | % | 09/01/2031 | 3,110 | 1,853,747 | |||||||||||
| San Luis Obispo (County of) Financing Authority (Lopez Dam Improvement); Series 2011 A, Ref. RB (INS–AGM)(a) |
5.00 | % | 08/01/2030 | 1,500 | 1,689,360 | |||||||||||
| Santa Clara (County of) Financing Authority (Multiple Facilities); Series 2008 L, Ref. Lease RB |
5.25 | % | 05/15/2036 | 3,000 | 3,250,320 | |||||||||||
| Santa Margarita Water District (Community Facilities District No. 2013-1); |
||||||||||||||||
| Series 2013, Special Tax RB |
5.63 | % | 09/01/2036 | 1,000 | 1,141,090 | |||||||||||
| Series 2013, Special Tax RB |
5.63 | % | 09/01/2043 | 1,000 | 1,135,900 | |||||||||||
| Santaluz Community Facilities District No. 2 (Improvement Area No. 1); |
||||||||||||||||
| Series 2011 A, Ref. Special Tax RB |
5.00 | % | 09/01/2028 | 825 | 920,865 | |||||||||||
| Series 2011 A, Ref. Special Tax RB |
5.00 | % | 09/01/2029 | 715 | 796,024 | |||||||||||
| Series 2011 A, Ref. Special Tax RB |
5.10 | % | 09/01/2030 | 465 | 518,229 | |||||||||||
| Sierra View Local Health Care District; Series 2007, RB(c)(d) |
5.25 | % | 07/01/2017 | 1,500 | 1,596,510 | |||||||||||
| Silicon Valley Tobacco Securitization Authority (Santa Clara); Series 2007 A, Tobacco Settlement CAB Turbo RB(b) |
0.00 | % | 06/01/2036 | 3,000 | 843,690 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco California Tax-Free Income Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| California–(continued) | ||||||||||||||||
| Simi Valley Unified School District (Election of 2004); |
||||||||||||||||
| Series 2007 C, Unlimited Tax CAB GO Bonds (INS–AGM)(a)(b) |
0.00 | % | 08/01/2028 | $ | 3,480 | $ | 2,385,679 | |||||||||
| Series 2007 C, Unlimited Tax CAB GO Bonds (INS–AGM)(a)(b) |
0.00 | % | 08/01/2030 | 2,765 | 1,677,553 | |||||||||||
| South Orange (County of) Public Financing Authority (Ladera Ranch); Series 2014 A, Ref. Sr. Lien Special Tax RB |
5.00 | % | 08/15/2034 | 895 | 1,011,386 | |||||||||||
| Southern California Metropolitan Water District; Series 2009 B, Ref. RB(e) |
5.00 | % | 07/01/2027 | 8,585 | 9,737,107 | |||||||||||
| Southern California Public Power Authority (Milford Wind Corridor Phase II); |
||||||||||||||||
| Series 2011 1, RB(e) |
5.25 | % | 07/01/2031 | 2,100 | 2,442,195 | |||||||||||
| Series 2011-1, RB(e) |
5.25 | % | 07/01/2029 | 2,100 | 2,515,086 | |||||||||||
| Southern California Tobacco Securitization Authority (San Diego County Tobacco Asset Securitization Corp.); Series 2006 A-1, Sr. Tobacco Settlement Asset-Backed RB |
5.13 | % | 06/01/2046 |
|
3,840 |
|
3,665,510 | |||||||||
| Temecula (City of) Redevelopment Agency (Temecula Redevelopment Project No. 1); Series 2002, Tax Allocation RB (INS–NATL)(a) |
5.13 | % | 08/01/2027 | 2,150 | 2,165,222 | |||||||||||
| Tustin (City of) Public Financing Authority; Series 2011 A, Water RB |
5.00 | % | 04/01/2041 | 1,000 | 1,129,360 | |||||||||||
| Tustin Unified School District (Community Facilities District No. 97-1); Series 2015, Ref. Special Tax RB |
5.00 | % | 09/01/2038 | 3,000 | 3,400,110 | |||||||||||
| Val Verde Unified School District; Series 2009 A, Ref. COP (INS–AGC)(a) |
5.13 | % | 03/01/2036 | 1,475 | 1,621,158 | |||||||||||
| Walnut (City of) Energy Center Authority; Series 2010 A, Ref. RB |
5.00 | % | 01/01/2035 | 3,000 | 3,352,110 | |||||||||||
| West Contra Costa Unified School District; Series 2005, Unlimited Tax CAB GO Bonds (INS–NATL)(a)(b) |
0.00 | % | 08/01/2025 | 2,500 | 1,974,550 | |||||||||||
| Western Riverside (County of) Water & Wastewater Financing Authority (Eastern Municipal Water District Improvement); Series 2009, RB (INS–AGC)(a) |
5.63 | % | 09/01/2039 | 1,000 | 1,128,280 | |||||||||||
| Whittier (City of) (Presbyterian Intercommunity Hospital, Inc.); Series 2014, Health Facility RB |
5.00 | % | 06/01/2044 | 1,500 | 1,686,930 | |||||||||||
| Yosemite Community College District (Election of 2004); Series 2008 C, Unlimited Tax CAB GO Bonds (INS–AGM)(a)(b) |
0.00 | % | 08/01/2024 | 4,685 | 3,867,421 | |||||||||||
| 421,651,920 | ||||||||||||||||
| Guam–1.65% | ||||||||||||||||
| Guam (Territory of) (Section 30); |
||||||||||||||||
| Series 2009 A, Limited Obligation RB |
5.38 | % | 12/01/2024 | 1,000 | 1,113,040 | |||||||||||
| Series 2009 A, Limited Obligation RB |
5.63 | % | 12/01/2029 | 660 | 733,550 | |||||||||||
| Guam (Territory of) International Airport Authority; Series 2013 C, General RB(f) |
6.25 | % | 10/01/2034 | 1,000 | 1,172,760 | |||||||||||
| Guam (Territory of) Waterworks Authority; |
||||||||||||||||
| Series 2014 A, Ref. Water & Wastewater System RB |
5.00 | % | 07/01/2035 | 765 | 853,189 | |||||||||||
| Series 2016, Water & Wastewater System RB |
5.00 | % | 01/01/2046 | 1,125 | 1,261,980 | |||||||||||
| Guam (Territory of); Series 2011 A, Business Privilege Tax RB |
5.13 | % | 01/01/2042 | 1,500 | 1,645,080 | |||||||||||
| 6,779,599 | ||||||||||||||||
| Puerto Rico–0.95% | ||||||||||||||||
| Puerto Rico (Commonwealth of) Public Buildings Authority; Series 2002 D, RB(c)(d) |
5.45 | % | 07/01/2017 | 3,680 | 3,921,482 | |||||||||||
| Virgin Islands–1.76% | ||||||||||||||||
| Virgin Islands (Government of) Port Authority; |
||||||||||||||||
| Series 2014 A, Ref. Marine RB(f) |
5.00 | % | 09/01/2029 | 1,645 | 1,880,186 | |||||||||||
| Series 2014 A, Ref. RB(f) |
5.00 | % | 09/01/2033 | 1,500 | 1,673,625 | |||||||||||
| Virgin Islands (Government of) Public Finance Authority (Matching Fund Loan Note — Diageo); Series 2009 A, Sub. RB |
6.63 | % | 10/01/2029 | 1,675 | 1,872,516 | |||||||||||
| Virgin Islands (Government of) Public Finance Authority (Matching Fund Loan Note); Series 2010 A, Sr. Lien RB |
5.00 | % | 10/01/2025 | 1,600 | 1,782,656 | |||||||||||
| 7,208,983 | ||||||||||||||||
| TOTAL INVESTMENTS(k)–107.00% (Cost $395,863,078) |
439,561,984 | |||||||||||||||
| FLOATING RATE NOTE OBLIGATIONS–(7.57)% |
||||||||||||||||
| Notes with interest and fee rates ranging from 0.53% to 0.62% at 02/29/2016 and contractual maturities of collateral ranging from 07/01/2022 to 04/01/2048 (See Note 1J)(l) |
(31,105,000 | ) | ||||||||||||||
| OTHER ASSETS LESS LIABILITIES–0.57% |
2,349,012 | |||||||||||||||
| NET ASSETS–100.00% |
$ | 410,805,996 | ||||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco California Tax-Free Income Fund
Investment Abbreviations:
| AGC | – Assured Guaranty Corp. | |
| AGM | – Assured Guaranty Municipal Corp. | |
| AMBAC | – American Municipal Bond Assurance Corp. | |
| CAB | – Capital Appreciation Bonds | |
| COP | – Certificates of Participation | |
| GO | – General Obligation | |
| INS | – Insurer | |
| Jr. | – Junior | |
| LOC | – Letter of Credit | |
| NATL | – National Public Finance Guarantee Corp. | |
| RB | – Revenue Bonds | |
| Ref. | – Refunding | |
| Sr. | – Senior | |
| Sub. | – Subordinated | |
| VRD | – Variable Rate Demand |
Notes to Schedule of Investments:
| (a) | Principal and/or interest payments are secured by the bond insurance company listed. |
| (b) | Zero coupon bond issued at a discount. |
| (c) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
| (d) | Advance refunded; secured by an escrow fund of U.S. Government obligations or other highly rated collateral. |
| (e) | Underlying security related to TOB Trusts entered into by the Fund. See Note 1J. |
| (f) | Security subject to the alternative minimum tax. |
| (g) | 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 February 29, 2016 was $11,520,419, which represented 2.80% of the Fund’s Net Assets. |
| (h) | Demand security payable upon demand by the Fund at specified time intervals no greater than thirteen months. Interest rate is redetermined periodically. Rate shown is the rate in effect on February 29, 2016. |
| (i) | Principal and interest payments are fully enhanced by a letter of credit from the bank listed or a predecessor bank, branch or subsidiary. |
| (j) | Security is subject to a reimbursement agreement which may require the Fund to pay amounts to a counterparty in the event of a significant decline in the market value of the security underlying the TOB Trusts. In case of a shortfall, the maximum potential amount of payments the Fund could ultimately be required to make under the agreement is $615,000. However, such shortfall payment would be reduced by the proceeds from the sale of the security underlying the TOB Trusts. |
| (k) | This table provides a listing of those entities that have either issued, guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the securities held in the portfolio. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the issuer’s obligations but may be called upon to satisfy the issuer’s obligations. |
| Entity | Percentage | |||
| Assured Guaranty Municipal Corp. |
7.6 | % | ||
| (l) | Floating rate note obligations related to securities held. The interest and fee rates shown reflect the rates in effect at February 29, 2016. At February 29, 2016, the Fund’s investments with a value of $53,714,221 are held by TOB Trusts and serve as collateral for the $31,105,000 in the floating rate note obligations outstanding at that date. |
Portfolio Composition
By credit sector, based on total investments
as of February 29, 2016
| Revenue Bonds |
74.4 | % | ||
| General Obligation Bonds |
14.6 | |||
| Pre-Refunded Bonds |
10.0 | |||
| Other |
1.0 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco California Tax-Free Income Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco California Tax-Free Income Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Interest |
$ | 9,401,649 | ||
| Expenses: |
||||
| Advisory fees |
909,458 | |||
| Administrative services fees |
51,964 | |||
| Custodian fees |
3,855 | |||
| Distribution fees: |
||||
| Class A |
387,708 | |||
| Class B |
17,733 | |||
| Class C |
121,494 | |||
| Interest, facilities and maintenance fees |
119,626 | |||
| Transfer agent fees |
107,546 | |||
| Trustees’ and officers’ fees and benefits |
17,332 | |||
| Other |
109,301 | |||
| Total expenses |
1,846,017 | |||
| Less: Expense offset arrangement(s) |
(113 | ) | ||
| Net expenses |
1,845,904 | |||
| Net investment income |
7,555,745 | |||
| Realized and unrealized gain from: |
||||
| Net realized gain from investment securities |
82,024 | |||
| Change in net unrealized appreciation of investment securities |
8,022,939 | |||
| Net realized and unrealized gain |
8,104,963 | |||
| Net increase in net assets resulting from operations |
$ | 15,660,708 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco California Tax-Free Income Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
||||||||
| Net investment income |
$ | 7,555,745 | $ | 14,488,491 | ||||
| Net realized gain (loss) |
82,024 | (24,505 | ) | |||||
| Change in net unrealized appreciation (depreciation) |
8,022,939 | (2,247,668 | ) | |||||
| Net increase in net assets resulting from operations |
15,660,708 | 12,216,318 | ||||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(6,115,545 | ) | (11,927,147 | ) | ||||
| Class B |
(288,066 | ) | (621,320 | ) | ||||
| Class C |
(542,032 | ) | (862,100 | ) | ||||
| Class Y |
(507,634 | ) | (995,664 | ) | ||||
| Total distributions from net investment income |
(7,453,277 | ) | (14,406,231 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
21,830,200 | 6,401,757 | ||||||
| Class B |
(900,845 | ) | (1,193,174 | ) | ||||
| Class C |
10,409,385 | 8,082,680 | ||||||
| Class Y |
3,202,318 | 1,472,808 | ||||||
| Net increase in net assets resulting from share transactions |
34,541,058 | 14,764,071 | ||||||
| Net increase in net assets |
42,748,489 | 12,574,158 | ||||||
| Net assets: |
||||||||
| Beginning of period |
368,057,507 | 355,483,349 | ||||||
| End of period (includes undistributed net investment income of $1,274,527 and $1,172,059, respectively) |
$ | 410,805,996 | $ | 368,057,507 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco California Tax-Free Income Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is to provide a high level of current income exempt from federal and California income tax, consistent with the preservation of capital.
The Fund currently consists of four different classes of shares: Class A, Class B, Class C and Class Y. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
Securities are fair valued using an evaluated quote provided by an independent pricing service approved by the Board of Trustees. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, 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. 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.
15 Invesco California Tax-Free Income Fund
Securities for which market quotations either are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Some of the factors which may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on transferability or disposition; trading in similar securities by the same issuer or comparable companies; relevant political, economic or issuer specific news; and other relevant factors under the circumstances.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any), adjusted for amortization of premiums and accretion of discounts on investments, is recorded on the accrual basis from settlement date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
| C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable and tax-exempt 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.
In addition, the Fund intends to invest in such municipal securities to allow it to qualify to pay shareholders “exempt-interest dividends”, as defined in the Internal Revenue Code.
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. | Interest, Facilities and Maintenance Fees — Interest, Facilities and Maintenance Fees include interest and related borrowing costs such as commitment fees and other expenses associated with lines of credit and interest and administrative expenses related to establishing and maintaining floating rate note obligations, if any. |
| 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 |
16 Invesco California Tax-Free Income Fund
| 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. | Floating Rate Note Obligations — The Fund invests in inverse floating rate securities, such as Tender Option Bonds (“TOBs”), for investment purposes and to enhance the yield of the Fund. Such securities may be purchased in the secondary market without first owning an underlying bond but generally are created through the sale of fixed rate bonds by the Fund to special purpose trusts established by a broker dealer or by the Fund (“TOB Trusts”) in exchange for cash and residual interests in the TOB Trusts’ assets and cash flows, which are in the form of inverse floating rate securities. The TOB Trusts finance the purchases of the fixed rate bonds by issuing floating rate notes to third parties and allowing the Fund to retain residual interests in the bonds. The floating rate notes issued by the TOB Trusts have interest rates that reset weekly and the floating rate note holders have the option to tender their notes to the TOB Trusts for redemption at par at each reset date. The residual interests held by the Fund (inverse floating rate securities) include the right of the Fund (1) to cause the holders of the floating rate notes to tender their notes at par at the next interest rate reset date, and (2) to transfer the municipal bond from the TOB Trust to the Fund, thereby collapsing the TOB Trust. Inverse floating rate securities tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. |
The Fund generally invests in inverse floating rate securities that include embedded leverage, thus exposing the Fund to greater risks and increased costs. The primary risks associated with inverse floating rate securities are varying degrees of liquidity and decreases in the value of such securities in response to changes in interest rates to a greater extent than fixed rate securities having similar credit quality, redemption provisions and maturity, which may cause the Fund’s net asset value to be more volatile than if it had not invested in inverse floating rate securities. In certain instances, the short-term floating rate notes created by the TOB Trust may not be able to be sold to third parties or, in the case of holders tendering (or putting) such notes for repayment of principal, may not be able to be remarketed to third parties. In such cases, the TOB Trust holding the fixed rate bonds may be collapsed with the entity that contributed the fixed rate bonds to the TOB Trust. In the case where a TOB Trust is collapsed with the Fund, the Fund will be required to repay the principal amount of the tendered securities, which may require the Fund to sell other portfolio holdings to raise cash to meet that obligation. The Fund could therefore be required to sell other portfolio holdings at a disadvantageous time or price to raise cash to meet this obligation, which risk will be heightened during times of market volatility, illiquidity or uncertainty. The embedded leverage in the TOB Trust could cause the Fund to lose more money than the value of the asset it has contributed to the TOB Trust and greater levels of leverage create the potential for greater losses. In addition, a Fund may enter into reimbursement agreements with the liquidity provider of certain TOB transactions in connection with certain residuals held by the Fund. These agreements commit a Fund to reimburse the liquidity provider to the extent that the liquidity provider must provide cash to a TOB Trust, including following the termination of a TOB Trust resulting from a mandatory tender event (“liquidity shortfall”). The reimbursement agreement will effectively make the Fund liable for the amount of the negative difference, if any, between the liquidation value of the underlying security and the purchase price of the floating rate notes issued by the TOB Trust.
The Fund accounts for the transfer of fixed rate bonds to the TOB Trusts as secured borrowings, with the securities transferred remaining in the Fund’s investment assets, and the related floating rate notes reflected as Fund liabilities under the caption Floating rate note obligations on the Statement of Assets and Liabilities. The Fund records the interest income from the fixed rate bonds under the caption Interest and records the expenses related to floating rate obligations and any administrative expenses of the TOB Trusts as a component of Interest, facilities and maintenance fees on the Statement of Operations.
Final rules implementing section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”) prohibit banking entities from engaging in proprietary trading of certain instruments and limit such entities’ investments in, and relationships with, “covered funds”, as defined in the rules. These rules preclude banking entities and their affiliates from sponsoring and/or providing services for existing TOB Trusts. A new TOB structure is being utilized by the Fund wherein the Fund, as holder of the residuals, will perform certain duties previously performed by banking entities as “sponsors” of TOB Trusts. These duties may be performed by a third-party service provider. The Fund’s expanded role under the new TOB structure may increase its operational and regulatory risk. The new structure is substantially similar to the previous structure; however, pursuant to the Volcker Rule, the remarketing agent would not be able to repurchase tendered floaters for its own account upon a failed remarketing. In the event of a failed remarketing, a banking entity serving as liquidity provider may loan the necessary funds to the TOB Trust to purchase the tendered floaters. The TOB Trust, not the Fund, would be the borrower and the loan from the liquidity provider will be secured by the purchased floaters now held by the TOB Trust. However, as previously described, the Fund would bear the risk of loss with respect to any liquidity shortfall to the extent it entered into a reimbursement agreement with the liquidity provider.
There can be no assurances that the new TOB structure will continue to be a viable form of leverage. Further, there can be no assurances that alternative forms of leverage will be available to the Fund in order to maintain current levels of leverage. Any alternative forms of leverage may be less advantageous to the Fund, and may adversely affect the Fund’s net asset value, distribution rate and ability to achieve its investment objective.
TOBs are presently classified as private placement securities. Private placement securities are subject to restrictions on resale because they have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), or are otherwise not readily marketable. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. Although atypical, these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Fund or less than what may be considered the fair value of such securities.
| K. | Other Risks — The value of, payment of interest on, repayment of principal for and the ability to sell a municipal security may be affected by constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives and the economics of the regions in which the issuers are located. |
Since many municipal securities are issued to finance similar projects, especially those relating to education, health care, transportation and utilities, conditions in those sectors can affect the overall municipal securities market and the Fund’s investments in municipal securities.
There is some risk that a portion or all of the interest received from certain tax-free municipal securities could become taxable as a result of determinations by the Internal Revenue Service.
17 Invesco California Tax-Free Income Fund
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||||
| First $500 million |
0 | .47% | ||||
| Next $250 million |
0 | .445% | ||||
| Next $250 million |
0 | .42% | ||||
| Next $250 million |
0 | .395% | ||||
| Over $1.25 billion |
0 | .37% | ||||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.47%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses and/or reimbursement (excluding certain items discussed below) of Class A, Class B, Class C and Class Y shares to 1.50%, 2.00%, 2.00% and 1.25% of average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the net annual fund operating expenses and/or reimbursement to exceed the numbers reflected above: (1) interest, facilities and maintenance fees; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”), an affiliate of the Adviser. The Fund has adopted a Plan of Distribution (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will reimburse IDI for distribution related expenses that IDI incurs up to a maximum of the following annual rates: (1) Class A — up to 0.25% of the average daily net assets of Class A shares; (2) Class B — up to 0.75% of the average daily net assets of Class B shares; and (3) Class C — up to 0.75% of the average daily net assets of Class C shares.
In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by IDI, but not yet reimbursed to IDI, may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares.
For the six months ended February 29, 2016, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $26,226 in front-end sales commissions from the sale of Class A shares and $1,973, $444 and $268 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
18 Invesco California Tax-Free Income 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of February 29, 2016, all of the securities in this Fund were valued based on Level 2 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
NOTE 4—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $113.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6—Cash Balances and Borrowings
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.
Inverse floating rate obligations resulting from the transfer of bonds to TOB Trusts are accounted for as secured borrowings. The average floating rate notes outstanding and average annual interest and fee rate related to inverse floating rate note obligations during the six months ended February 29, 2016 were $31,120,000 and 0.68%, respectively.
NOTE 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of August 31, 2015, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| August 31, 2016 |
$ | 4,399,730 | $ | — | $ | 4,399,730 | ||||||
| August 31, 2017 |
9,460,903 | — | 9,460,903 | |||||||||
| August 31, 2018 |
6,678,872 | — | 6,678,872 | |||||||||
| August 31, 2019 |
1,906,728 | — | 1,906,728 | |||||||||
| Not subject to expiration |
2,145,450 | 8,017,346 | 10,162,796 | |||||||||
| $ | 24,591,683 | $ | 8,017,346 | $ | 32,609,029 | |||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
19 Invesco California Tax-Free Income Fund
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $47,351,986 and $12,694,639, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 46,263,385 | ||
| Aggregate unrealized (depreciation) of investment securities |
(2,252,042 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 44,011,343 | ||
Cost of investments for tax purposes is $395,550,641.
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
2,792,904 | $ | 34,086,681 | 2,990,754 | $ | 36,545,462 | ||||||||||
| Class B |
2,915 | 36,459 | 16,866 | 209,331 | ||||||||||||
| Class C |
978,168 | 12,077,116 | 1,108,401 | 13,637,252 | ||||||||||||
| Class Y |
335,580 | 4,138,454 | 378,080 | 4,644,193 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
290,562 | 3,564,824 | 570,873 | 6,959,438 | ||||||||||||
| Class B |
10,761 | 133,393 | 24,298 | 298,984 | ||||||||||||
| Class C |
28,494 | 351,912 | 41,519 | 509,049 | ||||||||||||
| Class Y |
17,030 | 210,285 | 33,587 | 410,776 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
36,391 | 444,783 | 35,876 | 436,722 | ||||||||||||
| Class B |
(36,049 | ) | (444,783 | ) | (35,543 | ) | (436,722 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(1,329,948 | ) | (16,266,088 | ) | (3,086,033 | ) | (37,539,865 | ) | ||||||||
| Class B |
(50,684 | ) | (625,914 | ) | (102,736 | ) | (1,264,767 | ) | ||||||||
| Class C |
(163,968 | ) | (2,019,643 | ) | (495,997 | ) | (6,063,621 | ) | ||||||||
| Class Y |
(93,626 | ) | (1,146,421 | ) | (293,620 | ) | (3,582,161 | ) | ||||||||
| Net increase in share activity |
2,818,530 | $ | 34,541,058 | 1,186,325 | $ | 14,764,071 | ||||||||||
| (a) | 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. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
20 Invesco California Tax-Free Income Fund
NOTE 10—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Supplemental ratio of expenses to average interest, facilities and maintenance fees)(c) |
Ratio of net investment income to average net assets |
Portfolio turnover(d) |
||||||||||||||||||||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 12.09 | $ | 0.24 | $ | 0.25 | $ | 0.49 | $ | (0.24 | ) | $ | 12.34 | 4.05 | % | $ | 329,413 | 0.93 | %(e) | 0.93 | %(e) | 0.87 | %(e) | 3.93 | %(e) | 3 | % | |||||||||||||||||||||||||
| Year ended 08/31/15 |
12.15 | 0.48 | (0.06 | ) | 0.42 | (0.48 | ) | 12.09 | 3.48 | 300,873 | 0.91 | 0.91 | 0.86 | 3.94 | 12 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
11.20 | 0.49 | 0.95 | 1.44 | (0.49 | ) | 12.15 | 13.14 | 296,200 | 0.93 | 0.93 | 0.87 | 4.25 | 12 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
12.28 | 0.49 | (1.08 | ) | (0.59 | ) | (0.49 | ) | 11.20 | (5.06 | ) | 165,142 | 0.89 | 0.89 | 0.84 | 4.02 | 12 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
11.34 | 0.50 | 0.94 | 1.44 | (0.50 | ) | 12.28 | 12.91 | 163,047 | 0.87 | 0.87 | 0.82 | 4.21 | 18 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
11.75 | 0.52 | (0.41 | ) | 0.11 | (0.52 | ) | 11.34 | 1.13 | 148,884 | 0.90 | 0.90 | 0.85 | 4.66 | 25 | |||||||||||||||||||||||||||||||||||||
| Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
12.20 | 0.24 | 0.26 | 0.50 | (0.24 | ) | 12.46 | 4.12 | (f) | 14,564 | 0.92 | (e)(f) | 0.92 | (e)(f) | 0.86 | (e)(f) | 3.94 | (e)(f) | 3 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
12.26 | 0.49 | (0.06 | ) | 0.43 | (0.49 | ) | 12.20 | 3.51 | (f) | 15,150 | 0.88 | (f) | 0.88 | (f) | 0.83 | (f) | 3.97 | (f) | 12 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
11.28 | 0.50 | 0.98 | 1.48 | (0.50 | ) | 12.26 | 13.35 | (f) | 16,419 | 0.93 | (f) | 0.93 | (f) | 0.87 | (f) | 4.25 | (f) | 12 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
12.37 | 0.49 | (1.09 | ) | (0.60 | ) | (0.49 | ) | 11.28 | (5.11 | )(f) | 155,900 | 0.93 | (f) | 0.93 | (f) | 0.88 | (f) | 3.98 | (f) | 12 | |||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
11.42 | 0.50 | 0.95 | 1.45 | (0.50 | ) | 12.37 | 12.93 | (f) | 217,489 | 0.88 | (f) | 0.88 | (f) | 0.83 | (f) | 4.20 | (f) | 18 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
11.83 | 0.52 | (0.41 | ) | 0.11 | (0.52 | ) | 11.42 | 1.16 | (f) | 220,478 | 0.89 | (f) | 0.89 | (f) | 0.84 | (f) | 4.67 | (f) | 25 | ||||||||||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
12.16 | 0.21 | 0.27 | 0.48 | (0.21 | ) | 12.43 | 3.95 | 39,413 | 1.43 | (e) | 1.43 | (e) | 1.37 | (e) | 3.43 | (e) | 3 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
12.23 | 0.42 | (0.07 | ) | 0.35 | (0.42 | ) | 12.16 | 2.87 | (g) | 28,335 | 1.41 | (g) | 1.41 | (g) | 1.36 | (g) | 3.44 | (g) | 12 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
11.27 | 0.44 | 0.96 | 1.40 | (0.44 | ) | 12.23 | 12.62 | 20,485 | 1.43 | 1.43 | 1.37 | 3.75 | 12 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
12.36 | 0.43 | (1.09 | ) | (0.66 | ) | (0.43 | ) | 11.27 | (5.57 | ) | 21,558 | 1.40 | 1.40 | 1.35 | 3.51 | 12 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
11.41 | 0.44 | 0.95 | 1.39 | (0.44 | ) | 12.36 | 12.37 | 27,394 | 1.38 | 1.38 | 1.33 | 3.70 | 18 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
11.82 | 0.46 | (0.40 | ) | 0.06 | (0.47 | ) | 11.41 | 0.65 | 21,800 | 1.40 | 1.40 | 1.35 | 4.16 | 25 | |||||||||||||||||||||||||||||||||||||
| Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
12.13 | 0.25 | 0.26 | 0.51 | (0.25 | ) | 12.39 | 4.26 | 27,415 | 0.68 | (e) | 0.68 | (e) | 0.62 | (e) | 4.18 | (e) | 3 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
12.20 | 0.51 | (0.07 | ) | 0.44 | (0.51 | ) | 12.13 | 3.65 | 23,698 | 0.66 | 0.66 | 0.61 | 4.19 | 12 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
11.24 | 0.52 | 0.96 | 1.48 | (0.52 | ) | 12.20 | 13.48 | 22,380 | 0.69 | 0.69 | 0.63 | 4.49 | 12 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
12.33 | 0.52 | (1.09 | ) | (0.57 | ) | (0.52 | ) | 11.24 | (4.88 | ) | 20,569 | 0.65 | 0.65 | 0.60 | 4.26 | 12 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
11.38 | 0.53 | 0.95 | 1.48 | (0.53 | ) | 12.33 | 13.24 | 24,742 | 0.63 | 0.63 | 0.58 | 4.45 | 18 | ||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
11.79 | 0.55 | (0.41 | ) | 0.14 | (0.55 | ) | 11.38 | 1.40 | 24,195 | 0.65 | 0.65 | 0.60 | 4.91 | 25 | |||||||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | For the year ended August 31, 2011, ratio does not exclude facilities and maintenance fees. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended August 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $139,542,348 and sold of $13,399,363 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Van Kampen California Insured Tax Free Income Fund into the Fund. |
| (e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $316,941, $14,844, $32,576 and $24,768 for Class A, Class B, Class C and Class Y shares, respectively. |
| (f) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.24%, 0.22%, 0.24%, 0.27%, 0.25% and 0.25% for the six months ended February 29, 2016 and the years ended August 31, 2015, 2014, 2013, 2012 and 2011, respectively. |
| (g) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.74%. |
21 Invesco California Tax-Free Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 1,040.50 | $ | 4.72 | $ | 1,020.24 | $ | 4.67 | 0.93 | % | ||||||||||||
| B | 1,000.00 | 1,041.20 | 4.67 | 1,020.29 | 4.62 | 0.92 | ||||||||||||||||||
| C | 1,000.00 | 1,039.50 | 7.25 | 1,017.75 | 7.17 | 1.43 | ||||||||||||||||||
| Y | 1,000.00 | 1,042.60 | 3.45 | 1,021.48 | 3.42 | 0.68 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
22 Invesco California Tax-Free Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 MS-CTFI-SAR-1 Invesco Distributors, Inc.
|
| ||||
|
|
Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco Core Plus Bond Fund | ||||
|
Nasdaq: |
||||
| A: ACPSX ¡ B: CPBBX ¡ C: CPCFX ¡ R: CPBRX ¡ Y: CPBYX ¡ R5: CPIIX ¡ R6: CPBFX | ||||
|
| |||||
|
2 |
Fund Performance | ||||
|
4 |
Letters to Shareholders | ||||
|
5 |
Schedule of Investments | ||||
|
23 |
Financial Statements | ||||
|
25 |
Notes to Financial Statements | ||||
|
39 |
Financial Highlights | ||||
|
40 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco Core Plus Bond Fund
3 Invesco Core Plus Bond Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco Core Plus Bond Fund
Schedule of Investments(a)
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20 Invesco Core Plus Bond Fund
Investment Abbreviations:
| ARM | – Adjustable Rate Mortgage | |
| Conv. | – Convertible | |
| Ctfs. | – Certificates | |
| Deb. | – Debentures | |
| EUR | – Euro | |
| GBP | – British Pound | |
| Gtd. | – Guaranteed | |
| IO | – Interest Only | |
| Jr. | – Junior | |
| Pfd. | – Preferred | |
| PIK | – Payment in Kind | |
| RB | – Revenue Bonds | |
| REGS | – Regulation S | |
| REIT | – Real Estate Investment Trust | |
| REMICs | – Real Estate Mortgage Investment Conduits | |
| Sec. | – Secured | |
| Sr. | – Senior | |
| Sub. | – Subordinated | |
| TBA | – To Be Announced | |
| Unsec. | – Unsecured |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21 Invesco Core Plus Bond Fund
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at February 29, 2016 was $238,472,856, which represented 23.90% of the Fund’s Net Assets. |
| (c) | Perpetual bond with no specified maturity date. |
| (d) | All or a portion of this security is Payment-in-Kind. |
| Issuer | Cash Rate | PIK Rate | ||||||
| Alphabet Holding Co., Inc., Sr. Unsec. Global PIK Notes |
7.75 | % | 8.50 | % | ||||
| (e) | Defaulted security. Currently, the issuer is partially or fully in default with respect to interest payments. The value of this security at February 29, 2016 represented less than 1% of the Fund’s Net Assets. |
| (f) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on February 29, 2016. |
| (g) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1J. |
| (h) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (i) | All or a portion of the value was pledged and/or designated as collateral to cover margin requirements for open futures contracts and swap agreements. See Note 1I, Note 1P and Note 4. |
| (j) | Principal amount of security and interest payments are adjusted for inflation. See Note 1K. |
| (k) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
| (l) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
| (m) | The table below details options purchased: |
| Open Over-The-Counter Foreign Currency Options Purchased — Currency Risk | ||||||||||||||||||||||||||
| Description | Type of Contract |
Counterparty | Expiration Date |
Strike Price | Notional Value |
Value | ||||||||||||||||||||
| JPY versus KRW |
Call | Deutsche Bank Securities Inc. | 04/06/16 | KRW 11.30 | JPY | 2,242,500,000 | $ | 1,000,615 | ||||||||||||||||||
| USD versus CAD |
Call | Morgan Stanley Capital Services LLC | 03/07/16 | CAD 1.44 | USD | 19,600,000 | 120 | |||||||||||||||||||
| USD versus CNY |
Call | Bank of America Merrill Lynch | 04/22/16 | CNY 6.70 | USD | 10,000,000 | 74,209 | |||||||||||||||||||
| USD versus SGD |
Call | Goldman Sachs International | 03/16/16 | SGD 1.44 | USD | 19,800,000 | 10,999 | |||||||||||||||||||
| USD versus INR |
Put | Bank of America Merrill Lynch | 11/08/16 | INR 66.82 | USD | 10,000,000 | 49,245 | |||||||||||||||||||
| USD versus JPY |
Put | Bank of America Merrill Lynch | 06/13/16 | JPY 120.30 | USD | 29,250,000 | 2,187,822 | |||||||||||||||||||
| USD versus JPY |
Put | Deutsche Bank Securities Inc. | 06/13/16 | JPY 120.30 | USD | 29,250,000 | 1,439,376 | |||||||||||||||||||
| USD versus MXN |
Put | Goldman Sachs International | 08/10/16 | MXN 21.00 | USD | 10,000,000 | 263,613 | |||||||||||||||||||
| Total foreign currency options purchased — currency risk (Cost $2,666,450) |
|
$ | 5,025,999 | |||||||||||||||||||||||
Abbreviations:
Portfolio Composition
By security type, based on Total Investments
as of February 29, 2016
| U.S. Dollar Denominated Bonds and Notes |
41.6 | % | ||
| U.S. Government Sponsored Agency Mortgage-Backed Securities |
21.4 | |||
| Asset-Backed Securities |
17.7 | |||
| U.S. Treasury Securities |
8.5 | |||
| Preferred Stocks |
0.5 | |||
| Municipal Obligations |
0.1 | |||
| Non-U.S. Dollar Denominated Bonds & Notes |
0.1 | |||
| Money Market Funds |
9.7 | |||
| Put Options Purchased |
0.4 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
22 Invesco Core Plus Bond Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
23 Invesco Core Plus Bond Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Interest |
$ | 16,736,411 | ||
| Dividends |
170,635 | |||
| Dividends from affiliated money market funds |
126,840 | |||
| Total investment income |
17,033,886 | |||
| Expenses: |
||||
| Advisory fees |
2,137,073 | |||
| Administrative services fees |
127,208 | |||
| Custodian fees |
16,798 | |||
| Distribution fees: |
||||
| Class A |
652,706 | |||
| Class B |
39,252 | |||
| Class C |
347,339 | |||
| Class R |
14,548 | |||
| Transfer agent fees — A, B, C, R and Y |
663,023 | |||
| Transfer agent fees — R5 |
120 | |||
| Transfer agent fees — R6 |
124 | |||
| Trustees’ and officers’ fees and benefits |
19,871 | |||
| Other |
153,445 | |||
| Total expenses |
4,171,507 | |||
| Less: Fees waived, expenses reimbursed and expense offset arrangement(s) |
(361,856 | ) | ||
| Net expenses |
3,809,651 | |||
| Net investment income |
13,224,235 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities (includes net gain (loss) from securities sold to affiliates of $(206)) |
(463,441 | ) | ||
| Foreign currencies |
78,342 | |||
| Forward foreign currency contracts |
2,065,830 | |||
| Futures contracts |
(5,083,908 | ) | ||
| Option contracts written |
570,334 | |||
| Swap agreements |
1,044,052 | |||
| (1,788,791 | ) | |||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(3,186,571 | ) | ||
| Foreign currencies |
(21,043 | ) | ||
| Forward foreign currency contracts |
984,612 | |||
| Futures contracts |
(650,066 | ) | ||
| Option contracts written |
(335,029 | ) | ||
| Swap agreements |
613,539 | |||
| (2,594,558 | ) | |||
| Net realized and unrealized gain (loss) |
(4,383,349 | ) | ||
| Net increase in net assets resulting from operations |
$ | 8,840,886 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
24 Invesco Core Plus Bond Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
||||||||
| Net investment income |
$ | 13,224,235 | $ | 23,362,873 | ||||
| Net realized gain (loss) |
(1,788,791 | ) | 13,902,919 | |||||
| Change in net unrealized appreciation (depreciation) |
(2,594,558 | ) | (31,722,327 | ) | ||||
| Net increase in net assets resulting from operations |
8,840,886 | 5,543,465 | ||||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(8,700,544 | ) | (14,917,587 | ) | ||||
| Class B |
(101,488 | ) | (298,682 | ) | ||||
| Class C |
(895,653 | ) | (1,472,780 | ) | ||||
| Class R |
(89,790 | ) | (179,006 | ) | ||||
| Class Y |
(1,897,534 | ) | (2,379,308 | ) | ||||
| Class R5 |
(5,158 | ) | (33,725 | ) | ||||
| Class R6 |
(4,893,063 | ) | (10,732,408 | ) | ||||
| Total distributions from net investment income |
(16,583,230 | ) | (30,013,496 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
58,552,521 | 174,061,422 | ||||||
| Class B |
(1,151,284 | ) | (3,166,515 | ) | ||||
| Class C |
15,255,317 | 28,719,763 | ||||||
| Class R |
454,512 | 2,433,288 | ||||||
| Class Y |
15,239,927 | 95,315,767 | ||||||
| Class R5 |
(618,535 | ) | (808,803 | ) | ||||
| Class R6 |
(35,059,900 | ) | 15,020,198 | |||||
| Net increase in net assets resulting from share transactions |
52,672,558 | 311,575,120 | ||||||
| Net increase in net assets |
44,930,214 | 287,105,089 | ||||||
| Net assets: |
||||||||
| Beginning of period |
952,788,122 | 665,683,033 | ||||||
| End of period (includes undistributed net investment income of $(3,868,453) and $(509,458), respectively) |
$ | 997,718,336 | $ | 952,788,122 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Core Plus Bond Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is total return, comprised of current income and capital appreciation.
The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
25 Invesco Core Plus Bond Fund
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. 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. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
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
26 Invesco Core Plus Bond Fund
are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
| C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Futures Contracts — The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| J. | Dollar Rolls and Forward Commitment Transactions — The Fund may enter into dollar roll transactions to enhance the Fund’s performance. The Fund executes its dollar roll transactions in the to be announced (“TBA”) market whereby the Fund makes a forward commitment to purchase a security and, instead of accepting delivery, the position is offset by the sale of the security with a simultaneous agreement to repurchase at a future date. |
The Fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions increase the Fund’s portfolio turnover rate. The Fund will segregate liquid assets in an amount equal to its dollar roll commitments. Dollar roll transactions are considered borrowings under the 1940 Act.
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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.
| K. | 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 included as interest income in the Statement of Operations, even though investors do not receive their principal until maturity. |
| 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 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.
| 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 settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between Counterparties to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| N. | Call Options Written and Purchased — The Fund may write call options and/or buy call options. A covered call option gives the purchaser of such option the right to buy, and the writer the obligation to sell, the underlying security or foreign currency at the stated exercise price during the option period. An uncovered call option exists without the ownership of the underlying security. Options written by the Fund normally will have expiration dates between three and nine months from the date written. The exercise price of a call option may be below, equal to, or above the current market value of the underlying security at the time the option is written. |
Additionally, the Fund may enter into an option on a swap agreement, also called a “swaption”. A swaption is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based premium. A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the Counterparties.
When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded as an asset and an equivalent liability in the Statement of Assets and Liabilities. The amount of the liability is subsequently “marked-to-market” to reflect the current market value of the option written. If a written covered call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written covered call option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. A risk in writing a covered call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing an uncovered call option is that the Fund may incur significant losses if the value of the written security exceeds the exercise price of the option.
When the Fund buys a call option, an amount equal to the premium paid by the Fund is recorded as an investment on the Statement of Assets and Liabilities. The amount of the investment is subsequently “marked-to-market” to reflect the current value of the option purchased. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. 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.
| O. | Put Options Written and Purchased — 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 |
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| 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 Statement of Assets and Liabilities. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations as Net realized gain from 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. | Swap Agreements — The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. Such transactions are agreements between Counterparties. A swap agreement may be negotiated bilaterally and traded over-the-counter (“OTC”) between two parties (“uncleared/OTC”) or, in some instances, must be transacted through a future commission merchant (“FCM”) and cleared through a clearinghouse that serves as a central Counterparty (“centrally cleared swap”). These agreements may contain among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/or provide limits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.
In a centrally cleared swap, the Fund’s ultimate Counterparty is a central clearinghouse. The Fund initially will enter into centrally cleared swaps through an executing broker. When a fund enters into a centrally cleared swap, it must deliver to the central Counterparty (via the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the central Counterparty, but an FCM may require additional initial margin above the amount required by the central Counterparty. Initial margin deposits required upon entering into centrally cleared swaps are satisfied by cash or securities as collateral at the FCM. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the Statement of Assets and Liabilities. During the term of a cleared swap agreement, a “variation margin” amount may be required to be paid by the Fund or may be received by the Fund, based on the daily change in price of the underlying reference instrument subject to the swap agreement and is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities until the centrally cleared swap is terminated at which time a realized gain or loss is recorded.
A CDS is an agreement between Counterparties to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the “par value”, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer “par value” or the full notional value of the referenced obligation, and the Fund would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its Counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund’s maximum risk of loss from Counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the Counterparty and by the designation of collateral by the Counterparty to cover the Fund’s exposure to the Counterparty.
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets.
An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified notional amount.
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Changes in the value of centrally cleared and OTC swap agreements are recognized as unrealized gains (losses) in the Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Statement of Operations. The Fund segregates liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. A short position in a security poses more risk than holding the same security long. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited.
Notional amounts of each individual credit default swap agreement outstanding as of February 29, 2016 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.
| Q. | Other Risks — The Fund may invest in obligations issued by agencies and instrumentalities of the U.S. Government that may vary in the level of support they receive from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the Fund may not be able to recover its investment in such issuer from the U.S. Government. Many securities purchased by the Fund are not guaranteed by the U.S. Government. |
| R. | 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. |
| S. | Collateral — To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||||
| First $500 million |
0 | .45% | ||||
| Next $500 million |
0 | .425% | ||||
| Next $1.5 billion |
0 | .40% | ||||
| Next $2.5 billion |
0 | .375% | ||||
| Over $5 billion |
0 | .35% | ||||
For the six months ended February 29, 2016, 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. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may 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 December 31, 2016, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 0.86%, 1.61%, 1.61%, 1.11%, 0.61%, 0.61% and 0.61%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on December 31, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without the approval of the Board of Trustees. To the extent that the annualized expense ratio does not exceed these expense limits, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $80,941 and reimbursed class level expenses of $205,128, $3,084, $27,290, $2,286 and $41,704 of Class A, Class B, Class C, Class R and Class Y shares, respectively.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
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The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended February 29, 2016, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $132,804 in front-end sales commissions from the sale of Class A shares and $12,853, $461 and $3,808 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of February 29, 2016. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equity Securities |
$ | 124,522,794 | $ | — | $ | — | $ | 124,522,794 | ||||||||
| U.S. Treasury Securities |
— | 103,952,673 | — | 103,952,673 | ||||||||||||
| Corporate Debt Securities |
— | 502,789,776 | — | 502,789,776 | ||||||||||||
| U.S. Government Sponsored Agency Securities |
— | 261,578,185 | — | 261,578,185 | ||||||||||||
| Asset-Backed Securities |
— | 215,588,311 | — | 215,588,311 | ||||||||||||
| Municipal Obligations |
— | 1,269,452 | — | 1,269,452 | ||||||||||||
| Foreign Debt Securities |
— | 988,195 | — | 988,195 | ||||||||||||
| Foreign Sovereign Debt Securities |
— | 4,082,960 | — | 4,082,960 | ||||||||||||
| Options Purchased |
— | 5,025,999 | — | 5,025,999 | ||||||||||||
| 124,522,794 | 1,095,275,551 | — | 1,219,798,345 | |||||||||||||
| Forward Foreign Currency Contracts* |
— | 1,534,655 | — | 1,534,655 | ||||||||||||
| Futures Contracts* |
(841,749 | ) | — | — | (841,749 | ) | ||||||||||
| Options Written* |
— | (4,423,467 | ) | — | (4,423,467 | ) | ||||||||||
| Swap Agreements* |
— | 11,488 | — | 11,488 | ||||||||||||
| Total Investments |
$ | 123,681,045 | $ | 1,092,398,227 | $ | — | $ | 1,216,079,272 | ||||||||
| * | Forward foreign currency contracts, futures contracts and swap agreements are valued at unrealized appreciation (depreciation). Options written are shown at value. |
31 Invesco Core Plus Bond Fund
NOTE 4—Derivative Investments
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 February 29, 2016:
| Value | ||||||||
| Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
| Credit risk: |
||||||||
| Swap agreements(a) |
$ | — | $ | (145,836 | ) | |||
| Currency risk: |
||||||||
| Forward foreign currency contracts(b) |
7,221,770 | (5,687,115 | ) | |||||
| Options purchased(c) |
5,025,999 | — | ||||||
| Options written(d) |
— | (4,423,467 | ) | |||||
| Interest rate risk: |
||||||||
| Futures contracts(e) |
247,314 | (1,089,063 | ) | |||||
| Swap agreements(f) |
157,324 | — | ||||||
| Total |
$ | 12,652,407 | $ | (11,345,481 | ) | |||
| (a) | Values are disclosed on the Statement of Assets and Liabilities under the caption Unrealized depreciation on swap agreements — OTC. |
| (b) | Values are disclosed on the Statement of Assets and Liabilities under the captions Unrealized appreciation on forward foreign currency contracts outstanding and Unrealized depreciation on forward foreign currency contracts outstanding. |
| (c) | Options purchased are at value as reported in the Schedule of Investments. |
| (d) | Values are disclosed on the Statement of Assets and Liabilities under the caption Options written, at value. |
| (e) | Includes cumulative appreciation (depreciation) of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
| (f) | Includes cumulative appreciation of centrally cleared swap agreements. Only current day’s variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the six months ended February 29, 2016
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 |
Futures Contracts |
Options Purchased(a) |
Options Written |
Swap Agreements |
||||||||||||||||
| Realized Gain (Loss): |
||||||||||||||||||||
| Commodity risk |
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Credit risk |
— | — | (106,920 | ) | 283,458 | 1,057,444 | ||||||||||||||
| Currency risk |
2,065,830 | — | 1,784,949 | 286,876 | — | |||||||||||||||
| Equity risk |
— | — | — | — | — | |||||||||||||||
| Interest rate risk |
— | (5,083,908 | ) | (1,930,829 | ) | — | (13,392 | ) | ||||||||||||
| Change in Net Unrealized Appreciation (Depreciation): |
||||||||||||||||||||
| Commodity risk |
— | — | — | — | — | |||||||||||||||
| Credit risk |
— | — | 95,346 | (97,734 | ) | (71,648 | ) | |||||||||||||
| Currency risk |
984,612 | — | 2,734,433 | (237,295 | ) | — | ||||||||||||||
| Equity risk |
— | — | — | — | — | |||||||||||||||
| Interest rate risk |
— | (650,066 | ) | (278,489 | ) | — | 685,187 | |||||||||||||
| Total |
$ | 3,050,442 | $ | (5,733,974 | ) | $ | 2,298,490 | $ | 235,305 | $ | 1,657,591 | |||||||||
| (a) | Options purchased are included in the net realized gain (loss) from investment securities and the change in net unrealized appreciation (depreciation) of investment securities. |
The table below summarizes the average notional value of forward foreign currency contracts, futures contracts, options purchased, options written and swap agreements outstanding during the period.
| Forward Foreign Currency Contracts |
Futures Contracts |
Options Purchased |
Options Written |
Swap Agreements |
||||||||||||||||
| Average notional value |
$ | 394,773,949 | $ | 192,694,736 | $ | 249,723,169 | $ | 56,472,080 | $ | 86,759,021 | ||||||||||
32 Invesco Core Plus Bond Fund
| Open Forward Foreign Currency Contracts | ||||||||||||||||||||||||||
| Settlement Date |
Counterparty |
Contract to | Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||
| Deliver | Receive | |||||||||||||||||||||||||
| 03/01/2016 |
Citigroup Global Markets Inc. |
JPY | 20,748,941 | USD | 183,240 | $ | 184,057 | $ | (817 | ) | ||||||||||||||||
| 03/01/2016 |
Citigroup Global Markets Inc. |
USD | 22,400,000 | JPY | 2,532,185,600 | 22,462,241 | 62,241 | |||||||||||||||||||
| 03/01/2016 |
Deutsche Bank Securities Inc. |
JPY | 1,006,327,347 | USD | 8,960,000 | 8,926,821 | 33,179 | |||||||||||||||||||
| 03/01/2016 |
Nomura Securities International, Inc. |
JPY | 1,505,109,312 | USD | 13,440,000 | 13,351,363 | 88,637 | |||||||||||||||||||
| 03/08/2016 |
Morgan Stanley Capital Services LLC |
CAD | 17,474,170 | USD | 12,401,367 | 12,916,599 | (515,232 | ) | ||||||||||||||||||
| 03/08/2016 |
Morgan Stanley Capital Services LLC |
USD | 12,000,000 | CAD | 17,474,170 | 12,916,599 | 916,599 | |||||||||||||||||||
| 03/11/2016 |
Citigroup Global Markets Inc. |
EUR | 305,600 | USD | 337,072 | 332,534 | 4,538 | |||||||||||||||||||
| 03/11/2016 |
Deutsche Bank Securities Inc. |
GBP | 395,146 | USD | 595,126 | 550,010 | 45,116 | |||||||||||||||||||
| 03/11/2016 |
Deutsche Bank Securities Inc. |
JPY | 1,202,000,000 | USD | 10,293,346 | 10,666,582 | (373,236 | ) | ||||||||||||||||||
| 03/11/2016 |
Deutsche Bank Securities Inc. |
USD | 10,000,000 | JPY | 1,202,000,000 | 10,666,582 | 666,582 | |||||||||||||||||||
| 03/11/2016 |
Goldman Sachs International |
CAD | 13,925,900 | USD | 10,000,000 | 10,293,792 | (293,792 | ) | ||||||||||||||||||
| 03/11/2016 |
Goldman Sachs International |
EUR | 207,393 | USD | 223,197 | 225,672 | (2,475 | ) | ||||||||||||||||||
| 03/11/2016 |
Goldman Sachs International |
GBP | 86,210 | USD | 129,264 | 119,997 | 9,267 | |||||||||||||||||||
| 03/11/2016 |
Goldman Sachs International |
USD | 10,041,700 | CAD | 13,925,900 | 10,293,792 | 252,092 | |||||||||||||||||||
| 03/11/2016 |
Goldman Sachs International |
USD | 216,751 | EUR | 200,000 | 217,627 | 876 | |||||||||||||||||||
| 03/11/2016 |
Goldman Sachs International |
USD | 57,047 | GBP | 38,315 | 53,332 | (3,715 | ) | ||||||||||||||||||
| 03/14/2016 |
JPMorgan Chase Bank, N.A. |
AUD | 15,000,000 | USD | 10,578,150 | 10,698,774 | (120,624 | ) | ||||||||||||||||||
| 03/14/2016 |
JPMorgan Chase Bank, N.A. |
USD | 10,631,625 | AUD | 15,000,000 | 10,698,774 | 67,149 | |||||||||||||||||||
| 03/16/2016 |
Deutsche Bank Securities Inc. |
KRW | 13,046,400,000 | USD | 10,800,000 | 10,533,891 | 266,109 | |||||||||||||||||||
| 03/16/2016 |
Deutsche Bank Securities Inc. |
USD | 10,800,000 | JPY | 1,216,954,800 | 10,801,322 | 1,322 | |||||||||||||||||||
| 03/18/2016 |
Barclays Bank PLC |
JPY | 1,231,000,200 | USD | 11,002,911 | 10,926,806 | 76,105 | |||||||||||||||||||
| 03/18/2016 |
Barclays Bank PLC |
USD | 10,800,000 | JPY | 1,231,000,200 | 10,926,806 | 126,806 | |||||||||||||||||||
| 03/22/2016 |
Goldman Sachs International |
CAD | 44,302,356 | USD | 32,400,000 | 32,747,693 | (347,693 | ) | ||||||||||||||||||
| 03/22/2016 |
Goldman Sachs International |
JPY | 3,683,883,240 | USD | 32,489,430 | 32,704,409 | (214,979 | ) | ||||||||||||||||||
| 03/22/2016 |
Goldman Sachs International |
USD | 32,475,455 | CAD | 44,302,356 | 32,747,693 | 272,238 | |||||||||||||||||||
| 03/22/2016 |
Goldman Sachs International |
USD | 32,400,000 | JPY | 3,683,883,240 | 32,704,409 | 304,409 | |||||||||||||||||||
| 03/29/2016 |
Nomura Securities International, Inc. |
SGD | 14,100,123 | USD | 10,000,000 | 10,023,208 | (23,208 | ) | ||||||||||||||||||
| 03/29/2016 |
Nomura Securities International, Inc. |
USD | 10,000,000 | EUR | 9,095,622 | 9,903,013 | (96,987 | ) | ||||||||||||||||||
| 03/31/2016 |
Deutsche Bank Securities Inc. |
USD | 10,750,000 | GBP | 7,691,812 | 10,707,222 | (42,778 | ) | ||||||||||||||||||
| 04/01/2016 |
Deutsche Bank Securities Inc. |
TWD | 357,867,500 | USD | 10,750,000 | 10,721,808 | 28,192 | |||||||||||||||||||
| 04/04/2016 |
Deutsche Bank Securities Inc. |
MXN | 45,557,435 | USD | 2,651,000 | 2,505,409 | 145,591 | |||||||||||||||||||
| 04/04/2016 |
Deutsche Bank Securities Inc. |
USD | 2,685,378 | MXN | 45,557,435 | 2,505,409 | (179,969 | ) | ||||||||||||||||||
| 04/15/2016 |
Deutsche Bank Securities Inc. |
CNY | 133,860,000 | USD | 20,000,000 | 20,342,950 | (342,950 | ) | ||||||||||||||||||
| 04/15/2016 |
Deutsche Bank Securities Inc. |
USD | 20,000,000 | CNY | 133,840,000 | 20,339,910 | 339,910 | |||||||||||||||||||
| 05/05/2016 |
JPMorgan Chase Bank, N.A. |
CNY | 66,895,000 | USD | 10,000,000 | 10,141,555 | (141,555 | ) | ||||||||||||||||||
| 05/09/2016 |
Goldman Sachs International |
CAD | 13,902,110 | USD | 10,000,000 | 10,277,016 | (277,016 | ) | ||||||||||||||||||
| 05/09/2016 |
Goldman Sachs International |
JPY | 1,166,292,000 | USD | 10,496,733 | 10,367,937 | 128,796 | |||||||||||||||||||
| 05/09/2016 |
Goldman Sachs International |
USD | 10,057,449 | CAD | 13,902,110 | 10,277,016 | 219,567 | |||||||||||||||||||
| 05/09/2016 |
Goldman Sachs International |
USD | 10,000,000 | JPY | 1,166,292,000 | 10,367,937 | 367,937 | |||||||||||||||||||
| 05/10/2016 |
JPMorgan Chase Bank, N.A. |
JPY | 1,242,661,299 | USD | 10,944,035 | 11,047,180 | (103,145 | ) | ||||||||||||||||||
| 05/10/2016 |
JPMorgan Chase Bank, N.A. |
USD | 10,963,835 | CHF | 10,627,026 | 10,681,277 | (282,558 | ) | ||||||||||||||||||
| 05/10/2016 |
Nomura Securities International, Inc. |
CHF | 10,627,026 | USD | 10,700,000 | 10,681,277 | 18,723 | |||||||||||||||||||
| 05/10/2016 |
Nomura Securities International, Inc. |
USD | 10,700,000 | JPY | 1,242,661,299 | 11,047,180 | 347,180 | |||||||||||||||||||
| 06/13/2016 |
Deutsche Bank Securities Inc. |
CNY | 38,840,580 | USD | 6,084,051 | 5,863,749 | 220,302 | |||||||||||||||||||
| 06/13/2016 |
Deutsche Bank Securities Inc. |
USD | 6,120,000 | CNY | 38,840,580 | 5,863,749 | (256,251 | ) | ||||||||||||||||||
| 06/15/2016 |
Deutsche Bank Securities Inc. |
JPY | 1,159,291,000 | USD | 9,800,000 | 10,319,214 | (519,214 | ) | ||||||||||||||||||
| 06/15/2016 |
Deutsche Bank Securities Inc. |
USD | 24,214,820 | JPY | 2,813,931,625 | 25,047,690 | 832,870 | |||||||||||||||||||
| 06/15/2016 |
Merrill Lynch International |
JPY | 1,654,640,625 | USD | 13,750,000 | 14,728,476 | (978,476 | ) | ||||||||||||||||||
| 07/19/2016 |
Citigroup Global Markets Inc. |
JPY | 2,392,938,810 | USD | 21,270,000 | 21,329,478 | (59,478 | ) | ||||||||||||||||||
| 07/19/2016 |
Citigroup Global Markets Inc. |
USD | 21,336,640 | JPY | 2,392,938,810 | 21,329,478 | (7,162 | ) | ||||||||||||||||||
| 07/19/2016 |
Deutsche Bank Securities Inc. |
JPY | 1,697,289,750 | USD | 14,625,000 | 15,128,805 | (503,805 | ) | ||||||||||||||||||
33 Invesco Core Plus Bond Fund
| Open Forward Foreign Currency Contracts—(continued) | ||||||||||||||||||||||||||
| Settlement Date |
Counterparty |
Contract to | Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||
| Deliver | Receive | |||||||||||||||||||||||||
| 07/19/2016 |
Deutsche Bank Securities Inc. |
USD | 14,372,241 | JPY | 1,697,289,750 | $ | 15,128,805 | $ | 756,564 | |||||||||||||||||
| 11/28/2016 |
Deutsche Bank Securities Inc. |
USD | 12,157,916 | CNY | 83,129,750 | 12,359,034 | 201,118 | |||||||||||||||||||
| 11/28/2016 |
Goldman Sachs International |
USD | 5,781,412 | CNY | 39,520,000 | 5,875,502 | 94,090 | |||||||||||||||||||
| 11/28/2016 |
JPMorgan Chase Bank, N.A. | CNY | 122,649,750 | USD | 18,562,202 | 18,234,537 | 327,665 | |||||||||||||||||||
| Total open forward foreign currency contracts — currency risk |
$ | 1,534,655 | ||||||||||||||||||||||||
| Open Futures Contracts | ||||||||||||||||||||
| Futures Contracts | Type of Contract |
Number of Contracts |
Expiration Month |
Notional Value |
Unrealized Appreciation |
|||||||||||||||
| U.S. 2 Year Treasury Notes |
Long | 201 | June-2016 | 43,927,922 | $ | (94,650 | ) | |||||||||||||
| U.S. 5 Year Treasury Notes |
Long | 304 | June-2016 | 36,779,250 | (63,856 | ) | ||||||||||||||
| U.S. 10 Year Treasury Notes |
Long | 221 | June-2016 | 28,843,953 | (68,823 | ) | ||||||||||||||
| U.S. Long Bond |
Short | 101 | June-2016 | (16,617,656 | ) | 78,666 | ||||||||||||||
| U.S. Ultra Bond |
Short | 125 | June-2016 | (21,644,531 | ) | 168,648 | ||||||||||||||
| Euro Bond |
Short | 221 | March-2016 | (33,698,256 | ) | (861,734 | ) | |||||||||||||
| Total — interest rate risk |
$ | (841,749 | ) | |||||||||||||||||
| Open Over-The-Counter Credit Default Swaptions Written — Credit Risk | ||||||||||||||||||||||||||||||||||||||||||||
| Description | Type of Contract |
Counterparty | Exercise Rate |
Pay/ Receive Floating Rate |
Reference Entity | Expiration Date |
Implied Credit Spread(a) |
Premiums Received |
Notional Value |
Value | Unrealized Appreciation (Depreciation) |
|||||||||||||||||||||||||||||||||
| 5 Year Credit Default Swap |
Call | |
Goldman Sachs International |
|
0.98 | % | Receive | |
Markit CDX North America High |
|
03/16/2016 | 0.05 | % | (152,000 | ) | 20,000,000 | $ | (265,146 | ) | $ | (113,146 | ) | ||||||||||||||||||||||
| (a) | Implied credit spreads represent the current level as of February 29, 2016 at which protection could be bought or sold given the terms of the existing credit default swap contract and serve as an indicator of the current status of the payment/performance risk of the credit default swap contract. An implied credit 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 generally. |
| Open Over-The-Counter Foreign Currency Options Written | ||||||||||||||||||||||||||||||||||||||
| Description | Type of Contract |
Counterparty | Expiration Date |
Strike Price | Premiums Received |
Notional Value |
Value | Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||||||||||
| JPY versus KRW |
Call | Deutsche Bank Securities Inc. | 04/06/2016 | KRW | 11.30 | $ | (265,627 | ) | JPY | 2,242,500,000 | $ | (275,203 | ) | $ | (9,576 | ) | ||||||||||||||||||||||
| USD versus CNY |
Call | Bank of America Merrill Lunch | 04/22/2016 | CNY | 6.94 | (81,850 | ) | USD | 10,000,000 | (33,112 | ) | 48,738 | ||||||||||||||||||||||||||
| USD versus CNY |
Call | JPMorgan Chase Bank, N.A. | 05/03/2016 | CNY | 6.90 | (121,950 | ) | USD | 10,000,000 | (44,728 | ) | 77,222 | ||||||||||||||||||||||||||
| USD versus MXN |
Call | Goldman Sachs International | 08/10/2016 | MXN | 21.00 | (162,410 | ) | USD | 10,000,000 | (76,347 | ) | 86,063 | ||||||||||||||||||||||||||
| USD versus JPY |
Put | Deutsche Bank Securities Inc. | 06/13/2016 | JPY | 120.30 | (1,266,817 | ) | USD | 29,250,000 | (2,187,822 | ) | (921,005 | ) | |||||||||||||||||||||||||
| USD versus JPY |
Put | Citigroup Global Markets Inc. | 07/14/2016 | JPY | 116.50 | (1,569,555 | ) | USD | 29,250,000 | (1,507,339 | ) | 62,216 | ||||||||||||||||||||||||||
| USD versus CNY |
Put | Goldman Sachs International | 03/24/2016 | CNY | 6.52 | (50,591 | ) | USD | 10,000,000 | (33,770 | ) | 16,821 | ||||||||||||||||||||||||||
| Subtotal foreign currency options written — currency risk |
|
$ | (3,518,800 | ) | $ | (4,158,321 | ) | $ | (639,521 | ) | ||||||||||||||||||||||||||||
| Total options written |
|
$ | (3,670,800 | ) | $ | (4,423,467 | ) | $ | (752,667 | ) | ||||||||||||||||||||||||||||
Currency Abbreviations:
34 Invesco Core Plus Bond Fund
| Options Written Transactions | ||||||||||||||||||||||||||||
| Call Options | ||||||||||||||||||||||||||||
| Notional Value |
Notional Value |
Notional Value |
Premiums Received |
|||||||||||||||||||||||||
| Beginning of Period |
EUR | 17,000,000 | JPY | — | USD | 28,500,000 | $ | 409,003 | ||||||||||||||||||||
| Written |
EUR | — | JPY | 2,242,500,000 | USD | 88,500,000 | 969,159 | |||||||||||||||||||||
| Closed |
EUR | — | JPY | — | USD | (48,000,000 | ) | (278,783 | ) | |||||||||||||||||||
| Expired |
EUR | (17,000,000 | ) | JPY | — | USD | (19,000,000 | ) | (315,542 | ) | ||||||||||||||||||
| End of Period |
EUR | — | JPY | 2,242,500,000 | USD | 50,000,000 | $ | 783,837 | ||||||||||||||||||||
| Options Written Transactions | ||||||||||||||||||||
| Put Options | ||||||||||||||||||||
| Notional Value |
Notional Value |
Premiums Received |
||||||||||||||||||
| Beginning of Period |
EUR | — | USD | 9,000,000 | $ | 122,958 | ||||||||||||||
| Written |
EUR | 9,000,000 | USD | 118,500,000 | 3,211,664 | |||||||||||||||
| Closed |
EUR | — | USD | (40,000,000 | ) | (210,500 | ) | |||||||||||||
| Expired |
EUR | (9,000,000 | ) | USD | (19,000,000 | ) | (237,159 | ) | ||||||||||||
| End of Period |
EUR | — | USD | 68,500,000 | $ | 2,886,963 | ||||||||||||||
| Open Centrally Cleared Interest Rate Swap Agreements — Interest Rate Risk |
||||||||||||||||||||||||||||
| Counterparty/ Clearinghouse |
Pay/Receive Floating Rate |
Floating Rate Index | Fixed Rate |
Termination Date |
Notional Value | Unrealized Appreciation |
||||||||||||||||||||||
| Credit Suisse Securities (USA) LLC/CME |
Pay | 3 Month AUD BBSW | 2.11 | % | February-2019 | AUD | 144,300,000 | $ | 157,324 | |||||||||||||||||||
Abbreviations:
| Open Over-The-Counter Credit Default Swap Agreements — Credit Risk | ||||||||||||||||||||||||||||||
| Counterparty | Reference Entity | Buy/Sell Protection |
(Pay)/Receive Fixed Rate |
Expiration Date |
Implied Credit Spread(a) |
Notional Value |
Upfront Payments |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||
| Bank of America Merrill Lynch |
Citigroup Inc. | Buy | (1.00 | )% | 06/20/2017 | 0.60 | % | $ | (5,500,000 | ) | $ | 116,832 | $ | (145,836 | ) | |||||||||||||||
| (a) | Implied credit spreads represent the current level as of February 29, 2016, at which protection could be bought or sold given the terms of the existing credit default swap contract and serve as an indicator of the current status of the payment/performance risk of the credit default swap contract. An implied credit 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 generally. |
35 Invesco Core Plus Bond Fund
Offsetting Assets and Liabilities
Accounting Standards Update (“ASU”) No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which was subsequently clarified in Financial Accounting Standards Board ASU 2013-01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” is intended to enhance disclosures about financial instruments and derivative instruments that are subject to offsetting arrangements on the Statement of Assets and Liabilities and to enable investors to better understand the effect of those arrangements on the Fund’s financial position. In order for an arrangement to be eligible for netting, the Fund must have a basis to conclude that such netting arrangements are legally enforceable. The Fund enters into netting agreements and collateral agreements in an attempt to reduce the Fund’s Counterparty credit risk by providing for a single net settlement with a Counterparty of all financial transactions covered by the agreement in an event of default as defined under such agreement.
The following tables present derivative instruments that are either subject to an enforceable netting agreement or offset by collateral arrangements as of February 29, 2016
| Counterparty | Gross amounts Assets |
Gross Amounts Not Offset in the Statement of Assets and Liabilities |
Net Amount | |||||||||||||||||
| Financial Instruments |
Collateral Received | |||||||||||||||||||
| Non-Cash | Cash | |||||||||||||||||||
| Barclays Bank PLC(a) |
$ | 202,911 | $ | — | $ | — | $ | — | $ | 202,911 | ||||||||||
| Citigroup Global Markets Inc.(a) |
66,779 | (66,779 | ) | — | — | — | ||||||||||||||
| Deutsche Bank Securities Inc.(a) |
3,536,855 | (2,218,203 | ) | — | — | 1,318,652 | ||||||||||||||
| Goldman Sachs International(a) |
1,649,272 | (1,139,670 | ) | — | — | 509,602 | ||||||||||||||
| JPMorgan Chase Bank, N.A.(a) |
394,814 | (394,814 | ) | — | — | — | ||||||||||||||
| Morgan Stanley Capital Services LLC(a) |
916,599 | (515,232 | ) | — | — | 401,367 | ||||||||||||||
| Nomura Securities International, Inc.(a) |
454,540 | (120,195 | ) | — | — | 334,345 | ||||||||||||||
| Bank of America Merrill Lynch(b) |
2,311,276 | (33,112 | ) | — | — | 2,278,164 | ||||||||||||||
| Deutsche Bank Securities Inc.(b) |
2,439,991 | (2,439,991 | ) | — | — | — | ||||||||||||||
| Goldman Sachs International(b) |
274,612 | (274,612 | ) | — | — | — | ||||||||||||||
| Morgan Stanley Capital Services LLC(b) |
120 | — | — | — | 120 | |||||||||||||||
| Bank of America Merrill Lynch(c) |
117,492 | (117,492 | ) | — | — | — | ||||||||||||||
| Credit Suisse Securities (USA) LLC(d) |
157,324 | — | — | — | 157,324 | |||||||||||||||
| Total |
$ | 12,522,585 | $ | (7,320,100 | ) | $ | — | $ | — | $ | 5,202,485 | |||||||||
| Counterparty |
Gross amounts Liabilities |
Gross Amounts Not Offset in the Statement of Assets and Liabilities |
Net Amount | |||||||||||||||||
| Financial Instruments |
Collateral Pledged | |||||||||||||||||||
| Non-Cash | Cash | |||||||||||||||||||
| Citigroup Global Markets Inc.(a) |
$ | 67,457 | $ | (66,779 | ) | $ | — | $ | — | $ | 678 | |||||||||
| Deutsche Bank Securities Inc.(a) |
2,218,203 | (2,218,203 | ) | — | — | — | ||||||||||||||
| Goldman Sachs International(a) |
1,139,670 | (1,139,670 | ) | — | — | — | ||||||||||||||
| JPMorgan Chase Bank, N.A.(a) |
647,882 | (394,814 | ) | — | — | 253,068 | ||||||||||||||
| Merrill Lynch International(a) |
978,476 | — | — | — | 978,476 | |||||||||||||||
| Morgan Stanley Capital Services LLC(a) |
515,232 | (515,232 | ) | — | — | — | ||||||||||||||
| Nomura Securities International, Inc.(a) |
120,195 | (120,195 | ) | — | — | — | ||||||||||||||
| Bank of America Merrill Lynch(b) |
33,112 | (33,112 | ) | — | — | — | ||||||||||||||
| Citigroup Global Markets Inc. (b) |
1,507,339 | — | — | — | 1,507,339 | |||||||||||||||
| Deutsche Bank Securities Inc. (b) |
2,463,025 | (2,439,991 | ) | — | — | 23,034 | ||||||||||||||
| Goldman Sachs International (b) |
375,263 | (274,612 | ) | — | — | 100,651 | ||||||||||||||
| JPMorgan Chase Bank, N.A. (b) |
44,728 | — | — | — | 44,728 | |||||||||||||||
| Bank of America Merrill Lynch(c) |
170,739 | (117,492 | ) | (53,247 | ) | — | — | |||||||||||||
| Credit Suisse Securities (USA) LLC(c) |
662 | (662 | ) | — | — | — | ||||||||||||||
| Total |
$ | 10,281,983 | $ | (7,320,762 | ) | $ | (53,247 | ) | $ | — | $ | 2,907,974 | ||||||||
| (a) | Forward foreign currency contracts Counterparty. |
| (b) | Options contracts at value — OTC Counterparty. |
| (c) | Swap agreements — OTC Counterparty. |
| (d) | Swap agreements — centrally cleared Counterparty. Includes cumulative appreciation (depreciation). |
36 Invesco Core Plus Bond Fund
NOTE 5—Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the six months ended February 29, 2016, the Fund engaged in securities purchases of $6,865,588 and securities sales of $319,084, which resulted in net realized gain (loss) of $(206).
NOTE 6—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,423.
NOTE 7—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 8—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 State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund’s total assets.
NOTE 9—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of August 31, 2015, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| August 31, 2016 |
$ | 76,820,639 | $ | — | $ | 76,820,639 | ||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
37 Invesco Core Plus Bond Fund
NOTE 10—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $1,955,906,156 and $1,874,012,741, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $692,699,645 and $704,055,139, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 17,917,544 | ||
| Aggregate unrealized (depreciation) of investment securities |
(26,027,856 | ) | ||
| Net unrealized appreciation (depreciation) of investment securities |
$ | (8,110,312 | ) | |
Cost of investments for tax purposes is $1,227,908,657.
NOTE 11—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
11,103,571 | $ | 117,499,515 | 22,794,656 | $ | 247,856,089 | ||||||||||
| Class B |
34,634 | 366,364 | 97,108 | 1,055,710 | ||||||||||||
| Class C |
2,487,622 | 26,283,381 | 4,218,004 | 45,900,723 | ||||||||||||
| Class R |
116,455 | 1,233,554 | 434,461 | 4,705,542 | ||||||||||||
| Class Y |
4,488,058 | 47,456,027 | 10,907,806 | 118,966,984 | ||||||||||||
| Class R5 |
137 | 1,456 | 29,743 | 317,612 | ||||||||||||
| Class R6 |
2,237,396 | 23,653,746 | 2,716,835 | 29,628,889 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
724,496 | 7,665,409 | 1,361,980 | 14,812,636 | ||||||||||||
| Class B |
7,971 | 84,341 | 25,983 | 282,808 | ||||||||||||
| Class C |
73,040 | 772,544 | 132,476 | 1,439,880 | ||||||||||||
| Class R |
8,287 | 87,654 | 16,338 | 177,776 | ||||||||||||
| Class Y |
102,350 | 1,083,717 | 155,336 | 1,687,568 | ||||||||||||
| Class R5 |
398 | 4,220 | 2,906 | 31,585 | ||||||||||||
| Class R6 |
462,720 | 4,893,063 | 987,288 | 10,732,408 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
87,522 | 926,899 | 196,567 | 2,136,815 | ||||||||||||
| Class B |
(87,537 | ) | (926,899 | ) | (196,584 | ) | (2,136,815 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(6,389,724 | ) | (67,539,302 | ) | (8,351,410 | ) | (90,744,118 | ) | ||||||||
| Class B |
(63,789 | ) | (675,090 | ) | (218,008 | ) | (2,368,218 | ) | ||||||||
| Class C |
(1,114,793 | ) | (11,800,608 | ) | (1,716,630 | ) | (18,620,840 | ) | ||||||||
| Class R |
(81,827 | ) | (866,696 | ) | (226,273 | ) | (2,450,030 | ) | ||||||||
| Class Y |
(3,147,837 | ) | (33,299,817 | ) | (2,330,560 | ) | (25,338,785 | ) | ||||||||
| Class R5 |
(58,816 | ) | (624,211 | ) | (106,862 | ) | (1,158,000 | ) | ||||||||
| Class R6 |
(6,034,245 | ) | (63,606,709 | ) | (2,325,168 | ) | (25,341,099 | ) | ||||||||
| Net increase in share activity |
4,956,089 | $ | 52,672,558 | 28,605,992 | $ | 311,575,120 | ||||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 41% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
| In addition, 20% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are mutual funds that are advised by Invesco. |
38 Invesco Core Plus Bond Fund
NOTE 12—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 10.63 | $ | 0.14 | $ | (0.04 | ) | $ | 0.10 | $ | (0.18 | ) | $ | — | $ | (0.18 | ) | $ | 10.55 | 0.91 | % | $ | 549,691 | 0.84 | %(d) | 0.94 | %(d) | 2.65 | %(d) | 248 | % | |||||||||||||||||||||||||
| Year ended 08/31/15 |
10.92 | 0.30 | (0.20 | ) | 0.10 | (0.39 | ) | — | (0.39 | ) | 10.63 | 0.91 | 495,226 | 0.84 | 0.97 | 2.78 | 537 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.41 | 0.39 | 0.58 | 0.97 | (0.46 | ) | — | (0.46 | ) | 10.92 | 9.44 | 333,641 | 0.81 | 1.03 | 3.62 | 398 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
10.95 | 0.31 | (0.51 | ) | (0.20 | ) | (0.34 | ) | — | (0.34 | ) | 10.41 | (1.92 | ) | 324,537 | 0.73 | 0.99 | 2.86 | 252 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
10.60 | 0.37 | 0.44 | 0.81 | (0.44 | ) | (0.02 | ) | (0.46 | ) | 10.95 | 7.86 | 295,311 | 0.74 | 1.01 | 3.44 | 297 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
10.75 | 0.35 | (0.03 | ) | 0.32 | (0.32 | ) | (0.15 | ) | (0.47 | ) | 10.60 | 3.10 | 225,417 | 0.75 | 1.20 | 3.27 | 138 | ||||||||||||||||||||||||||||||||||||||
| Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
10.63 | 0.10 | (0.04 | ) | 0.06 | (0.14 | ) | — | (0.14 | ) | 10.55 | 0.53 | 7,281 | 1.59 | (d) | 1.69 | (d) | 1.90 | (d) | 248 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.91 | 0.22 | (0.19 | ) | 0.03 | (0.31 | ) | — | (0.31 | ) | 10.63 | 0.25 | 8,494 | 1.59 | 1.72 | 2.03 | 537 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.41 | 0.31 | 0.57 | 0.88 | (0.38 | ) | — | (0.38 | ) | 10.91 | 8.53 | 11,899 | 1.56 | 1.78 | 2.87 | 398 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
10.95 | 0.23 | (0.51 | ) | (0.28 | ) | (0.26 | ) | — | (0.26 | ) | 10.41 | (2.66 | ) | 15,876 | 1.48 | 1.74 | 2.11 | 252 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
10.60 | 0.29 | 0.44 | 0.73 | (0.36 | ) | (0.02 | ) | (0.38 | ) | 10.95 | 7.06 | 22,465 | 1.49 | 1.76 | 2.69 | 297 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
10.74 | 0.27 | (0.02 | ) | 0.25 | (0.24 | ) | (0.15 | ) | (0.39 | ) | 10.60 | 2.43 | 24,401 | 1.50 | 1.95 | 2.52 | 138 | ||||||||||||||||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
10.63 | 0.10 | (0.04 | ) | 0.06 | (0.14 | ) | — | (0.14 | ) | 10.55 | 0.53 | 79,906 | 1.59 | (d) | 1.69 | (d) | 1.90 | (d) | 248 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.91 | 0.22 | (0.19 | ) | 0.03 | (0.31 | ) | — | (0.31 | ) | 10.63 | 0.25 | 65,160 | 1.59 | 1.72 | 2.03 | 537 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.41 | 0.31 | 0.57 | 0.88 | (0.38 | ) | — | (0.38 | ) | 10.91 | 8.53 | 38,142 | 1.56 | 1.78 | 2.87 | 398 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
10.94 | 0.23 | (0.50 | ) | (0.27 | ) | (0.26 | ) | — | (0.26 | ) | 10.41 | (2.56 | ) | 35,770 | 1.48 | 1.74 | 2.11 | 252 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
10.60 | 0.29 | 0.44 | 0.73 | (0.37 | ) | (0.02 | ) | (0.39 | ) | 10.94 | 6.96 | 37,950 | 1.49 | 1.76 | 2.69 | 297 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
10.74 | 0.27 | (0.02 | ) | 0.25 | (0.24 | ) | (0.15 | ) | (0.39 | ) | 10.60 | 2.43 | 33,476 | 1.50 | 1.95 | 2.52 | 138 | ||||||||||||||||||||||||||||||||||||||
| Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
10.63 | 0.13 | (0.05 | ) | 0.08 | (0.16 | ) | — | (0.16 | ) | 10.55 | 0.78 | 6,256 | 1.09 | (d) | 1.19 | (d) | 2.40 | (d) | 248 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.91 | 0.27 | (0.19 | ) | 0.08 | (0.36 | ) | — | (0.36 | ) | 10.63 | 0.75 | 5,848 | 1.09 | 1.22 | 2.53 | 537 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.41 | 0.36 | 0.57 | 0.93 | (0.43 | ) | — | (0.43 | ) | 10.91 | 9.07 | 3,554 | 1.06 | 1.28 | 3.37 | 398 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
10.95 | 0.28 | (0.51 | ) | (0.23 | ) | (0.31 | ) | — | (0.31 | ) | 10.41 | (2.16 | ) | 2,820 | 0.98 | 1.24 | 2.61 | 252 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
10.60 | 0.34 | 0.44 | 0.78 | (0.41 | ) | (0.02 | ) | (0.43 | ) | 10.95 | 7.59 | 3,313 | 0.99 | 1.26 | 3.19 | 297 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
10.74 | 0.32 | (0.02 | ) | 0.30 | (0.29 | ) | (0.15 | ) | (0.44 | ) | 10.60 | 2.94 | 2,301 | 1.00 | 1.45 | 3.02 | 138 | ||||||||||||||||||||||||||||||||||||||
| Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
10.64 | 0.15 | (0.04 | ) | 0.11 | (0.19 | ) | — | (0.19 | ) | 10.56 | 1.03 | 116,820 | 0.59 | (d) | 0.69 | (d) | 2.90 | (d) | 248 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.92 | 0.33 | (0.19 | ) | 0.14 | (0.42 | ) | — | (0.42 | ) | 10.64 | 1.25 | 102,380 | 0.59 | 0.72 | 3.03 | 537 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.42 | 0.42 | 0.56 | 0.98 | (0.48 | ) | — | (0.48 | ) | 10.92 | 9.61 | 9,699 | 0.56 | 0.78 | 3.87 | 398 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
10.95 | 0.34 | (0.50 | ) | (0.16 | ) | (0.37 | ) | — | (0.37 | ) | 10.42 | (1.58 | ) | 1,456 | 0.48 | 0.74 | 3.11 | 252 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
10.60 | 0.39 | 0.45 | 0.84 | (0.47 | ) | (0.02 | ) | (0.49 | ) | 10.95 | 8.12 | 5,753 | 0.49 | 0.76 | 3.69 | 297 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
10.74 | 0.37 | (0.01 | ) | 0.36 | (0.35 | ) | (0.15 | ) | (0.50 | ) | 10.60 | 3.46 | 5,234 | 0.50 | 0.95 | 3.52 | 138 | ||||||||||||||||||||||||||||||||||||||
| Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
10.63 | 0.15 | (0.05 | ) | 0.10 | (0.19 | ) | — | (0.19 | ) | 10.54 | 0.95 | 48 | 0.57 | (d) | 0.59 | (d) | 2.92 | (d) | 248 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.91 | 0.33 | (0.19 | ) | 0.14 | (0.42 | ) | — | (0.42 | ) | 10.63 | 1.25 | 668 | 0.59 | 0.60 | 3.03 | 537 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.40 | 0.41 | 0.58 | 0.99 | (0.48 | ) | — | (0.48 | ) | 10.91 | 9.72 | 1,495 | 0.56 | 0.60 | 3.87 | 398 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
10.94 | 0.34 | (0.51 | ) | (0.17 | ) | (0.37 | ) | — | (0.37 | ) | 10.40 | (1.68 | ) | 1,960 | 0.48 | 0.56 | 3.11 | 252 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
10.60 | 0.39 | 0.44 | 0.83 | (0.47 | ) | (0.02 | ) | (0.49 | ) | 10.94 | 8.03 | 169,474 | 0.49 | 0.56 | 3.69 | 297 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
10.74 | 0.37 | (0.01 | ) | 0.36 | (0.35 | ) | (0.15 | ) | (0.50 | ) | 10.60 | 3.46 | 166,656 | 0.50 | 0.66 | 3.52 | 138 | ||||||||||||||||||||||||||||||||||||||
| Class R6 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
10.63 | 0.15 | (0.05 | ) | 0.10 | (0.19 | ) | — | (0.19 | ) | 10.54 | 0.99 | 237,716 | 0.48 | (d) | 0.50 | (d) | 3.01 | (d) | 248 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.91 | 0.34 | (0.19 | ) | 0.15 | (0.43 | ) | — | (0.43 | ) | 10.63 | 1.32 | 275,013 | 0.52 | 0.53 | 3.10 | 537 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.41 | 0.42 | 0.56 | 0.98 | (0.48 | ) | — | (0.48 | ) | 10.91 | 9.64 | 267,254 | 0.54 | 0.56 | 3.89 | 398 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13(e) |
10.97 | 0.32 | (0.54 | ) | (0.22 | ) | (0.34 | ) | — | (0.34 | ) | 10.41 | (2.07 | ) | 185,513 | 0.48 | (f) | 0.54 | (f) | 3.11 | (f) | 252 | ||||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the period ended August 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $390,261,951 and sold of $29,803,473 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Core Bond Fund and Invesco Van Kampen Core Plus Fixed Income Fund into the Fund. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $525,034, $7,893, $69,850, $5,851, $106,744, $289 and $266,135 for Class A, Class B, Class C, Class R, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
| (e) | Commencement date of September 24, 2012 for Class R6 shares. |
| (f) | Annualized. |
39 Invesco Core Plus Bond Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 1,009.10 | $ | 4.20 | $ | 1,020.69 | $ | 4.22 | 0.84 | % | ||||||||||||
| B | 1,000.00 | 1,005.30 | 7.93 | 1,016.96 | 7.97 | 1.59 | ||||||||||||||||||
| C | 1,000.00 | 1,005.30 | 7.93 | 1,016.96 | 7.97 | 1.59 | ||||||||||||||||||
| R | 1,000.00 | 1,007.80 | 5.44 | 1,019.44 | 5.47 | 1.09 | ||||||||||||||||||
| Y | 1,000.00 | 1,010.30 | 2.95 | 1,021.93 | 2.97 | 0.59 | ||||||||||||||||||
| R5 | 1,000.00 | 1,009.50 | 2.85 | 1,022.03 | 2.87 | 0.57 | ||||||||||||||||||
| R6 | 1,000.00 | 1,009.90 | 2.40 | 1,022.48 | 2.41 | 0.48 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
40 Invesco Core Plus Bond Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 CPB-SAR-1 Invesco Distributors, Inc.
|
| ||||
|
|
Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco Equally-Weighted S&P 500 Fund | ||||
|
Nasdaq: |
||||
| A: VADAX ¡ B: VADBX ¡ C: VADCX ¡ R: VADRX ¡ Y: VADDX ¡ R6: VADFX | ||||
|
| |||||
|
2 |
Fund Performance | ||||
|
4 |
Letters to Shareholders | ||||
|
5 |
Schedule of Investments | ||||
|
14 |
Financial Statements | ||||
|
16 |
Notes to Financial Statements | ||||
|
23 |
Financial Highlights | ||||
|
24 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco Equally-Weighted S&P 500 Fund
3 Invesco Equally-Weighted S&P 500 Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco Equally-Weighted S&P 500 Fund
Schedule of Investments(a)
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Equally-Weighted S&P 500 Fund
Investment Abbreviations:
| REIT | – Real Estate Investment Trust |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | The Fund’s Adviser is a subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated with the Fund. See Note 5. |
| (d) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1I and Note 4. |
| (e) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
Portfolio Composition
By sector, based on Net Assets
as of February 29, 2016
| Consumer Discretionary |
16.8 | % | ||
| Financials |
16.7 | |||
| Industrials |
13.3 | |||
| Information Technology |
13.0 | |||
| Health Care |
10.8 | |||
| Consumer Staples |
8.1 | |||
| Energy |
7.6 | |||
| Utilities |
6.6 | |||
| Materials |
5.4 | |||
| Telecommunication Services |
1.1 | |||
| Money Market Funds Plus Other Assets Less Liabilities |
0.6 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Equally-Weighted S&P 500 Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Equally-Weighted S&P 500 Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $2,427) |
$ | 52,029,083 | ||
| Dividends from affiliates |
201,843 | |||
| Total investment income |
52,230,926 | |||
| Expenses: |
||||
| Advisory fees |
2,533,688 | |||
| Administrative services fees |
306,246 | |||
| Custodian fees |
69,643 | |||
| Distribution fees: |
||||
| Class A |
2,229,918 | |||
| Class B |
40,062 | |||
| Class C |
3,816,725 | |||
| Class R |
228,282 | |||
| Transfer agent fees — A, B, C, R & Y |
3,069,677 | |||
| Transfer agent fees — R6 |
2,973 | |||
| Trustees’ and officers’ fees and benefits |
58,983 | |||
| Other |
773,171 | |||
| Total expenses |
13,129,368 | |||
| Less: Fees waived and expense offset arrangement(s) |
(43,774 | ) | ||
| Net expenses |
13,085,594 | |||
| Net investment income |
39,145,332 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
83,108,845 | |||
| Futures contracts |
(5,847,828 | ) | ||
| 77,261,017 | ||||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(274,676,769 | ) | ||
| Futures contracts |
4,313,804 | |||
| (270,362,965 | ) | |||
| Net realized and unrealized gain (loss) |
(193,101,948 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (153,956,616 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Equally-Weighted S&P 500 Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
|
|||||||
| Net investment income |
$ | 39,145,332 | $ | 57,480,218 | ||||
| Net realized gain |
77,261,017 | 44,400,916 | ||||||
| Change in net unrealized appreciation (depreciation) |
(270,362,965 | ) | (200,646,282 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(153,956,616 | ) | (98,765,148 | ) | ||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(25,881,811 | ) | (16,858,607 | ) | ||||
| Class B |
(68,005 | ) | (75,582 | ) | ||||
| Class C |
(7,024,603 | ) | (2,502,255 | ) | ||||
| Class R |
(1,158,685 | ) | (624,853 | ) | ||||
| Class Y |
(32,793,334 | ) | (16,046,854 | ) | ||||
| Class R6 |
(607,413 | ) | (1,937,107 | ) | ||||
| Total distributions from net investment income |
(67,533,851 | ) | (38,045,258 | ) | ||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
(23,878,959 | ) | (22,937,580 | ) | ||||
| Class B |
(107,081 | ) | (195,607 | ) | ||||
| Class C |
(11,061,008 | ) | (6,475,856 | ) | ||||
| Class R |
(1,242,285 | ) | (1,012,662 | ) | ||||
| Class Y |
(26,041,641 | ) | (18,300,963 | ) | ||||
| Class R6 |
(449,730 | ) | (2,090,876 | ) | ||||
| Total distributions from net realized gains |
(62,780,704 | ) | (51,013,544 | ) | ||||
| Share transactions-net: |
||||||||
| Class A |
72,637,326 | 350,674,194 | ||||||
| Class B |
(1,946,812 | ) | (6,623,821 | ) | ||||
| Class C |
88,678,922 | 434,132,904 | ||||||
| Class R |
7,741,520 | 27,401,759 | ||||||
| Class Y |
(65,035,842 | ) | 996,912,519 | |||||
| Class R6 |
36,372,020 | 188,329,413 | ||||||
| Net increase in net assets resulting from share transactions |
138,447,134 | 1,990,826,968 | ||||||
| Net increase (decrease) in net assets |
(145,824,037 | ) | 1,803,003,018 | |||||
| Net assets: |
||||||||
| Beginning of period |
4,763,536,126 | 2,960,533,108 | ||||||
| End of period (includes undistributed net investment income of $11,712,627 and $40,101,146, respectively) |
$ | 4,617,712,089 | $ | 4,763,536,126 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Equally-Weighted S&P 500 Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is total return through growth of capital and current income.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y and Class R6
16 Invesco Equally-Weighted S&P 500 Fund
shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from 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
17 Invesco Equally-Weighted S&P 500 Fund
are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R6 are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual 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. | Futures Contracts — The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| J. | 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. |
18 Invesco Equally-Weighted S&P 500 Fund
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||||
| First $2 billion |
0 | .12% | ||||
| Over $2 billion |
0 | .10% | ||||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.11%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses and/or reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y and Class R6 shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75% and 1.75%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the net annual fund operating expenses and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $41,683.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”), an affiliate of the Adviser. The Fund has adopted a Plan of Distribution (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will reimburse IDI for distribution related expenses that IDI incurs up to a maximum of the following annual rates: (1) Class A — up to 0.25% of the average daily net assets of Class A shares; (2) Class B — up to 1.00% of the average daily net assets of Class B shares; (3) Class C — up to 1.00% of the average daily net assets of Class C shares; and (4) Class R — up to 0.50% of the average daily net assets of Class R shares.
In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by IDI, but not yet reimbursed to IDI, may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares.
For the six months ended February 29, 2016, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $343,149 in front-end sales commissions from the sale of Class A shares and $47,750, $1,110 and $128,115 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
19 Invesco Equally-Weighted S&P 500 Fund
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of February 29, 2016. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equity Securities |
$ | 4,609,628,759 | $ | — | $ | — | $ | 4,609,628,759 | ||||||||
| Futures Contracts* |
798,964 | — | — | 798,964 | ||||||||||||
| Total Investments |
$ | 4,610,427,723 | $ | — | $ | — | $ | 4,610,427,723 | ||||||||
| * | Unrealized appreciation. |
NOTE 4—Derivative Investments
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 February 29, 2016:
| Value | ||||||||
| Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
| Equity risk: |
||||||||
| Futures contracts(a) |
$ | 798,964 | $ | (— | ) | |||
| (a) | Includes cumulative appreciation of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the six months ended February 29, 2016
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 |
||||
| Futures Contracts | ||||
| Realized Gain (Loss): |
||||
| Equity risk |
$ | (5,847,828 | ) | |
| Change in Net Unrealized Appreciation: |
||||
| Equity risk |
4,313,804 | |||
| Total |
$ | (1,534,024 | ) | |
The table below summarizes the average notional value of futures contracts outstanding during the period.
| Futures Contracts | ||||
| Average notional value |
$ | 41,502,232 | ||
| Open Futures Contracts — Equity Risk | ||||||||||||||||||||
| Futures Contracts | Type of Contract |
Number of Contracts |
Expiration Month |
Notional Value |
Unrealized Appreciation |
|||||||||||||||
| E-Mini S&P 500 Index |
Long | 303 | March-2016 | $ | 29,231,925 | $ | 798,964 | |||||||||||||
NOTE 5—Investments in Affiliates
The Fund’s Adviser is a subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated with the Fund. The following is a summary of the transactions in, and earnings from, investments in Invesco Ltd. for the six months ended February 29, 2016.
| Value 08/31/15 |
Purchases at Cost |
Proceeds from Sales |
Change in (Depreciation) |
Realized Gain |
Value 02/29/16 |
Dividend Income |
||||||||||||||||||||||
| Invesco Ltd. |
$ | 8,621,575 | $ | 2,100,796 | $ | (553,798 | ) | $ | (2,149,320 | ) | $ | 55,371 | $ | 8,074,624 | $ | 154,273 | ||||||||||||
20 Invesco Equally-Weighted S&P 500 Fund
NOTE 6—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,091.
NOTE 7—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 8—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, 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 9—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of August 31, 2015.
NOTE 10—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $935,544,277 and $822,284,458, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 942,965,662 | ||
| Aggregate unrealized (depreciation) of investment securities |
(291,080,321 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 651,885,341 | ||
Cost of investments for tax purposes is $3,957,743,418.
21 Invesco Equally-Weighted S&P 500 Fund
NOTE 11—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
5,898,979 | $ | 270,894,627 | 16,005,691 | $ | 784,165,212 | ||||||||||
| Class B |
11,309 | 534,037 | 34,912 | 1,702,372 | ||||||||||||
| Class C |
3,826,015 | 169,822,056 | 10,580,817 | 499,514,855 | ||||||||||||
| Class R |
530,593 | 24,254,496 | 1,121,093 | 54,845,808 | ||||||||||||
| Class Y |
11,032,784 | 511,332,934 | 30,177,325 | 1,486,812,841 | ||||||||||||
| Class R6 |
4,301,247 | 189,284,397 | 4,487,464 | 224,884,801 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
970,959 | 44,120,381 | 738,018 | 34,922,997 | ||||||||||||
| Class B |
3,471 | 157,254 | 5,237 | 247,497 | ||||||||||||
| Class C |
379,367 | 16,608,691 | 181,392 | 8,289,654 | ||||||||||||
| Class R |
52,982 | 2,399,007 | 34,670 | 1,635,742 | ||||||||||||
| Class Y |
1,087,004 | 49,784,798 | 615,826 | 29,356,434 | ||||||||||||
| Class R6 |
23,058 | 1,056,729 | 84,454 | 4,027,614 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
34,287 | 1,575,822 | 117,662 | 5,790,549 | ||||||||||||
| Class B |
(34,489 | ) | (1,575,822 | ) | (118,138 | ) | (5,790,549 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(5,353,361 | ) | (243,953,504 | ) | (9,723,008 | ) | (474,204,564 | ) | ||||||||
| Class B |
(23,713 | ) | (1,062,281 | ) | (57,629 | ) | (2,783,141 | ) | ||||||||
| Class C |
(2,237,458 | ) | (97,751,825 | ) | (1,560,796 | ) | (73,671,605 | ) | ||||||||
| Class R |
(420,897 | ) | (18,911,983 | ) | (595,599 | ) | (29,079,791 | ) | ||||||||
| Class Y |
(13,789,598 | ) | (626,153,574 | ) | (10,517,430 | ) | (519,256,756 | ) | ||||||||
| Class R6 |
(3,176,846 | ) | (153,969,106 | ) | (824,237 | ) | (40,583,002 | ) | ||||||||
| Net increase in share activity |
3,115,693 | $ | 138,447,134 | 40,787,724 | $ | 1,990,826,968 | ||||||||||
| (a) | 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. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
| On October 16, 2015, a total of 3,109,979 Class R6 shares of the Fund valued at $149,863,711 were redeemed by a significant shareholder and settled through a redemption-in-kind transaction. |
22 Invesco Equally-Weighted S&P 500 Fund
NOTE 12—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 46.87 | $ | 0.39 | $ | (1.86 | ) | $ | (1.47 | ) | $ | (0.66 | ) | $ | (0.62 | ) | $ | (1.28 | ) | $ | 44.12 | (3.21 | )% | $ | 1,752,958 | 0.54 | %(d) | 0.54 | %(d) | 1.70 | %(d) | 18 | % | |||||||||||||||||||||||
| Year ended 08/31/15 |
48.54 | 0.67 | (1.18 | ) | (0.51 | ) | (0.49 | ) | (0.67 | ) | (1.16 | ) | 46.87 | (1.07 | ) | 1,789,491 | 0.54 | 0.54 | 1.36 | 21 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
40.07 | 0.59 | 9.45 | 10.04 | (0.48 | ) | (1.09 | ) | (1.57 | ) | 48.54 | 25.64 | 1,506,665 | 0.56 | 0.56 | 1.31 | 17 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
33.40 | 0.55 | 7.47 | 8.02 | (0.51 | ) | (0.84 | ) | (1.35 | ) | 40.07 | 24.83 | 999,730 | 0.57 | 0.57 | 1.48 | 18 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
29.89 | 0.42 | 3.61 | 4.03 | (0.52 | ) | — | (0.52 | ) | 33.40 | 13.66 | 730,648 | 0.60 | 0.60 | 1.34 | 27 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
25.26 | 0.39 | 4.65 | 5.04 | (0.41 | ) | — | (0.41 | ) | 29.89 | 19.91 | 639,478 | 0.56 | 0.56 | 1.26 | 22 | ||||||||||||||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
46.56 | 0.22 | (1.85 | ) | (1.63 | ) | (0.39 | ) | (0.62 | ) | (1.01 | ) | 43.92 | (3.57 | ) | 6,536 | 1.29 | (d) | 1.29 | (d) | 0.95 | (d) | 18 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
48.35 | 0.30 | (1.16 | ) | (0.86 | ) | (0.26 | ) | (0.67 | ) | (0.93 | ) | 46.56 | (1.81 | ) | 8,950 | 1.29 | 1.29 | 0.61 | 21 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
40.01 | 0.25 | 9.44 | 9.69 | (0.26 | ) | (1.09 | ) | (1.35 | ) | 48.35 | 24.70 | 15,851 | 1.31 | 1.31 | 0.56 | 17 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
33.34 | 0.27 | 7.49 | 7.76 | (0.25 | ) | (0.84 | ) | (1.09 | ) | 40.01 | 23.90 | 22,925 | 1.32 | 1.32 | 0.73 | 18 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
29.70 | 0.18 | 3.61 | 3.79 | (0.15 | ) | — | (0.15 | ) | 33.34 | 12.82 | 42,131 | 1.35 | 1.35 | 0.59 | 27 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
25.05 | 0.16 | 4.60 | 4.76 | (0.11 | ) | — | (0.11 | ) | 29.70 | 18.98 | 77,702 | 1.31 | 1.31 | 0.51 | 22 | ||||||||||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
45.03 | 0.22 | (1.79 | ) | (1.57 | ) | (0.39 | ) | (0.62 | ) | (1.01 | ) | 42.45 | (3.57 | )(e) | 791,489 | 1.27 | (d)(e) | 1.27 | (d)(e) | 0.97 | (d)(e) | 18 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
46.79 | 0.29 | (1.12 | ) | (0.83 | ) | (0.26 | ) | (0.67 | ) | (0.93 | ) | 45.03 | (1.81 | ) | 750,898 | 1.29 | 1.29 | 0.61 | 21 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
38.75 | 0.25 | 9.14 | 9.39 | (0.26 | ) | (1.09 | ) | (1.35 | ) | 46.79 | 24.73 | 349,739 | 1.31 | 1.31 | 0.56 | 17 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
32.33 | 0.26 | 7.24 | 7.50 | (0.24 | ) | (0.84 | ) | (1.08 | ) | 38.75 | 23.88 | 141,986 | 1.32 | 1.32 | 0.73 | 18 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
28.81 | 0.18 | 3.49 | 3.67 | (0.15 | ) | — | (0.15 | ) | 32.33 | 12.80 | 77,691 | 1.35 | 1.35 | 0.59 | 27 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
24.29 | 0.16 | 4.47 | 4.63 | (0.11 | ) | — | (0.11 | ) | 28.81 | 19.04 | 67,788 | 1.31 | 1.31 | 0.51 | 22 | ||||||||||||||||||||||||||||||||||||||||
| Class R |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
46.65 | 0.33 | (1.85 | ) | (1.52 | ) | (0.57 | ) | (0.62 | ) | (1.19 | ) | 43.94 | (3.34 | ) | 91,538 | 0.79 | (d) | 0.79 | (d) | 1.45 | (d) | 18 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
48.36 | 0.54 | (1.17 | ) | (0.63 | ) | (0.41 | ) | (0.67 | ) | (1.08 | ) | 46.65 | (1.33 | ) | 89,588 | 0.79 | 0.79 | 1.11 | 21 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
39.95 | 0.48 | 9.43 | 9.91 | (0.41 | ) | (1.09 | ) | (1.50 | ) | 48.36 | 25.35 | 65,777 | 0.81 | 0.81 | 1.06 | 17 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
33.31 | 0.46 | 7.44 | 7.90 | (0.42 | ) | (0.84 | ) | (1.26 | ) | 39.95 | 24.48 | 29,320 | 0.82 | 0.82 | 1.23 | 18 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
29.77 | 0.35 | 3.59 | 3.94 | (0.40 | ) | — | (0.40 | ) | 33.31 | 13.36 | 8,924 | 0.85 | 0.85 | 1.09 | 27 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
25.14 | 0.31 | 4.63 | 4.94 | (0.31 | ) | — | (0.31 | ) | 29.77 | 19.62 | 1,176 | 0.81 | 0.81 | 1.01 | 22 | ||||||||||||||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
47.30 | 0.45 | (1.87 | ) | (1.42 | ) | (0.77 | ) | (0.62 | ) | (1.39 | ) | 44.49 | (3.08 | ) | 1,756,067 | 0.29 | (d) | 0.29 | (d) | 1.95 | (d) | 18 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
48.95 | 0.80 | (1.19 | ) | (0.39 | ) | (0.59 | ) | (0.67 | ) | (1.26 | ) | 47.30 | (0.83 | ) | 1,945,879 | 0.29 | 0.29 | 1.61 | 21 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
40.38 | 0.71 | 9.52 | 10.23 | (0.57 | ) | (1.09 | ) | (1.66 | ) | 48.95 | 25.95 | 1,021,247 | 0.31 | 0.31 | 1.56 | 17 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
33.64 | 0.65 | 7.52 | 8.17 | (0.59 | ) | (0.84 | ) | (1.43 | ) | 40.38 | 25.16 | 481,948 | 0.32 | 0.32 | 1.73 | 18 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
30.13 | 0.50 | 3.63 | 4.13 | (0.62 | ) | — | (0.62 | ) | 33.64 | 13.94 | 309,645 | 0.35 | 0.35 | 1.59 | 27 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
25.47 | 0.47 | 4.68 | 5.15 | (0.49 | ) | — | (0.49 | ) | 30.13 | 20.19 | 178,056 | 0.31 | 0.31 | 1.51 | 22 | ||||||||||||||||||||||||||||||||||||||||
| Class R6 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
47.37 | 0.48 | (1.87 | ) | (1.39 | ) | (0.83 | ) | (0.62 | ) | (1.45 | ) | 44.53 | (3.03 | ) | 219,125 | 0.17 | (d) | 0.17 | (d) | 2.07 | (d) | 18 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
48.99 | 0.87 | (1.20 | ) | (0.33 | ) | (0.62 | ) | (0.67 | ) | (1.29 | ) | 47.37 | (0.70 | ) | 178,731 | 0.16 | 0.16 | 1.74 | 21 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
40.39 | 0.78 | 9.49 | 10.27 | (0.58 | ) | (1.09 | ) | (1.67 | ) | 48.99 | 26.05 | 1,253 | 0.22 | 0.22 | 1.65 | 17 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13(f) |
34.93 | 0.62 | 6.27 | 6.89 | (0.59 | ) | (0.84 | ) | (1.43 | ) | 40.39 | 20.58 | 12 | 0.27 | (g) | 0.27 | (g) | 1.78 | (g) | 18 | ||||||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $1,793,737, $8,057, $790,337, $91,814, $1,927,664 and $83,610 for Class A, Class B, Class C, Class R, Class Y and Class R6 shares, respectively. |
| (e) | The total return, ratio of expenses to average net assets and the ratio of net investment income reflect actual 12b-1 fees of 0.97% for the six months ended February 29, 2016. |
| (f) | Commencement date of September 24, 2012. |
| (g) | Annualized. |
23 Invesco Equally-Weighted S&P 500 Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 967.90 | $ | 2.64 | $ | 1,022.18 | $ | 2.72 | 0.54 | % | ||||||||||||
| B | 1,000.00 | 964.30 | 6.30 | 1,018.45 | 6.47 | 1.29 | ||||||||||||||||||
| C | 1,000.00 | 964.30 | 6.20 | 1,018.55 | 6.37 | 1.27 | ||||||||||||||||||
| R | 1,000.00 | 966.60 | 3.86 | 1,020.93 | 3.97 | 0.79 | ||||||||||||||||||
| Y | 1,000.00 | 969.20 | 1.42 | 1,023.42 | 1.46 | 0.29 | ||||||||||||||||||
| R6 | 1,000.00 | 969.70 | 0.83 | 1,024.02 | 0.86 | 0.17 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
24 Invesco Equally-Weighted S&P 500 Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 MS-EWSP-SAR-1 Invesco Distributors, Inc.
|
| ||||
|
|
Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco Equity and Income Fund | ||||
|
Nasdaq: |
||||
| A: ACEIX ¡ B: ACEQX ¡ C: ACERX ¡ R: ACESX ¡ Y: ACETX ¡ R5: ACEKX ¡ R6: IEIFX | ||||
|
| |||||
|
2 |
Fund Performance | ||||
|
4 |
Letters to Shareholders | ||||
|
5 |
Schedule of Investments | ||||
|
17 |
Financial Statements | ||||
|
19 |
Notes to Financial Statements | ||||
|
27 |
Financial Highlights | ||||
|
28 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco Equity and Income Fund
3 Invesco Equity and Income Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco Equity and Income Fund
Schedule of Investments(a)
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Equity and Income Fund
Investment Abbreviations:
| ADR | – American Depositary Receipt | |
| Conv. | – Convertible | |
| Ctfs. | – Certificates | |
| Deb. | – Debentures | |
| Gtd. | – Guaranteed | |
| Jr. | – Junior | |
| Pfd. | – Preferred | |
| RB | – Revenue Bonds | |
| REIT | – Real Estate Investment Trust | |
| Sec. | – Secured | |
| Sr. | – Senior | |
| Sub. | – Subordinated | |
| Unsec. | – Unsecured |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Equity and Income Fund
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at February 29, 2016 was $495,009,158, which represented 3.97% of the Fund’s Net Assets. |
| (d) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
| (e) | Perpetual bond with no specified maturity date. |
| (f) | Exchangeable for a basket of four common stocks and one ordinary Share. |
| (g) | Exchangeable for a basket of five common shares. |
| (h) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (i) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1K and Note 4. |
| (j) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
Portfolio Composition
By security type, based on Net Assets as of February 29, 2016
| Common Stocks & Other Equity Interests |
62.4 | % | ||
| Bonds and Notes |
20.6 | |||
| U.S. Treasury Securities |
7.8 | |||
| Preferred Stocks |
1.0 | |||
| Security types each less than 1% of portfolio |
0.5 | |||
| Money Market Funds Plus Other Assets Less Liabilities |
7.7 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Equity and Income Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Equity and Income Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $2,382,962) |
$ | 105,765,212 | ||
| Dividends from affiliated money market funds |
941,839 | |||
| Interest |
47,845,256 | |||
| Total investment income |
154,552,307 | |||
| Expenses: |
||||
| Advisory fees |
23,066,563 | |||
| Administrative services fees |
434,804 | |||
| Custodian fees |
188,869 | |||
| Distribution fees: |
||||
| Class A |
12,015,457 | |||
| Class B |
1,203,330 | |||
| Class C |
8,131,005 | |||
| Class R |
542,962 | |||
| Transfer agent fees — A, B, C, R and Y |
10,510,060 | |||
| Transfer agent fees — R5 |
203,032 | |||
| Transfer agent fees — R6 |
3,119 | |||
| Trustees’ and officers’ fees and benefits |
197,733 | |||
| Other |
942,849 | |||
| Total expenses |
57,439,783 | |||
| Less: Fees waived and expense offset arrangement(s) |
(638,379 | ) | ||
| Net expenses |
56,801,404 | |||
| Net investment income |
97,750,903 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
85,412,694 | |||
| Foreign currencies |
(178,443 | ) | ||
| Forward foreign currency contracts |
22,479,760 | |||
| Futures contracts |
(4,628,543 | ) | ||
| 103,085,468 | ||||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(924,658,151 | ) | ||
| Foreign currencies |
(127,294 | ) | ||
| Forward foreign currency contracts |
7,295,097 | |||
| Futures contracts |
(361,589 | ) | ||
| (917,851,937 | ) | |||
| Net realized and unrealized gain (loss) |
(814,766,469 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (717,015,566 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco Equity and Income Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
|
|||||||
| Net investment income |
$ | 97,750,903 | $ | 180,306,245 | ||||
| Net realized gain |
103,085,468 | 639,775,006 | ||||||
| Change in net unrealized appreciation (depreciation) |
(917,851,937 | ) | (1,063,505,802 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(717,015,566 | ) | (243,424,551 | ) | ||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(141,120,777 | ) | (260,216,393 | ) | ||||
| Class B |
(2,609,727 | ) | (7,021,414 | ) | ||||
| Class C |
(17,561,951 | ) | (30,002,656 | ) | ||||
| Class R |
(2,902,913 | ) | (5,368,311 | ) | ||||
| Class Y |
(12,228,861 | ) | (21,553,271 | ) | ||||
| Class R5 |
(6,657,549 | ) | (12,247,206 | ) | ||||
| Class R6 |
(3,176,691 | ) | (4,726,916 | ) | ||||
| Total distributions from net investment income |
(186,258,469 | ) | (341,136,167 | ) | ||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
(266,959,800 | ) | (842,979,900 | ) | ||||
| Class B |
(6,706,307 | ) | (33,958,762 | ) | ||||
| Class C |
(45,979,749 | ) | (140,184,003 | ) | ||||
| Class R |
(5,987,733 | ) | (19,237,356 | ) | ||||
| Class Y |
(21,242,026 | ) | (63,938,513 | ) | ||||
| Class R5 |
(11,414,804 | ) | (34,430,457 | ) | ||||
| Class R6 |
(5,223,400 | ) | (12,907,558 | ) | ||||
| Total distributions from net realized gains |
(363,513,819 | ) | (1,147,636,549 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
249,174,917 | 970,871,766 | ||||||
| Class B |
(45,808,148 | ) | (124,425,413 | ) | ||||
| Class C |
34,511,259 | 254,679,990 | ||||||
| Class R |
7,381,982 | 18,275,914 | ||||||
| Class Y |
23,343,797 | 162,275,763 | ||||||
| Class R5 |
23,190,723 | 60,543,892 | ||||||
| Class R6 |
29,417,157 | 63,841,482 | ||||||
| Net increase in net assets resulting from share transactions |
321,211,687 | 1,406,063,394 | ||||||
| Net increase (decrease) in net assets |
(945,576,167 | ) | (326,133,873 | ) | ||||
| Net assets: |
||||||||
| Beginning of period |
13,427,042,056 | 13,753,175,929 | ||||||
| End of period (includes undistributed net investment income of $(24,446,024) and $64,061,542, respectively) |
$ | 12,481,465,889 | $ | 13,427,042,056 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Equity and Income Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
19 Invesco Equity and Income Fund
The Fund’s investment objective is current income and, secondarily, capital appreciation.
The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. 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. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
20 Invesco Equity and Income Fund
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 and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income, if any, are declared and paid quarterly and are recorded on the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at 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.
21 Invesco Equity and Income Fund
| J. | Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| K. | Futures Contracts — The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between Counterparties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| L. | Collateral — To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||
| First $150 million |
0.50% | |||
| Next $100 million |
0.45% | |||
| Next $100 million |
0.40% | |||
| Over $350 million |
0.35% | |||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.35%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.50%, 2.25%, 2.25%, 1.75%, 1.25%, 1.25% and 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 total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
22 Invesco Equity and Income Fund
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $624,064.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A shares, Class B shares, Class C shares and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets, up to 1.00% each of Class B and Class C average daily net assets and up to 0.50% of Class R average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the six months ended February 29, 2016, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $1,584,974 in front-end sales commissions from the sale of Class A shares and $51,419, $14,292 and $47,048 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the six months ended February 29, 2016, the Fund incurred $31,251 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 or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of February 29, 2016. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equity Securities |
$ | 8,350,327,215 | $ | 467,630,695 | $ | — | $ | 8,817,957,910 | ||||||||
| U.S. Treasury Securities |
— | 971,728,001 | — | 971,728,001 | ||||||||||||
| Corporate Debt Securities |
— | 2,569,378,639 | — | 2,569,378,639 | ||||||||||||
| U.S. Government Sponsored Agency Securities |
— | 56,732,211 | — | 56,732,211 | ||||||||||||
| Municipal Obligations |
— | 9,141,231 | — | 9,141,231 | ||||||||||||
| 8,350,327,215 | 4,074,610,777 | — | 12,424,937,992 | |||||||||||||
| Forward Foreign Currency Contracts* |
— | 13,702,887 | — | 13,702,887 | ||||||||||||
| Futures Contracts* |
151,079 | — | — | 151,079 | ||||||||||||
| Total Investments |
$ | 8,350,478,294 | $ | 4,088,313,664 | $ | — | $ | 12,438,791,958 | ||||||||
| * | Unrealized appreciation (depreciation). |
23 Invesco Equity and Income Fund
NOTE 4—Derivative Investments
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 February 29, 2016:
| Value | ||||||||
| Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
| Currency risk: |
||||||||
| Forward foreign currency contracts(a) |
$ | 16,202,382 | $ | (2,499,495 | ) | |||
| Interest rate risk: |
||||||||
| Futures contracts(b) |
151,079 | — | ||||||
| Total |
$ | 16,353,461 | $ | (2,499,495 | ) | |||
| (a) | Values are disclosed on the Statement of Assets and Liabilities under the captions Unrealized appreciation on forward foreign currency contracts outstanding and Unrealized depreciation on forward foreign currency contracts outstanding. |
| (b) | Includes cumulative appreciation (depreciation) of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the six months ended February 29, 2016
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 |
Futures Contracts |
|||||||
| Realized Gain (Loss): |
||||||||
| Currency risk |
$ | 22,479,760 | $ | — | ||||
| Interest rate risk |
— | (4,628,543 | ) | |||||
| Change in Net Unrealized Appreciation (Depreciation): |
||||||||
| Currency risk |
7,295,097 | — | ||||||
| Interest rate risk |
— | (361,589 | ) | |||||
| Total |
$ | 29,774,857 | $ | (4,990,132 | ) | |||
The table below summarizes the average notional value of forward foreign currency contracts and futures contracts outstanding during the period.
| Forward Foreign Currency Contracts |
Futures Contracts |
|||||||
| Average notional value |
$ | 864,024,308 | $ | 178,105,702 | ||||
| Open Forward Foreign Currency Contracts | ||||||||||||||||||||||||||
| Settlement
|
Counterparty |
Contract to | Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||
| Deliver | Receive | |||||||||||||||||||||||||
| 03/11/16 |
Bank of New York Mellon (The) |
CAD | 71,310,346 | USD | 51,605,357 | $ | 52,711,414 | $ | (1,106,057 | ) | ||||||||||||||||
| 03/11/16 |
Bank of New York Mellon (The) |
CHF | 38,167,477 | USD | 39,341,425 | 38,247,694 | 1,093,731 | |||||||||||||||||||
| 03/11/16 |
Bank of New York Mellon (The) |
EUR | 81,660,503 | USD | 92,451,939 | 88,857,711 | 3,594,228 | |||||||||||||||||||
| 03/11/16 |
Bank of New York Mellon (The) |
GBP | 54,671,771 | USD | 79,226,777 | 76,098,413 | 3,128,364 | |||||||||||||||||||
| 03/11/16 |
Bank of New York Mellon (The) |
ILS | 172,911,726 | USD | 44,718,164 | 44,326,527 | 391,637 | |||||||||||||||||||
| 03/11/16 |
State Street Bank and Trust Co. |
CAD | 82,768,147 | USD | 59,897,185 | 61,180,828 | (1,283,643 | ) | ||||||||||||||||||
| 03/11/16 |
State Street Bank and Trust Co. |
CHF | 29,812,940 | USD | 30,739,743 | 29,875,598 | 864,145 | |||||||||||||||||||
| 03/11/16 |
State Street Bank and Trust Co. |
EUR | 77,586,093 | USD | 87,855,000 | 84,424,200 | 3,430,800 | |||||||||||||||||||
| 03/11/16 |
State Street Bank and Trust Co. |
GBP | 59,802,885 | USD | 86,650,792 | 83,240,483 | 3,410,309 | |||||||||||||||||||
| 03/11/16 |
State Street Bank and Trust Co. |
ILS | 134,206,836 | USD | 34,693,561 | 34,404,393 | 289,168 | |||||||||||||||||||
| 03/11/16 |
State Street Bank and Trust Co. |
USD | 13,222,599 | CHF | 13,085,303 | 13,112,804 | (109,795 | ) | ||||||||||||||||||
| Total forward foreign currency contracts — currency risk |
|
$ | 13,702,887 | |||||||||||||||||||||||
Currency Abbreviations:
| Open Futures Contracts | ||||||||||||||||||||
| Futures Contracts | Type of Contract |
Number of Contracts |
Expiration Month |
Notional Value |
Unrealized Appreciation |
|||||||||||||||
| U.S. Treasury 5 Year Notes |
Short | 507 | June-2016 | $ | (61,339,078 | ) | $ | 58,208 | ||||||||||||
| U.S. Treasury 10 Year Notes |
Short | 868 | June-2016 | (113,287,563 | ) | 92,871 | ||||||||||||||
| Total futures contracts — interest rate risk |
|
$ | 151,079 | |||||||||||||||||
24 Invesco Equity and Income Fund
Offsetting Assets and Liabilities
Accounting Standards Update (“ASU”) No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which was subsequently clarified in Financial Accounting Standards Board ASU 2013-01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” is intended to enhance disclosures about financial instruments and derivative instruments that are subject to offsetting arrangements on the Statement of Assets and Liabilities and to enable investors to better understand the effect of those arrangements on the Fund’s financial position. In order for an arrangement to be eligible for netting, the Fund must have a basis to conclude that such netting arrangements are legally enforceable. The Fund enters into netting agreements and collateral agreements in an attempt to reduce the Fund’s Counterparty credit risk by providing for a single net settlement with a Counterparty of all financial transactions covered by the agreement in an event of default as defined under such agreement.
The following tables present derivative instruments that are either subject to an enforceable netting agreement or offset by collateral arrangements as of February 29, 2016.
| Gross Amounts Not Offset in the Statement of Assets and Liabilities |
||||||||||||||||||||
| Gross amounts of Recognized Assets |
Financial Instruments |
Collateral Received | ||||||||||||||||||
| Counterparty | Non-Cash | Cash | Net Amount |
|||||||||||||||||
| Bank of New York Mellon (The) |
$ | 8,207,960 | $ | (1,106,057 | ) | $ | — | $ | — | $ | 7,101,903 | |||||||||
| State Street Bank and Trust Co. |
7,994,422 | (1,393,438 | ) | — | — | 6,600,984 | ||||||||||||||
| Total |
$ | 16,202,382 | $ | (2,499,495 | ) | $ | — | $ | — | $ | 13,702,887 | |||||||||
| Gross Amounts Not Offset in the Statement of Assets and Liabilities |
||||||||||||||||||||
| Gross amounts of Recognized Liabilities |
Financial Instruments |
Collateral Pledged | ||||||||||||||||||
| Counterparty | Non-Cash | Cash | Net Amount |
|||||||||||||||||
| Bank of New York Mellon (The) |
$ | 1,106,057 | $ | (1,106,057 | ) | $ | — | $ | — | $ | — | |||||||||
| State Street Bank and Trust Co. |
1,393,438 | (1,393,438 | ) | — | — | — | ||||||||||||||
| Total |
$ | 2,499,495 | $ | (2,499,495 | ) | $ | — | $ | — | $ | — | |||||||||
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $14,315.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, 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 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
25 Invesco Equity and Income Fund
The Fund did not have a capital loss carryforward as of August 31, 2015.
NOTE 9—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $3,199,856,014 and $1,800,048,746, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $3,919,183,220 and $3,804,836,929, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 1,354,334,231 | ||
| Aggregate unrealized (depreciation) of investment securities |
(792,587,501 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 561,746,730 | ||
Cost of investments for tax purposes is $11,863,191,262.
NOTE 10—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
63,839,059 | $ | 617,269,683 | 132,855,407 | $ | 1,407,335,195 | ||||||||||
| Class B |
159,999 | 1,498,700 | 391,128 | 4,066,382 | ||||||||||||
| Class C |
12,814,169 | 122,183,080 | 31,927,192 | 332,741,941 | ||||||||||||
| Class R |
3,490,904 | 33,832,095 | 5,817,559 | 61,877,721 | ||||||||||||
| Class Y |
10,271,772 | 98,799,817 | 29,754,125 | 316,032,681 | ||||||||||||
| Class R5 |
5,967,318 | 59,048,516 | 14,653,172 | 154,978,913 | ||||||||||||
| Class R6 |
6,563,750 | 62,405,624 | 13,351,616 | 140,910,100 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
39,838,200 | 381,710,931 | 101,273,868 | 1,032,701,699 | ||||||||||||
| Class B |
964,782 | 9,028,163 | 3,975,218 | 39,580,117 | ||||||||||||
| Class C |
6,155,065 | 57,943,952 | 15,458,277 | 154,681,888 | ||||||||||||
| Class R |
922,920 | 8,885,471 | 2,401,902 | 24,594,997 | ||||||||||||
| Class Y |
3,216,834 | 30,839,285 | 7,619,261 | 77,752,111 | ||||||||||||
| Class R5 |
1,883,286 | 18,056,232 | 4,569,798 | 46,663,503 | ||||||||||||
| Class R6 |
876,743 | 8,400,091 | 1,726,337 | 17,634,474 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
4,133,768 | 39,787,276 | 10,509,185 | 111,300,490 | ||||||||||||
| Class B |
(4,228,077 | ) | (39,787,276 | ) | (10,741,031 | ) | (111,300,490 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(81,943,810 | ) | (789,592,973 | ) | (148,952,999 | ) | (1,580,465,618 | ) | ||||||||
| Class B |
(1,756,495 | ) | (16,547,735 | ) | (5,457,994 | ) | (56,771,422 | ) | ||||||||
| Class C |
(15,417,127 | ) | (145,615,773 | ) | (22,383,709 | ) | (232,743,839 | ) | ||||||||
| Class R |
(3,668,928 | ) | (35,335,584 | ) | (6,407,390 | ) | (68,196,804 | ) | ||||||||
| Class Y |
(11,125,512 | ) | (106,295,305 | ) | (22,048,368 | ) | (231,509,029 | ) | ||||||||
| Class R5 |
(5,507,159 | ) | (53,914,025 | ) | (13,327,278 | ) | (141,098,524 | ) | ||||||||
| Class R6 |
(4,234,844 | ) | (41,388,558 | ) | (9,037,781 | ) | (94,703,092 | ) | ||||||||
| Net increase in share activity |
33,216,617 | $ | 321,211,687 | 137,927,495 | $ | 1,406,063,394 | ||||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 36% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
26 Invesco Equity and Income Fund
NOTE 11—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
| Class A |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 10.01 | $ | 0.07 | $ | (0.59 | ) | $ | (0.52 | ) | $ | (0.14 | ) | $ | (0.27 | ) | $ | (0.41 | ) | $ | 9.08 | (5.36 | )% | $ | 9,196,390 | 0.79 | %(d) | 0.80 | %(d) | 1.57 | %(d) | 43 | % | |||||||||||||||||||||||
| Year ended 08/31/15 |
11.42 | 0.15 | (0.33 | ) | (0.18 | ) | (0.28 | ) | (0.95 | ) | (1.23 | ) | 10.01 | (1.65 | ) | 9,879,022 | 0.79 | 0.80 | 1.38 | 69 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.43 | 0.22 | (e) | 1.56 | 1.78 | (0.20 | ) | (0.59 | ) | (0.79 | ) | 11.42 | 17.86 | 10,181,796 | 0.79 | 0.80 | 1.99 | (e) | 60 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
9.05 | 0.17 | 1.42 | 1.59 | (0.21 | ) | — | (0.21 | ) | 10.43 | 17.80 | 8,752,700 | 0.78 | 0.79 | 1.74 | 26 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.19 | 0.17 | 0.85 | 1.02 | (0.16 | ) | — | (0.16 | ) | 9.05 | 12.67 | 7,878,694 | 0.80 | 0.81 | 2.05 | 21 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.53 | 0.15 | 0.66 | 0.81 | (0.15 | ) | — | (0.15 | ) | 8.19 | 10.78 | 7,908,623 | 0.81 | 0.81 | 1.74 | 22 | ||||||||||||||||||||||||||||||||||||||||
| Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.78 | 0.04 | (0.58 | ) | (0.54 | ) | (0.10 | ) | (0.27 | ) | (0.37 | ) | 8.87 | (5.68 | ) | 202,715 | 1.54 | (d) | 1.55 | (d) | 0.82 | (d) | 43 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.18 | 0.07 | (0.32 | ) | (0.25 | ) | (0.20 | ) | (0.95 | ) | (1.15 | ) | 9.78 | (2.41 | ) | 271,120 | 1.54 | 1.55 | 0.63 | 69 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.22 | 0.13 | (e) | 1.54 | 1.67 | (0.12 | ) | (0.59 | ) | (0.71 | ) | 11.18 | 17.01 | 442,318 | 1.54 | 1.55 | 1.24 | (e) | 60 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.87 | 0.09 | 1.39 | 1.48 | (0.13 | ) | — | (0.13 | ) | 10.22 | 16.90 | 570,146 | 1.53 | 1.54 | 0.99 | 26 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.04 | 0.15 | 0.83 | 0.98 | (0.15 | ) | — | (0.15 | ) | 8.87 | 12.36 | 739,631 | 1.02 | 1.56 | 1.83 | 21 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.39 | 0.14 | 0.65 | 0.79 | (0.14 | ) | — | (0.14 | ) | 8.04 | 10.69 | (f) | 1,014,527 | 0.84 | (f) | 0.98 | (f) | 1.71 | (f) | 22 | ||||||||||||||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.83 | 0.03 | (0.57 | ) | (0.54 | ) | (0.10 | ) | (0.27 | ) | (0.37 | ) | 8.92 | (5.65 | ) | 1,544,030 | 1.54 | (d) | 1.55 | (d) | 0.82 | (d) | 43 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.24 | 0.07 | (0.33 | ) | (0.26 | ) | (0.20 | ) | (0.95 | ) | (1.15 | ) | 9.83 | (2.48 | ) | 1,667,769 | 1.54 | 1.55 | 0.63 | 69 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.27 | 0.13 | (e) | 1.55 | 1.68 | (0.12 | ) | (0.59 | ) | (0.71 | ) | 11.24 | 17.03 | 1,624,965 | 1.54 | 1.55 | 1.24 | (e) | 60 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.91 | 0.10 | 1.40 | 1.50 | (0.14 | ) | — | (0.14 | ) | 10.27 | 16.95 | 1,284,225 | 1.53 | 1.54 | 0.99 | 26 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.07 | 0.11 | 0.83 | 0.94 | (0.10 | ) | — | (0.10 | ) | 8.91 | 11.77 | (g) | 1,157,325 | 1.54 | (g) | 1.54 | (g) | 1.31 | (g) | 21 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.42 | 0.09 | 0.65 | 0.74 | (0.09 | ) | — | (0.09 | ) | 8.07 | 9.95 | (g) | 1,216,936 | 1.54 | (g) | 1.54 | (g) | 1.01 | (g) | 22 | ||||||||||||||||||||||||||||||||||||
| Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
10.05 | 0.06 | (0.59 | ) | (0.53 | ) | (0.13 | ) | (0.27 | ) | (0.40 | ) | 9.12 | (5.46 | ) | 208,203 | 1.04 | (d) | 1.05 | (d) | 1.32 | (d) | 43 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.47 | 0.13 | (0.34 | ) | (0.21 | ) | (0.26 | ) | (0.95 | ) | (1.21 | ) | 10.05 | (1.98 | ) | 221,987 | 1.04 | 1.05 | 1.13 | 69 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.47 | 0.19 | (e) | 1.58 | 1.77 | (0.18 | ) | (0.59 | ) | (0.77 | ) | 11.47 | 17.60 | 232,455 | 1.04 | 1.05 | 1.74 | (e) | 60 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
9.08 | 0.15 | 1.43 | 1.58 | (0.19 | ) | — | (0.19 | ) | 10.47 | 17.57 | 193,610 | 1.03 | 1.04 | 1.49 | 26 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.23 | 0.15 | 0.85 | 1.00 | (0.15 | ) | — | (0.15 | ) | 9.08 | 12.23 | 176,940 | 1.05 | 1.06 | 1.80 | 21 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.57 | 0.13 | 0.66 | 0.79 | (0.13 | ) | — | (0.13 | ) | 8.23 | 10.45 | 182,135 | 1.06 | 1.06 | 1.49 | 22 | ||||||||||||||||||||||||||||||||||||||||
| Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
10.01 | 0.09 | (0.59 | ) | (0.50 | ) | (0.16 | ) | (0.27 | ) | (0.43 | ) | 9.08 | (5.24 | ) | 732,843 | 0.54 | (d) | 0.55 | (d) | 1.82 | (d) | 43 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.43 | 0.17 | (0.33 | ) | (0.16 | ) | (0.31 | ) | (0.95 | ) | (1.26 | ) | 10.01 | (1.49 | ) | 784,238 | 0.54 | 0.55 | 1.63 | 69 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.43 | 0.24 | (e) | 1.58 | 1.82 | (0.23 | ) | (0.59 | ) | (0.82 | ) | 11.43 | 18.25 | 719,931 | 0.54 | 0.55 | 2.24 | (e) | 60 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
9.05 | 0.20 | 1.41 | 1.61 | (0.23 | ) | — | (0.23 | ) | 10.43 | 18.10 | 477,207 | 0.53 | 0.54 | 1.99 | 26 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.20 | 0.20 | 0.84 | 1.04 | (0.19 | ) | — | (0.19 | ) | 9.05 | 12.83 | 410,600 | 0.55 | 0.56 | 2.30 | 21 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.54 | 0.17 | 0.67 | 0.84 | (0.18 | ) | — | (0.18 | ) | 8.20 | 11.04 | 422,009 | 0.56 | 0.56 | 1.99 | 22 | ||||||||||||||||||||||||||||||||||||||||
| Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
10.02 | 0.08 | (0.59 | ) | (0.51 | ) | (0.16 | ) | (0.27 | ) | (0.43 | ) | 9.08 | (5.30 | ) | 394,629 | 0.47 | (d) | 0.48 | (d) | 1.89 | (d) | 43 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.43 | 0.18 | (0.32 | ) | (0.14 | ) | (0.32 | ) | (0.95 | ) | (1.27 | ) | 10.02 | (1.32 | ) | 411,579 | 0.47 | 0.48 | 1.70 | 69 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.43 | 0.25 | (e) | 1.58 | 1.83 | (0.24 | ) | (0.59 | ) | (0.83 | ) | 11.43 | 18.33 | 402,366 | 0.48 | 0.49 | 2.30 | (e) | 60 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
9.05 | 0.20 | 1.42 | 1.62 | (0.24 | ) | — | (0.24 | ) | 10.43 | 18.17 | 241,540 | 0.47 | 0.48 | 2.05 | 26 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.20 | 0.21 | 0.84 | 1.05 | (0.20 | ) | — | (0.20 | ) | 9.05 | 12.96 | 238,392 | 0.44 | 0.44 | 2.41 | 21 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.54 | 0.19 | 0.65 | 0.84 | (0.18 | ) | — | (0.18 | ) | 8.20 | 11.16 | 156,096 | 0.39 | 0.39 | 2.16 | 22 | ||||||||||||||||||||||||||||||||||||||||
| Class R6 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
10.01 | 0.10 | (0.60 | ) | (0.50 | ) | (0.16 | ) | (0.27 | ) | (0.43 | ) | 9.08 | (5.16 | ) | 202,656 | 0.37 | (d) | 0.38 | (d) | 1.99 | (d) | 43 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.43 | 0.19 | (0.33 | ) | (0.14 | ) | (0.33 | ) | (0.95 | ) | (1.28 | ) | 10.01 | (1.33 | ) | 191,328 | 0.37 | 0.38 | 1.80 | 69 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.43 | 0.26 | (e) | 1.58 | 1.84 | (0.25 | ) | (0.59 | ) | (0.84 | ) | 11.43 | 18.44 | 149,346 | 0.39 | 0.40 | 2.39 | (e) | 60 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13(h) |
9.27 | 0.21 | 1.14 | 1.35 | (0.19 | ) | — | (0.19 | ) | 10.43 | 14.81 | 37,884 | 0.37 | (i) | 0.38 | (i) | 2.15 | (i) | 26 | |||||||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $9,672,919, $241,988, $1,635,136, $218,378, $771,283, $408,403 and $198,065 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
| (e) | Net investment income per share and the ratio of net investment income to average net assets includes significant dividends received during the period. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividends are $0.16 and 1.47%, $0.07 and 0.72%, $0.07 and 0.72%, $0.13 and 1.22%, $0.18 and 1.72%, $0.19 and 1.78% and $0.20 and 1.87% for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
| (f) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.28% for the year ended August 31, 2011. |
| (g) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.99% and 0.97% for the years ended August 31, 2012 and August 31, 2011. |
| (h) | Commencement date of September 24, 2012. |
| (i) | Annualized. |
27 Invesco Equity and Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 946.40 | $ | 3.82 | $ | 1,020.93 | $ | 3.97 | 0.79 | % | ||||||||||||
| B | 1,000.00 | 943.20 | 7.44 | 1,017.21 | 7.72 | 1.54 | ||||||||||||||||||
| C | 1,000.00 | 943.50 | 7.44 | 1,017.21 | 7.72 | 1.54 | ||||||||||||||||||
| R | 1,000.00 | 945.40 | 5.03 | 1,019.69 | 5.22 | 1.04 | ||||||||||||||||||
| Y | 1,000.00 | 947.60 | 2.61 | 1,022.18 | 2.72 | 0.54 | ||||||||||||||||||
| R5 | 1,000.00 | 947.00 | 2.28 | 1,022.53 | 2.36 | 0.47 | ||||||||||||||||||
| R6 | 1,000.00 | 948.40 | 1.79 | 1,023.02 | 1.86 | 0.37 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
28 Invesco Equity and Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 VK-EQI-SAR-1 Invesco Distributors, Inc.
|
| ||||
|
|
Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco Floating Rate Fund | ||||
|
Nasdaq: |
||||
| A: AFRAX ¡ C: AFRCX ¡ R: AFRRX ¡ Y: AFRYX ¡ R5: AFRIX ¡ R6: AFRFX | ||||
|
| |||||
|
2 |
Fund Performance | ||||
|
4 |
Letters to Shareholders | ||||
|
5 |
Schedule of Investments | ||||
|
24 |
Financial Statements | ||||
|
27 |
Notes to Financial Statements | ||||
|
37 |
Financial Highlights | ||||
|
38 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco Floating Rate Fund
3 Invesco Floating Rate Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco Floating Rate Fund
Schedule of Investments
February 29, 2016
(Unaudited)
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Variable Rate Senior Loan Interests–83.83%(a)(b) |
||||||||||||||||
| Aerospace & Defense–1.76% | ||||||||||||||||
| BE Aerospace Inc., Term Loan |
4.00 | % | 12/16/2021 | $ | 1,961 | $ | 1,965,468 | |||||||||
| CAMP International Holding Co., |
||||||||||||||||
| First Lien Term Loan |
4.75 | % | 05/31/2019 | 3,658 | 3,438,627 | |||||||||||
| Second Lien Term Loan |
8.25 | % | 11/30/2019 | 258 | 235,204 | |||||||||||
| Consolidated Aerospace Manufacturing, LLC, Term Loan |
4.75 | % | 08/11/2022 | 2,431 | 2,272,991 | |||||||||||
| IAP Worldwide Services, |
||||||||||||||||
| Revolver Loan(c) |
0.00 | % | 07/18/2018 | 877 | 859,152 | |||||||||||
| Second Lien Term Loan (Acquired 08/18/2014; Cost $950,525) |
8.00 | % | 07/18/2019 | 1,021 | 1,025,737 | |||||||||||
| PRV Aerospace, LLC, Term Loan |
6.50 | % | 05/09/2018 | 1,903 | 1,807,592 | |||||||||||
| Transdigm Inc., |
||||||||||||||||
| Term Loan C |
3.75 | % | 02/28/2020 | 4,093 | 3,984,336 | |||||||||||
| Term Loan D |
3.75 | % | 06/04/2021 | 6,974 | 6,682,781 | |||||||||||
| Term Loan E |
3.50 | % | 05/16/2022 | 8,958 | 8,583,004 | |||||||||||
| 30,854,892 | ||||||||||||||||
| Air Transport–0.72% | ||||||||||||||||
| American Airlines, Inc., Term Loan |
3.25 | % | 06/27/2020 | 5,258 | 5,174,608 | |||||||||||
| Delta Air Lines, Inc., Revolver Loan(c) |
0.00 | % | 10/18/2017 | 1,145 | 1,124,822 | |||||||||||
| Gol LuxCo S.A. (Luxembourg), Term Loan |
6.50 | % | 08/31/2020 | 5,842 | 5,841,654 | |||||||||||
| United Continental Holdings, Inc., Term Loan B-1 |
3.50 | % | 09/15/2021 | 374 | 372,476 | |||||||||||
| 12,513,560 | ||||||||||||||||
| Automotive–3.16% | ||||||||||||||||
| Affinia Group Inc., Term Loan B-2 |
4.75 | % | 04/27/2020 | 4,077 | 4,074,680 | |||||||||||
| Autoparts Holdings Ltd., First Lien Term Loan |
7.05 | % | 07/29/2017 | 1,283 | 1,047,476 | |||||||||||
| BBB Industries, LLC, Second Lien Term Loan |
9.75 | % | 11/03/2022 | 1,033 | 957,604 | |||||||||||
| Britax Group Ltd., Term Loan |
4.50 | % | 10/15/2020 | 1,763 | 1,247,718 | |||||||||||
| FCA US LLC, Term Loan |
3.50 | % | 05/24/2017 | 2,023 | 2,016,345 | |||||||||||
| Federal-Mogul Holdings Corp., |
||||||||||||||||
| Term Loan B(d) |
— | 04/15/2018 | 768 | 673,457 | ||||||||||||
| Term Loan C |
4.75 | % | 04/15/2021 | 27,787 | 22,623,280 | |||||||||||
| Gates Global, LLC, Term Loan |
4.25 | % | 07/05/2021 | 7,320 | 6,469,186 | |||||||||||
| Goodyear Tire & Rubber Co., Second Lien Term Loan |
3.75 | % | 04/30/2019 | 877 | 880,834 | |||||||||||
| Midas Intermediate Holdco II, LLC, First Lien Delayed Draw Term Loan(c) |
0.00 | % | 08/18/2021 | 171 | 169,581 | |||||||||||
| Nelson Bidco Ltd. (United Kingdom), Second Lien Term Loan |
8.25 | % | 12/17/2022 | GBP | 2,750 | 3,846,727 | ||||||||||
| Tower Automotive Holdings USA, LLC, Term Loan |
4.00 | % | 04/23/2020 | 5,181 | 5,012,303 | |||||||||||
| Transtar Holding Co., |
||||||||||||||||
| First Lien Term Loan |
5.75 | % | 10/09/2018 | 4,627 | 3,655,018 | |||||||||||
| Second Lien Term Loan |
10.00 | % | 10/09/2019 | 1,654 | 1,306,357 | |||||||||||
| Wand Intermediate I L.P., Second Lien Term Loan |
8.25 | % | 09/17/2022 | 1,406 | 1,251,386 | |||||||||||
| 55,231,952 | ||||||||||||||||
| Beverage and Tobacco–0.07% | ||||||||||||||||
| Winebow Holdings, Inc., Second Lien Term Loan |
8.50 | % | 12/31/2021 | 1,508 | 1,251,789 | |||||||||||
| Building & Development–2.27% | ||||||||||||||||
| ABC Supply Co., Inc., Term Loan B |
3.50 | % | 04/16/2020 | 454 | 448,211 | |||||||||||
| Capital Automotive L.P., Second Lien Term Loan |
6.00 | % | 04/30/2020 | 3,330 | 3,271,263 | |||||||||||
| DI Purchaser, Inc., First Lien Term Loan |
6.00 | % | 12/15/2021 | 700 | 566,602 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Building & Development–(continued) | ||||||||||||||||
| Lake at Las Vegas Joint Venture, LLC, |
||||||||||||||||
| Exit Revolver Loan(c) |
0.00 | % | 02/28/2017 | $ | 13 | $ | 9,114 | |||||||||
| PIK Exit Revolver Loan(e) |
5.00 | % | 02/28/2017 | 155 | 111,141 | |||||||||||
| Mannington Mills, Inc., Term Loan |
4.75 | % | 10/01/2021 | 690 | 660,101 | |||||||||||
| Mueller Water Products, Inc., Term Loan |
4.00 | % | 11/25/2021 | 105 | 104,755 | |||||||||||
| Nortek, Inc., Incremental Term Loan 1 |
3.50 | % | 10/30/2020 | 3,400 | 3,257,252 | |||||||||||
| Quikrete Holdings, Inc., First Lien Term Loan |
4.00 | % | 09/26/2020 | 9,428 | 9,224,985 | |||||||||||
| Re/Max International, Inc., Term Loan |
4.25 | % | 07/31/2020 | 2,734 | 2,699,777 | |||||||||||
| Realogy Corp., |
||||||||||||||||
| Synthetic LOC (Acquired 11/18/2011-08/08/2012; Cost $1,308) |
4.68 | % | 10/10/2016 | — | 285 | |||||||||||
| Term Loan B |
3.75 | % | 03/05/2020 | 19,488 | 19,349,497 | |||||||||||
| 39,702,983 | ||||||||||||||||
| Business Equipment & Services–8.20% | ||||||||||||||||
| Acosta, Inc., Term Loan B-1 |
4.25 | % | 09/26/2021 | 2,944 | 2,782,997 | |||||||||||
| Asurion LLC, |
||||||||||||||||
| Incremental Term Loan B-1 |
5.00 | % | 05/24/2019 | 211 | 199,057 | |||||||||||
| Incremental Term Loan B-2 |
4.25 | % | 07/08/2020 | 19,677 | 18,111,475 | |||||||||||
| Incremental Term Loan B-4 |
5.00 | % | 08/04/2022 | 2,634 | 2,425,315 | |||||||||||
| Second Lien Term Loan |
8.50 | % | 03/03/2021 | 23,167 | 19,008,518 | |||||||||||
| AVSC Holding Corp., First Lien Term Loan |
4.50 | % | 01/25/2021 | 4 | 3,779 | |||||||||||
| Brickman Group Ltd. LLC, |
||||||||||||||||
| First Lien Term Loan |
4.00 | % | 12/18/2020 | 1,709 | 1,658,650 | |||||||||||
| Second Lien Term Loan |
7.50 | % | 12/17/2021 | 1,110 | 1,007,427 | |||||||||||
| Caraustar Industries, Inc., |
||||||||||||||||
| Incremental Term Loan |
8.00 | % | 05/01/2019 | 256 | 244,779 | |||||||||||
| Term Loan |
8.00 | % | 05/01/2019 | 2,775 | 2,691,522 | |||||||||||
| Checkout Holding Corp., |
||||||||||||||||
| Second Lien Term Loan |
7.75 | % | 04/11/2022 | 4,379 | 2,497,330 | |||||||||||
| Term Loan B |
4.50 | % | 04/09/2021 | 6,275 | 4,816,187 | |||||||||||
| Connolly, LLC, Second Lien Term Loan |
8.00 | % | 05/14/2022 | 3,411 | 3,368,523 | |||||||||||
| Crossmark Holdings, Inc., |
||||||||||||||||
| First Lien Term Loan |
4.50 | % | 12/20/2019 | 4,566 | 3,287,791 | |||||||||||
| Second Lien Term Loan |
8.75 | % | 12/21/2020 | 576 | 302,626 | |||||||||||
| Dream Secured Bondco AB (Sweden), Term Loan B-1 |
5.25 | % | 10/21/2022 | EUR | 892 | 964,800 | ||||||||||
| Equinix, Inc., Term Loan B |
4.00 | % | 12/08/2022 | 710 | 711,878 | |||||||||||
| Expert Global Solutions, Inc., First Lien Term Loan B |
8.50 | % | 04/03/2018 | 3,809 | 3,758,202 | |||||||||||
| First Data Corp., |
||||||||||||||||
| Term Loan |
3.93 | % | 03/23/2018 | 19,899 | 19,677,437 | |||||||||||
| Term Loan |
4.18 | % | 07/10/2022 | 9,870 | 9,627,058 | |||||||||||
| Genesys Telecom Holdings, U.S., Inc., |
||||||||||||||||
| Term Loan |
4.00 | % | 02/08/2020 | 781 | 760,747 | |||||||||||
| Term Loan 2 |
4.50 | % | 11/13/2020 | 5,019 | 4,901,770 | |||||||||||
| Hillman Group Inc. (The), Term Loan(d) |
— | 06/30/2021 | 1,719 | 1,644,157 | ||||||||||||
| Inmar, Inc., Second Lien Term Loan |
8.00 | % | 01/27/2022 | 40 | 30,389 | |||||||||||
| Karman Buyer Corp., |
||||||||||||||||
| Second Lien Term Loan |
7.50 | % | 07/25/2022 | 3,750 | 3,140,854 | |||||||||||
| Term Loan |
4.25 | % | 07/25/2021 | 3,950 | 3,762,905 | |||||||||||
| Kronos Inc., Second Lien Term Loan |
9.75 | % | 04/30/2020 | 1,710 | 1,663,152 | |||||||||||
| LS Deco LLC, Term Loan B |
5.50 | % | 05/21/2022 | 1,399 | 1,399,220 | |||||||||||
| Prime Security Services Borrower, LLC, Second Lien Term Loan B |
9.75 | % | 07/01/2022 | 1,317 | 1,215,360 | |||||||||||
| Sensus USA, Inc., First Lien Term Loan |
4.50 | % | 05/09/2017 | 3,317 | 3,197,177 | |||||||||||
| Spin Holdco Inc., First Lien Term Loan |
4.25 | % | 11/14/2019 | 11,869 | 11,316,173 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Business Equipment & Services–(continued) | ||||||||||||||||
| TaxAct, Inc., Term Loan |
7.00 | % | 12/31/2022 | $ | 2,669 | $ | 2,600,884 | |||||||||
| TNS Inc., Second Lien Term Loan |
9.00 | % | 08/14/2020 | 231 | 225,340 | |||||||||||
| Trans Union LLC, Term Loan B-2 |
3.50 | % | 04/09/2021 | 6,053 | 5,913,425 | |||||||||||
| Wash MultiFamily Laundry Systems, LLC, |
||||||||||||||||
| First Lien Term Loan |
4.25 | % | 05/13/2022 | 355 | 343,214 | |||||||||||
| First Lien Term Loan |
4.25 | % | 05/13/2022 | 2,026 | 1,959,776 | |||||||||||
| Second Lien Term Loan |
8.00 | % | 05/12/2023 | 222 | 209,090 | |||||||||||
| Second Lien Term Loan |
8.00 | % | 05/14/2023 | 39 | 36,621 | |||||||||||
| WOWMIDCO SAS (France), Term Loan B(d) |
— | 01/01/2023 | EUR | 1,713 | 1,829,835 | |||||||||||
| 143,295,440 | ||||||||||||||||
| Cable & Satellite Television–4.73% | ||||||||||||||||
| Altice Financing S.A. (Luxembourg), |
||||||||||||||||
| Term Loan |
5.50 | % | 07/02/2019 | 1,203 | 1,192,894 | |||||||||||
| Term Loan |
5.25 | % | 02/04/2022 | 3,855 | 3,745,736 | |||||||||||
| Euro Term Loan |
5.25 | % | 02/04/2022 | EUR | 995 | 1,062,451 | ||||||||||
| Charter Communications Operating, LLC, Term Loan I |
3.50 | % | 01/24/2023 | 15,588 | 15,532,748 | |||||||||||
| CSC Holdings, LLC, Term Loan |
5.00 | % | 10/09/2022 | 10,463 | 10,388,191 | |||||||||||
| ION Media Networks, Inc., Term Loan B-1 |
4.75 | % | 12/18/2020 | 317 | 308,272 | |||||||||||
| MCC Iowa LLC, Term Loan H |
3.25 | % | 01/29/2021 | 3,227 | 3,163,646 | |||||||||||
| Mediacom Illinois LLC, |
||||||||||||||||
| Term Loan E |
3.40 | % | 10/23/2017 | 669 | 665,671 | |||||||||||
| Term Loan G |
3.50 | % | 06/30/2021 | 176 | 173,968 | |||||||||||
| Quebecor Media Inc. (Canada), Term Loan B-1 |
3.25 | % | 08/17/2020 | 2,454 | 2,389,049 | |||||||||||
| Virgin Media Investment Holdings Ltd. (United Kingdom), Term Loan F |
3.50 | % | 06/30/2023 | 6,318 | 6,128,553 | |||||||||||
| WideOpenWest Finance, LLC, |
||||||||||||||||
| Term Loan B |
4.50 | % | 04/01/2019 | 1,899 | 1,828,426 | |||||||||||
| Term Loan B-1 |
3.75 | % | 07/17/2017 | 916 | 911,383 | |||||||||||
| YPSO Holding S.A. (France), |
||||||||||||||||
| Term Loan B-5 |
4.56 | % | 07/29/2022 | 2,219 | 2,127,817 | |||||||||||
| Term Loan B-6 |
4.75 | % | 02/10/2023 | 16,285 | 15,694,606 | |||||||||||
| Term Loan B-6 |
4.75 | % | 02/10/2023 | EUR | 3,150 | 3,283,252 | ||||||||||
| Ziggo B.V. (Netherlands), |
||||||||||||||||
| Term Loan B-1 |
3.50 | % | 01/15/2022 | 5,435 | 5,228,395 | |||||||||||
| Term Loan B-2 |
3.51 | % | 01/15/2022 | 3,502 | 3,369,276 | |||||||||||
| Term Loan B-3 |
3.60 | % | 01/15/2022 | 5,760 | 5,541,256 | |||||||||||
| 82,735,590 | ||||||||||||||||
| Chemicals & Plastics–2.73% | ||||||||||||||||
| Allnex & Cy S.C.A., |
||||||||||||||||
| Term Loan B-1 |
4.50 | % | 10/03/2019 | 563 | 557,649 | |||||||||||
| Term Loan B-2 |
4.50 | % | 10/03/2019 | 292 | 289,347 | |||||||||||
| Chemours Co. (The), Term Loan B |
3.75 | % | 05/12/2022 | 773 | 699,760 | |||||||||||
| Chemstralia Finco Ltd., Term Loan |
7.25 | % | 02/28/2022 | 3,235 | 3,154,165 | |||||||||||
| Chromaflo Technologies Corp., |
||||||||||||||||
| First Lien Term Loan B |
4.50 | % | 12/02/2019 | 344 | 325,808 | |||||||||||
| Second Lien Term Loan |
8.25 | % | 06/02/2020 | 815 | 623,522 | |||||||||||
| Colouroz Investment LLC (Germany), |
||||||||||||||||
| First Lien Term Loan B-2 |
4.50 | % | 09/07/2021 | 2,919 | 2,777,566 | |||||||||||
| Second Lien Term Loan B-2 |
8.25 | % | 09/05/2022 | 4,949 | 4,528,294 | |||||||||||
| Term Loan C |
4.50 | % | 09/07/2021 | 483 | 459,164 | |||||||||||
| Eco Services Operations LLC, Term Loan |
4.75 | % | 12/01/2021 | 2,580 | 2,531,546 | |||||||||||
| Gemini HDPE LLC, Term Loan |
4.75 | % | 08/06/2021 | 316 | 308,411 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Chemicals & Plastics–(continued) | ||||||||||||||||
| HII Holding Corp., First Lien Term Loan |
4.25 | % | 12/20/2019 | $ | 2,015 | $ | 1,923,914 | |||||||||
| Huntsman International, LLC, Incremental Term Loan |
3.75 | % | 10/01/2021 | 2,267 | 2,200,730 | |||||||||||
| Ineos Holdings Ltd., |
||||||||||||||||
| Term Loan |
3.75 | % | 05/04/2018 | 8,210 | 8,021,932 | |||||||||||
| Term Loan 1 |
2.94 | % | 12/31/2016 | 959 | 955,312 | |||||||||||
| MacDermid, Inc., |
||||||||||||||||
| First Lien Term Loan B |
5.50 | % | 06/07/2020 | 1,403 | 1,279,459 | |||||||||||
| Term Loan B-3 |
5.50 | % | 06/07/2020 | 9 | 8,662 | |||||||||||
| OMNOVA Solutions, Inc., Term Loan B-1 |
4.25 | % | 05/31/2018 | 1,140 | 1,134,254 | |||||||||||
| Otter Products, LLC, Term Loan B |
5.75 | % | 06/03/2020 | 6,157 | 5,603,115 | |||||||||||
| Oxea Finance LLC, First Lien Term Loan B-2 |
4.25 | % | 01/15/2020 | 5,465 | 5,289,195 | |||||||||||
| ProAmpac Intermediate Inc., Second Lien Term Loan |
9.25 | % | 08/18/2023 | 122 | 107,055 | |||||||||||
| Royal Holdings, Inc., Second Lien Term Loan |
8.50 | % | 06/19/2023 | 660 | 637,311 | |||||||||||
| Styrolution US Holding LLC, First Lien Term Loan B-1 |
6.50 | % | 11/07/2019 | 2,824 | 2,816,630 | |||||||||||
| Tata Chemicals North America Inc., Term Loan |
3.75 | % | 08/07/2020 | 1,453 | 1,420,556 | |||||||||||
| 47,653,357 | ||||||||||||||||
| Clothing & Textiles–0.60% | ||||||||||||||||
| ABG Intermediate Holdings 2 LLC, |
||||||||||||||||
| First Lien Term Loan |
5.50 | % | 05/27/2021 | 2,352 | 2,275,674 | |||||||||||
| Second Lien Term Loan |
9.50 | % | 05/27/2022 | 2,243 | 2,085,708 | |||||||||||
| Ascena Retail Group, Inc., Term Loan B |
5.25 | % | 08/21/2022 | 6,621 | 6,182,241 | |||||||||||
| 10,543,623 | ||||||||||||||||
| Conglomerates–0.27% | ||||||||||||||||
| Epiq Systems, Inc., Term Loan |
4.50 | % | 08/27/2020 | 2,929 | 2,899,770 | |||||||||||
| Jarden Corp., Term Loan B-2 |
3.19 | % | 07/30/2022 | 34 | 34,462 | |||||||||||
| Penn Engineering & Manufacturing Corp., Incremental Term Loan B |
4.00 | % | 08/29/2021 | 124 | 122,108 | |||||||||||
| Spectrum Brands, Inc., Term Loan |
3.50 | % | 06/23/2022 | 1,624 | 1,623,527 | |||||||||||
| 4,679,867 | ||||||||||||||||
| Containers & Glass Products–0.83% | ||||||||||||||||
| Berlin Packaging, LLC, |
||||||||||||||||
| Second Lien Term Loan |
7.75 | % | 09/30/2022 | 760 | 684,151 | |||||||||||
| Term Loan |
4.50 | % | 10/01/2021 | 519 | 507,667 | |||||||||||
| BWAY Holding Co., Term Loan |
5.50 | % | 08/14/2020 | 900 | 858,606 | |||||||||||
| Consolidated Container Co. LLC, Term Loan |
5.00 | % | 07/03/2019 | 374 | 338,761 | |||||||||||
| Duran Group (Germany), Term Loan C |
8.25 | % | 11/28/2019 | 2,544 | 2,530,811 | |||||||||||
| Hoffmaster Group, Inc., |
||||||||||||||||
| First Lien Term Loan |
5.25 | % | 05/09/2020 | 3,825 | 3,738,935 | |||||||||||
| Second Lien Term Loan (Acquired 05/13/2014; Cost $777,390) |
10.00 | % | 05/09/2021 | 786 | 713,441 | |||||||||||
| LA Holding B.V. (Netherlands), |
||||||||||||||||
| Term Loan B-1A (Acquired 12/16/2015; Cost $675,127) |
6.50 | % | 06/18/2018 | EUR | 618 | 669,028 | ||||||||||
| Term Loan B-1B (Acquired 12/16/2015; Cost $726,502) |
6.50 | % | 06/18/2018 | EUR | 665 | 719,939 | ||||||||||
| Term Loan B-1C (Acquired 12/16/2015; Cost $236,788) |
6.50 | % | 06/18/2018 | EUR | 217 | 234,649 | ||||||||||
| Ranpak Corp., |
||||||||||||||||
| Second Lien Term Loan |
8.25 | % | 10/03/2022 | 415 | 344,284 | |||||||||||
| Term Loan B-1 |
4.25 | % | 10/01/2021 | 576 | 548,942 | |||||||||||
| Reynolds Group Holdings Inc., Incremental Term Loan |
4.50 | % | 12/01/2018 | 1,574 | 1,571,514 | |||||||||||
| Tekni-Plex, Inc., Second Lien Term Loan |
8.75 | % | 06/01/2023 | 1,122 | 1,048,973 | |||||||||||
| 14,509,701 | ||||||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Cosmetics & Toiletries–0.55% | ||||||||||||||||
| Coty Inc., Term Loan B |
3.75 | % | 10/27/2022 | $ | 2,228 | $ | 2,224,208 | |||||||||
| Galleria Co., Term Loan B |
3.75 | % | 01/26/2023 | 5,278 | 5,256,354 | |||||||||||
| Prestige Brands, Inc., Term Loan B-3 |
3.50 | % | 09/03/2021 | 2,100 | 2,098,342 | |||||||||||
| 9,578,904 | ||||||||||||||||
| Drugs–1.68% | ||||||||||||||||
| BPA Laboratories, |
||||||||||||||||
| First Lien Term Loan |
3.12 | % | 07/03/2017 | 1,202 | 970,147 | |||||||||||
| Second Lien Term Loan |
3.12 | % | 07/03/2017 | 1,045 | 841,452 | |||||||||||
| Catalent Pharma Solutions, Inc., Term Loan |
4.25 | % | 05/20/2021 | 806 | 799,367 | |||||||||||
| Endo Pharmaceuticals Holding Inc., Incremental Term Loan B |
3.75 | % | 09/25/2022 | 3,185 | 3,151,520 | |||||||||||
| Grifols Worldwide Operations USA, Inc., Term Loan B |
3.44 | % | 02/27/2021 | 10,781 | 10,762,853 | |||||||||||
| Valeant Pharmaceuticals International, Inc. (Canada), |
||||||||||||||||
| Series C-2 Term Loan B |
3.75 | % | 12/11/2019 | 6,613 | 6,234,766 | |||||||||||
| Series E-1 Term Loan B |
3.75 | % | 08/05/2020 | 6,991 | 6,555,073 | |||||||||||
| 29,315,178 | ||||||||||||||||
| Ecological Services & Equipment–0.04% | ||||||||||||||||
| ADS Waste Holdings, Inc., Term Loan B-2 |
3.75 | % | 10/09/2019 | 608 | 592,144 | |||||||||||
| Waste Industries USA, Inc., Term Loan |
4.25 | % | 02/27/2020 | 90 | 89,474 | |||||||||||
| 681,618 | ||||||||||||||||
| Electronics & Electrical–8.20% | ||||||||||||||||
| 4L Technologies Inc., Term Loan (Acquired 05/09/2014-10/08/2014; Cost $10,150,959) |
5.51 | % | 05/08/2020 | 10,207 | 9,288,519 | |||||||||||
| Avago Technologies Cayman Ltd. (Luxembourg), Term Loan B-1 |
4.25 | % | 02/01/2023 | 33,254 | 32,843,812 | |||||||||||
| AVG Technologies N.V. (Netherlands), Term Loan |
5.75 | % | 10/15/2020 | 1,749 | 1,705,140 | |||||||||||
| Blackboard Inc., Term Loan B-3 |
4.75 | % | 10/04/2018 | 4,671 | 4,215,483 | |||||||||||
| CommScope, Inc., Term Loan 5 |
3.83 | % | 12/29/2022 | 4,531 | 4,506,465 | |||||||||||
| Compuware Corp., |
|
|||||||||||||||
| Term Loan B-1 |
6.25 | % | 12/15/2019 | 3,326 | 3,085,884 | |||||||||||
| Term Loan B-2 |
6.25 | % | 12/15/2021 | 1,059 | 953,845 | |||||||||||
| Dell International LLC, Term Loan C |
3.75 | % | 10/29/2018 | 2,931 | 2,929,808 | |||||||||||
| Deltek, Inc., First Lien Term Loan |
5.00 | % | 06/25/2022 | 4,713 | 4,550,703 | |||||||||||
| Diamond US Holding LLC, Term Loan |
4.75 | % | 12/17/2021 | 2,706 | 2,657,826 | |||||||||||
| Hyland Software, Inc., Second Lien Term Loan |
8.25 | % | 07/03/2023 | 643 | 587,770 | |||||||||||
| Lattice Semiconductor Corp., Term Loan |
5.25 | % | 03/10/2021 | 2,834 | 2,663,622 | |||||||||||
| Lully Finance LLC, Second Lien Term Loan B-1 |
9.50 | % | 10/16/2023 | 1,281 | 1,184,920 | |||||||||||
| MA Finance Co., LLC, Term Loan C |
4.50 | % | 11/20/2019 | 6,030 | 5,788,867 | |||||||||||
| Mediaocean LLC, Term Loan |
5.75 | % | 08/15/2022 | 2,155 | 2,133,414 | |||||||||||
| Microsemi Corp., Term Loan B |
5.25 | % | 01/15/2023 | 9,902 | 9,904,526 | |||||||||||
| Mirion Technologies, Inc., Term Loan |
5.75 | % | 03/31/2022 | 1,831 | 1,808,112 | |||||||||||
| MSC Software Corp., |
|
|||||||||||||||
| First Lien Term Loan |
5.00 | % | 05/29/2020 | 316 | 287,268 | |||||||||||
| Second Lien Term Loan |
8.50 | % | 06/01/2021 | 803 | 690,250 | |||||||||||
| Natel Engineering Co., Inc., Term Loan |
6.75 | % | 04/10/2020 | 2,400 | 2,291,794 | |||||||||||
| NeuStar, Inc., Incremental Term Loan |
4.43 | % | 01/22/2018 | 5,863 | 5,613,363 | |||||||||||
| Oberthur Technologies of America Corp., Term Loan B-2 |
4.50 | % | 10/18/2019 | 1,856 | 1,814,720 | |||||||||||
| Peak 10, Inc., Second Lien Term Loan |
8.25 | % | 06/17/2022 | 788 | 716,743 | |||||||||||
| RP Crown Parent, LLC, |
|
|||||||||||||||
| First Lien Term Loan |
6.00 | % | 12/21/2018 | 12,669 | 11,496,798 | |||||||||||
| Second Lien Term Loan |
11.25 | % | 12/21/2019 | 602 | 477,511 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Electronics & Electrical–(continued) | ||||||||||||||||
| SolarWinds Holdings, Inc., Term Loan |
6.50 | % | 02/03/2023 | $ | 7,613 | $ | 7,325,489 | |||||||||
| SS&C Technologies Inc., |
|
|||||||||||||||
| Term Loan B-1 |
4.01 | % | 07/08/2022 | 5,534 | 5,498,022 | |||||||||||
| Term Loan B-2 |
4.02 | % | 07/08/2022 | 798 | 792,706 | |||||||||||
| Sybil Software LLC, Term Loan |
4.25 | % | 03/20/2020 | 1,091 | 1,081,925 | |||||||||||
| TTM Technologies, Inc., Term Loan B |
6.00 | % | 05/31/2021 | 6,036 | 5,733,966 | |||||||||||
| Zebra Technologies Corp., Term Loan |
4.75 | % | 10/27/2021 | 8,606 | 8,670,740 | |||||||||||
| 143,300,011 | ||||||||||||||||
| Equipment Leasing–0.16% | ||||||||||||||||
| Flying Fortress Inc., Term Loan |
3.50 | % | 04/30/2020 | 104 | 104,037 | |||||||||||
| IBC Capital US LLC, Term Loan |
4.75 | % | 09/09/2021 | 3,055 | 2,726,598 | |||||||||||
| 2,830,635 | ||||||||||||||||
| Financial Intermediaries–1.13% | ||||||||||||||||
| Bankruptcy Management Solutions, Inc., Term Loan B |
7.00 | % | 06/27/2018 | 22 | 19,608 | |||||||||||
| Black Knight InfoServ, LLC, Term Loan B |
3.75 | % | 05/27/2022 | 940 | 940,051 | |||||||||||
| iPayment Inc., Term Loan |
6.75 | % | 05/08/2017 | 3,978 | 3,808,832 | |||||||||||
| LPL Holdings, Inc., Term Loan B |
4.75 | % | 11/20/2022 | 17 | 15,867 | |||||||||||
| MoneyGram International, Inc., Term Loan |
4.25 | % | 03/27/2020 | 9,441 | 8,733,134 | |||||||||||
| RJO Holdings Corp., Term Loan |
7.19 | % | 12/10/2016 | 1,598 | 1,398,065 | |||||||||||
| RPI Finance Trust, Term Loan B-4 |
3.50 | % | 11/09/2020 | 1,948 | 1,943,432 | |||||||||||
| Stiphout Finance LLC, |
|
|||||||||||||||
| Term Loan |
4.75 | % | 10/26/2022 | 1,984 | 1,949,484 | |||||||||||
| Second Lien Term Loan |
9.00 | % | 10/26/2023 | 1,020 | 994,346 | |||||||||||
| 19,802,819 | ||||||||||||||||
| Food & Drug Retailers–1.28% | ||||||||||||||||
| Albertson’s LLC, |
|
|||||||||||||||
| Term Loan B-4 |
5.50 | % | 08/25/2021 | 16,447 | 16,094,070 | |||||||||||
| Term Loan B-5 |
5.50 | % | 12/21/2022 | 1,692 | 1,649,006 | |||||||||||
| Pret A Manger (United Kingdom), Term Loan B |
5.51 | % | 06/19/2020 | GBP | 1,750 | 2,424,777 | ||||||||||
| Supervalu Inc., Term Loan |
4.50 | % | 03/21/2019 | 2,310 | 2,184,890 | |||||||||||
| 22,352,743 | ||||||||||||||||
| Food Products–4.16% | ||||||||||||||||
| AdvancePierre Foods, Inc., |
||||||||||||||||
| First Lien Term Loan |
5.75 | % | 07/10/2017 | 4,794 | 4,797,780 | |||||||||||
| Second Lien Term Loan |
9.50 | % | 10/10/2017 | 2,540 | 2,515,998 | |||||||||||
| Candy Intermediate Holdings, Inc., Term Loan |
7.50 | % | 06/18/2018 | 3,648 | 3,629,989 | |||||||||||
| Charger OpCo B.V., Term Loan B-1 |
4.25 | % | 07/02/2022 | 10,445 | 10,269,263 | |||||||||||
| CSM Bakery Supplies LLC, |
||||||||||||||||
| First Lien Term Loan |
5.00 | % | 07/03/2020 | 18 | 16,941 | |||||||||||
| Second Lien Term Loan |
8.75 | % | 07/03/2021 | 2,515 | 2,289,099 | |||||||||||
| Dole Food Co., Inc., Term Loan B |
4.50 | % | 11/01/2018 | 7,457 | 7,279,623 | |||||||||||
| Hearthside Group Holdings, LLC, |
||||||||||||||||
| Revolver Loan(c) |
0.00 | % | 06/02/2019 | 2,431 | 2,233,405 | |||||||||||
| Revolver Loan |
3.59 | % | 06/02/2019 | 270 | 248,156 | |||||||||||
| Term Loan |
4.50 | % | 06/02/2021 | 399 | 379,009 | |||||||||||
| Hostess Brands, LLC, Second Lien Term Loan B |
8.50 | % | 08/03/2023 | 28 | 26,460 | |||||||||||
| JBS USA, LLC, |
||||||||||||||||
| Incremental Term Loan |
4.00 | % | 10/30/2022 | 7,481 | 7,289,190 | |||||||||||
| Term Loan |
3.75 | % | 05/25/2018 | 6,906 | 6,897,833 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Food Products–(continued) | ||||||||||||||||
| Keurig Green Mountain, Inc., Term Loan B(d) |
— | 03/03/2023 | $ | 18,910 | $ | 18,595,318 | ||||||||||
| NBTY, Inc., Term Loan B-2 |
3.50 | % | 10/01/2017 | 919 | 908,436 | |||||||||||
| Post Holdings, Inc., Revolver Loan(c) |
0.00 | % | 01/29/2019 | 3,566 | 3,560,417 | |||||||||||
| QCE LLC, PIK Term Loan(e) |
15.00 | % | 06/30/2019 | 6 | 829 | |||||||||||
| Shearer’s Foods, LLC, |
||||||||||||||||
| First Lien Term Loan |
4.94 | % | 06/30/2021 | 507 | 491,846 | |||||||||||
| Incremental Term Loan |
5.25 | % | 06/30/2021 | 991 | 962,897 | |||||||||||
| Second Lien Term Loan |
7.75 | % | 06/30/2022 | 457 | 422,471 | |||||||||||
| 72,814,960 | ||||||||||||||||
| Food Service–0.71% | ||||||||||||||||
| Aramark Corp., LOC |
3.92 | % | 07/26/2016 | 10 | 9,704 | |||||||||||
| New Red Finance, Inc., Term Loan B-2 |
3.75 | % | 12/10/2021 | 1,138 | 1,134,108 | |||||||||||
| Portillo’s Holdings, LLC, Second Lien Term Loan |
8.00 | % | 08/01/2022 | 841 | 801,718 | |||||||||||
| Restaurant Holding Co., LLC, First Lien Term Loan (Acquired 02/28/2014; Cost $2,654,571) |
8.75 | % | 02/28/2019 | 2,720 | 2,447,885 | |||||||||||
| Steak ‘n Shake, Inc., Term Loan |
4.75 | % | 03/19/2021 | 1,921 | 1,892,248 | |||||||||||
| TMK Hawk Parent, Corp., |
||||||||||||||||
| First Lien Term Loan |
5.25 | % | 10/01/2021 | 1,210 | 1,194,610 | |||||||||||
| Second Lien Term Loan |
8.50 | % | 10/01/2022 | 1,083 | 1,066,996 | |||||||||||
| US Foods, Inc., Incremental Term Loan |
4.50 | % | 03/31/2019 | 3,872 | 3,828,662 | |||||||||||
| 12,375,931 | ||||||||||||||||
| Forest Products–0.38% | ||||||||||||||||
| Builders FirstSource, Inc., Term Loan |
6.00 | % | 07/29/2022 | 1,922 | 1,862,772 | |||||||||||
| NewPage Corp., |
||||||||||||||||
| DIP Delayed Draw Term Loan (Acquired 01/28/2016; Cost $570,546)(c)(f) |
0.00 | % | 07/26/2017 | 571 | 570,546 | |||||||||||
| Term Loan (Acquired 01/28/2016; Cost $1,358,717)(f) |
11.00 | % | 07/26/2017 | 1,426 | 1,355,047 | |||||||||||
| Term Loan B(d)(f)(g) |
— | 02/11/2021 | 4,697 | 1,227,132 | ||||||||||||
| Xerium Technologies, Inc., Term Loan |
6.25 | % | 05/17/2019 | 1,638 | 1,605,089 | |||||||||||
| 6,620,586 | ||||||||||||||||
| Health Care–4.26% | ||||||||||||||||
| Acadia Healthcare Co., Inc., |
||||||||||||||||
| Incremental Term Loan B |
4.25 | % | 02/11/2022 | 1,094 | 1,094,851 | |||||||||||
| Term Loan B-2 |
4.50 | % | 02/16/2023 | 3,322 | 3,324,435 | |||||||||||
| CareCore National, LLC, Term Loan |
5.50 | % | 03/05/2021 | 7,805 | 6,634,646 | |||||||||||
| Community Health Systems, Inc., |
|
|||||||||||||||
| Incremental Term Loan F |
3.74 | % | 12/31/2018 | 3,882 | 3,782,324 | |||||||||||
| Incremental Term Loan G |
3.75 | % | 12/31/2019 | 3,830 | 3,661,961 | |||||||||||
| Creganna Finance (US) LLC, |
|
|||||||||||||||
| First Lien Term Loan |
4.75 | % | 12/01/2021 | 1,154 | 1,154,455 | |||||||||||
| Second Lien Term Loan |
9.00 | % | 06/01/2022 | 981 | 985,042 | |||||||||||
| DJO Finance LLC, Term Loan |
4.25 | % | 06/07/2020 | 6,526 | 6,307,779 | |||||||||||
| Greatbatch Ltd., Term Loan B |
5.25 | % | 10/27/2022 | 4,661 | 4,610,003 | |||||||||||
| HC Group Holdings III, Inc., Term Loan |
6.00 | % | 04/07/2022 | 2,813 | 2,799,019 | |||||||||||
| Hill-Rom Holdings, Inc., Term Loan B |
3.50 | % | 09/08/2022 | 3,086 | 3,084,064 | |||||||||||
| Indigo Cleanco Ltd. (United Kingdom), Term Loan B (Acquired 08/04/2015; Cost $2,783,156) |
5.26 | % | 07/08/2021 | GBP | 1,797 | 2,435,637 | ||||||||||
| Kindred Healthcare, Inc., Term Loan |
4.25 | % | 04/09/2021 | 994 | 944,283 | |||||||||||
| Kinetic Concepts, Inc., Term Loan E-1 |
4.50 | % | 05/04/2018 | 5,538 | 5,426,014 | |||||||||||
| MPH Acquisition Holdings LLC, Term Loan |
3.75 | % | 03/31/2021 | 4,472 | 4,373,224 | |||||||||||
| National Surgical Hospitals, Inc., Term Loan |
4.50 | % | 06/01/2022 | 1,774 | 1,685,973 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Health Care–(continued) | ||||||||||||||||
| New Millennium HoldCo, Inc., Term Loan |
7.50 | % | 12/21/2020 | $ | 8,869 | $ | 8,120,472 | |||||||||
| Ortho-Clinical Diagnostics, Inc., Term Loan |
4.75 | % | 06/30/2021 | 1,500 | 1,286,046 | |||||||||||
| Phillips-Medisize Corp., Second Lien Term Loan |
8.25 | % | 06/16/2022 | 788 | 673,423 | |||||||||||
| Surgery Center Holdings, Inc., Second Lien Term Loan |
8.50 | % | 11/03/2021 | 1,894 | 1,718,541 | |||||||||||
| Surgical Care Affiliates, LLC, Term Loan |
4.25 | % | 03/17/2022 | 5,170 | 5,137,324 | |||||||||||
| Tunstall Group Finance Ltd. (United Kingdom), Term Loan B-2(d) |
— | 10/16/2020 | EUR | 2,000 | 2,027,285 | |||||||||||
| Western Dental Services, Inc., Term Loan |
7.50 | % | 11/01/2018 | 3,709 | 3,251,312 | |||||||||||
| 74,518,113 | ||||||||||||||||
| Home Furnishings–0.41% | ||||||||||||||||
| Mattress Holding Corp., |
|
|||||||||||||||
| Incremental Term Loan |
6.25 | % | 10/20/2021 | 5,125 | 4,964,627 | |||||||||||
| Term Loan |
6.25 | % | 10/20/2021 | 2,265 | 2,204,049 | |||||||||||
| 7,168,676 | ||||||||||||||||
| Industrial Equipment–1.53% | ||||||||||||||||
| Accudyne Industries LLC, Term Loan |
4.00 | % | 12/13/2019 | 2,961 | 2,421,881 | |||||||||||
| Crosby US Acquisition Corp., |
|
|||||||||||||||
| First Lien Term Loan |
4.00 | % | 11/23/2020 | 7,178 | 5,323,350 | |||||||||||
| Second Lien Term Loan |
7.00 | % | 11/22/2021 | 1,620 | 830,044 | |||||||||||
| Doosan Infracore International, Inc., Term Loan B |
4.50 | % | 05/28/2021 | 4,765 | 4,478,647 | |||||||||||
| Filtration Group Corp., Second Lien Term Loan |
8.25 | % | 11/22/2021 | 446 | 429,660 | |||||||||||
| Gardner Denver, Inc., Term Loan |
4.25 | % | 07/30/2020 | 1,176 | 973,460 | |||||||||||
| Generac Power System, Inc., Term Loan B |
3.50 | % | 05/31/2020 | 1,500 | 1,468,580 | |||||||||||
| North American Lifting Holdings, Inc., First Lien Term Loan |
5.50 | % | 11/27/2020 | 3,505 | 2,625,748 | |||||||||||
| Rexnord LLC/ RBS Global, Inc., Term Loan B |
4.00 | % | 08/21/2020 | 5,851 | 5,611,384 | |||||||||||
| Tank Holding Corp., Term Loan |
5.25 | % | 03/16/2022 | 883 | 848,469 | |||||||||||
| Terex Corp., Term Loan |
3.50 | % | 08/13/2021 | 231 | 227,966 | |||||||||||
| Virtuoso US LLC, Term Loan |
4.25 | % | 02/11/2021 | 1,521 | 1,479,221 | |||||||||||
| 26,718,410 | ||||||||||||||||
| Insurance–0.18% | ||||||||||||||||
| Cooper Gay Swett & Crawford Ltd., |
|
|||||||||||||||
| First Lien Term Loan |
5.00 | % | 04/16/2020 | 1,901 | 1,882,609 | |||||||||||
| Second Lien Term Loan |
8.25 | % | 10/16/2020 | 1,300 | 1,288,878 | |||||||||||
| 3,171,487 | ||||||||||||||||
| Leisure Goods, Activities & Movies–3.10% | ||||||||||||||||
| Alpha Topco Ltd. (United Kingdom), |
|
|||||||||||||||
| Second Lien Term Loan |
7.75 | % | 07/29/2022 | 7,388 | 6,421,126 | |||||||||||
| Term Loan B-3 |
4.75 | % | 07/30/2021 | 19,886 | 18,551,946 | |||||||||||
| AMC Entertainment, Inc., Term Loan |
4.00 | % | 12/15/2022 | 2,670 | 2,671,774 | |||||||||||
| Bright Horizons Family Solutions, Inc., Term Loan B-1 |
4.50 | % | 01/30/2020 | 468 | 467,809 | |||||||||||
| Cinemark USA, Inc., Term Loan |
3.56 | % | 05/06/2022 | 241 | 241,271 | |||||||||||
| CWGS Group, LLC, Term Loan |
5.75 | % | 02/20/2020 | 5,828 | 5,707,418 | |||||||||||
| Dorna Sports S.L. (Spain), Term Loan B |
4.33 | % | 04/30/2021 | 1,780 | 1,723,437 | |||||||||||
| Equinox Holdings Inc., Revolver Loan (Acquired 04/14/2014-11/05/2014; Cost $1,847,623)(c) |
0.00 | % | 02/01/2018 | 1,866 | 1,679,639 | |||||||||||
| Fitness International, LLC, Term Loan B |
5.50 | % | 07/01/2020 | 5,789 | 5,448,880 | |||||||||||
| Infront Finance Luxembourg S.a r.l. (Switzerland), Term Loan D |
8.00 | % | 06/28/2020 | EUR | 1,250 | 1,332,617 | ||||||||||
| Metro-Goldwyn-Mayer Inc., Second Lien Term Loan |
5.13 | % | 06/26/2020 | 1,556 | 1,528,857 | |||||||||||
| Performance Sports Group Ltd. (Canada), Term Loan |
4.50 | % | 04/15/2021 | 259 | 240,324 | |||||||||||
| Regal Cinemas Corp., Term Loan |
3.80 | % | 04/01/2022 | 2,529 | 2,528,096 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Leisure Goods, Activities & Movies–(continued) | ||||||||||||||||
| Seaworld Parks & Entertainment, Inc., |
|
|||||||||||||||
| Term Loan B-2 |
3.00 | % | 05/14/2020 | $ | 4,168 | $ | 3,971,369 | |||||||||
| Term Loan B-3 |
4.00 | % | 05/14/2020 | 324 | 319,012 | |||||||||||
| Six Flags Theme Parks, Inc., Term Loan B |
3.50 | % | 06/30/2022 | 1,310 | 1,307,107 | |||||||||||
| 54,140,682 | ||||||||||||||||
| Lodging & Casinos–3.95% | ||||||||||||||||
| Belmond Interfin Ltd. (Bermuda), Term Loan |
4.00 | % | 03/21/2021 | 3,164 | 3,088,491 | |||||||||||
| Caesars Growth Properties Holdings, LLC, Term Loan B |
6.25 | % | 05/08/2021 | 5,971 | 4,781,945 | |||||||||||
| Cannery Casino Resorts, LLC, First Lien Term Loan |
6.00 | % | 10/02/2018 | 4,494 | 4,434,572 | |||||||||||
| ESH Hospitality, Inc., Term Loan |
5.00 | % | 06/24/2019 | 3,771 | 3,789,173 | |||||||||||
| Four Seasons Holdings Inc. (Canada), |
|
|||||||||||||||
| First Lien Term Loan |
3.50 | % | 06/27/2020 | 3,219 | 3,172,175 | |||||||||||
| Second Lien Term Loan |
6.25 | % | 12/27/2020 | 485 | 476,110 | |||||||||||
| Harrah’s Operating Co., Inc., Term Loan B-6(f) |
1.50 | % | 03/01/2017 | 11,423 | 10,030,902 | |||||||||||
| Hilton Worldwide Finance, LLC, Term Loan |
3.50 | % | 10/26/2020 | 9,051 | 9,035,779 | |||||||||||
| La Quinta Intermediate Holdings LLC, Term Loan |
3.75 | % | 04/14/2021 | 7,586 | 7,257,091 | |||||||||||
| MGM Resorts International, Term Loan B |
3.50 | % | 12/20/2019 | 968 | 960,663 | |||||||||||
| Scientific Games International, Inc., |
|
|||||||||||||||
| Term Loan |
6.00 | % | 10/18/2020 | 15,765 | 14,562,656 | |||||||||||
| Term Loan B-2 |
6.00 | % | 10/01/2021 | 1,965 | 1,805,331 | |||||||||||
| Twin River Management Group, Inc., Term Loan |
5.25 | % | 07/10/2020 | 5,790 | 5,748,076 | |||||||||||
| 69,142,964 | ||||||||||||||||
| Nonferrous Metals & Minerals–0.66% | ||||||||||||||||
| Arch Coal, Inc., |
|
|||||||||||||||
| DIP Term Loan(c)(f) |
0.00 | % | 01/31/2017 | 3,457 | 3,318,639 | |||||||||||
| Term Loan |
6.25 | % | 05/16/2018 | 9,521 | 2,835,227 | |||||||||||
| Dynacast International LLC, Second Lien Term Loan |
9.50 | % | 01/30/2023 | 25 | 23,075 | |||||||||||
| EP Minerals, LLC, Term Loan |
5.50 | % | 08/20/2020 | 874 | 855,292 | |||||||||||
| Novelis Inc., Term Loan |
4.00 | % | 06/02/2022 | 4,821 | 4,510,376 | |||||||||||
| 11,542,609 | ||||||||||||||||
| Oil & Gas–3.85% | ||||||||||||||||
| Ameriforge Group Inc., First Lien Term Loan |
5.00 | % | 12/19/2019 | 68 | 30,332 | |||||||||||
| Ascent Resources — Marcellus, LLC, |
|
|||||||||||||||
| First Lien Term Loan |
5.25 | % | 08/04/2020 | 5,037 | 873,128 | |||||||||||
| Second Lien Term Loan |
8.50 | % | 08/04/2021 | 999 | 41,644 | |||||||||||
| Bronco Midstream Funding, LLC, Term Loan |
5.00 | % | 08/17/2020 | 5,860 | 3,486,989 | |||||||||||
| Citgo Holding Inc., Term Loan |
9.50 | % | 05/12/2018 | 8,027 | 7,936,355 | |||||||||||
| CJ Holding Co., |
|
|||||||||||||||
| Term Loan B-1 |
6.50 | % | 03/24/2020 | 333 | 131,434 | |||||||||||
| Term Loan B-2 |
7.25 | % | 03/24/2022 | 2,747 | 1,011,911 | |||||||||||
| Crestwood Holdings LLC, Term Loan B-1 |
7.00 | % | 06/19/2019 | 3,840 | 1,589,864 | |||||||||||
| Drillships Financing Holding Inc., Term Loan B-1 |
6.00 | % | 03/31/2021 | 16,785 | 4,895,646 | |||||||||||
| Drillships Ocean Ventures, Inc., Term Loan |
5.50 | % | 07/25/2021 | 6,945 | 2,795,472 | |||||||||||
| EFR Benelux B.V. (Netherlands), Second Lien Term Loan |
8.50 | % | 08/28/2019 | EUR | 500 | 545,456 | ||||||||||
| EMG Utica, LLC, Term Loan |
4.75 | % | 03/27/2020 | 2,254 | 1,746,606 | |||||||||||
| Fieldwood Energy LLC, Term Loan |
3.88 | % | 09/28/2018 | 6,784 | 4,160,936 | |||||||||||
| Floatel International Ltd., Term Loan |
6.00 | % | 06/27/2020 | 6,576 | 2,827,807 | |||||||||||
| Glenn Pool Oil & Gas Trust I, Term Loan (Acquired 06/08/2011; Cost $83,694) |
4.50 | % | 05/02/2016 | 84 | 83,484 | |||||||||||
| HGIM Corp., Term Loan B |
5.50 | % | 06/18/2020 | 8,592 | 3,966,726 | |||||||||||
| Jonah Energy LLC, Second Lien Term Loan |
7.50 | % | 05/12/2021 | 3,067 | 1,349,566 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Oil & Gas–(continued) | ||||||||||||||||
| McDermott International, Inc., Term Loan |
5.25 | % | 04/16/2019 | $ | 1,469 | $ | 1,319,011 | |||||||||
| NGPL PipeCo LLC, Term Loan |
6.75 | % | 09/15/2017 | 3,891 | 3,686,280 | |||||||||||
| Osum Productions Corp. (Canada), Term Loan |
6.50 | % | 07/31/2020 | 3,454 | 1,606,145 | |||||||||||
| Pacific Drilling S.A. (Luxembourg), Term Loan |
4.50 | % | 06/03/2018 | 2,519 | 507,726 | |||||||||||
| Paragon Offshore Finance Co. (Cayman Islands), Term Loan(f) |
3.75 | % | 07/16/2021 | 2,525 | 563,178 | |||||||||||
| Petroleum GEO-Services ASA, Term Loan |
3.25 | % | 03/19/2021 | 6,822 | 3,670,053 | |||||||||||
| Samchully Midstream 3 LLC, Term Loan |
5.75 | % | 10/20/2021 | 2,631 | 1,848,183 | |||||||||||
| Samson Investment Co., Second Lien Term Loan 1(f)(g) |
0.00 | % | 09/25/2018 | 10,513 | 332,890 | |||||||||||
| Seadrill Operating LP, Term Loan |
4.00 | % | 02/21/2021 | 19,058 | 8,038,555 | |||||||||||
| Seventy Seven Operating LLC, Term Loan |
3.75 | % | 06/25/2021 | 2,422 | 1,448,289 | |||||||||||
| Southcross Energy Partners, L.P., Term Loan |
5.25 | % | 08/04/2021 | 1,874 | 1,009,421 | |||||||||||
| Targa Resources Corp., Term Loan |
5.75 | % | 02/25/2022 | 970 | 800,435 | |||||||||||
| Veresen Midstream US LLC, Term Loan B-1 |
5.25 | % | 03/31/2022 | 5,346 | 5,015,857 | |||||||||||
| 67,319,379 | ||||||||||||||||
| Publishing–2.28% | ||||||||||||||||
| Getty Images, Inc., |
|
|||||||||||||||
| Revolver Loan(c) |
0.00 | % | 10/18/2017 | 6,893 | 5,376,764 | |||||||||||
| Term Loan |
4.75 | % | 10/18/2019 | 7,022 | 4,851,499 | |||||||||||
| MediMedia USA, Inc., First Lien Term Loan (Acquired 05/10/2013-09/05/2013; Cost $1,737,355) |
8.00 | % | 11/20/2018 | 1,755 | 1,715,450 | |||||||||||
| Merrill Communications LLC, Term Loan |
6.25 | % | 06/01/2022 | 6,392 | 5,137,278 | |||||||||||
| Newsday, LLC, Term Loan |
3.94 | % | 10/12/2016 | 6,892 | 6,896,617 | |||||||||||
| ProQuest LLC, Term Loan |
5.75 | % | 10/24/2021 | 6,850 | 6,559,256 | |||||||||||
| Tribune Media Co., Term Loan B |
3.75 | % | 12/28/2020 | 9,407 | 9,343,986 | |||||||||||
| 39,880,850 | ||||||||||||||||
| Radio & Television–2.26% | ||||||||||||||||
| Block Communications, Inc., Term Loan B |
4.00 | % | 11/07/2021 | 1,155 | 1,150,923 | |||||||||||
| Gray Television, Inc., Term Loan C |
4.25 | % | 06/13/2021 | 1,309 | 1,307,995 | |||||||||||
| iHeartCommunications, Inc., |
|
|||||||||||||||
| Term Loan D |
7.19 | % | 01/30/2019 | 6,101 | 4,020,044 | |||||||||||
| Term Loan E |
7.94 | % | 07/31/2019 | 43,274 | 28,371,549 | |||||||||||
| Media General Inc., Term Loan B |
4.00 | % | 07/31/2020 | 3,410 | 3,406,783 | |||||||||||
| Sinclair Television Group Inc., Incremental Term Loan B-1 |
3.50 | % | 07/30/2021 | 1,311 | 1,307,446 | |||||||||||
| 39,564,740 | ||||||||||||||||
| Retailers (except Food & Drug)–4.51% | ||||||||||||||||
| Cortefiel, S.A. (Spain), |
|
|||||||||||||||
| Term Loan B-1(d) |
— | 03/20/2017 | EUR | 384 | 342,123 | |||||||||||
| Term Loan B-2(d) |
— | 03/20/2017 | EUR | 421 | 375,042 | |||||||||||
| Term Loan B-3(d) |
— | 03/20/2017 | EUR | 196 | 174,312 | |||||||||||
| Term Loan B-3(d) |
— | 03/20/2017 | EUR | 514 | 458,006 | |||||||||||
| David’s Bridal, Inc., |
|
|||||||||||||||
| Asset-Based Revolver Loan(c) |
0.00 | % | 10/11/2017 | 1,573 | 1,431,139 | |||||||||||
| Term Loan |
5.25 | % | 10/11/2019 | 2,397 | 2,016,174 | |||||||||||
| Fullbeauty Brands Holdings Corp., Term Loan |
5.75 | % | 10/14/2022 | 4,295 | 3,979,658 | |||||||||||
| J. Crew Group, Inc., Term Loan |
4.00 | % | 03/05/2021 | 2,910 | 1,963,856 | |||||||||||
| Jill Holdings LLC, Term Loan |
6.00 | % | 05/08/2022 | 1,430 | 1,344,468 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Retailers (except Food & Drug)–(continued) | ||||||||||||||||
| Kirk Beauty One GmbH (Germany), |
|
|||||||||||||||
| Term Loan B-1 |
6.00 | % | 08/13/2022 | EUR | 211 | $ | 228,100 | |||||||||
| Term Loan B-2 |
6.00 | % | 08/13/2022 | EUR | 129 | 138,992 | ||||||||||
| Term Loan B-3 |
6.00 | % | 08/13/2022 | EUR | 221 | 238,300 | ||||||||||
| Term Loan B-4 |
6.00 | % | 08/13/2022 | EUR | 146 | 158,210 | ||||||||||
| Term Loan B-5 |
6.00 | % | 08/13/2022 | EUR | 33 | 35,158 | ||||||||||
| Term Loan B-6 |
6.00 | % | 08/13/2022 | EUR | 168 | 181,488 | ||||||||||
| Term Loan B-7 |
6.00 | % | 08/13/2022 | EUR | 93 | 100,467 | ||||||||||
| Lands’ End, Inc., Term Loan B |
4.25 | % | 04/02/2021 | 4,284 | 3,141,649 | |||||||||||
| Men’s Wearhouse, Inc. (The), Term Loan B |
4.50 | % | 06/18/2021 | 1,419 | 1,283,675 | |||||||||||
| National Vision, Inc., Second Lien Term Loan |
6.75 | % | 03/13/2022 | 132 | 116,829 | |||||||||||
| Nine West Holdings, Inc., Term Loan |
4.75 | % | 10/08/2019 | 4,268 | 2,731,485 | |||||||||||
| Payless, Inc., |
||||||||||||||||
| Second Lien Term Loan |
8.50 | % | 03/11/2022 | 2,178 | 489,969 | |||||||||||
| Term Loan |
5.00 | % | 03/11/2021 | 7,622 | 3,611,108 | |||||||||||
| Petco Animal Supplies, Inc., |
||||||||||||||||
| Term Loan B-1 |
5.75 | % | 01/26/2023 | 4,778 | 4,690,741 | |||||||||||
| Term Loan B-2 |
5.62 | % | 01/26/2023 | 2,183 | 2,143,136 | |||||||||||
| Pier 1 Imports (U.S.), Inc., Term Loan |
4.50 | % | 04/30/2021 | 1,536 | 1,405,658 | |||||||||||
| Savers Inc., Term Loan |
5.00 | % | 07/09/2019 | 4,240 | 3,226,854 | |||||||||||
| Sears Roebuck Acceptance Corp., Term Loan |
5.50 | % | 06/30/2018 | 24,611 | 22,811,249 | |||||||||||
| Staples, Inc., Term Loan B |
4.75 | % | 02/02/2022 | 1,649 | 1,639,583 | |||||||||||
| Toys ‘R’ US Property Co. I, LLC, Term Loan |
6.00 | % | 08/21/2019 | 13,584 | 11,919,895 | |||||||||||
| Toys ‘R’ US-Delaware, Inc., |
||||||||||||||||
| Canadian Term Loan A-1 |
8.25 | % | 10/24/2019 | 1,745 | 1,691,408 | |||||||||||
| Term Loan A-1 |
8.25 | % | 10/24/2019 | 2,164 | 2,097,346 | |||||||||||
| Term Loan B-2 |
5.25 | % | 05/25/2018 | 93 | 73,730 | |||||||||||
| Term Loan B-3 |
5.25 | % | 05/25/2018 | 27 | 21,277 | |||||||||||
| Vivarte (France), Term Loan(d) |
— | 10/29/2019 | EUR | 1,000 | 1,082,749 | |||||||||||
| Wilton Brands LLC, Term Loan B |
8.50 | % | 08/30/2018 | 1,581 | 1,466,302 | |||||||||||
| 78,810,136 | ||||||||||||||||
| Steel–0.66% | ||||||||||||||||
| Fortescue Metals Group Ltd., Term Loan |
4.25 | % | 06/30/2019 | 14,911 | 11,502,710 | |||||||||||
| Surface Transport–0.59% | ||||||||||||||||
| Hertz Corp. (The), |
||||||||||||||||
| LOC |
3.75 | % | 03/09/2018 | 552 | 537,799 | |||||||||||
| Term Loan B-2(d) |
— | 03/11/2018 | 511 | 502,366 | ||||||||||||
| Kenan Advantage Group, Inc., |
||||||||||||||||
| Canadian Term Loan |
4.00 | % | 07/31/2022 | 242 | 237,856 | |||||||||||
| Delayed Draw Term Loan 1(c) |
0.00 | % | 01/31/2017 | 106 | 104,404 | |||||||||||
| Term Loan |
4.00 | % | 07/31/2022 | 758 | 745,712 | |||||||||||
| PODS Holding, LLC, Second Lien Term Loan |
9.25 | % | 02/02/2023 | 1,276 | 1,249,629 | |||||||||||
| Stena International S.A. (Luxembourg), Term Loan |
4.00 | % | 03/03/2021 | 4,616 | 3,577,324 | |||||||||||
| U.S. Shipping Corp., Term Loan B-2 |
5.25 | % | 06/26/2021 | 3,636 | 3,417,919 | |||||||||||
| 10,373,009 | ||||||||||||||||
| Telecommunications–6.94% | ||||||||||||||||
| Communications Sales & Leasing, Inc., Term Loan |
5.00 | % | 10/24/2022 | 8,853 | 8,261,381 | |||||||||||
| Consolidated Communications, Inc., Term Loan |
4.25 | % | 12/23/2020 | 6,614 | 6,554,870 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Telecommunications–(continued) | ||||||||||||||||
| CWC-US Co-Borrower, LLC, |
||||||||||||||||
| Term Loan B-1(d) |
— | 12/31/2022 | $ | 730 | $ | 710,753 | ||||||||||
| Term Loan B-2(d) |
— | 12/31/2022 | 597 | 581,526 | ||||||||||||
| Fairpoint Communications, Inc., Term Loan |
7.50 | % | 02/14/2019 | 6,338 | 6,179,518 | |||||||||||
| Frontier Communications Corp., Delayed Draw Term Loan A(c) |
0.00 | % | 03/31/2021 | 5,716 | 5,344,883 | |||||||||||
| GTT Communications, Inc., Term Loan |
6.25 | % | 10/22/2022 | 2,803 | 2,785,445 | |||||||||||
| Level 3 Communications, Inc., |
||||||||||||||||
| Term Loan B |
4.00 | % | 01/15/2020 | 13,826 | 13,829,277 | |||||||||||
| Term Loan B-II |
3.50 | % | 05/31/2022 | 24,334 | 24,053,852 | |||||||||||
| Term Loan B-III |
4.00 | % | 08/01/2019 | 428 | 428,698 | |||||||||||
| LTS Buyer LLC, Second Lien Term Loan |
8.00 | % | 04/12/2021 | 82 | 77,960 | |||||||||||
| Nextgen Finance, LLC, Term Loan B |
5.00 | % | 05/31/2021 | 5,398 | 4,660,066 | |||||||||||
| NTELOS Inc., Term Loan B |
5.75 | % | 11/09/2019 | 6,500 | 6,435,489 | |||||||||||
| SBA Senior Finance II LLC, |
||||||||||||||||
| Incremental Term Loan B-1-A |
3.25 | % | 03/24/2021 | 1,231 | 1,211,504 | |||||||||||
| Incremental Term Loan B-2 |
3.25 | % | 06/10/2022 | 466 | 458,055 | |||||||||||
| Syniverse Holdings, Inc., |
||||||||||||||||
| Term Loan |
4.00 | % | 04/23/2019 | 9,263 | 6,136,847 | |||||||||||
| Term Loan |
4.00 | % | 04/23/2019 | 5,500 | 3,634,592 | |||||||||||
| T-Mobile USA, Inc., Term Loan |
3.50 | % | 11/09/2022 | 6,421 | 6,435,763 | |||||||||||
| Telesat LLC, Term Loan B-2 |
3.50 | % | 03/28/2019 | 1,247 | 1,221,687 | |||||||||||
| U.S. Telepacific Corp., Term Loan |
6.00 | % | 11/25/2020 | 6,663 | 6,360,274 | |||||||||||
| Zayo Group, LLC, |
||||||||||||||||
| Incremental Term Loan |
4.50 | % | 05/06/2021 | 571 | 571,149 | |||||||||||
| Term Loan |
3.75 | % | 05/06/2021 | 15,687 | 15,501,138 | |||||||||||
| 121,434,727 | ||||||||||||||||
| Utilities–5.02% | ||||||||||||||||
| Aria Energy Operating LLC, Term Loan |
5.00 | % | 05/27/2022 | 1,720 | 1,453,606 | |||||||||||
| Calpine Construction Finance Co., L.P., Term Loan B-2 |
3.25 | % | 01/31/2022 | 13,057 | 12,232,882 | |||||||||||
| Calpine Corp., |
||||||||||||||||
| Term Loan |
4.00 | % | 10/09/2019 | 942 | 914,633 | |||||||||||
| Term Loan |
3.50 | % | 05/27/2022 | 5,911 | 5,613,614 | |||||||||||
| Term Loan |
4.00 | % | 01/15/2023 | 8,529 | 8,273,187 | |||||||||||
| Term Loan B |
4.00 | % | 10/31/2020 | 6,177 | 5,963,136 | |||||||||||
| Dynegy Inc., Term Loan B-2 |
4.00 | % | 04/23/2020 | 7,035 | 6,623,339 | |||||||||||
| Energy Future Intermediate Holding Co. LLC, Term Loan |
4.25 | % | 12/19/2016 | 2,516 | 2,508,852 | |||||||||||
| Granite Acquisition, Inc., |
||||||||||||||||
| First Lien Term Loan B |
5.00 | % | 12/17/2021 | 6,014 | 5,468,367 | |||||||||||
| First Lien Term Loan C |
5.00 | % | 12/17/2021 | 265 | 241,059 | |||||||||||
| Second Lien Term Loan B |
8.25 | % | 12/17/2022 | 1,098 | 851,095 | |||||||||||
| NSG Holdings LLC, Term Loan (Acquired 12/17/12-10/04/13; Cost $791,230) |
3.75 | % | 12/11/2019 | 794 | 766,260 | |||||||||||
| Southeast PowerGen LLC, Term Loan B |
4.50 | % | 12/02/2021 | 1,858 | 1,765,204 | |||||||||||
| Texas Competitive Electric Holdings Co., LLC, |
||||||||||||||||
| DIP Revolver Loan(c)(f) |
0.00 | % | 11/07/2016 | 26,667 | 26,264,800 | |||||||||||
| Term Loan(f) |
4.50 | % | 10/10/2017 | 5,116 | 1,415,781 | |||||||||||
| TPF II Power, LLC, Term Loan |
5.50 | % | 10/02/2021 | 6,091 | 5,755,874 | |||||||||||
| USIC Holding, Inc., First Lien Term Loan |
4.00 | % | 07/10/2020 | 1,827 | 1,725,592 | |||||||||||
| 87,837,281 | ||||||||||||||||
| Total Variable Rate Senior Loan Interests |
1,465,771,912 | |||||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Bonds and Notes–7.52% |
||||||||||||||||
| Aerospace & Defense–0.26% | ||||||||||||||||
| LMI Aerospace, Inc. |
7.38 | % | 07/15/2019 | $ | 4,875 | $ | 4,570,313 | |||||||||
| Air Transport–0.38% | ||||||||||||||||
| Mesa Airlines, Inc.(h) |
5.75 | % | 07/15/2025 | 6,646 | 6,679,230 | |||||||||||
| Business Equipment & Services–0.31% | ||||||||||||||||
| ADT Corp. (The) |
6.25 | % | 10/15/2021 | 2,222 | 2,183,115 | |||||||||||
| Dream Secured Bondco AB (Sweden) (Acquired 10/21/2015; Cost $245,669)(h)(i) |
8.25 | % | 10/21/2023 | EUR | 2,112 | 244,885 | ||||||||||
| Dream Secured Bondco AB (Sweden) (Acquired 10/02/2015-10/21/2015; Cost $3,018,108)(h)(i) |
7.09 | % | 10/21/2023 | SEK | 2,775 | 2,996,446 | ||||||||||
| 5,424,446 | ||||||||||||||||
| Cable & Satellite Television–0.59% | ||||||||||||||||
| Altice Financing SA (Luxembourg)(h) |
6.63 | % | 02/15/2023 | 851 | 842,490 | |||||||||||
| Charter Communications Operating, LLC(h) |
5.88 | % | 04/01/2024 | 2,142 | 2,192,872 | |||||||||||
| Charter Communications Operating, LLC(h) |
5.75 | % | 02/15/2026 | 932 | 940,155 | |||||||||||
| UPC Broadband Holdings, B.V. (Netherlands)(h) |
7.25 | % | 11/15/2021 | 967 | 1,028,221 | |||||||||||
| UPC Broadband Holdings, B.V. (Netherlands)(h) |
6.88 | % | 01/15/2022 | 156 | 166,225 | |||||||||||
| Virgin Media Investment Holdings Ltd. (United Kingdom)(h) |
5.50 | % | 01/15/2025 | GBP | 3,465 | 4,557,510 | ||||||||||
| YPSO Holding S.A. (France)(h) |
6.00 | % | 05/15/2022 | 555 | 552,225 | |||||||||||
| 10,279,698 | ||||||||||||||||
| Chemicals & Plastics–0.26% | ||||||||||||||||
| Chemours Co. (The)(h) |
6.63 | % | 05/15/2023 | 1,010 | 739,825 | |||||||||||
| Hexion Specialty Chemicals, Inc. |
6.63 | % | 04/15/2020 | 3,966 | 3,152,970 | |||||||||||
| Ineos Holdings Ltd.(h) |
6.13 | % | 08/15/2018 | 615 | 618,075 | |||||||||||
| 4,510,870 | ||||||||||||||||
| Containers & Glass Products–0.48% | ||||||||||||||||
| Ardagh Glass Finance PLC(h) |
6.25 | % | 01/31/2019 | 932 | 920,350 | |||||||||||
| Ardagh Glass Finance PLC(h) |
7.00 | % | 11/15/2020 | 151 | 141,570 | |||||||||||
| Ardagh Glass Finance PLC(h) |
4.25 | % | 01/15/2022 | EUR | 750 | 806,954 | ||||||||||
| Onex Wizard US Acquisition(h) |
7.75 | % | 02/15/2023 | EUR | 1,750 | 1,968,389 | ||||||||||
| Reynolds Group Holdings Inc.(h) |
5.63 | % | 12/15/2016 | 2,973 | 2,976,716 | |||||||||||
| Reynolds Group Holdings Inc. |
9.88 | % | 08/15/2019 | 561 | 579,934 | |||||||||||
| Reynolds Group Holdings Inc. |
5.75 | % | 10/15/2020 | 634 | 654,605 | |||||||||||
| Sealed Air Corp.(h) |
4.50 | % | 09/15/2023 | EUR | 375 | 423,234 | ||||||||||
| 8,471,752 | ||||||||||||||||
| Electronics & Electrical–0.30% | ||||||||||||||||
| Blackboard Inc.(h) |
7.75 | % | 11/15/2019 | 4,194 | 3,386,655 | |||||||||||
| ICBPI (United Kingdom)(h)(i) |
8.00 | % | 05/30/2021 | EUR | 1,750 | 1,789,514 | ||||||||||
| 5,176,169 | ||||||||||||||||
| Financial Intermediaries–0.81% | ||||||||||||||||
| Arrow Global Finance (United Kingdom)(h)(i) |
5.14 | % | 11/01/2021 | EUR | 1,000 | 1,077,026 | ||||||||||
| Cabot Financial S.A. (Luxembourg)(h) |
6.50 | % | 04/01/2021 | GBP | 3,000 | 3,810,859 | ||||||||||
| Cabot Financial S.A. (Luxembourg)(h)(i) |
5.70 | % | 11/15/2021 | EUR | 1,000 | 1,024,048 | ||||||||||
| Garfunkelux Holdco 3 S.A. (Luxembourg)(h) |
7.50 | % | 08/01/2022 | EUR | 3,220 | 3,468,725 | ||||||||||
| Garfunkelux Holdco 3 S.A. (Luxembourg)(h) |
11.00 | % | 11/01/2023 | GBP | 1,000 | 1,268,324 | ||||||||||
| Lindorff Group AB (Norway)(h)(i) |
5.32 | % | 08/15/2020 | EUR | 500 | 535,081 | ||||||||||
| TMF Group Holdco B.V. (Netherlands)(h) |
9.88 | % | 12/01/2019 | EUR | 2,500 | 2,910,544 | ||||||||||
| 14,094,607 | ||||||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Food Products–0.04% | ||||||||||||||||
| Wagamama Finance (United Kingdom)(h) |
7.88 | % | 02/01/2020 | GBP | 500 | $ | 732,461 | |||||||||
| Health Care–1.06% | ||||||||||||||||
| Care UK Health & Social Care PLC (United Kingdom)(h)(i) |
5.59 | % | 07/15/2019 | GBP | 2,954 | 3,541,052 | ||||||||||
| Community Health Systems, Inc. |
6.88 | % | 02/01/2022 | 1,320 | 1,145,100 | |||||||||||
| DaVita HealthCare Partners Inc. |
5.13 | % | 07/15/2024 | 557 | 567,792 | |||||||||||
| DJO Finance LLC(h) |
10.75 | % | 04/15/2020 | 5,087 | 4,145,905 | |||||||||||
| DJO Finance LLC(h) |
8.13 | % | 06/15/2021 | 4,493 | 3,762,887 | |||||||||||
| IDH Finance PLC (United Kingdom)(h)(i) |
5.57 | % | 12/01/2018 | GBP | 2,000 | 2,755,864 | ||||||||||
| IDH Finance PLC (United Kingdom)(h) |
6.00 | % | 12/01/2018 | GBP | 500 | 690,601 | ||||||||||
| Kinetic Concepts, Inc. |
10.50 | % | 11/01/2018 | 1,764 | 1,631,700 | |||||||||||
| Kinetic Concepts, Inc.(h) |
7.88 | % | 02/15/2021 | 335 | 345,888 | |||||||||||
| 18,586,789 | ||||||||||||||||
| Industrial Equipment–0.13% | ||||||||||||||||
| Galapagos Holding S.A. (Luxembourg)(h)(i) |
4.62 | % | 06/15/2021 | EUR | 2,225 | 2,208,125 | ||||||||||
| Insurance–0.19% | ||||||||||||||||
| Domestic & General Group Ltd. (United Kingdom)(h)(i) |
5.59 | % | 11/15/2019 | GBP | 2,450 | 3,338,593 | ||||||||||
| Leisure Goods, Activities & Movies–0.22% | ||||||||||||||||
| Carmike Cinemas, Inc.(h) |
6.00 | % | 06/15/2023 | 1,019 | 1,075,045 | |||||||||||
| Corleone Capital Ltd. (United Kingdom)(h)(i) |
4.84 | % | 08/01/2018 | EUR | 2,170 | 2,342,931 | ||||||||||
| Sabre, Inc.(h) |
5.25 | % | 11/15/2023 | 341 | 344,410 | |||||||||||
| 3,762,386 | ||||||||||||||||
| Lodging & Casinos–0.06% | ||||||||||||||||
| ESH Hospitality, Inc.(h) |
5.25 | % | 05/01/2025 | 1,019 | 993,525 | |||||||||||
| Nonferrous Metals & Minerals–0.14% | ||||||||||||||||
| TiZir Ltd. (United Kingdom) |
9.00 | % | 09/28/2017 | 3,600 | 2,430,000 | |||||||||||
| Oil & Gas–0.32% | ||||||||||||||||
| Drill Rigs Holdings Inc.(h) |
6.50 | % | 10/01/2017 | 7,256 | 3,736,840 | |||||||||||
| FTS International, Inc.(h)(i) |
8.01 | % | 06/15/2020 | 2,012 | 1,230,696 | |||||||||||
| Pacific Drilling S.A. (Luxembourg)(h) |
5.38 | % | 06/01/2020 | 2,798 | 622,555 | |||||||||||
| Seventy Seven Operating LLC |
6.50 | % | 07/15/2022 | 236 | 7,080 | |||||||||||
| 5,597,171 | ||||||||||||||||
| Radio & Television–0.36% | ||||||||||||||||
| IHeartCommunications, Inc.(h) |
8.75 | % | 12/15/2020 | 4,561 | 4,629,415 | |||||||||||
| Sinclair Television Group Inc. |
6.38 | % | 11/01/2021 | 1,208 | 1,253,300 | |||||||||||
| Univision Communications Inc.(h) |
6.75 | % | 09/15/2022 | 450 | 479,790 | |||||||||||
| 6,362,505 | ||||||||||||||||
| Retailers (except Food & Drug)–0.39% | ||||||||||||||||
| Claire’s Stores Inc.(h) |
6.13 | % | 03/15/2020 | 1,210 | 611,050 | |||||||||||
| Guitar Center, Inc.(h) |
6.50 | % | 04/15/2019 | 1,644 | 1,397,400 | |||||||||||
| New Look PLC (United Kingdom)(h) |
8.00 | % | 07/01/2023 | GBP | 2,725 | 3,566,325 | ||||||||||
| TWIN SET — Simona Barbieri S.p.A. (Italy)(h)(i) |
5.73 | % | 07/15/2019 | EUR | 1,250 | 1,251,708 | ||||||||||
| 6,826,483 | ||||||||||||||||
| Steel–0.01% | ||||||||||||||||
| Fortescue Metals Group Ltd.(h) |
9.75 | % | 03/01/2022 | 279 | 263,655 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| Surface Transport–0.06% | ||||||||||||||||
| WFS Global Holding SAS (France)(h) |
9.50 | % | 07/15/2022 | EUR | 1,000 | $ | 1,125,958 | |||||||||
| Telecommunications–0.98% | ||||||||||||||||
| Goodman Networks Inc. |
12.13 | % | 07/01/2018 | 7,708 | 2,312,400 | |||||||||||
| SoftBank Group Corp. (Japan)(h) |
4.75 | % | 07/30/2025 | EUR | 3,000 | 3,087,156 | ||||||||||
| Wind Telecomunicazioni S.p.A. (Italy)(h) |
6.50 | % | 04/30/2020 | 256 | 260,488 | |||||||||||
| Wind Telecomunicazioni S.p.A. (Italy)(h) |
7.00 | % | 04/23/2021 | EUR | 3,950 | 4,103,644 | ||||||||||
| Wind Telecomunicazioni S.p.A. (Italy)(h) |
7.38 | % | 04/23/2021 | 1,422 | 1,308,240 | |||||||||||
| Windstream Corp. |
7.50 | % | 06/01/2022 | 1,484 | 1,164,940 | |||||||||||
| Windstream Corp. |
6.38 | % | 08/01/2023 | 17 | 12,559 | |||||||||||
| Zayo Group, LLC |
6.38 | % | 05/15/2025 | 5,089 | 4,872,717 | |||||||||||
| 17,122,144 | ||||||||||||||||
| Utilities–0.17% | ||||||||||||||||
| Calpine Corp.(h) |
6.00 | % | 01/15/2022 | 807 | 829,192 | |||||||||||
| Calpine Corp.(h) |
7.88 | % | 01/15/2023 | — | 275 | |||||||||||
| NRG Energy Inc. |
6.25 | % | 07/15/2022 | 1,579 | 1,342,150 | |||||||||||
| NRG Energy Inc. |
6.63 | % | 03/15/2023 | 880 | 750,200 | |||||||||||
| 2,921,817 | ||||||||||||||||
| Total Bonds and Notes |
131,478,697 | |||||||||||||||
| Structured Products–5.45% |
||||||||||||||||
| Apidos Cinco CDO(h)(i) |
4.87 | % | 05/14/2020 | 345 | 321,238 | |||||||||||
| Apidos CLO IX-R(h)(i) |
6.72 | % | 07/15/2023 | 3,032 | 2,521,338 | |||||||||||
| Apidos CLO X(h)(i) |
6.87 | % | 10/30/2022 | 3,367 | 2,711,098 | |||||||||||
| Apidos CLO X(h)(i) |
6.87 | % | 10/30/2022 | 2,190 | 1,763,381 | |||||||||||
| Apidos CLO XI(h)(i) |
5.87 | % | 01/17/2023 | 1,181 | 873,855 | |||||||||||
| Apidos CLO XV(h)(i) |
5.37 | % | 10/20/2025 | 6,500 | 4,575,311 | |||||||||||
| Ares XI CLO, Ltd(h)(i) |
6.62 | % | 10/11/2021 | 1,002 | 946,335 | |||||||||||
| Atrium X LLC(h)(i) |
5.12 | % | 07/16/2025 | 3,742 | 2,789,889 | |||||||||||
| Babson CLO Ltd. 2007-I(h)(i) |
3.87 | % | 01/18/2021 | 1,034 | 942,587 | |||||||||||
| Babson CLO Ltd. 2013-II(h)(i) |
5.12 | % | 01/18/2025 | 6,540 | 4,392,467 | |||||||||||
| Carlyle Global Market Strategies CLO 2012-2(h)(i) |
6.72 | % | 07/20/2023 | 3,541 | 2,796,151 | |||||||||||
| Carlyle Global Market Strategies CLO 2012-3(h)(i) |
6.12 | % | 10/04/2024 | 3,188 | 2,450,600 | |||||||||||
| Carlyle Global Market Strategies CLO 2013-1(h)(i) |
6.12 | % | 02/14/2025 | 3,200 | 2,522,051 | |||||||||||
| Carlyle High Yield Partners 10, Ltd.(h)(i) |
3.82 | % | 04/19/2022 | 2,000 | 1,730,726 | |||||||||||
| Dryden Senior Loan Fund 2013-30(h)(i) |
5.62 | % | 11/15/2025 | 3,276 | 2,069,420 | |||||||||||
| Dryden Senior Loan Fund 2014-34(h)(i) |
5.42 | % | 10/15/2026 | 1,000 | 690,077 | |||||||||||
| Dryden XI-Leveraged Loan CDO 2006(h)(i) |
4.52 | % | 04/12/2020 | 427 | 392,377 | |||||||||||
| Duane Street CLO 2007-4(h)(i) |
4.87 | % | 11/14/2021 | 2,428 | 2,172,108 | |||||||||||
| Flagship CLO VI(h)(i) |
5.24 | % | 06/10/2021 | 3,254 | 2,979,531 | |||||||||||
| Flagship CLO VI(h)(i) |
5.24 | % | 06/10/2021 | 987 | 903,527 | |||||||||||
| Four Corners CLO II, Ltd.(h)(i) |
2.47 | % | 01/26/2020 | 310 | 291,485 | |||||||||||
| Four Corners CLO II, Ltd.(h)(i) |
2.47 | % | 01/26/2020 | 103 | 96,848 | |||||||||||
| Gallatin Funding CLO VII 2014-1 Ltd.(h)(i) |
6.29 | % | 07/15/2023 | 3,068 | 2,633,504 | |||||||||||
| Halcyon Loan Investors CLO II, Ltd.(h)(i) |
4.22 | % | 04/24/2021 | 917 | 813,561 | |||||||||||
| Highbridge Loan Management 6-2015, Ltd.(h)(i) |
6.07 | % | 05/05/2027 | 500 | 338,133 | |||||||||||
| ING Investment Management CLO 2012-4, Ltd.(h)(i) |
6.37 | % | 10/15/2023 | 1,861 | 1,441,626 | |||||||||||
| ING Investment Management CLO 2013-1, Ltd.(h)(i) |
5.62 | % | 04/15/2024 | 4,808 | 3,428,905 | |||||||||||
| ING Investment Management CLO 2013-3, Ltd.(h)(i) |
5.12 | % | 01/18/2026 | 2,745 | 1,857,283 | |||||||||||
| ING Investment Management CLO III, Ltd.(h)(i) |
4.12 | % | 12/13/2020 | 1,188 | 1,080,838 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 Invesco Floating Rate Fund
| Interest Rate |
Maturity Date |
Principal Amount (000)* |
Value | |||||||||||||
| ING Investment Management CLO IV, Ltd.(h)(i) |
4.87 | % | 06/14/2022 | $ | 293 | $ | 259,562 | |||||||||
| Keuka Park CLO 2013-1(h)(i) |
5.12 | % | 10/21/2024 | 617 | 424,149 | |||||||||||
| Kingsland Ltd. 2006-2(h)(i) |
5.12 | % | 04/21/2021 | 1,205 | 1,099,466 | |||||||||||
| KKR Financial CLO 2012-1, Ltd.(h)(i) |
6.01 | % | 12/15/2024 | 2,100 | 1,516,744 | |||||||||||
| KKR Financial CLO 2013-1, Ltd.(h)(i) |
5.37 | % | 07/15/2025 | 2,461 | 1,655,461 | |||||||||||
| Madison Park Funding II, Ltd.(h)(i) |
5.35 | % | 03/25/2020 | 700 | 658,821 | |||||||||||
| Madison Park Funding IV, Ltd.(h)(i) |
4.19 | % | 03/22/2021 | 1,344 | 1,216,269 | |||||||||||
| Madison Park Funding IX, Ltd.(h)(i) |
5.87 | % | 08/15/2022 | 736 | 606,772 | |||||||||||
| Madison Park Funding X, Ltd.(h)(i) |
5.87 | % | 01/20/2025 | 1,953 | 1,530,519 | |||||||||||
| Madison Park Funding XIV, Ltd.(h)(i) |
5.37 | % | 07/20/2026 | 1,350 | 994,452 | |||||||||||
| Madison Park Funding XIV, Ltd.(h)(i) |
6.02 | % | 07/20/2026 | 1,915 | 1,283,531 | |||||||||||
| Magnetite CLO Ltd.(h)(i) |
6.06 | % | 09/15/2023 | 1,988 | 1,612,526 | |||||||||||
| Maps CLO Fund LLC(h)(i) |
4.87 | % | 07/20/2022 | 1,685 | 1,492,125 | |||||||||||
| NewStar Commercial Loan Funding 2015-1(h)(i) |
6.12 | % | 01/20/2027 | 1,000 | 942,250 | |||||||||||
| Northwoods Capital, 2013-10A Ltd.(h)(i) |
4.22 | % | 11/04/2025 | 1,130 | 904,450 | |||||||||||
| Octagon Investment Partners XIV Ltd.(h)(i) |
5.87 | % | 01/15/2024 | 2,052 | 1,414,971 | |||||||||||
| Octagon Investment Partners XIX Ltd.(h)(i) |
5.47 | % | 04/15/2026 | 2,920 | 1,893,010 | |||||||||||
| Octagon Investment Partners XVII Ltd.(h)(i) |
5.12 | % | 10/25/2025 | 1,975 | 1,239,283 | |||||||||||
| Octagon Investment Partners XVIII Ltd.(h)(i) |
5.87 | % | 12/16/2024 | 4,442 | 3,201,727 | |||||||||||
| Octagon Investment Partners XXI Ltd.(h)(i) |
7.22 | % | 11/14/2026 | 3,500 | 2,424,922 | |||||||||||
| Pacifica CDO VI, Ltd.(h)(i) |
4.37 | % | 08/15/2021 | 565 | 478,792 | |||||||||||
| Regatta IV Funding, 2014-1 Ltd.(h)(i) |
5.57 | % | 07/25/2026 | 3,250 | 1,765,104 | |||||||||||
| Seneca Park CLO Ltd. 2014-1(h)(i) |
5.32 | % | 07/17/2026 | 2,750 | 1,866,447 | |||||||||||
| Silverado CLO 2006-II Ltd.(h)(i) |
4.37 | % | 10/16/2020 | 886 | 772,028 | |||||||||||
| Slater Mill Loan Fund, LP(h)(i) |
6.12 | % | 08/17/2022 | 1,108 | 782,482 | |||||||||||
| St. James River CLO Ltd. 2007-1(h)(i) |
4.79 | % | 06/11/2021 | 481 | 435,825 | |||||||||||
| Stone Tower CLO, 2007-6 Ltd.(h)(i) |
4.22 | % | 04/17/2021 | 1,750 | 1,542,432 | |||||||||||
| Symphony CLO VIII, Ltd.(h)(i) |
6.62 | % | 01/09/2023 | 1,156 | 1,007,488 | |||||||||||
| Symphony CLO XI, Ltd.(h)(i) |
5.87 | % | 01/17/2025 | 2,640 | 2,035,266 | |||||||||||
| Symphony CLO XII, Ltd.(h)(i) |
5.52 | % | 10/15/2025 | 1,850 | 1,369,357 | |||||||||||
| Symphony CLO XIV, Ltd.(h)(i) |
5.22 | % | 07/14/2026 | 2,750 | 1,762,857 | |||||||||||
| TriMaran CLO VII, Ltd.(h)(i) |
3.91 | % | 06/15/2021 | 1,535 | 1,353,043 | |||||||||||
| Voya CLO 2014-2, Ltd(h)(i) |
5.37 | % | 07/17/2026 | 1,875 | 1,198,554 | |||||||||||
| Total Structured Products |
95,266,935 | |||||||||||||||
| Shares | ||||||||||||||||
| Common Stocks & Other Equity Interests–0.65%(j) |
||||||||||||||||
| Aerospace & Defense–0.01% | ||||||||||||||||
| IAP Worldwide Services(h)(k) |
134 | 200,865 | ||||||||||||||
| Automotive–0.01% | ||||||||||||||||
| Dayco Products, LLC(h)(k) |
3,266 | 84,916 | ||||||||||||||
| Dayco Products, LLC(h)(k) |
3,261 | 84,786 | ||||||||||||||
| 169,702 | ||||||||||||||||
| Building & Development–0.10% | ||||||||||||||||
| Lake at Las Vegas Joint Venture, LLC, Class A (Acquired 04/28/2010-07/15/2010; Cost $664,569)(h)(k) |
1 | 0 | ||||||||||||||
| Lake at Las Vegas Joint Venture, LLC, Class B (Acquired 06/30/2010; Cost $3,408,940)(h)(k) |
0 | 0 | ||||||||||||||
| Stile Acquisition Corp. (Canada)(k) |
27,093 | 1,558,119 | ||||||||||||||
| United Subcontractors, Inc.(h)(k) |
4,840 | 145,214 | ||||||||||||||
| 1,703,333 | ||||||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20 Invesco Floating Rate Fund
| Shares | Value | |||||||||||
| Business Equipment & Services–0.04% | ||||||||||||
| EmployBridge Holding Co.(h)(k) |
43,971 | $ | 604,601 | |||||||||
| Cable & Satellite Television–0.14% | ||||||||||||
| ION Media Networks, Inc. |
4,471 | 2,476,487 | ||||||||||
| Chemicals & Plastics–0.00% | ||||||||||||
| LyondellBasell Industries N.V.–Class A |
218 | 17,486 | ||||||||||
| Drugs–0.00% | ||||||||||||
| BPA Laboratories, Class A, Wts. expiring 04/29/24, (Acquired 04/29/2014; Cost $0)(h)(k) |
3 | 0 | ||||||||||
| BPA Laboratories, Class B, Wts. expiring 04/29/24, (Acquired 04/29/2014; Cost $0)(h)(k) |
6 | 0 | ||||||||||
| 0 | ||||||||||||
| Financial Intermediaries–0.00% | ||||||||||||
| Bankruptcy Management Solutions, Inc.(h)(k) |
335 | 12,563 | ||||||||||
| Bankruptcy Management Solutions, Inc., Class A, Wts. expiring 06/27/18, (Acquired 06/27/2013; Cost $0)(h)(k) |
0 | 0 | ||||||||||
| Bankruptcy Management Solutions, Inc., Class B, Wts. expiring 06/27/18, (Acquired 06/27/2013; Cost $0)(h)(k) |
0 | 0 | ||||||||||
| Bankruptcy Management Solutions, Inc., Class C, Wts. expiring 06/27/18, (Acquired 06/27/2013; Cost $0)(h)(k) |
0 | 0 | ||||||||||
| 12,563 | ||||||||||||
| Food Products–0.00% | ||||||||||||
| QCE LLC(h)(k) |
17 | 0 | ||||||||||
| Forest Products–0.00% | ||||||||||||
| Xerium Technologies, Inc.(k) |
1,766 | 12,945 | ||||||||||
| Health Care–0.19% | ||||||||||||
| New Milennium Holdco.(h)(k) |
259,087 | 3,324,863 | ||||||||||
| Leisure Goods, Activities & Movies–0.00% | ||||||||||||
| AMF Bowling Centers, Inc.(k) |
1,665 | 64,935 | ||||||||||
| Lodging & Casinos–0.05% | ||||||||||||
| Twin River Worldwide Holdings, Inc.,(h)(k) |
18,663 | 907,488 | ||||||||||
| Publishing–0.06% | ||||||||||||
| F&W Publications, Inc.(h)(k) |
288 | 21,600 | ||||||||||
| Merrill Communications LLC Class A,(h)(k) |
133,776 | 735,768 | ||||||||||
| Tribune Media Co., Class A |
9,050 | 324,895 | ||||||||||
| Tribune Publishing Co. |
2,262 | 18,978 | ||||||||||
| 1,101,241 | ||||||||||||
| Surface Transport–0.01% | ||||||||||||
| U.S. Shipping Corp. (Acquired 09/28/2007-09/30/2009; Cost $0)(h)(k) |
6,189 | 62 | ||||||||||
| U.S. Shipping Corp. (Acquired 09/28/2007-09/30/2009; Cost $87,805)(h)(k) |
87,805 | 74,634 | ||||||||||
| 74,696 | ||||||||||||
| Telecommunications–0.04% | ||||||||||||
| FairPoint Communications, Inc.(k) |
44,928 | 675,268 | ||||||||||
| Utilities–0.00% | ||||||||||||
| Bicent Power, LLC, Series A, Wts. expiring 08/21/22, (Acquired 08/21/2012; Cost $0)(h)(k) |
0 | 0 | ||||||||||
| Bicent Power, LLC, Series B, Wts. expiring 08/21/22, (Acquired 08/21/2012; Cost $0)(h)(k) |
0 | 0 | ||||||||||
| 0 | ||||||||||||
| Total Common Stocks & Other Equity Interests |
11,346,473 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21 Invesco Floating Rate Fund
| Shares | Value | |||||||||||
| Preferred Stocks–0.01% |
||||||||||||
| Building & Development–0.01% | ||||||||||||
| United Subcontractors, Inc.(h)(k) |
4,840 | $ | 101,650 | |||||||||
| Retailers (except Food & Drug)–0.00% | ||||||||||||
| Vivarte (France) (Acquired 01/06/2016; Cost $0)(h)(k) |
934 | — | ||||||||||
| Total Preferred Stocks |
101,650 | |||||||||||
| Money Market Funds–1.01% |
||||||||||||
| Liquid Assets Portfolio–Institutional Class, 0.42%(l) |
8,864,273 | 8,864,273 | ||||||||||
| Premier Portfolio–Institutional Class, 0.38%(l) |
8,864,273 | 8,864,273 | ||||||||||
| Total Money Market Funds |
17,728,546 | |||||||||||
| TOTAL INVESTMENTS–98.47% (Cost $1,946,231,981) |
1,721,694,213 | |||||||||||
| OTHER ASSETS LESS LIABILITIES–1.53% |
26,714,968 | |||||||||||
| NET ASSETS–100.00% |
$ | 1,748,409,181 | ||||||||||
Investment Abbreviations:
| CDO | – Collateralized Debt Obligation | |
| CLO | – Collateralized Loan Obligation | |
| DIP | – Debtor-in-possession | |
| EUR | – Euro | |
| GBP | – British Pound | |
| IBC | – International Bancshares Corp. | |
| LOC | – Letter of Credit | |
| PIK | – Payment in Kind | |
| SEK | – Swedish Krona | |
| Wts. | – Warrants |
Notes to Schedule of Investments:
| * | Principal amounts are denominated in U.S. dollars unless otherwise noted. |
| (a) | 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 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. |
| (b) | Variable rate senior loan interests are, at present, not readily marketable, not registered under the Securities Act of 1933, as amended (the “1933 Act”), and may be subject to contractual and legal restrictions on sale. Senior secured corporate loans and senior secured debt securities in the Fund’s portfolio generally have variable rates which adjust to a base, such as the London Inter-Bank Offered Rate (“LIBOR”), on set dates, typically every 30 days but not greater than one year; and/or have interest rates that float at a margin above a widely recognized base lending rate such as the Prime Rate of a designated U.S. bank. |
| (c) | All or a portion of this holding is subject to unfunded loan commitments. Interest rate will be determined at the time of funding. See Note 8. |
| (d) | This floating rate interest will settle after February 29, 2016, at which time the interest rate will be determined. |
| (e) | All or a portion of this security is Payment-in-Kind. |
| Issuer | Cash Rate | PIK Rate | ||||||
| Lake at Las Vegas Joint Venture LLC, PIK Exit Revolver Loan |
— | % | 5.00 | % | ||||
| QCE LLC, PIK Term Loan |
— | 15.00 | ||||||
| (f) | The borrower has filed for protection in federal bankruptcy court. |
| (g) | Defaulted security. Currently, the issuer is in default with respect to principal and/or interest payments. The aggregate value of these securities at February 29, 2016 was $1,560,022, which represented less than 1% of the Fund’s Net Assets. |
| (h) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933. 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 February 29, 2016 was $204,413,767, which represented 11.69% of the Fund’s Net Assets. |
| (i) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on February 29, 2016. |
| (j) | Acquired through the restructuring of senior loans. |
| (k) | Non-income producing security. |
| (l) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
22 Invesco Floating Rate Fund
Portfolio Composition*
By credit quality rating based on total investments† as of February 29, 2016
| BBB+ |
0.4 | % | ||
| BBB |
2.5 | |||
| BBB- |
2.8 | |||
| BB+ |
8.0 | |||
| BB |
19.3 | |||
| BB- |
13.4 | |||
| B+ |
10.5 | |||
| B |
18.8 | |||
| B- |
8.0 | |||
| CCC+ |
6.8 | |||
| CCC |
2.7 | |||
| CCC- |
0.3 | |||
| CC |
0.0 | |||
| C |
0.0 | |||
| D |
0.8 | |||
| Not-Rated |
5.0 | |||
| Equity |
0.7 |
| † | 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 and Poor’s rating methodology, please visit standardandpoors.com and select “Understanding Ratings” under Rating Resources on the homepage. |
| * | Excluding money market holdings |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
23 Invesco Floating Rate Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
24 Invesco Floating Rate Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Interest |
$ | 63,133,994 | ||
| Dividends |
3,394 | |||
| Dividends from affiliated money market funds |
51,105 | |||
| Other income |
1,854,408 | |||
| Total investment income |
65,042,901 | |||
| Expenses: |
||||
| Advisory fees |
6,393,634 | |||
| Administrative services fees |
222,857 | |||
| Custodian fees |
202,891 | |||
| Class A |
930,150 | |||
| Class C |
1,928,583 | |||
| Class R |
27,692 | |||
| Interest, facilities and maintenance fees |
504,167 | |||
| Transfer agent fees — A, C, R & Y |
1,023,082 | |||
| Transfer agent fees — R5 |
1,694 | |||
| Transfer agent fees — R6 |
3,139 | |||
| Trustees’ and officers’ fees and benefits |
33,471 | |||
| Other |
220,663 | |||
| Total expenses |
11,492,023 | |||
| Less: Fees waived and expense offset arrangement(s) |
(45,443 | ) | ||
| Net expenses |
11,446,580 | |||
| Net investment income |
53,596,321 | |||
| Realized and unrealized gain (loss): |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
(58,565,298 | ) | ||
| Foreign currencies |
1,930,605 | |||
| Forward foreign currency contracts |
(1,306,636 | ) | ||
| (57,941,329 | ) | |||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(126,593,296 | ) | ||
| Foreign currencies |
188,387 | |||
| Forward foreign currency contracts |
4,063,709 | |||
| (122,341,200 | ) | |||
| Net realized and unrealized gain (loss) |
(180,282,529 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (126,686,208 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
25 Invesco Floating Rate Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
|
|||||||
| Net investment income |
$ | 53,596,321 | $ | 109,334,487 | ||||
| Net realized gain (loss) |
(57,941,329 | ) | (9,077,969 | ) | ||||
| Change in net unrealized appreciation (depreciation) |
(122,341,200 | ) | (118,044,276 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(126,686,208 | ) | (17,787,758 | ) | ||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(20,139,524 | ) | (41,201,004 | ) | ||||
| Class C |
(12,642,236 | ) | (25,284,497 | ) | ||||
| Class R |
(285,171 | ) | (494,668 | ) | ||||
| Class Y |
(19,678,664 | ) | (39,480,871 | ) | ||||
| Class R5 |
(95,607 | ) | (212,956 | ) | ||||
| Class R6 |
(3,506,763 | ) | (4,858,586 | ) | ||||
| Total distributions to shareholders from net investment income |
(56,347,965 | ) | (111,532,582 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
(146,848,693 | ) | (126,076,413 | ) | ||||
| Class C |
(78,475,401 | ) | (88,632,668 | ) | ||||
| Class R |
(589,494 | ) | 1,411,096 | |||||
| Class Y |
(210,040,769 | ) | 46,121,653 | |||||
| Class R5 |
95,738 | (4,354,384 | ) | |||||
| Class R6 |
27,366,616 | 19,769,006 | ||||||
| Net change in net assets resulting from share transactions |
(408,492,003 | ) | (151,761,710 | ) | ||||
| Net increase (decrease) in net assets |
(591,526,176 | ) | (281,082,050 | ) | ||||
| Net assets applicable to common shares: |
||||||||
| Beginning of period |
2,339,935,357 | 2,621,017,407 | ||||||
| End of period (includes undistributed net investment income of $(3,777,677) and $(1,026,033), respectively) |
$ | 1,748,409,181 | $ | 2,339,935,357 | ||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
26 Invesco Floating Rate Fund
Statement of Cash Flows
For the six months ended February 29, 2016
(Unaudited)
| Cash provided by operating activities: |
||||
| Net increase (decrease) in net assets resulting from operations |
$ | (126,686,208 | ) | |
| Adjustments to reconcile net increase in net assets to net cash provided by operating activities: |
| |||
| Purchases of investments |
(571,424,879 | ) | ||
| Proceeds from sales of investments |
1,003,214,047 | |||
| Net change in transactions in forward foreign currency contracts |
(4,063,709 | ) | ||
| Decrease in interest receivables and other assets |
2,759,210 | |||
| Amortization of loan fees |
(394,602 | ) | ||
| Accretion of discount on investment securities |
(5,313,724 | ) | ||
| Decrease in accrued expenses and other payables |
(309,602 | ) | ||
| Net realized loss from investment securities |
58,565,298 | |||
| Net change in unrealized depreciation on investment securities |
126,593,296 | |||
| Net cash provided by operating activities |
482,939,127 | |||
| Cash provided by (used in) financing activities: |
||||
| Dividends paid to common shareholders from net investment income |
(17,127,871 | ) | ||
| Proceeds from shares of beneficial interest sold |
273,896,564 | |||
| Disbursements from shares of beneficial interest reacquired |
(714,720,362 | ) | ||
| Net cash provided by (used in) financing activities |
(457,951,669 | ) | ||
| Net increase in cash and cash equivalents |
24,987,458 | |||
| Cash and cash equivalents at beginning of period |
28,942,603 | |||
| Cash and cash equivalents at end of period |
$ | 53,930,061 | ||
| Non-cash financing activities: |
||||
| Value of shares of beneficial interest issued in reinvestment of dividends paid to shareholders |
$ | 39,824,938 | ||
| Supplemental disclosure of cash flow information: |
||||
| Cash paid during the period for interest, facilities and maintenance fees |
$ | 337,500 | ||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Floating Rate Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is total return, comprised of current income and capital appreciation.
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Variable rate senior loan interests are fair valued using an evaluated quote provided by an independent pricing service. Evaluated 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. |
Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible securities) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market (but not securities reported on the NASDAQ Stock Exchange) are valued based on the prices furnished by independent pricing services, in which case the securities may be considered fair valued, or by market makers. Each security reported on the NASDAQ Stock Exchange is valued at the NASDAQ Official Closing Price (“NOCP”) as of the close of the customary trading session on the valuation date or absent a NOCP, at the closing bid price.
27 Invesco Floating Rate Fund
Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. 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.
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.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from the settlement date. Facility fees received may be amortized over the life of the loan. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
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.
Other income is comprised primarily of amendment fees which are recorded when received. Amendment fees are received in return for changes in the terms of the loan or note.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
28 Invesco Floating Rate Fund
| C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Interest, Facilities and Maintenance Fees — Interest, Facilities and Maintenance Fees include interest and related borrowing costs such as commitment fees and other expenses associated with lines of credit and interest and administrative expenses related to establishing and maintaining the credit agreement. |
| H. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the 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. | Cash and Cash Equivalents — For the purposes of the Statement of Cash Flows, the Fund defines Cash and Cash Equivalents as cash (including foreign currency), money market funds and other investments held in lieu of cash and excludes investments made with cash collateral received. |
| K. | 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. |
| 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 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.
| 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. |
29 Invesco Floating Rate Fund
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| N. | Industry Focus — To the extent that the Fund invests a greater amount of its assets in securities of issuers in the banking and financial services industries, the Fund’s performance will depend to a greater extent on the overall condition of those industries. The value of these securities can be sensitive to changes in government regulation, interest rates and economic downturns in the U.S. and abroad. |
| O. | Bank Loan Risk — Although the resale, or secondary market for floating rate loans has grown substantially over the past decade, both in overall size and number of market participants, there is no organized exchange or board of trade on which floating rate loans are traded. Instead, the secondary market for floating rate loans is a private, unregulated interdealer or interbank resale market. Such a market may therefore be subject to irregular trading activity, wide 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 manages counterparty credit risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. |
| P. | Other Risks — The Fund may invest all or substantially of its assets in senior secured floating rate loans and senior secured debt securities that are determined to be rated below investment grade. These securities are generally considered to have speculative characteristics and are subject to greater risk of loss of principal and interest than higher rated securities. The value of lower quality debt securities and floating rate loans can be more volatile due to increased sensitivity to adverse issuer, political, regulatory, market or economic developments. |
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 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”.
| Q. | Leverage Risk — The Fund may utilize leverage to seek to enhance the yield of the Fund by borrowing. There are risks associated with borrowing in an effort to increase the yield and distributions on the shares, including that the costs of the financial leverage may exceed the income from investments made with such leverage, the higher volatility of the net asset value of the shares, and that fluctuations in the interest rates on the borrowing may affect the yield and distributions to the shareholders. There can be no assurance that the Fund’s leverage strategy will be successful. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||||
| First $500 million |
0 | .65% | ||||
| Next $4.5 billion |
0 | .60% | ||||
| Next $5 billion |
0 | .575% | ||||
| Over $10 billion |
0 | .55% | ||||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.61%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, 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 reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.50%, 2.00%, 1.75%, 1.25%, 1.25% and 1.25%, respectively, of average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following
30 Invesco Floating Rate Fund
expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest, facilities and maintenance fees; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $44,588.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
Also, Invesco has entered into service agreements whereby State Street Bank and Trust Company (“SSB”) serves as the custodian, fund accountant and provides certain administrative services to the Fund.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 0.75% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended February 29, 2016, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $52,058 in front-end sales commissions from the sale of Class A shares and $246,813 and $31,159 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of February 29, 2016. 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.
31 Invesco Floating Rate Fund
During the six months ended February 29, 2016, there were transfers from Level 2 to level 3 of $34,673,989, due to third-party vendor quotations utilizing single market quotes and from level 3 to level 2 of $41,229,314, due to third-party vendor quotations utilizing more than one market quote.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equity Securities |
$ | 20,336,237 | $ | 5,807,357 | $ | 3,033,075 | $ | 29,176,669 | ||||||||
| Variable Rate Senior Loan Interests |
— | 1,351,085,011 | 114,686,901 | 1,465,771,912 | ||||||||||||
| Bonds and Notes |
— | 121,558,136 | 9,920,561 | 131,478,697 | ||||||||||||
| Structured Products |
— | 95,266,935 | — | 95,266,935 | ||||||||||||
| 20,336,237 | 1,573,717,439 | 127,640,537 | 1,721,694,213 | |||||||||||||
| Forward Foreign Currency Contracts* |
— | 3,843,656 | — | 3,843,656 | ||||||||||||
| Total Investments |
$ | 20,336,237 | $ | 1,577,561,095 | $ | 127,640,537 | $ | 1,725,537,869 | ||||||||
| * | Unrealized appreciation. |
A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the reporting period in relation to net assets.
The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) during the six months ended February 29, 2016:
| Beginning as of August 31, 2015 |
Purchases | Sales | Accrued discounts/ premiums |
Net realized gain (loss) |
Net Change in Unrealized Appreciation/ (Depreciation) |
Transfers into Level 3 |
Transfers out of Level 3 |
Ending Balance, as of February 29, |
||||||||||||||||||||||||||||
| Variable Rate Senior Loan Interests |
$ | 150,150,779 | $ | 15,535,399 | $ | (34,692,792 | ) | $ | 875,184 | $ | (302,750 | ) | $ | (12,432,671 | ) | $ | 36,953,220 | $ | (41,399,468 | ) | $ | 114,686,901 | ||||||||||||||
| Bonds & Notes |
— | 9,909,351 | — | 423 | — | 10,787 | — | — | 9,920,561 | |||||||||||||||||||||||||||
| Equity Securities |
2,708,358 | — | — | — | — | 377,089 | 12,563 | (64,935 | ) | 3,033,075 | ||||||||||||||||||||||||||
| Total |
$ | 152,859,137 | $ | 25,444,750 | $ | (34,692,792 | ) | $ | 875,607 | $ | (302,750 | ) | $ | (12,044,795 | ) | $ | 36,965,783 | $ | (41,464,403 | ) | $ | 127,640,537 | ||||||||||||||
Securities determined to be Level 3 at the end of the reporting period were valued utilizing quotes from a third-party vendor pricing service. A significant change in third-party pricing information could result in a significantly lower or higher value in Level 3 investments.
NOTE 4—Derivative Investments
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 February 29, 2016:
| Value | ||||||||
| Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
| Currency risk: |
||||||||
| Forward foreign currency contracts(a) |
$ | 3,898,077 | $ | (54,421 | ) | |||
| (a) | Values are disclosed on the Statement of Assets and Liabilities under the caption Unrealized appreciation on forward foreign currency contracts outstanding and Unrealized depreciation on forward foreign currency contracts outstanding . |
Effect of Derivative Investments for the six months ended February 29, 2016
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 |
||||
| Realized Gain (loss): |
||||
| Currency risk |
$ | (1,306,636 | ) | |
| Change in Net Unrealized Appreciation: |
||||
| Currency risk |
4,063,709 | |||
| Total |
$ | 2,757,073 | ||
The table below summarizes the average notional value of forward foreign currency contracts outstanding during the period.
| Forward Foreign Currency Contracts |
||||
| Average notional value |
$ | 96,159,440 | ||
32 Invesco Floating Rate Fund
| Open Forward Foreign Currency Contracts at Period-End | ||||||||||||||||||||||||||
| Settlement
|
Contract to | Notional Value | Unrealized Appreciation (Depreciation) |
|||||||||||||||||||||||
| Counterparty | Deliver | Receive | ||||||||||||||||||||||||
| 03/14/16 |
State Street Bank and Trust Co. |
USD | 846,894 | EUR | 750,000 | $ | 816,156 | $ | (30,738 | ) | ||||||||||||||||
| 03/14/16 |
State Street Bank and Trust Co. |
EUR | 52,500,000 | USD | 59,615,693 | 57,130,902 | 2,484,791 | |||||||||||||||||||
| 03/14/16 |
State Street Bank and Trust Co. |
USD | 545,643 | GBP | 375,000 | 521,960 | (23,683 | ) | ||||||||||||||||||
| 03/14/16 |
State Street Bank and Trust Co. |
GBP | 26,500,000 | USD | 38,291,970 | 36,885,168 | 1,406,802 | |||||||||||||||||||
| 03/14/16 |
State Street Bank and Trust Co. |
SEK | 2,150,000 | USD | 257,705 | 251,221 | 6,484 | |||||||||||||||||||
| Total Forward Foreign Currency Contracts — Currency Risk |
|
$ | 3,843,656 | |||||||||||||||||||||||
Currency Abbreviations:
Offsetting Assets and Liabilities
Accounting Standards Update (“ASU”) No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which was subsequently clarified in Financial Accounting Standards Board ASU 2013-01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” is intended to enhance disclosures about financial instruments and derivative instruments that are subject to offsetting arrangements on the Statement of Assets and Liabilities and to enable investors to better understand the effect of those arrangements on the Fund’s financial position. In order for an arrangement to be eligible for netting, the Fund must have a basis to conclude that such netting arrangements are legally enforceable. The Fund enters into netting agreements and collateral agreements in an attempt to reduce the Fund’s Counterparty credit risk by providing for a single net settlement with a Counterparty of all financial transactions covered by the agreement in an event of default as defined under such agreement.
The following tables present derivative instruments that are either subject to an enforceable netting agreement or offset by collateral arrangements as of February 29, 2016.
| Gross amounts of Recognized Assets |
Gross Amounts Not Offset in the Statement of Assets and Liabilities |
|||||||||||||||||||
| Financial Instruments |
Collateral Received | Net Amount |
||||||||||||||||||
| Counterparty | Non-Cash | Cash | ||||||||||||||||||
| State Street Bank and Trust Co. |
$ | 3,898,077 | $ | (54,421 | ) | $ | — | $ | — | $ | 3,843,656 | |||||||||
| Gross amounts of Recognized Liabilities |
Gross Amounts Not Offset in the Statement of Assets and Liabilities |
|||||||||||||||||||
| Financial Instruments |
Collateral Pledged | Net Amount |
||||||||||||||||||
| Counterparty | Non-Cash | Cash | ||||||||||||||||||
| State Street Bank and Trust Co. |
$ | 54,421 | $ | (54,421 | ) | $ | — | $ | — | $ | — | |||||||||
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $855.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
33 Invesco Floating Rate Fund
NOTE 7—Borrowings
The Board of Trustees of the Fund approved a revolving line of credit agreement with SSB in which the Fund may borrow up to the lesser of (1) $500,000,000 or (2) the limits set by its prospectus for borrowings. This agreement will expire on July 20, 2016.
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, 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 8—Unfunded Loan Commitments
As of February 29, 2016, the Fund had unfunded loan commitments, which could be extended at the option of the borrower, pursuant to the following loan agreements with the following borrowers:
| Borrower |
Type | Principal Amount |
Value | |||||||
| Arch Coal, Inc. |
DIP Term Loan |
$ | 3,456,916 | $ | 3,318,639 | |||||
| David’s Bridal, Inc. |
Asset-Based Revolver Loan |
1,572,680 | 1,431,139 | |||||||
| Delta Air Lines, Inc. |
Revolver Loan |
1,144,857 | 1,124,822 | |||||||
| Equinox Holdings, Inc. |
Revolver Loan |
1,866,265 | 1,679,639 | |||||||
| Frontier Communications Corp. |
Delayed Draw Term Loan A |
5,716,452 | 5,344,883 | |||||||
| Getty Images, Inc. |
Revolver Loan |
6,893,288 | 5,376,764 | |||||||
| Hearthside Group Holdings, LLC |
Revolver Loan |
2,430,969 | 2,233,405 | |||||||
| IAP Worldwide Services |
Revolver Loan |
876,686 | 859,152 | |||||||
| Kenan Advantage Group, Inc. |
Delayed Draw Term Loan 1 |
106,061 | 104,404 | |||||||
| Lake at Las Vegas Joint Venture, LLC |
Exit Revolver Loan |
12,703 | 9,114 | |||||||
| Midas Intermediate Holdco II, LLC |
First Lien Delayed Draw Term Loan |
170,934 | 169,581 | |||||||
| NewPage Corp. |
DIP Delayed Draw Term Loan |
570,546 | 570,546 | |||||||
| Post Holdings, Inc. |
Revolver Loan |
3,566,087 | 3,560,417 | |||||||
| Texas Competitive Electric Holdings Co., LLC |
DIP Revolver Loan |
26,666,667 | 26,264,800 | |||||||
| $ | 55,051,111 | $ | 52,047,305 | |||||||
NOTE 9—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of August 31, 2015, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| August 31, 2017 |
$ | 2,739,285 | $ | — | $ | 2,739,285 | ||||||
| Not subject to expiration |
734,335 | 9,722,246 | 10,456,581 | |||||||||
| $ | 3,473,620 | $ | 9,722,246 | $ | 13,195,866 | |||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
34 Invesco Floating Rate Fund
NOTE 10—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $499,202,621 and $958,754,363, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 8,500,731 | ||
| Aggregate unrealized (depreciation) of investment securities |
(235,539,776 | ) | ||
| Net unrealized appreciation (depreciation) of investment securities |
$ | (227,039,045 | ) | |
Cost of investments for tax purposes is $1,948,733,258.
NOTE 11—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
7,634,844 | $ | 55,687,808 | 39,709,720 | $ | 308,748,638 | ||||||||||
| Class C |
4,945,398 | 35,954,975 | 20,069,741 | 155,362,291 | ||||||||||||
| Class R |
71,663 | 522,633 | 305,899 | 2,374,253 | ||||||||||||
| Class Y |
18,329,459 | 132,980,445 | 75,722,818 | 587,249,556 | ||||||||||||
| Class R5 |
61,836 | 451,219 | 183,215 | 1,423,310 | ||||||||||||
| Class R6 |
5,557,613 | 41,380,423 | 4,230,090 | 33,067,238 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
1,913,181 | 13,796,154 | 3,775,435 | 29,292,254 | ||||||||||||
| Class C |
1,303,344 | 9,357,177 | 2,452,652 | 18,940,243 | ||||||||||||
| Class R |
37,367 | 269,619 | 58,511 | 454,357 | ||||||||||||
| Class Y |
1,777,949 | 12,815,757 | 3,496,532 | 27,064,107 | ||||||||||||
| Class R5 |
11,034 | 79,467 | 26,246 | 204,201 | ||||||||||||
| Class R6 |
487,416 | 3,506,764 | 626,454 | 4,856,839 | ||||||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(29,894,122 | ) | (216,332,655 | ) | (59,768,075 | ) | (464,117,305 | ) | ||||||||
| Class C |
(17,271,476 | ) | (123,787,553 | ) | (34,029,469 | ) | (262,935,202 | ) | ||||||||
| Class R |
(189,826 | ) | (1,381,746 | ) | (182,991 | ) | (1,417,514 | ) | ||||||||
| Class Y |
(49,600,075 | ) | (355,836,971 | ) | (73,501,780 | ) | (568,192,010 | ) | ||||||||
| Class R5 |
(60,303 | ) | (434,948 | ) | (767,212 | ) | (5,981,895 | ) | ||||||||
| Class R6 |
(2,485,962 | ) | (17,520,571 | ) | (2,338,925 | ) | (18,155,071 | ) | ||||||||
| Net increase (decrease) in share activity |
(57,370,660 | ) | $ | (408,492,003 | ) | (19,931,139 | ) | $ | (151,761,710 | ) | ||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 61% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
35 Invesco Floating Rate Fund
NOTE 12—Senior Loan Participation Commitments
The Fund invests in participations, assignments, or acts as a party to the primary lending syndicate of a Senior Loan interest to corporations, partnerships, and other entities. When the Fund purchases a participation of a Senior Loan interest, the Fund typically enters into a contractual agreement with the lender or other third party selling the participation, but not with the borrower directly. As such, the Fund assumes the credit risk of the borrower, selling participant or other persons interpositioned between the Fund and the borrower.
At the six months ended February 29, 2016, the following sets forth the selling participants with respect to interest in Senior Loans purchased by the Fund on a participation basis.
| Selling Participant | Principal Amount |
Value | ||||||
| Barclays Bank PLC |
$ | 6,893,288 | $ | 5,376,764 | ||||
| Citibank N.A. |
26,666,667 | 26,264,800 | ||||||
| Goldman Sachs Lending Partners LLC |
5,138,767 | 4,991,556 | ||||||
| Total |
$ | 38,698,722 | $ | 36,633,120 | ||||
36 Invesco Floating Rate Fund
NOTE 13—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Net asset value, end of period(b) |
Total return(c) |
Net assets, end of period (000’s omitted) |
Ratio
of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(d) |
|||||||||||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 7.56 | $ | 0.19 | $ | (0.63 | ) | $ | (0.44 | ) | $ | (0.19 | ) | $ | 6.93 | (5.83 | )% | $ | 639,131 | 1.08 | %(e)(f) | 1.08 | %(e)(f) | 5.15 | %(e) | 24 | % | |||||||||||||||||||||
| Year ended 08/31/15 |
7.95 | 0.35 | (0.38 | ) | (0.03 | ) | (0.36 | ) | 7.56 | (0.42 | ) | 850,891 | 1.06 | (f) | 1.06 | (f) | 4.51 | 59 | ||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
7.93 | 0.32 | 0.03 | 0.35 | (0.33 | ) | 7.95 | 4.33 | 1,025,092 | 1.03 | (f) | 1.04 | (f) | 4.01 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
7.77 | 0.35 | 0.17 | 0.52 | (0.36 | ) | 7.93 | 6.83 | 957,442 | 1.08 | (f) | 1.09 | (f) | 4.36 | 97 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.36 | 0.37 | 0.41 | 0.78 | (0.37 | ) | 7.77 | 10.75 | 448,142 | 1.11 | (f) | 1.11 | (f) | 4.80 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.47 | 0.35 | (0.11 | ) | 0.24 | (0.35 | ) | 7.36 | 3.07 | 450,750 | 0.99 | (f) | 1.00 | (f) | 4.53 | 152 | ||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
7.52 | 0.17 | (0.61 | ) | (0.44 | ) | (0.18 | ) | 6.90 | (5.97 | ) | 446,625 | 1.58 | (e)(f) | 1.58 | (e)(f) | 4.65 | (e) | 24 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
7.92 | 0.31 | (0.39 | ) | (0.08 | ) | (0.32 | ) | 7.52 | (1.07 | ) | 570,097 | 1.56 | (f) | 1.56 | (f) | 4.01 | 59 | ||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
7.90 | 0.28 | 0.03 | 0.31 | (0.29 | ) | 7.92 | 3.91 | 691,152 | 1.53 | (f) | 1.54 | (f) | 3.51 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
7.73 | 0.31 | 0.18 | 0.49 | (0.32 | ) | 7.90 | 6.45 | 518,948 | 1.58 | (f) | 1.59 | (f) | 3.86 | 97 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.32 | 0.33 | 0.41 | 0.74 | (0.33 | ) | 7.73 | 10.24 | 258,800 | 1.61 | (f) | 1.61 | (f) | 4.30 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.44 | 0.31 | (0.12 | ) | 0.19 | (0.31 | ) | 7.32 | 2.41 | 267,796 | 1.49 | (f) | 1.50 | (f) | 4.03 | 152 | ||||||||||||||||||||||||||||||||
| Class R |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
7.57 | 0.18 | (0.62 | ) | (0.44 | ) | (0.19 | ) | 6.94 | (5.94 | ) | 10,412 | 1.33 | (e)(f) | 1.33 | (e)(f) | 4.90 | (e) | 24 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
7.97 | 0.33 | (0.39 | ) | (0.06 | ) | (0.34 | ) | 7.57 | (0.79 | ) | 11,969 | 1.31 | (f) | 1.31 | (f) | 4.26 | 59 | ||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
7.95 | 0.30 | 0.03 | 0.33 | (0.31 | ) | 7.97 | 4.18 | 11,152 | 1.28 | (f) | 1.29 | (f) | 3.76 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
7.79 | 0.33 | 0.17 | 0.50 | (0.34 | ) | 7.95 | 6.57 | 3,559 | 1.33 | (f) | 1.34 | (f) | 4.11 | 97 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.37 | 0.35 | 0.42 | 0.77 | (0.35 | ) | 7.79 | 10.61 | 1,779 | 1.36 | (f) | 1.36 | (f) | 4.55 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.49 | 0.33 | (0.12 | ) | 0.21 | (0.33 | ) | 7.37 | 2.68 | 1,491 | 1.24 | (f) | 1.25 | (f) | 4.28 | 152 | ||||||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
7.54 | 0.19 | (0.61 | ) | (0.42 | ) | (0.20 | ) | 6.92 | (5.60 | ) | 534,579 | 0.83 | (e)(f) | 0.83 | (e)(f) | 5.40 | (e) | 24 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
7.94 | 0.37 | (0.39 | ) | (0.02 | ) | (0.38 | ) | 7.54 | (0.31 | ) | 805,611 | 0.81 | (f) | 0.81 | (f) | 4.76 | 59 | ||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
7.92 | 0.34 | 0.03 | 0.37 | (0.35 | ) | 7.94 | 4.69 | 802,508 | 0.78 | (f) | 0.79 | (f) | 4.26 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
7.76 | 0.37 | 0.17 | 0.54 | (0.38 | ) | 7.92 | 7.10 | 550,974 | 0.83 | (f) | 0.84 | (f) | 4.61 | 97 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.34 | 0.38 | 0.42 | 0.80 | (0.38 | ) | 7.76 | 11.19 | 165,609 | 0.86 | (f) | 0.86 | (f) | 5.05 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.46 | 0.37 | (0.12 | ) | 0.25 | (0.37 | ) | 7.34 | 3.19 | 125,900 | 0.74 | (f) | 0.75 | (f) | 4.78 | 152 | ||||||||||||||||||||||||||||||||
| Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
7.56 | 0.19 | (0.62 | ) | (0.43 | ) | (0.20 | ) | 6.93 | (5.71 | ) | 3,265 | 0.83 | (e)(f) | 0.83 | (e)(f) | 5.40 | (e) | 24 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
7.96 | 0.37 | (0.39 | ) | (0.02 | ) | (0.38 | ) | 7.56 | (0.29 | ) | 3,466 | 0.80 | (f) | 0.80 | (f) | 4.77 | 59 | ||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
7.94 | 0.34 | 0.03 | 0.37 | (0.35 | ) | 7.96 | 4.72 | 8,087 | 0.76 | (f) | 0.77 | (f) | 4.28 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
7.77 | 0.37 | 0.18 | 0.55 | (0.38 | ) | 7.94 | 7.26 | 9,260 | 0.81 | (f) | 0.82 | (f) | 4.63 | 97 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.36 | 0.39 | 0.41 | 0.80 | (0.39 | ) | 7.77 | 11.13 | 58,039 | 0.77 | (f) | 0.77 | (f) | 5.14 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.47 | 0.38 | (0.12 | ) | 0.26 | (0.37 | ) | 7.36 | 3.40 | 48,967 | 0.68 | (f) | 0.69 | (f) | 4.84 | 152 | ||||||||||||||||||||||||||||||||
| Class R6 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
7.56 | 0.20 | (0.62 | ) | (0.42 | ) | (0.21 | ) | 6.93 | (5.67 | ) | 114,398 | 0.73 | (e)(f) | 0.73 | (e)(f) | 5.50 | (e) | 24 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
7.95 | 0.38 | (0.38 | ) | 0.00 | (0.39 | ) | 7.56 | (0.06 | ) | 97,902 | 0.70 | (f) | 0.70 | (f) | 4.87 | 59 | |||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
7.94 | 0.35 | 0.01 | 0.36 | (0.35 | ) | 7.95 | 4.66 | 83,025 | 0.69 | (f) | 0.70 | (f) | 4.35 | 82 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13(g) |
7.84 | 0.35 | 0.11 | 0.46 | (0.36 | ) | 7.94 | 6.01 | 63,032 | 0.76 | (f)(h) | 0.77 | (f)(h) | 4.68 | (h) | 97 | ||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share for the fiscal years ended August 31, 2012 and prior. |
| (c) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $748,209, $517,115, $11,138, $698,648, $3,401 and $122,745 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
| (f) | Ratio includes line of credit expense of 0.05%, 0.03%, 0.02%, 0.02%, 0.03% and 0.01% for the six months ended February 29, 2016 and the years ended August 31, 2015, August 31, 2014, August 31, 2013, August 31, 2012 and August 31, 2011, respectively. |
| (g) | Commencement date of September 24, 2012. |
| (h) | Annualized. |
37 Invesco Floating Rate Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 941.70 | $ | 5.21 | $ | 1,019.49 | $ | 5.42 | 1.08 | % | ||||||||||||
| C | 1,000.00 | 940.30 | 7.62 | 1,017.01 | 7.92 | 1.58 | ||||||||||||||||||
| R | 1,000.00 | 940.60 | 6.42 | 1,018.25 | 6.67 | 1.33 | ||||||||||||||||||
| Y | 1,000.00 | 944.00 | 4.01 | 1,020.74 | 4.17 | 0.83 | ||||||||||||||||||
| R5 | 1,000.00 | 942.90 | 4.01 | 1,020.74 | 4.17 | 0.83 | ||||||||||||||||||
| R6 | 1,000.00 | 943.30 | 3.53 | 1,021.23 | 3.67 | 0.73 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
38 Invesco Floating Rate Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 FLR-SAR-1 Invesco Distributors, Inc.
|
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Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco S&P 500 Index Fund | ||||
|
Nasdaq: |
||||
| A: SPIAX ¡ B: SPIBX ¡ C: SPICX ¡ Y: SPIDX | ||||
|
| |||||
|
2 |
Fund Performance | ||||
|
3 |
Letters to Shareholders | ||||
|
4 |
Schedule of Investments | ||||
|
13 |
Financial Statements | ||||
|
15 |
Notes to Financial Statements | ||||
|
22 |
Financial Highlights | ||||
|
23 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
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NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco S&P 500 Index Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
3 Invesco S&P 500 Index Fund
Schedule of Investments(a)
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco S&P 500 Index Fund
Investment Abbreviations:
| REIT | – Real Estate Investment Trust |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | The Fund’s Adviser is a subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated with the Fund. See Note 5. |
| (d) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1I and Note 4. |
| (e) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
Portfolio Composition
By sector, based on Net Assets
as of February 29, 2016
| Information Technology |
20.1 | % | ||
| Financials |
15.3 | |||
| Health Care |
14.5 | |||
| Consumer Discretionary |
12.7 | |||
| Consumer Staples |
10.5 | |||
| Industrials |
10.0 | |||
| Energy |
6.5 | |||
| Utilities |
3.3 | |||
| Materials |
2.8 | |||
| Telecommunication Services |
2.7 | |||
| Money Market Funds Plus Other Assets Less Liabilities |
1.6 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco S&P 500 Index Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco S&P 500 Index Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $178) |
$ | 9,073,424 | ||
| Dividends from affiliates |
30,307 | |||
| Total investment income |
9,103,731 | |||
| Expenses: |
||||
| Advisory fees |
483,389 | |||
| Administrative services fees |
100,109 | |||
| Custodian fees |
29,113 | |||
| Distribution fees: |
||||
| Class A |
691,999 | |||
| Class B |
23,780 | |||
| Class C |
904,226 | |||
| Transfer agent fees |
539,948 | |||
| Trustees’ and officers’ fees and benefits |
17,109 | |||
| Other |
175,943 | |||
| Total expenses |
2,965,616 | |||
| Less: Fees waived and expense offset arrangement(s) |
(14,832 | ) | ||
| Net expenses |
2,950,784 | |||
| Net investment income |
6,152,947 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
1,950,462 | |||
| Futures contracts |
(765,077 | ) | ||
| 1,185,385 | ||||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(23,317,130 | ) | ||
| Futures contracts |
818,820 | |||
| (22,498,310 | ) | |||
| Net realized and unrealized gain (loss) |
(21,312,925 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (15,159,978 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco S&P 500 Index Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
|
|||||||
| Net investment income |
$ | 6,152,947 | $ | 9,943,392 | ||||
| Net realized gain |
1,185,385 | 12,136,389 | ||||||
| Change in net unrealized appreciation (depreciation) |
(22,498,310 | ) | (24,352,997 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(15,159,978 | ) | (2,273,216 | ) | ||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(9,027,890 | ) | (6,708,197 | ) | ||||
| Class B |
(44,560 | ) | (41,456 | ) | ||||
| Class C |
(1,800,621 | ) | (776,453 | ) | ||||
| Class Y |
(1,298,508 | ) | (488,719 | ) | ||||
| Total distributions from net investment income |
(12,171,579 | ) | (8,014,825 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
33,512,799 | (17,280,449 | ) | |||||
| Class B |
(932,692 | ) | (3,038,091 | ) | ||||
| Class C |
28,899,044 | 43,635,887 | ||||||
| Class Y |
34,365,203 | 24,505,883 | ||||||
| Net increase in net assets resulting from share transactions |
95,844,354 | 47,823,230 | ||||||
| Net increase in net assets |
68,512,797 | 37,535,189 | ||||||
| Net assets: |
||||||||
| Beginning of period |
752,695,897 | 715,160,708 | ||||||
| End of period (includes undistributed net investment income of $1,824,712 and $7,843,344, respectively) |
$ | 821,208,694 | $ | 752,695,897 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco S&P 500 Index Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is total return through growth of capital and current income.
The Fund currently consists of four different classes of shares: Class A, Class B, Class C and Class Y. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
15 Invesco S&P 500 Index Fund
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from 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 and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s |
16 Invesco S&P 500 Index Fund
| 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. | Futures Contracts — The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| J. | Collateral — To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||
| First $2 billion |
0.12% | |||
| Over $2 billion |
0.10% | |||
For the six months ended February 29, 2016, the effective advisory fees 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. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or reimbursement (excluding certain items discussed below) of Class A, Class B, Class C and Class Y shares to 2.00%, 2.75%, 2.75% and 1.75% of average daily net assets (the “expense limits”), respectively. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. The fee waiver agreement cannot be terminated during its term. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees.
17 Invesco S&P 500 Index Fund
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $14,066.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, the expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”), an affiliate of the Adviser. The Fund has adopted a Plan of Distribution (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will reimburse IDI for distribution related expenses that IDI incurs up to a maximum of the following annual rates: (1) Class A — up to 0.25% of the average daily net assets of Class A shares; (2) Class B — up to 1.00% of the average daily net assets of Class B shares; and (3) Class C — up to 1.00% of the average daily net assets of Class C shares.
In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by IDI, but not yet reimbursed to IDI, may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares.
For the six months ended February 29, 2016, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $44,163 in front-end sales commissions from the sale of Class A shares and $384, $335 and $15,351 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of February 29, 2016. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equity Securities |
$ | 820,279,872 | $ | — | $ | — | $ | 820,279,872 | ||||||||
| Futures Contracts* |
219,951 | — | — | 219,951 | ||||||||||||
| Total Investments |
$ | 820,499,823 | $ | — | $ | — | $ | 820,499,823 | ||||||||
| * | Unrealized appreciation. |
18 Invesco S&P 500 Index Fund
NOTE 4—Derivative Investments
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 February 29, 2016:
| Value | ||||||||
| Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
| Equity risk: |
||||||||
| Futures contracts(a) |
$ | 219,951 | $ | — | ||||
| (a) | Includes cumulative appreciation of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the six months ended February 29, 2016
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 |
||||
| Futures Contracts | ||||
| Realized Gain (Loss): |
||||
| Equity risk |
$ | (765,077 | ) | |
| Change in Net Unrealized Appreciation: |
||||
| Equity risk |
818,820 | |||
| Total |
$ | 53,743 | ||
The table below summarizes the average notional value of futures contracts outstanding during the period.
| Futures Contracts | ||||
| Average notional value |
$ | 21,561,437 | ||
| Open Futures Contracts — Equity Risk | ||||||||||||||||||||
| Futures Contracts | Type of Contract |
Number of Contracts |
Expiration Month |
Notional Value |
Unrealized Appreciation |
|||||||||||||||
| E-Mini S&P 500 Index |
Long | 137 | March-2016 | $ | 13,217,075 | $ | 219,951 | |||||||||||||
NOTE 5—Investments in Affiliates
The Fund’s Adviser is a subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated with the Fund. The following is a summary of the transactions in, and earnings from, investments in Invesco Ltd. for the six months ended February 29, 2016.
| Value 08/31/15 |
Purchases at Cost |
Proceeds from Sales |
Change in Unrealized Appreciation (Depreciation) |
Realized Gain (Loss) |
Value 02/29/16 |
Dividend Income |
||||||||||||||||||||||
| Invesco Ltd. |
$ | 626,498 | $ | 66,503 | $ | (3,259 | ) | $ | (147,276 | ) | $ | (1,061 | ) | $ | 541,405 | $ | 10,572 | |||||||||||
NOTE 6—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $766.
NOTE 7—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.
19 Invesco S&P 500 Index Fund
NOTE 8—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, 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 9—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of August 31, 2015, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| August 31, 2017 |
$ | 7,791,415 | $ | — | $ | 7,791,415 | ||||||
| August 31, 2018 |
19,847,354 | — | 19,847,354 | |||||||||
| August 31, 2019 |
10,267,726 | — | 10,267,726 | |||||||||
| $ | 37,906,495 | $ | — | $ | 37,906,495 | |||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 10—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $104,864,155 and $17,250,553, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 323,819,826 | ||
| Aggregate unrealized (depreciation) of investment securities |
(18,116,194 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 305,703,632 | ||
Cost of investments for tax purposes is $514,576,240.
20 Invesco S&P 500 Index Fund
NOTE 11—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
4,039,821 | $ | 88,855,801 | 4,466,067 | $ | 98,414,922 | ||||||||||
| Class B |
9,716 | 201,725 | 27,111 | 593,239 | ||||||||||||
| Class C |
2,306,408 | 48,647,228 | 2,802,822 | 60,071,002 | ||||||||||||
| Class Y |
2,868,722 | 62,842,664 | 1,679,230 | 37,709,460 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
376,356 | 8,136,825 | 281,199 | 6,051,415 | ||||||||||||
| Class B |
1,881 | 39,916 | 1,732 | 36,649 | ||||||||||||
| Class C |
73,432 | 1,540,596 | 32,806 | 685,648 | ||||||||||||
| Class Y |
53,253 | 1,163,579 | 21,191 | 460,483 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
39,237 | 844,678 | 106,759 | 2,375,610 | ||||||||||||
| Class B |
(40,082 | ) | (844,678 | ) | (108,964 | ) | (2,375,610 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(2,974,745 | ) | (64,324,505 | ) | (5,598,294 | ) | (124,122,396 | ) | ||||||||
| Class B |
(15,681 | ) | (329,655 | ) | (59,315 | ) | (1,292,369 | ) | ||||||||
| Class C |
(1,042,407 | ) | (21,288,780 | ) | (798,622 | ) | (17,120,763 | ) | ||||||||
| Class Y |
(1,411,059 | ) | (29,641,040 | ) | (616,691 | ) | (13,664,060 | ) | ||||||||
| Net increase in share activity |
4,284,852 | $ | 95,844,354 | 2,237,031 | $ | 47,823,230 | ||||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and own, in the aggregate, 61% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
21 Invesco S&P 500 Index Fund
NOTE 12—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 21.42 | $ | 0.18 | $ | (0.43 | ) | $ | (0.25 | ) | $ | (0.34 | ) | $ | 20.83 | (1.24 | )% | $ | 550,904 | 0.58 | %(d) | 0.58 | %(d) | 1.68 | %(d) | 2 | % | |||||||||||||||||||||
| Year ended 08/31/15 |
21.69 | 0.32 | (0.33 | ) | (0.01 | ) | (0.26 | ) | 21.42 | (0.05 | ) | 534,656 | 0.58 | 0.58 | 1.44 | 4 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
17.67 | 0.29 | 4.01 | 4.30 | (0.28 | ) | 21.69 | 24.54 | (e) | 557,688 | 0.59 | (e) | 0.59 | (e) | 1.45 | (e) | 5 | |||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
15.26 | 0.27 | 2.43 | 2.70 | (0.29 | ) | 17.67 | 18.04 | 467,234 | 0.62 | 0.62 | 1.64 | 6 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
13.25 | 0.22 | 2.03 | 2.25 | (0.24 | ) | 15.26 | 17.26 | 410,772 | 0.65 | 0.67 | 1.55 | 3 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
11.36 | 0.19 | 1.85 | 2.04 | (0.15 | ) | 13.25 | 17.94 | 369,597 | 0.61 | 0.61 | 1.42 | 4 | |||||||||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
20.94 | 0.10 | (0.43 | ) | (0.33 | ) | (0.20 | ) | 20.41 | (1.61 | ) | 4,087 | 1.33 | (d) | 1.33 | (d) | 0.93 | (d) | 2 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
21.24 | 0.15 | (0.33 | ) | (0.18 | ) | (0.12 | ) | 20.94 | (0.85 | ) | 5,117 | 1.33 | 1.33 | 0.69 | 4 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
17.32 | 0.13 | 3.94 | 4.07 | (0.15 | ) | 21.24 | 23.60 | 8,150 | 1.35 | 1.35 | 0.69 | 5 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
14.96 | 0.14 | 2.40 | 2.54 | (0.18 | ) | 17.32 | 17.14 | 11,045 | 1.37 | 1.37 | 0.89 | 6 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
12.92 | 0.11 | 2.01 | 2.12 | (0.08 | ) | 14.96 | 16.47 | 19,912 | 1.40 | 1.42 | 0.80 | 3 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
11.10 | 0.09 | 1.80 | 1.89 | (0.07 | ) | 12.92 | 17.02 | 37,840 | 1.36 | 1.36 | 0.67 | 4 | |||||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
20.70 | 0.10 | (0.42 | ) | (0.32 | ) | (0.20 | ) | 20.18 | (1.58 | ) | 187,702 | 1.33 | (d) | 1.33 | (d) | 0.93 | (d) | 2 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
20.99 | 0.15 | (0.32 | ) | (0.17 | ) | (0.12 | ) | 20.70 | (0.81 | ) | 164,876 | 1.33 | 1.33 | 0.69 | 4 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
17.12 | 0.13 | 3.89 | 4.02 | (0.15 | ) | 20.99 | 23.59 | 124,452 | 1.35 | 1.35 | 0.69 | 5 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
14.79 | 0.14 | 2.37 | 2.51 | (0.18 | ) | 17.12 | 17.14 | (f) | 91,761 | 1.36 | (f) | 1.36 | (f) | 0.90 | (f) | 6 | |||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
12.79 | 0.11 | 1.99 | 2.10 | (0.10 | ) | 14.79 | 16.50 | 78,797 | 1.40 | 1.42 | 0.80 | 3 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
10.99 | 0.10 | 1.77 | 1.87 | (0.07 | ) | 12.79 | 17.01 | (f) | 68,753 | 1.27 | (f) | 1.27 | (f) | 0.76 | (f) | 4 | |||||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
21.67 | 0.21 | (0.43 | ) | (0.22 | ) | (0.39 | ) | 21.06 | (1.10 | ) | 78,516 | 0.33 | (d) | 0.33 | (d) | 1.93 | (d) | 2 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
21.94 | 0.38 | (0.34 | ) | 0.04 | (0.31 | ) | 21.67 | 0.17 | 48,047 | 0.33 | 0.33 | 1.69 | 4 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
17.87 | 0.34 | 4.05 | 4.39 | (0.32 | ) | 21.94 | 24.83 | 24,870 | 0.35 | 0.35 | 1.69 | 5 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
15.43 | 0.32 | 2.45 | 2.77 | (0.33 | ) | 17.87 | 18.33 | 22,546 | 0.37 | 0.37 | 1.89 | 6 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
13.40 | 0.26 | 2.06 | 2.32 | (0.29 | ) | 15.43 | 17.64 | 14,518 | 0.40 | 0.42 | 1.80 | 3 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
11.48 | 0.23 | 1.86 | 2.09 | (0.17 | ) | 13.40 | 18.21 | 16,824 | 0.36 | 0.36 | 1.67 | 4 | |||||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $556,641, $4,782, $181,839 and $66,813 for Class A, Class B, Class C and Class Y shares, respectively. |
| (e) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.24% for the year ended August 31, 2014. |
| (f) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.99% and 0.91% for the years ended August 31, 2013 and 2011, respectively. |
22 Invesco S&P 500 Index Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 987.60 | $ | 2.87 | $ | 1,021.98 | $ | 2.92 | 0.58 | % | ||||||||||||
| B | 1,000.00 | 983.90 | 6.56 | 1,018.25 | 6.67 | 1.33 | ||||||||||||||||||
| C | 1,000.00 | 984.20 | 6.56 | 1,018.25 | 6.67 | 1.33 | ||||||||||||||||||
| Y | 1,000.00 | 989.00 | 1.63 | 1,023.22 | 1.66 | 0.33 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
23 Invesco S&P 500 Index Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
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SEC file numbers: 811-09913 and 333-36074 MS-SPI-SAR-1 Invesco Distributors, Inc.
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Semiannual Report to Shareholders
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February 29, 2016 | ||
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Invesco Global Real Estate Income Fund | ||||
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Nasdaq: |
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| A: ASRAX ¡ B: SARBX ¡ C: ASRCX ¡ Y: ASRYX ¡ R5: ASRIX ¡ R6: ASRFX | ||||
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2 |
Fund Performance | ||||
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4 |
Letters to Shareholders | ||||
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5 |
Schedule of Investments | ||||
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9 |
Financial Statements | ||||
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11 |
Notes to Financial Statements | ||||
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18 |
Financial Highlights | ||||
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19 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
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NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco Global Real Estate Income Fund
3 Invesco Global Real Estate Income Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco Global Real Estate Income Fund
Schedule of Investments
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Global Real Estate Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Global Real Estate Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Global Real Estate Income Fund
Investment Abbreviations:
| AUD | – Australian Dollar | |
| Conv. | – Convertible | |
| Ctfs. | – Certificates | |
| EUR | – Euro | |
| GBP | – British Pound | |
| Gtd. | – Guaranteed | |
| Pfd. | – Preferred | |
| REIT | – Real Estate Investment Trust | |
| Sr. | – Senior | |
| Sub. | – Subordinated | |
| Unsec. | – Unsecured |
Notes to Schedule of Investments:
| (a) | Non-income producing security. |
| (b) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on February 29, 2016. |
| (c) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
| (d) | 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 February 29, 2016 was $123,993,882, which represented 13.23% of the Fund’s Net Assets. |
| (e) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
Portfolio Composition
By country, based on Net Assets
as of February 29, 2016
| United States |
62.8 | % | ||
| Japan |
8.3 | |||
| Australia |
6.8 | |||
| United Kingdom |
4.3 | |||
| Hong Kong |
3.7 | |||
| France |
3.1 | |||
| Singapore |
2.5 | |||
| Countries each less than 2.0% of portfolio |
4.1 | |||
| Money Market Funds Plus Other Assets Less Liabilities |
4.4 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Global Real Estate Income Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Global Real Estate Income Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $500,897) |
$ | 18,190,732 | ||
| Dividends from affiliated money market funds |
19,894 | |||
| Interest |
4,200,892 | |||
| Total investment income |
22,411,518 | |||
| Expenses: |
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| Advisory fees |
3,424,423 | |||
| Administrative services fees |
119,149 | |||
| Custodian fees |
59,177 | |||
| Distribution fees: |
||||
| Class A |
540,285 | |||
| Class B |
4,835 | |||
| Class C |
494,507 | |||
| Transfer Agent Fees — A, B, C and Y |
854,317 | |||
| Transfer agent fees — R5 |
6,289 | |||
| Transfer agent fees — R6 |
689 | |||
| Trustees’ and officers’ fees and benefits |
20,686 | |||
| Other |
172,513 | |||
| Total expenses |
5,696,870 | |||
| Less: Fees waived and expense offset arrangement(s) |
(9,483 | ) | ||
| Net expenses |
5,687,387 | |||
| Net investment income |
16,724,131 | |||
| Realized and unrealized gain (loss) from: |
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| Net realized gain (loss) from: |
||||
| Investment securities |
(5,592,037 | ) | ||
| Foreign currencies |
(328,816 | ) | ||
| (5,920,853 | ) | |||
| Change in net unrealized appreciation of: |
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| Investment securities |
267,523 | |||
| Foreign currencies |
166,407 | |||
| 433,930 | ||||
| Net realized and unrealized gain (loss) |
(5,486,923 | ) | ||
| Net increase in net assets resulting from operations |
$ | 11,237,208 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Global Real Estate Income Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
| |||||||
| Net investment income |
$ | 16,724,131 | $ | 36,575,244 | ||||
| Net realized gain (loss) |
(5,920,853 | ) | 32,010,471 | |||||
| Change in net unrealized appreciation (depreciation) |
433,930 | (100,582,189 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
11,237,208 | (31,996,474 | ) | |||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(7,725,239 | ) | (23,842,662 | ) | ||||
| Class B |
(13,014 | ) | (50,721 | ) | ||||
| Class C |
(1,312,746 | ) | (3,912,502 | ) | ||||
| Class Y |
(6,962,458 | ) | (19,395,644 | ) | ||||
| Class R5 |
(245,541 | ) | (1,048,545 | ) | ||||
| Class R6 |
(28,704 | ) | (69,263 | ) | ||||
| Total distributions from net investment income |
(16,287,702 | ) | (48,319,337 | ) | ||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
(9,628,157 | ) | (292,934 | ) | ||||
| Class B |
(21,631 | ) | (812 | ) | ||||
| Class C |
(2,248,413 | ) | (60,843 | ) | ||||
| Class Y |
(8,688,128 | ) | (234,608 | ) | ||||
| Class R5 |
(291,961 | ) | (12,797 | ) | ||||
| Class R6 |
(36,308 | ) | (758 | ) | ||||
| Total distributions from net realized gains |
(20,914,598 | ) | (602,752 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
(98,385,962 | ) | (69,248,140 | ) | ||||
| Class B |
(157,371 | ) | (494,308 | ) | ||||
| Class C |
(6,105,280 | ) | (6,291,726 | ) | ||||
| Class Y |
(31,521,658 | ) | 27,381 | |||||
| Class R5 |
(1,837,461 | ) | (9,236,603 | ) | ||||
| Class R6 |
82,262,667 | 137,220 | ||||||
| Net increase (decrease) in net assets resulting from share transactions |
(55,745,065 | ) | (85,106,176 | ) | ||||
| Net increase (decrease) in net assets |
(81,710,157 | ) | (166,024,739 | ) | ||||
| Net assets: |
||||||||
| Beginning of period |
1,018,787,602 | 1,184,812,341 | ||||||
| End of period (includes undistributed net investment income of $(3,502,884) and $(3,939,313), respectively) |
$ | 937,077,445 | $ | 1,018,787,602 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Global Real Estate Income Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is current income and, secondarily, capital appreciation.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y, Class R5 and Class R6
11 Invesco Global Real Estate Income Fund
shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices will be used to value debt obligations and corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. 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. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
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
12 Invesco Global Real Estate Income Fund
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 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 timely 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 in the Statement of Changes in Net Assets. These recharacterizations are reflected in the accompanying financial statements.
| C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income, if any, are declared and paid quarterly and are recorded on the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at 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.
13 Invesco Global Real Estate Income Fund
| J. | Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| K. | Other Risks — The Fund’s investments are concentrated in a comparatively narrow segment of the economy. Consequently, the Fund may tend to be more volatile than other mutual funds, and the value of the Fund’s investments may tend to rise and fall more rapidly. |
Because the Fund concentrates its assets in the real estate industry, an investment in the Fund will be closely linked to the performance of the real estate markets. Property values may fall due to increasing vacancies or declining rents resulting from economic, legal, cultural or technological developments.
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||
| First $250 million |
0.75% | |||
| Next $250 million |
0.74% | |||
| Next $500 million |
0.73% | |||
| Next $1.5 billion |
0.72% | |||
| Next $2.5 billion |
0.71% | |||
| Next $2.5 billion |
0.70% | |||
| Next $2.5 billion |
0.69% | |||
| Over $10 billion |
0.68% | |||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.74%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, 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 reimbursemnt (excluding certain items discussed below) of Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.75%, 1.75%, 1.75% and 1.75%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursemnt to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $8,981.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund,
14 Invesco Global Real Estate Income Fund
subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B and Class C shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and Class C shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended February 29, 2016, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $20,973 in front-end sales commissions from the sale of Class A shares and $1,618, $321 and $4,264 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of February 29, 2016. 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.
During the six months ended February 29, 2016, there were transfers from Level 1 to Level 2 of $24,354,264 and from Level 2 to Level 1 of $23,170,802, due to foreign fair value adjustments.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Australia |
$ | 29,122,960 | $ | 34,087,147 | $ | — | $ | 63,210,107 | ||||||||
| Canada |
14,744,481 | — | — | 14,744,481 | ||||||||||||
| France |
— | 28,773,054 | — | 28,773,054 | ||||||||||||
| Germany |
— | 4,376,131 | — | 4,376,131 | ||||||||||||
| Hong Kong |
23,555,606 | 11,425,989 | — | 34,981,595 | ||||||||||||
| Ireland |
— | 2,395,498 | — | 2,395,498 | ||||||||||||
| Japan |
— | 77,530,708 | — | 77,530,708 | ||||||||||||
| Netherlands |
5,477,169 | 4,730,422 | — | 10,207,591 | ||||||||||||
| Singapore |
23,477,517 | — | — | 23,477,517 | ||||||||||||
| Sweden |
— | 4,077,276 | — | 4,077,276 | ||||||||||||
| Switzerland |
— | 3,044,872 | — | 3,044,872 | ||||||||||||
| United Kingdom |
— | 40,472,283 | — | 40,472,283 | ||||||||||||
| United States |
495,430,400 | 133,893,609 | — | 629,324,009 | ||||||||||||
| Total Investments |
$ | 591,808,133 | $ | 344,806,989 | $ | — | $ | 936,615,122 | ||||||||
NOTE 4—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $502.
15 Invesco Global Real Estate Income Fund
NOTE 5—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of August 31, 2015.
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $233,871,589 and $339,848,475, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 40,177,876 | ||
| Aggregate unrealized (depreciation) of investment securities |
(57,735,048 | ) | ||
| Net unrealized appreciation (depreciation) of investment securities |
$ | (17,557,172 | ) | |
Cost of investments for tax purposes is $954,172,294.
16 Invesco Global Real Estate Income Fund
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
3,388,486 | $ | 29,152,222 | 14,146,624 | $ | 132,193,306 | ||||||||||
| Class B |
21 | 189 | 8,986 | 85,063 | ||||||||||||
| Class C |
291,324 | 2,528,279 | 1,694,288 | 15,727,052 | ||||||||||||
| Class Y |
5,763,965 | 49,983,801 | 16,793,913 | 155,523,659 | ||||||||||||
| Class R5 |
57,663 | 504,702 | 493,785 | 4,598,900 | ||||||||||||
| Class R6 |
9,804,786 | 83,320,267 | 81,299 | 757,438 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
1,589,942 | 13,567,220 | 1,728,158 | 15,861,225 | ||||||||||||
| Class B |
3,652 | 31,141 | 4,439 | 40,677 | ||||||||||||
| Class C |
345,104 | 2,940,977 | 328,419 | 3,010,348 | ||||||||||||
| Class Y |
1,500,962 | 12,767,277 | 1,662,514 | 15,213,953 | ||||||||||||
| Class R5 |
59,955 | 511,423 | 109,918 | 1,007,205 | ||||||||||||
| Class R6 |
7,575 | 64,632 | 7,578 | 69,582 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
8,573 | 74,795 | 35,460 | 327,764 | ||||||||||||
| Class B |
(8,586 | ) | (74,795 | ) | (35,507 | ) | (327,764 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(16,171,803 | ) | (141,180,199 | ) | (23,541,803 | ) | (217,630,435 | ) | ||||||||
| Class B |
(13,066 | ) | (113,906 | ) | (31,167 | ) | (292,284 | ) | ||||||||
| Class C |
(1,331,029 | ) | (11,574,536 | ) | (2,710,025 | ) | (25,029,126 | ) | ||||||||
| Class Y |
(10,934,795 | ) | (94,272,736 | ) | (18,509,565 | ) | (170,710,231 | ) | ||||||||
| Class R5 |
(328,275 | ) | (2,853,586 | ) | (1,604,082 | ) | (14,842,708 | ) | ||||||||
| Class R6 |
(126,950 | ) | (1,122,232 | ) | (74,210 | ) | (689,800 | ) | ||||||||
| Net increase (decrease) in share activity |
(6,092,496 | ) | $ | (55,745,065 | ) | (9,410,978 | ) | $ | (85,106,176 | ) | ||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 48% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
| In addition, 9% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are other mutual funds that are also advised by Invesco. |
17 Invesco Global Real Estate Income Fund
NOTE 10—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio
of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 8.81 | $ | 0.16 | $ | (0.07 | ) | $ | 0.09 | $ | (0.15 | ) | $ | (0.20 | ) | $ | (0.35 | ) | $ | 8.55 | 1.03 | % | $ | 389,582 | 1.26 | %(d) | 1.26 | %(d) | 3.57 | %(d) | 25 | % | ||||||||||||||||||||||||
| Year ended 08/31/15 |
9.48 | 0.29 | (0.57 | ) | (0.28 | ) | (0.38 | ) | (0.01 | ) | (0.39 | ) | 8.81 | (3.08 | ) | 499,799 | 1.22 | 1.22 | 3.12 | 60 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
8.52 | 0.29 | 1.19 | 1.48 | (0.42 | ) | (0.10 | ) | (0.52 | ) | 9.48 | 18.13 | 609,824 | 1.27 | 1.27 | 3.26 | 61 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.97 | 0.36 | (0.31 | ) | 0.05 | (0.50 | ) | — | (0.50 | ) | 8.52 | 0.43 | 615,876 | 1.26 | 1.27 | 4.00 | 63 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.39 | 0.41 | 0.57 | 0.98 | (0.40 | ) | — | (0.40 | ) | 8.97 | (e) | 12.19 | 318,464 | 1.31 | 1.31 | 4.82 | 49 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.77 | 0.32 | 0.61 | 0.93 | (0.31 | ) | — | (0.31 | ) | 8.39 | 12.11 | 203,100 | 1.30 | 1.30 | 3.83 | 101 | ||||||||||||||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
8.79 | 0.12 | (0.06 | ) | 0.06 | (0.11 | ) | (0.20 | ) | (0.31 | ) | 8.54 | 0.76 | 879 | 2.01 | (d) | 2.01 | (d) | 2.82 | (d) | 25 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
9.46 | 0.22 | (0.57 | ) | (0.35 | ) | (0.31 | ) | (0.01 | ) | (0.32 | ) | 8.79 | (3.83 | ) | 1,064 | 1.97 | 1.97 | 2.37 | 60 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
8.51 | 0.23 | 1.18 | 1.41 | (0.36 | ) | (0.10 | ) | (0.46 | ) | 9.46 | 17.13 | 1,647 | 2.02 | 2.02 | 2.51 | 61 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.95 | 0.29 | (0.30 | ) | (0.01 | ) | (0.43 | ) | — | (0.43 | ) | 8.51 | (0.23 | ) | 1,822 | 2.01 | 2.02 | 3.25 | 63 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.36 | 0.34 | 0.59 | 0.93 | (0.34 | ) | — | (0.34 | ) | 8.95 | (e) | 11.49 | 1,606 | 2.06 | 2.06 | 4.07 | 49 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.75 | 0.26 | 0.59 | 0.85 | (0.24 | ) | — | (0.24 | ) | 8.36 | 11.15 | 1,772 | 2.05 | 2.05 | 3.08 | 101 | ||||||||||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
8.79 | 0.12 | (0.06 | ) | 0.06 | (0.11 | ) | (0.20 | ) | (0.31 | ) | 8.54 | 0.76 | 95,039 | 2.01 | (d) | 2.01 | (d) | 2.82 | (d) | 25 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
9.46 | 0.22 | (0.57 | ) | (0.35 | ) | (0.31 | ) | (0.01 | ) | (0.32 | ) | 8.79 | (3.83 | ) | 103,988 | 1.97 | 1.97 | 2.37 | 60 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
8.51 | 0.23 | 1.18 | 1.41 | (0.36 | ) | (0.10 | ) | (0.46 | ) | 9.46 | 17.14 | 118,319 | 2.02 | 2.02 | 2.51 | 61 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.95 | 0.29 | (0.30 | ) | (0.01 | ) | (0.43 | ) | — | (0.43 | ) | 8.51 | (0.23 | ) | 108,878 | 2.01 | 2.02 | 3.25 | 63 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.36 | 0.34 | 0.59 | 0.93 | (0.34 | ) | — | (0.34 | ) | 8.95 | (e) | 11.49 | 44,790 | 2.06 | 2.06 | 4.07 | 49 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.75 | 0.26 | 0.59 | 0.85 | (0.24 | ) | — | (0.24 | ) | 8.36 | 11.15 | 26,511 | 2.05 | 2.05 | 3.08 | 101 | ||||||||||||||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
8.79 | 0.17 | (0.07 | ) | 0.10 | (0.16 | ) | (0.20 | ) | (0.36 | ) | 8.53 | 1.16 | 355,339 | 1.01 | (d) | 1.01 | (d) | 3.82 | (d) | 25 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
9.45 | 0.31 | (0.55 | ) | (0.24 | ) | (0.41 | ) | (0.01 | ) | (0.42 | ) | 8.79 | (2.75 | ) | 398,283 | 0.97 | 0.97 | 3.37 | 60 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
8.50 | 0.32 | 1.17 | 1.49 | (0.44 | ) | (0.10 | ) | (0.54 | ) | 9.45 | 18.33 | 428,854 | 1.02 | 1.02 | 3.51 | 61 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.95 | 0.39 | (0.32 | ) | 0.07 | (0.52 | ) | — | (0.52 | ) | 8.50 | 0.68 | 270,196 | 1.01 | 1.02 | 4.25 | 63 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.36 | 0.43 | 0.58 | 1.01 | (0.42 | ) | — | (0.42 | ) | 8.95 | (e) | 12.62 | 114,525 | 1.06 | 1.06 | 5.07 | 49 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.75 | 0.34 | 0.60 | 0.94 | (0.33 | ) | — | (0.33 | ) | 8.36 | 12.28 | 26,139 | 1.05 | 1.05 | 4.08 | 101 | ||||||||||||||||||||||||||||||||||||||||
| Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
8.81 | 0.17 | (0.07 | ) | 0.10 | (0.16 | ) | (0.20 | ) | (0.36 | ) | 8.55 | 1.21 | 11,989 | 0.92 | (d) | 0.92 | (d) | 3.91 | (d) | 25 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
9.47 | 0.32 | (0.56 | ) | (0.24 | ) | (0.41 | ) | (0.01 | ) | (0.42 | ) | 8.81 | (2.68 | ) | 14,204 | 0.91 | 0.91 | 3.43 | 60 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
8.52 | 0.32 | 1.18 | 1.50 | (0.45 | ) | (0.10 | ) | (0.55 | ) | 9.47 | 18.40 | 24,749 | 0.91 | 0.91 | 3.62 | 61 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.96 | 0.39 | (0.30 | ) | 0.09 | (0.53 | ) | — | (0.53 | ) | 8.52 | 0.85 | 23,565 | 0.94 | 0.95 | 4.32 | 63 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
8.38 | 0.44 | 0.57 | 1.01 | (0.43 | ) | — | (0.43 | ) | 8.96 | (e) | 12.63 | 30,076 | 0.98 | 0.98 | 5.15 | 49 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
7.76 | 0.35 | 0.61 | 0.96 | (0.34 | ) | — | (0.34 | ) | 8.38 | 12.52 | 35,777 | 0.96 | 0.96 | 4.17 | 101 | ||||||||||||||||||||||||||||||||||||||||
| Class R6 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
8.81 | 0.17 | (0.06 | ) | 0.11 | (0.17 | ) | (0.20 | ) | (0.37 | ) | 8.55 | 1.24 | 84,249 | 0.84 | (d) | 0.84 | (d) | 3.99 | (d) | 25 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
9.48 | 0.33 | (0.57 | ) | (0.24 | ) | (0.42 | ) | (0.01 | ) | (0.43 | ) | 8.81 | (2.70 | ) | 1,449 | 0.84 | 0.84 | 3.50 | 60 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
8.52 | 0.34 | 1.18 | 1.52 | (0.46 | ) | (0.10 | ) | (0.56 | ) | 9.48 | 18.62 | 1,420 | 0.87 | 0.87 | 3.66 | 61 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13(f) |
8.98 | 0.38 | (0.41 | ) | (0.03 | ) | (0.43 | ) | — | (0.43 | ) | 8.52 | (0.49 | ) | 60 | 0.86 | (g) | 0.87 | (g) | 4.40 | (g) | 63 | ||||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $434,603, $972, $99,445, $378,603, $12,861 and $6,595 for Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares, respectively. |
| (e) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share. |
| (f) | Commencement date of September 24, 2012. |
| (g) | Annualized. |
18 Invesco Global Real Estate Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 1,010.30 | $ | 6.30 | $ | 1,018.60 | $ | 6.32 | 1.26 | % | ||||||||||||
| B | 1,000.00 | 1,007.60 | 10.03 | 1,014.87 | 10.07 | 2.01 | ||||||||||||||||||
| C | 1,000.00 | 1,007.60 | 10.03 | 1,014.87 | 10.07 | 2.01 | ||||||||||||||||||
| Y | 1,000.00 | 1,011.60 | 5.05 | 1,019.84 | 5.07 | 1.01 | ||||||||||||||||||
| R5 | 1,000.00 | 1,012.10 | 4.60 | 1,020.29 | 4.62 | 0.92 | ||||||||||||||||||
| R6 | 1,000.00 | 1,012.40 | 4.20 | 1,020.69 | 4.22 | 0.84 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
19 Invesco Global Real Estate Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 GREI-SAR-1 Invesco Distributors, Inc.
|
| ||||
|
|
Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco Low Volatility Equity Yield Fund | ||||
|
Nasdaq: |
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| A: SCAUX ¡ B: SBCUX ¡ C: SCCUX ¡ R: SCRUX ¡ Y: SCAYX Investor: SCNUX ¡ R5: SCIUX | ||||
|
| |||||
|
2 |
Fund Performance | ||||
|
4 |
Letters to Shareholders | ||||
|
5 |
Schedule of Investments | ||||
|
9 |
Financial Statements | ||||
|
11 |
Notes to Financial Statements | ||||
|
18 |
Financial Highlights | ||||
|
19 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco Low Volatility Equity Yield Fund
3 Invesco Low Volatility Equity Yield Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco Low Volatility Equity Yield Fund
Schedule of Investments(a)
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Low Volatility Equity Yield Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Low Volatility Equity Yield Fund
Investment Abbreviations:
| REIT | – Real Estate Investment Trust |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | All or a portion of this security was out on loan at February 29, 2016. |
| (c) | Non-income producing security. |
| (d) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (e) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1J and Note 4. |
| (f) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
| (g) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Low Volatility Equity Yield Fund
Portfolio Composition
By sector, based on Net Assets
as of February 29, 2016
| Financials |
23.4 | % | ||
| Consumer Staples |
16.1 | |||
| Utilities |
13.9 | |||
| Consumer Discretionary |
12.2 | |||
| Information Technology |
11.5 | |||
| Telecommunication Services |
5.5 | |||
| Energy |
5.3 | |||
| Industrials |
4.5 | |||
| Health Care |
2.9 | |||
| Materials |
1.5 | |||
| U.S. Treasury Bills, Plus Money Market Funds, Plus Other Assets Less Liabilities |
3.2 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Low Volatility Equity Yield Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Low Volatility Equity Yield Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $2,350) |
$ | 5,498,761 | ||
| Dividends from affiliated money market funds (includes securities lending income of $104,395) |
109,794 | |||
| Total investment income |
5,608,555 | |||
| Expenses: |
||||
| Advisory fees |
813,580 | |||
| Administrative services fees |
46,218 | |||
| Custodian fees |
6,333 | |||
| Distribution fees: |
||||
| Class A |
213,024 | |||
| Class B |
21,733 | |||
| Class C |
142,215 | |||
| Class R |
418 | |||
| Investor Class |
62,651 | |||
| Transfer agent fees — A, B, C, R, Y and Investor |
295,738 | |||
| Transfer agent fees — R5 |
3,817 | |||
| Trustees’ and officers’ fees and benefits |
16,431 | |||
| Other |
106,121 | |||
| Total expenses |
1,728,279 | |||
| Less: Fees waived and expense offset arrangement(s) |
(5,880 | ) | ||
| Net expenses |
1,722,399 | |||
| Net investment income |
3,886,156 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
(6,907,872 | ) | ||
| Futures contracts |
(227,315 | ) | ||
| (7,135,187 | ) | |||
| Change in net unrealized appreciation of: |
||||
| Investment securities |
2,017,711 | |||
| Futures contracts |
314,577 | |||
| 2,332,288 | ||||
| Net realized and unrealized gain (loss) |
(4,802,899 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (916,743 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Low Volatility Equity Yield Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
|
|||||||
| Net investment income |
$ | 3,886,156 | $ | 8,060,559 | ||||
| Net realized gain (loss) |
(7,135,187 | ) | 8,378,828 | |||||
| Change in net unrealized appreciation (depreciation) |
2,332,288 | (52,620,041 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
(916,743 | ) | (36,180,654 | ) | ||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(2,874,260 | ) | (6,009,779 | ) | ||||
| Class B |
(60,214 | ) | (192,301 | ) | ||||
| Class C |
(374,042 | ) | (766,000 | ) | ||||
| Class R |
(2,576 | ) | (5,153 | ) | ||||
| Class Y |
(87,877 | ) | (175,638 | ) | ||||
| Investor Class |
(853,840 | ) | (1,748,652 | ) | ||||
| Class R5 |
(257,459 | ) | (498,712 | ) | ||||
| Total distributions from net investment income |
(4,510,268 | ) | (9,396,235 | ) | ||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
— | (16,453,349 | ) | |||||
| Class B |
— | (783,284 | ) | |||||
| Class C |
— | (2,900,697 | ) | |||||
| Class R |
— | (12,480 | ) | |||||
| Class Y |
— | (428,354 | ) | |||||
| Investor Class |
— | (4,778,723 | ) | |||||
| Class R5 |
— | (1,151,603 | ) | |||||
| Total distributions from net realized gains |
— | (26,508,490 | ) | |||||
| Share transactions–net: |
||||||||
| Class A |
(9,169,603 | ) | (2,198,900 | ) | ||||
| Class B |
(1,706,684 | ) | (4,876,741 | ) | ||||
| Class C |
(2,557,593 | ) | (2,365,103 | ) | ||||
| Class R |
5,818 | 3,817 | ||||||
| Class Y |
1,187,758 | 674,638 | ||||||
| Investor Class |
(3,701,967 | ) | 500,182 | |||||
| Class R5 |
(427,445 | ) | 932,506 | |||||
| Net increase (decrease) in net assets resulting from share transactions |
(16,369,716 | ) | (7,329,601 | ) | ||||
| Net increase (decrease) in net assets |
(21,796,727 | ) | (79,414,980 | ) | ||||
| Net assets: |
||||||||
| Beginning of period |
284,741,696 | 364,156,676 | ||||||
| End of period (includes undistributed net investment income of $2,114,192 and $2,738,304, respectively) |
$ | 262,944,969 | $ | 284,741,696 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Low Volatility Equity Yield Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is income and long-term growth of capital.
11 Invesco Low Volatility Equity Yield Fund
The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Investor Class and Class R5. Class Y and Investor Class shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Investor Class and Class R5 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
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.
12 Invesco Low Volatility Equity Yield Fund
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income, if any, are declared and paid quarterly and are recorded on the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated 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. |
13 Invesco Low Volatility Equity Yield Fund
| J. | Futures Contracts — The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| K. | Collateral — To the extent the Fund has pledged 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 Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||||
| First $250 million |
0 | .60% | ||||
| Next $250 million |
0 | .575% | ||||
| Next $500 million |
0 | .55% | ||||
| Next $1.5 billion |
0 | .525% | ||||
| Next $2.5 billion |
0 | .50% | ||||
| Next $2.5 billion |
0 | .475% | ||||
| Next $2.5 billion |
0 | .45% | ||||
| Over $10 billion |
0 | .425% | ||||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.60%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Investor Class and Class R5 shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75%, 2.00% and 1.75%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $3,745.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
14 Invesco Low Volatility Equity Yield Fund
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y, Investor Class and Class R5 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C, Class R and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares, 0.50% of the average daily net assets of Class R shares and 0.25% of the average daily net assets of Investor Class shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended February 29, 2016, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $6,842 in front-end sales commissions from the sale of Class A shares and $902, $312 and $1,052 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of February 29, 2016. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equity Securities |
$ | 271,670,723 | $ | — | $ | — | $ | 271,670,723 | ||||||||
| U.S. Treasury Securities |
— | 649,974 | — | 649,974 | ||||||||||||
| 271,670,723 | 649,974 | — | 272,320,697 | |||||||||||||
| Futures Contracts* |
126,586 | — | — | 126,586 | ||||||||||||
| Total Investments |
$ | 271,797,309 | $ | 649,974 | $ | — | $ | 272,447,283 | ||||||||
| * | Unrealized appreciation. |
NOTE 4—Derivative Investments
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 February 29, 2016:
| Value | ||||||||
| Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
| Equity risk: |
||||||||
| Futures contracts(a) |
$ | 126,586 | $ | — | ||||
| (a) | Includes cumulative appreciation of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
15 Invesco Low Volatility Equity Yield Fund
Effect of Derivative Investments for the six months ended February 29, 2016
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 |
||||
| Futures Contracts | ||||
| Realized Gain (Loss): |
||||
| Equity risk |
$ | (227,315 | ) | |
| Change in Net Unrealized Appreciation: |
||||
| Equity risk |
314,577 | |||
| Total |
$ | 87,262 | ||
The table below summarizes the average notional value of futures contracts outstanding during the period.
| Futures Contracts | ||||
| Average notional value |
$ | 6,026,044 | ||
| Open Futures Contracts — Equity Risk | ||||||||||||||||||||
| Futures Contracts | Type of Contract |
Number of Contracts |
Expiration Month |
Notional Value |
Unrealized Appreciation |
|||||||||||||||
| E–Mini S&P 500 Index |
Long | 81 | March-2016 | $ | 7,814,475 | $ | 126,586 | |||||||||||||
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,135.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, 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 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of August 31, 2015, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| August 31, 2016 |
$ | 9,977,947 | $ | — | $ | 9,977,947 | ||||||
| August 31, 2018 |
21,115,609 | — | 21,115,609 | |||||||||
| $ | 31,093,556 | $ | — | $ | 31,093,556 | |||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
16 Invesco Low Volatility Equity Yield Fund
NOTE 9—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $120,565,839 and $141,822,550, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $649,146 and $0, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 18,354,595 | ||
| Aggregate unrealized (depreciation) of investment securities |
(27,892,942 | ) | ||
| Net unrealized appreciation (depreciation) of investment securities |
$ | (9,538,347 | ) | |
Cost of investments for tax purposes is $281,859,044.
NOTE 10—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
278,963 | $ | 2,582,048 | 678,854 | $ | 7,278,910 | ||||||||||
| Class B |
10,500 | 95,570 | 7,577 | 80,772 | ||||||||||||
| Class C |
57,038 | 523,277 | 190,688 | 2,019,877 | ||||||||||||
| Class R |
2,862 | 26,421 | 7,169 | 74,689 | ||||||||||||
| Class Y |
159,950 | 1,468,852 | 178,350 | 1,934,247 | ||||||||||||
| Investor Class |
79,371 | 735,931 | 266,183 | 2,858,315 | ||||||||||||
| Class R5 |
55,325 | 517,075 | 218,919 | 2,360,543 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
283,809 | 2,641,653 | 1,971,458 | 20,490,517 | ||||||||||||
| Class B |
6,217 | 57,201 | 82,277 | 842,760 | ||||||||||||
| Class C |
34,434 | 315,870 | 301,117 | 3,076,130 | ||||||||||||
| Class R |
255 | 2,362 | 1,537 | 15,910 | ||||||||||||
| Class Y |
7,637 | 71,331 | 46,413 | 484,365 | ||||||||||||
| Investor Class |
88,476 | 826,483 | 605,330 | 6,310,713 | ||||||||||||
| Class R5 |
23,300 | 217,323 | 157,715 | 1,648,232 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
146,955 | 1,369,198 | 377,824 | 3,982,977 | ||||||||||||
| Class B |
(149,030 | ) | (1,369,198 | ) | (383,127 | ) | (3,982,977 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(1,699,194 | ) | (15,762,502 | ) | (3,254,893 | ) | (33,951,304 | ) | ||||||||
| Class B |
(53,151 | ) | (490,257 | ) | (172,118 | ) | (1,817,296 | ) | ||||||||
| Class C |
(376,498 | ) | (3,396,740 | ) | (719,971 | ) | (7,461,110 | ) | ||||||||
| Class R |
(2,455 | ) | (22,965 | ) | (8,142 | ) | (86,782 | ) | ||||||||
| Class Y |
(37,893 | ) | (352,425 | ) | (166,333 | ) | (1,743,974 | ) | ||||||||
| Investor Class |
(562,813 | ) | (5,264,381 | ) | (817,875 | ) | (8,668,846 | ) | ||||||||
| Class R5 |
(128,057 | ) | (1,161,843 | ) | (286,382 | ) | (3,076,269 | ) | ||||||||
| Net increase (decrease) in share activity |
(1,773,999 | ) | $ | (16,369,716 | ) | (717,430 | ) | $ | (7,329,601 | ) | ||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 17% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
17 Invesco Low Volatility Equity Yield Fund
NOTE 11—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio
of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
| Class A |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 9.40 | $ | 0.13 | $ | (0.15 | ) | $ | (0.02 | ) | $ | (0.16 | ) | $ | — | $ | (0.16 | ) | $ | 9.22 | (0.27 | )% | $ | 165,182 | 1.20 | %(d) | 1.20 | %(d) | 2.92 | %(d) | 45 | % | ||||||||||||||||||||||||
| Year ended 08/31/15 |
11.75 | 0.26 | (1.43 | ) | (1.17 | ) | (0.31 | ) | (0.87 | ) | (1.18 | ) | 9.40 | (10.72 | ) | 177,739 | 1.15 | 1.15 | 2.49 | 101 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
9.98 | 0.31 | 1.92 | 2.23 | (0.29 | ) | (0.17 | ) | (0.46 | ) | 11.75 | 22.91 | 224,786 | 1.14 | 1.14 | 2.80 | 109 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.66 | 0.12 | 1.31 | 1.43 | (0.11 | ) | — | (0.11 | ) | 9.98 | 16.71 | 199,636 | 1.18 | 1.18 | 1.31 | 107 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.34 | 0.09 | 1.27 | 1.36 | (0.04 | ) | — | (0.04 | ) | 8.66 | 18.54 | 198,831 | 1.03 | 1.23 | 1.10 | 45 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
6.29 | 0.07 | 1.06 | 1.13 | (0.08 | ) | — | (0.08 | ) | 7.34 | 18.00 | 204,311 | 1.00 | 1.22 | 0.90 | 125 | ||||||||||||||||||||||||||||||||||||||||
| Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.26 | 0.10 | (0.15 | ) | (0.05 | ) | (0.12 | ) | — | (0.12 | ) | 9.09 | (0.57 | ) | 3,467 | 1.95 | (d) | 1.95 | (d) | 2.17 | (d) | 45 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.59 | 0.18 | (1.42 | ) | (1.24 | ) | (0.22 | ) | (0.87 | ) | (1.09 | ) | 9.26 | (11.42 | ) | 5,253 | 1.90 | 1.90 | 1.74 | 101 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
9.84 | 0.22 | 1.90 | 2.12 | (0.20 | ) | (0.17 | ) | (0.37 | ) | 11.59 | 22.08 | 11,962 | 1.89 | 1.89 | 2.05 | 109 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.53 | 0.05 | 1.29 | 1.34 | (0.03 | ) | — | (0.03 | ) | 9.84 | 15.72 | 13,288 | 1.93 | 1.93 | 0.56 | 107 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.26 | 0.03 | 1.26 | 1.29 | (0.02 | ) | — | (0.02 | ) | 8.53 | 17.75 | 16,913 | 1.78 | 1.98 | 0.35 | 45 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
6.22 | 0.01 | 1.06 | 1.07 | (0.03 | ) | — | (0.03 | ) | 7.26 | 17.15 | 20,750 | 1.75 | 1.97 | 0.15 | 125 | ||||||||||||||||||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.24 | 0.10 | (0.16 | ) | (0.06 | ) | (0.12 | ) | — | (0.12 | ) | 9.06 | (0.69 | ) | 26,799 | 1.95 | (d) | 1.95 | (d) | 2.17 | (d) | 45 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.56 | 0.18 | (1.41 | ) | (1.23 | ) | (0.22 | ) | (0.87 | ) | (1.09 | ) | 9.24 | (11.37 | ) | 29,959 | 1.90 | 1.90 | 1.74 | 101 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
9.82 | 0.22 | 1.89 | 2.11 | (0.20 | ) | (0.17 | ) | (0.37 | ) | 11.56 | 22.01 | 40,119 | 1.89 | 1.89 | 2.05 | 109 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.51 | 0.05 | 1.29 | 1.34 | (0.03 | ) | — | (0.03 | ) | 9.82 | 15.75 | 37,335 | 1.93 | 1.93 | 0.56 | 107 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.25 | 0.03 | 1.25 | 1.28 | (0.02 | ) | — | (0.02 | ) | 8.51 | 17.64 | 41,148 | 1.78 | 1.98 | 0.35 | 45 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
6.22 | 0.01 | 1.05 | 1.06 | (0.03 | ) | — | (0.03 | ) | 7.25 | 16.99 | 48,592 | 1.75 | 1.97 | 0.15 | 125 | ||||||||||||||||||||||||||||||||||||||||
| Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.35 | 0.12 | (0.15 | ) | (0.03 | ) | (0.14 | ) | — | (0.14 | ) | 9.18 | (0.30 | ) | 173 | 1.45 | (d) | 1.45 | (d) | 2.67 | (d) | 45 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.69 | 0.24 | (1.43 | ) | (1.19 | ) | (0.28 | ) | (0.87 | ) | (1.15 | ) | 9.35 | (10.93 | ) | 170 | 1.40 | 1.40 | 2.24 | 101 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
9.93 | 0.28 | 1.91 | 2.19 | (0.26 | ) | (0.17 | ) | (0.43 | ) | 11.69 | 22.60 | 206 | 1.39 | 1.39 | 2.55 | 109 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.61 | 0.10 | 1.30 | 1.40 | (0.08 | ) | — | (0.08 | ) | 9.93 | 16.37 | 200 | 1.43 | 1.43 | 1.06 | 107 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.31 | 0.07 | 1.26 | 1.33 | (0.03 | ) | — | (0.03 | ) | 8.61 | 18.24 | 1,059 | 1.28 | 1.48 | 0.85 | 45 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
6.27 | 0.05 | 1.06 | 1.11 | (0.07 | ) | — | (0.07 | ) | 7.31 | 17.68 | 1,300 | 1.25 | 1.47 | 0.65 | 125 | ||||||||||||||||||||||||||||||||||||||||
| Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.45 | 0.15 | (0.17 | ) | (0.02 | ) | (0.17 | ) | — | (0.17 | ) | 9.26 | (0.24 | ) | 5,968 | 0.95 | (d) | 0.95 | (d) | 3.17 | (d) | 45 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.80 | 0.29 | (1.43 | ) | (1.14 | ) | (0.34 | ) | (0.87 | ) | (1.21 | ) | 9.45 | (10.43 | ) | 4,861 | 0.90 | 0.90 | 2.74 | 101 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.02 | 0.33 | 1.94 | 2.27 | (0.32 | ) | (0.17 | ) | (0.49 | ) | 11.80 | 23.24 | 5,383 | 0.89 | 0.89 | 3.05 | 109 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.71 | 0.15 | 1.30 | 1.45 | (0.14 | ) | — | (0.14 | ) | 10.02 | 16.90 | 4,189 | 0.93 | 0.93 | 1.56 | 107 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.37 | 0.11 | 1.27 | 1.38 | (0.04 | ) | — | (0.04 | ) | 8.71 | 18.89 | 4,269 | 0.78 | 0.98 | 1.35 | 45 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
6.32 | 0.09 | 1.06 | 1.15 | (0.10 | ) | — | (0.10 | ) | 7.37 | 18.24 | 3,846 | 0.75 | 0.97 | 1.15 | 125 | ||||||||||||||||||||||||||||||||||||||||
| Investor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.43 | 0.14 | (0.16 | ) | (0.02 | ) | (0.16 | ) | — | (0.16 | ) | 9.25 | (0.27 | ) | 48,203 | 1.20 | (d) | 1.20 | (d) | 2.92 | (d) | 45 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.78 | 0.27 | (1.44 | ) | (1.17 | ) | (0.31 | ) | (0.87 | ) | (1.18 | ) | 9.43 | (10.68 | ) | 52,880 | 1.15 | 1.15 | 2.49 | 101 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.01 | 0.31 | 1.92 | 2.23 | (0.29 | ) | (0.17 | ) | (0.46 | ) | 11.78 | 22.85 | 65,428 | 1.14 | 1.14 | 2.80 | 109 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.69 | 0.12 | 1.31 | 1.43 | (0.11 | ) | — | (0.11 | ) | 10.01 | 16.65 | 64,369 | 1.18 | 1.18 | 1.31 | 107 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.36 | 0.09 | 1.28 | 1.37 | (0.04 | ) | — | (0.04 | ) | 8.69 | 18.63 | 63,296 | 1.03 | 1.23 | 1.10 | 45 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
6.32 | 0.07 | 1.05 | 1.12 | (0.08 | ) | — | (0.08 | ) | 7.36 | 17.76 | 63,890 | 1.00 | 1.22 | 0.90 | 125 | ||||||||||||||||||||||||||||||||||||||||
| Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.46 | 0.16 | (0.16 | ) | 0.00 | (0.18 | ) | — | (0.18 | ) | 9.28 | (0.05 | ) | 13,153 | 0.78 | (d) | 0.78 | (d) | 3.34 | (d) | 45 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
11.82 | 0.31 | (1.44 | ) | (1.13 | ) | (0.36 | ) | (0.87 | ) | (1.23 | ) | 9.46 | (10.35 | ) | 13,881 | 0.75 | 0.75 | 2.89 | 101 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.03 | 0.35 | 1.94 | 2.29 | (0.33 | ) | (0.17 | ) | (0.50 | ) | 11.82 | 23.48 | 16,272 | 0.75 | 0.75 | 3.19 | 109 | |||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
8.71 | 0.16 | 1.31 | 1.47 | (0.15 | ) | — | (0.15 | ) | 10.03 | 17.12 | 13,000 | 0.76 | 0.76 | 1.73 | 107 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
7.37 | 0.11 | 1.28 | 1.39 | (0.05 | ) | — | (0.05 | ) | 8.71 | 18.90 | 11,397 | 0.76 | 0.77 | 1.37 | 45 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
6.32 | 0.09 | 1.06 | 1.15 | (0.10 | ) | — | (0.10 | ) | 7.37 | 18.24 | 11,645 | 0.74 | 0.77 | 1.18 | 125 | ||||||||||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the period ended August 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $286,080,448 and sold of $155,521,831 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Select Equity Fund and Invesco Van Kampen Equity Premium Income Fund into the Fund. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $171,356, $4,370, $28,599, $168, $5,130, $50,396 and $13,650 for Class A, Class B, Class C, Class R, Class Y, Investor Class and Class R5 shares, respectively. |
18 Invesco Low Volatility Equity Yield Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 997.30 | $ | 5.96 | $ | 1,018.90 | $ | 6.02 | 1.20 | % | ||||||||||||
| B | 1,000.00 | 994.30 | 9.67 | 1,015.17 | 9.77 | 1.95 | ||||||||||||||||||
| C | 1,000.00 | 993.10 | 9.66 | 1,015.17 | 9.77 | 1.95 | ||||||||||||||||||
| R | 1,000.00 | 997.00 | 7.20 | 1,017.65 | 7.27 | 1.45 | ||||||||||||||||||
| Y | 1,000.00 | 997.60 | 4.72 | 1,020.14 | 4.77 | 0.95 | ||||||||||||||||||
| Investor | 1,000.00 | 997.30 | 5.96 | 1,018.90 | 6.02 | 1.20 | ||||||||||||||||||
| R5 | 1,000.00 | 999.50 | 3.88 | 1,020.98 | 3.92 | 0.78 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
19 Invesco Low Volatility Equity Yield Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 LVEY-SAR-1 Invesco Distributors, Inc.
|
| ||||
|
|
Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco Growth and Income Fund | ||||
|
Nasdaq: |
||||
| A: ACGIX ¡ B: ACGJX ¡ C: ACGKX ¡ R: ACGLX ¡ Y: ACGMX ¡ R5: ACGQX ¡ R6: GIFFX | ||||
|
| |||||
|
2 |
Fund Performance | ||||
|
4 |
Letters to Shareholders | ||||
|
5 |
Schedule of Investments | ||||
|
8 |
Financial Statements | ||||
|
10 |
Notes to Financial Statements | ||||
|
18 |
Financial Highlights | ||||
|
19 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco Growth and Income Fund
3 Invesco Growth and Income Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco Growth and Income Fund
Schedule of Investments(a)
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Growth and Income Fund
Investment Abbreviations:
| ADR | – American Depositary Receipt |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Growth and Income Fund
Portfolio Composition
By sector, based on Net Assets
as of February 29, 2016
| Financials |
28.8 | % | ||
| Information Technology |
14.0 | |||
| Health Care |
13.3 | |||
| Energy |
11.1 | |||
| Consumer Discretionary |
9.4 | |||
| Industrials |
8.3 | |||
| Consumer Staples |
6.9 | |||
| Telecommunication Services |
2.8 | |||
| Utilities |
1.8 | |||
| Materials |
0.6 | |||
| Money Market Funds Plus Other Assets Less Liabilities |
3.0 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Growth and Income Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Growth and Income Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $2,339,490) |
$ | 94,399,922 | ||
| Dividends from affiliated money market funds |
214,530 | |||
| Total investment income |
94,614,452 | |||
| Expenses: |
||||
| Advisory fees |
13,945,491 | |||
| Administrative services fees |
356,623 | |||
| Custodian fees |
134,177 | |||
| Distribution fees: |
||||
| Class A |
5,251,281 | |||
| Class B |
56,609 | |||
| Class C |
1,467,946 | |||
| Class R |
326,074 | |||
| Transfer agent fees — A, B, C, R and Y |
6,602,240 | |||
| Transfer agent fees — R5 |
362,644 | |||
| Transfer agent fees — R6 |
9,215 | |||
| Trustees’ and officers’ fees and benefits |
108,114 | |||
| Other |
440,101 | |||
| Total expenses |
29,060,515 | |||
| Less: Fees waived and expense offset arrangement(s) |
(159,658 | ) | ||
| Net expenses |
28,900,857 | |||
| Net investment income |
65,713,595 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
147,041,360 | |||
| Foreign currencies |
(192,949 | ) | ||
| Forward foreign currency contracts |
22,242,898 | |||
| 169,091,309 | ||||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(857,523,050 | ) | ||
| Foreign currencies |
(165,793 | ) | ||
| Forward foreign currency contracts |
6,331,859 | |||
| (851,356,984 | ) | |||
| Net realized and unrealized gain (loss) |
(682,265,675 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (616,552,080 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Growth and Income Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
||||||||
| Net investment income |
$ | 65,713,595 | $ | 128,816,413 | ||||
| Net realized gain |
169,091,309 | 711,943,080 | ||||||
| Change in net unrealized appreciation (depreciation) |
(851,356,984 | ) | (1,039,891,789 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(616,552,080 | ) | (199,132,296 | ) | ||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(44,348,140 | ) | (95,852,748 | ) | ||||
| Class B |
(482,001 | ) | (1,361,186 | ) | ||||
| Class C |
(1,943,179 | ) | (3,750,293 | ) | ||||
| Class R |
(1,202,458 | ) | (2,785,361 | ) | ||||
| Class Y |
(21,079,028 | ) | (46,673,590 | ) | ||||
| Class R5 |
(8,859,154 | ) | (18,554,045 | ) | ||||
| Class R6 |
(8,731,041 | ) | (16,315,170 | ) | ||||
| Total distributions from net investment income |
(86,645,001 | ) | (185,292,393 | ) | ||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
(293,157,140 | ) | (452,856,740 | ) | ||||
| Class B |
(3,128,396 | ) | (6,596,296 | ) | ||||
| Class C |
(20,896,404 | ) | (29,434,651 | ) | ||||
| Class R |
(9,082,838 | ) | (15,312,972 | ) | ||||
| Class Y |
(123,300,010 | ) | (194,870,035 | ) | ||||
| Class R5 |
(50,003,257 | ) | (71,525,594 | ) | ||||
| Class R6 |
(46,577,661 | ) | (60,590,022 | ) | ||||
| Total distributions from net realized gains |
(546,145,706 | ) | (831,186,310 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
15,654,518 | (190,458,025 | ) | |||||
| Class B |
(6,250,655 | ) | (22,934,232 | ) | ||||
| Class C |
11,537,296 | 18,566,173 | ||||||
| Class R |
(3,060,472 | ) | (20,329,574 | ) | ||||
| Class Y |
7,787,064 | (21,583,356 | ) | |||||
| Class R5 |
103,860,101 | (30,967,417 | ) | |||||
| Class R6 |
(34,305,811 | ) | 163,697,019 | |||||
| Net increase (decrease) in net assets resulting from share transactions |
95,222,041 | (104,009,412 | ) | |||||
| Net increase (decrease) in net assets |
(1,154,120,746 | ) | (1,319,620,411 | ) | ||||
| Net assets: |
||||||||
| Beginning of period |
8,296,024,658 | 9,615,645,069 | ||||||
| End of period (includes undistributed net investment income of $30,482,441 and $51,413,847, respectively) |
$ | 7,141,903,912 | $ | 8,296,024,658 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Growth and Income Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is total return through growth of capital and current income.
10 Invesco Growth and Income Fund
The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations — Securities, including restricted securities, are valued according to the following policy.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and
11 Invesco Growth and Income Fund
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 and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income, if any, are declared and paid quarterly and are recorded on the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| J. | Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.
12 Invesco Growth and Income Fund
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||||
| First $150 million |
0 | .50% | ||||
| Next $100 million |
0 | .45% | ||||
| Next $100 million |
0 | .40% | ||||
| Over $350 million |
0 | .35% | ||||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.35%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75%, 1.75% and 1.75%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $155,325.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A, Class B, Class C and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets, up to 1.00% each of Class B and Class C average daily net assets and up to 0.50% of Class R average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the six months ended February 29, 2016, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $229,903 in front-end sales commissions from the sale of Class A shares and $5,429, $1,672 and $8,102 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
13 Invesco Growth and Income Fund
For the six months ended February 29, 2016, the Fund incurred $27,926 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 or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of February 29, 2016. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equity Securities |
$ | 6,635,076,372 | $ | 436,781,684 | $ | — | $ | 7,071,858,056 | ||||||||
| Forward Foreign Currency Contracts* |
— | 12,736,378 | — | 12,736,378 | ||||||||||||
| Total Investments |
$ | 6,635,076,372 | $ | 449,518,062 | $ | — | $ | 7,084,594,434 | ||||||||
| * | Unrealized appreciation. |
NOTE 4—Derivative Investments
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 February 29, 2016:
| Value | ||||||||
| Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
| Currency risk: |
||||||||
| Forward foreign currency contracts(a) |
$ | 15,318,654 | $ | (2,582,276 | ) | |||
| (a) | Values are disclosed on the Statement of Assets and Liabilities under the captions Unrealized appreciation on forward foreign currency contracts outstanding and Unrealized depreciation on forward foreign currency contracts outstanding. |
Effect of Derivative Investments for the six months ended February 29, 2016
The table below summarizes the gains 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 |
||||
| Realized Gain: |
||||
| Currency risk |
$ | 22,242,898 | ||
| Change in Net Unrealized Appreciation: |
||||
| Currency risk |
6,331,859 | |||
| Total |
$ | 28,574,757 | ||
The table below summarizes the average notional value of forward foreign currency contracts outstanding during the period.
| Forward Foreign Currency Contracts |
||||
| Average notional value |
$ | 834,234,475 | ||
14 Invesco Growth and Income Fund
| Open Forward Foreign Currency Contracts | ||||||||||||||||||||||||||
| Settlement Date
|
Contract to | Notional Value |
Unrealized Appreciation (Depreciation) |
|||||||||||||||||||||||
| Counterparty | Deliver | Receive | ||||||||||||||||||||||||
| 03/11/16 | Bank of New York Mellon (The) | CAD | 71,042,058 | USD | 51,411,204 | $ | 52,513,100 | $ | (1,101,896 | ) | ||||||||||||||||
| 03/11/16 | State Street Bank & Trust Co. | CAD | 82,456,754 | USD | 59,671,838 | 60,950,652 | (1,278,814 | ) | ||||||||||||||||||
| 03/11/16 | State Street Bank & Trust Co. | USD | 2,488,730 | CAD | 3,403,990 | 2,516,172 | 27,442 | |||||||||||||||||||
| 03/11/16 | Bank of New York Mellon (The) | CHF | 38,966,338 | USD | 40,164,857 | 39,048,234 | 1,116,623 | |||||||||||||||||||
| 03/11/16 | State Street Bank & Trust Co. | CHF | 30,436,935 | USD | 31,383,137 | 30,500,905 | 882,232 | |||||||||||||||||||
| 03/11/16 | State Street Bank & Trust Co. | USD | 14,802,738 | CHF | 14,655,471 | 14,686,272 | (116,466 | ) | ||||||||||||||||||
| 03/11/16 | Bank of New York Mellon (The) | EUR | 51,535,269 | USD | 85,803,079 | 82,467,337 | 3,335,742 | |||||||||||||||||||
| 03/11/16 | State Street Bank & Trust Co. | EUR | 56,372,012 | USD | 81,536,739 | 78,352,671 | 3,184,068 | |||||||||||||||||||
| 03/11/16 | State Street Bank & Trust Co. | USD | 3,853,146 | EUR | 3,494,124 | 3,802,081 | (51,065 | ) | ||||||||||||||||||
| 03/11/16 | Bank of New York Mellon (The) | GBP | 51,535,269 | USD | 74,681,562 | 71,732,671 | 2,948,891 | |||||||||||||||||||
| 03/11/16 | State Street Bank & Trust Co. | GBP | 56,372,012 | USD | 81,679,663 | 78,465,002 | 3,214,661 | |||||||||||||||||||
| 03/11/16 | State Street Bank & Trust Co. | USD | 2,493,162 | GBP | 1,766,724 | 2,459,127 | (34,035 | ) | ||||||||||||||||||
| 03/11/16 | Bank of New York Mellon (The) | ILK | 154,673,542 | USD | 40,001,433 | 39,651,105 | 350,328 | |||||||||||||||||||
| 03/11/16 | State Street Bank & Trust Co. | ILK | 120,051,121 | USD | 31,034,193 | 30,775,526 | 258,667 | |||||||||||||||||||
| Total Forward Foreign Currency Contracts — Currency Risk |
$ | 12,736,378 | ||||||||||||||||||||||||
Currency Abbreviations:
| CAD | – Canadian Dollar | |
| CHF | – Swiss Franc | |
| EUR | – Euro | |
| GBP | – British Pound Sterling | |
| ILK | – Israeli Shekel | |
| USD | – U.S. Dollar |
Offsetting Assets and Liabilities
Accounting Standards Update (“ASU”) No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which was subsequently clarified in Financial Accounting Standards Board ASU 2013-01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” is intended to enhance disclosures about financial instruments and derivative instruments that are subject to offsetting arrangements on the Statement of Assets and Liabilities and to enable investors to better understand the effect of those arrangements on the Fund’s financial position. In order for an arrangement to be eligible for netting, the Fund must have a basis to conclude that such netting arrangements are legally enforceable. The Fund enters into netting agreements and collateral agreements in an attempt to reduce the Fund’s Counterparty credit risk by providing for a single net settlement with a Counterparty of all financial transactions covered by the agreement in an event of default as defined under such agreement.
The following tables present derivative instruments that are either subject to an enforceable netting agreement or offset by collateral arrangements as of February 29, 2016.
| Counterparty |
Gross amounts |
Gross Amounts Not Offset in the Statement of Assets and Liabilities |
Net |
|||||||||||||||||
| Financial Instruments |
Collateral Received | |||||||||||||||||||
| Non-Cash | Cash | |||||||||||||||||||
| Bank of New York Mellon (The) |
$ | 7,751,584 | $ | (1,101,896 | ) | $ | — | $ | — | $ | 6,649,688 | |||||||||
| State Street Bank & Trust Co. |
7,567,070 | (1,480,380 | ) | — | — | 6,086,690 | ||||||||||||||
| Total |
$ | 15,318,654 | $ | (2,582,276 | ) | $ | — | $ | — | $ | 12,736,378 | |||||||||
| Counterparty |
Gross amounts |
Gross Amounts Not Offset in the Statement of Assets and Liabilities |
Net |
|||||||||||||||||
| Financial Instruments |
Collateral Pledged | |||||||||||||||||||
| Non-Cash | Cash | |||||||||||||||||||
| Bank of New York Mellon (The) |
$ | 1,101,896 | $ | (1,101,896 | ) | $ | — | $ | — | $ | — | |||||||||
| State Street Bank & Trust Co. |
1,480,380 | (1,480,380 | ) | — | — | — | ||||||||||||||
| Total |
$ | 2,582,276 | $ | (2,582,276 | ) | $ | — | $ | — | $ | — | |||||||||
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $4,333.
15 Invesco Growth and Income Fund
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, 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 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of August 31, 2015.
NOTE 9—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $778,159,412 and $1,301,621,554, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 1,434,113,242 | ||
| Aggregate unrealized (depreciation) of investment securities |
(538,700,681 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 895,412,561 | ||
Cost of investments for tax purposes is $6,176,445,495.
16 Invesco Growth and Income Fund
NOTE 10—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
7,936,665 | $ | 189,548,616 | 17,888,584 | $ | 485,903,239 | ||||||||||
| Class B |
5,718 | 135,342 | 24,494 | 667,225 | ||||||||||||
| Class C |
564,543 | 13,468,265 | 1,253,277 | 33,557,232 | ||||||||||||
| Class R |
537,840 | 12,880,746 | 1,075,763 | 29,268,433 | ||||||||||||
| Class Y |
5,334,139 | 126,731,241 | 18,424,623 | 503,537,339 | ||||||||||||
| Class R5 |
5,777,748 | 136,972,217 | 8,520,759 | 231,266,680 | ||||||||||||
| Class R6 |
4,233,336 | 100,801,724 | 10,683,508 | 288,569,077 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
13,765,069 | 320,494,776 | 20,187,250 | 521,859,531 | ||||||||||||
| Class B |
149,182 | 3,444,689 | 295,592 | 7,581,858 | ||||||||||||
| Class C |
908,786 | 20,907,785 | 1,183,905 | 30,214,201 | ||||||||||||
| Class R |
441,461 | 10,281,567 | 699,242 | 18,074,952 | ||||||||||||
| Class Y |
5,926,894 | 138,153,705 | 8,962,519 | 232,043,868 | ||||||||||||
| Class R5 |
2,522,708 | 58,861,975 | 3,472,896 | 90,078,761 | ||||||||||||
| Class R6 |
2,305,401 | 53,814,411 | 2,877,870 | 74,651,350 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
299,964 | 7,127,448 | 815,263 | 22,186,231 | ||||||||||||
| Class B |
(302,421 | ) | (7,127,448 | ) | (821,538 | ) | (22,186,231 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(21,133,772 | ) | (501,516,322 | ) | (44,887,223 | ) | (1,220,407,026 | ) | ||||||||
| Class B |
(115,069 | ) | (2,703,238 | ) | (332,033 | ) | (8,997,084 | ) | ||||||||
| Class C |
(976,544 | ) | (22,838,754 | ) | (1,680,802 | ) | (45,205,260 | ) | ||||||||
| Class R |
(1,101,209 | ) | (26,222,785 | ) | (2,495,100 | ) | (67,672,959 | ) | ||||||||
| Class Y |
(10,819,896 | ) | (257,097,882 | ) | (27,829,736 | ) | (757,164,563 | ) | ||||||||
| Class R5 |
(3,839,578 | ) | (91,974,091 | ) | (12,993,861 | ) | (352,312,858 | ) | ||||||||
| Class R6 |
(8,259,425 | ) | (188,921,946 | ) | (7,359,673 | ) | (199,523,408 | ) | ||||||||
| Net increase (decrease) in share activity |
4,161,540 | $ | 95,222,041 | (2,034,421 | ) | $ | (104,009,412 | ) | ||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 33% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
17 Invesco Growth and Income Fund
NOTE 11—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
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| Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 25.44 | $ | 0.19 | $ | (2.04 | ) | $ | (1.85 | ) | $ | (0.25 | ) | $ | (1.72 | ) | $ | (1.97 | ) | $ | 21.62 | (7.79 | )% | $ | 3,802,005 | 0.84 | %(d) | 0.84 | %(d) | 1.57 | %(d) | 10 | % | |||||||||||||||||||||||
| Year ended 08/31/15 |
29.30 | 0.35 | (1.09 | ) | (0.74 | ) | (0.54 | ) | (2.58 | ) | (3.12 | ) | 25.44 | (2.61 | ) | 4,450,596 | 0.84 | 0.84 | 1.29 | 23 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
24.92 | 0.55 | (e) | 4.78 | 5.33 | (0.33 | ) | (0.62 | ) | (0.95 | ) | 29.30 | 21.84 | 5,302,375 | 0.83 | 0.84 | 2.03 | (e) | 31 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
20.48 | 0.31 | 4.47 | 4.78 | (0.34 | ) | — | (0.34 | ) | 24.92 | 23.57 | 4,766,860 | 0.81 | 0.82 | 1.37 | 29 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
18.01 | 0.32 | 2.42 | 2.74 | (0.27 | ) | — | (0.27 | ) | 20.48 | 15.33 | 4,266,135 | 0.83 | 0.84 | 1.66 | 25 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
16.06 | 0.24 | 1.91 | 2.15 | (0.20 | ) | — | (0.20 | ) | 18.01 | 13.37 | 4,149,537 | 0.83 | 0.84 | 1.23 | 23 | ||||||||||||||||||||||||||||||||||||||||
| Class B |
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| Six months ended 02/29/16 |
25.24 | 0.19 | (2.02 | ) | (1.83 | ) | (0.25 | ) | (1.72 | ) | (1.97 | ) | 21.44 | (7.77 | )(f) | 37,644 | 0.84 | (d)(f) | 0.84 | (d)(f) | 1.57 | (d)(f) | 10 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
29.10 | 0.35 | (1.09 | ) | (0.74 | ) | (0.54 | ) | (2.58 | ) | (3.12 | ) | 25.24 | (2.65 | )(f) | 50,939 | 0.84 | (f) | 0.84 | (f) | 1.29 | (f) | 23 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
24.75 | 0.54 | (e) | 4.75 | 5.29 | (0.32 | ) | (0.62 | ) | (0.94 | ) | 29.10 | 21.86 | (f) | 82,970 | 0.83 | (f) | 0.84 | (f) | 2.03 | (e)(f) | 31 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
20.34 | 0.31 | 4.44 | 4.75 | (0.34 | ) | — | (0.34 | ) | 24.75 | 23.57 | (f) | 101,723 | 0.81 | (f) | 0.82 | (f) | 1.37 | (f) | 29 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
17.88 | 0.31 | 2.41 | 2.72 | (0.26 | ) | — | (0.26 | ) | 20.34 | 15.37 | (f) | 124,930 | 0.81 | (f) | 0.82 | (f) | 1.68 | (f) | 25 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
15.93 | 0.23 | 1.90 | 2.13 | (0.18 | ) | — | (0.18 | ) | 17.88 | 13.36 | (f) | 173,129 | 0.83 | (f) | 0.84 | (f) | 1.23 | (f) | 23 | ||||||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
25.17 | 0.10 | (2.01 | ) | (1.91 | ) | (0.16 | ) | (1.72 | ) | (1.88 | ) | 21.38 | (8.12 | )(g) | 273,600 | 1.57 | (d)(g) | 1.57 | (d)(g) | 0.84 | (d)(g) | 10 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
29.01 | 0.15 | (1.08 | ) | (0.93 | ) | (0.33 | ) | (2.58 | ) | (2.91 | ) | 25.17 | (3.33 | ) | 309,526 | 1.59 | 1.59 | 0.54 | 23 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
24.68 | 0.34 | (e) | 4.73 | 5.07 | (0.12 | ) | (0.62 | ) | (0.74 | ) | 29.01 | 20.94 | 334,902 | 1.58 | 1.59 | 1.28 | (e) | 31 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
20.29 | 0.14 | 4.42 | 4.56 | (0.17 | ) | — | (0.17 | ) | 24.68 | 22.63 | 289,458 | 1.56 | 1.57 | 0.62 | 29 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
17.84 | 0.18 | 2.40 | 2.58 | (0.13 | ) | — | (0.13 | ) | 20.29 | 14.53 | (g) | 254,679 | 1.55 | (g) | 1.56 | (g) | 0.94 | (g) | 25 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
15.91 | 0.09 | 1.90 | 1.99 | (0.06 | ) | — | (0.06 | ) | 17.84 | 12.52 | (g) | 258,606 | 1.57 | (g) | 1.58 | (g) | 0.49 | (g) | 23 | ||||||||||||||||||||||||||||||||||||
| Class R |
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| Six months ended 02/29/16 |
25.45 | 0.16 | (2.03 | ) | (1.87 | ) | (0.22 | ) | (1.72 | ) | (1.94 | ) | 21.64 | (7.86 | ) | 115,606 | 1.09 | (d) | 1.09 | (d) | 1.32 | (d) | 10 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
29.31 | 0.29 | (1.10 | ) | (0.81 | ) | (0.47 | ) | (2.58 | ) | (3.05 | ) | 25.45 | (2.86 | ) | 139,084 | 1.09 | 1.09 | 1.04 | 23 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
24.93 | 0.48 | (e) | 4.78 | 5.26 | (0.26 | ) | (0.62 | ) | (0.88 | ) | 29.31 | 21.53 | 181,301 | 1.08 | 1.09 | 1.78 | (e) | 31 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
20.49 | 0.25 | 4.47 | 4.72 | (0.28 | ) | — | (0.28 | ) | 24.93 | 23.26 | 170,691 | 1.06 | 1.07 | 1.12 | 29 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
18.02 | 0.27 | 2.42 | 2.69 | (0.22 | ) | — | (0.22 | ) | 20.49 | 15.03 | 147,659 | 1.08 | 1.09 | 1.41 | 25 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
16.07 | 0.19 | 1.92 | 2.11 | (0.16 | ) | — | (0.16 | ) | 18.02 | 13.08 | 147,453 | 1.08 | 1.09 | 0.98 | 23 | ||||||||||||||||||||||||||||||||||||||||
| Class Y |
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| Six months ended 02/29/16 |
25.46 | 0.22 | (2.03 | ) | (1.81 | ) | (0.29 | ) | (1.72 | ) | (2.01 | ) | 21.64 | (7.66 | ) | 1,613,507 | 0.59 | (d) | 0.59 | (d) | 1.82 | (d) | 10 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
29.33 | 0.42 | (1.10 | ) | (0.68 | ) | (0.61 | ) | (2.58 | ) | (3.19 | ) | 25.46 | (2.39 | ) | 1,886,928 | 0.59 | 0.59 | 1.54 | 23 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
24.94 | 0.62 | (e) | 4.78 | 5.40 | (0.39 | ) | (0.62 | ) | (1.01 | ) | 29.33 | 22.17 | 2,186,472 | 0.58 | 0.59 | 2.28 | (e) | 31 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
20.50 | 0.37 | 4.47 | 4.84 | (0.40 | ) | — | (0.40 | ) | 24.94 | 23.86 | 1,826,646 | 0.56 | 0.57 | 1.62 | 29 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
18.03 | 0.36 | 2.42 | 2.78 | (0.31 | ) | — | (0.31 | ) | 20.50 | 15.60 | 1,504,586 | 0.58 | 0.59 | 1.91 | 25 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
16.08 | 0.28 | 1.92 | 2.20 | (0.25 | ) | — | (0.25 | ) | 18.03 | 13.64 | 1,544,968 | 0.58 | 0.59 | 1.48 | 23 | ||||||||||||||||||||||||||||||||||||||||
| Class R5 |
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| Six months ended 02/29/16 |
25.49 | 0.23 | (2.03 | ) | (1.80 | ) | (0.30 | ) | (1.72 | ) | (2.02 | ) | 21.67 | (7.59 | ) | 724,674 | 0.48 | (d) | 0.48 | (d) | 1.93 | (d) | 10 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
29.36 | 0.45 | (1.10 | ) | (0.65 | ) | (0.64 | ) | (2.58 | ) | (3.22 | ) | 25.49 | (2.29 | ) | 738,797 | 0.48 | 0.48 | 1.65 | 23 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
24.97 | 0.65 | (e) | 4.78 | 5.43 | (0.42 | ) | (0.62 | ) | (1.04 | ) | 29.36 | 22.27 | 880,275 | 0.47 | 0.48 | 2.39 | (e) | 31 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
20.53 | 0.39 | 4.47 | 4.86 | (0.42 | ) | — | (0.42 | ) | 24.97 | 23.96 | 718,816 | 0.47 | 0.48 | 1.71 | 29 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
18.05 | 0.39 | 2.43 | 2.82 | (0.34 | ) | — | (0.34 | ) | 20.53 | 15.80 | 697,346 | 0.46 | 0.47 | 2.03 | 25 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
16.08 | 0.32 | 1.92 | 2.24 | (0.27 | ) | — | (0.27 | ) | 18.05 | 13.87 | 307,338 | 0.39 | 0.40 | 1.67 | 23 | ||||||||||||||||||||||||||||||||||||||||
| Class R6 |
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| Six months ended 02/29/16 |
25.49 | 0.25 | (2.03 | ) | (1.78 | ) | (0.32 | ) | (1.72 | ) | (2.04 | ) | 21.67 | (7.55 | ) | 574,867 | 0.38 | (d) | 0.38 | (d) | 2.03 | (d) | 10 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
29.36 | 0.48 | (1.10 | ) | (0.62 | ) | (0.67 | ) | (2.58 | ) | (3.25 | ) | 25.49 | (2.19 | ) | 720,155 | 0.38 | 0.38 | 1.75 | 23 | ||||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
24.97 | 0.68 | (e) | 4.78 | 5.46 | (0.45 | ) | (0.62 | ) | (1.07 | ) | 29.36 | 22.38 | 647,350 | 0.38 | 0.39 | 2.48 | (e) | 31 | |||||||||||||||||||||||||||||||||||||
| Year ended 08/31/13(h) |
21.23 | 0.43 | 3.66 | 4.09 | (0.35 | ) | — | (0.35 | ) | 24.97 | 19.45 | 335,549 | 0.38 | (i) | 0.38 | (i) | 1.80 | (i) | 29 | |||||||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For year ended August 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $138,016,999 and sold of $13,000,923 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Fundamental Value Fund & Invesco Large Cap Relative Value Fund into the Fund. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $4,227,490, $45,536, $298,452, $131,146, $1,793,319, $729,334 and $680,218 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
| (e) | Net investment income per share and the ratio of net investment income to average net assets includes significant dividends received during the period. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividends are $0.34 and 1.24%, $0.33 and 1.24%, $0.13 and 0.49%, $0.27 and 0.99%, $0.41 and 1.49%, $0.44 and 1.60% and $0.47 and 1.69% for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
| (f) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.25%, 0.25%, 0.25%, 0.25%, 0.23% and 0.25% for the six months ended February 29, 2016 and the years ended August 31, 2015, 2014, 2013, 2012 and 2011, respectively. |
| (g) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.99%, 0.97% and 0.99% for the six months ended February 29, 2016 and years ended August 31, 2012 and 2011, respectively. |
| (h) | Commencement date of September 24, 2012. |
| (i) | Annualized. |
18 Invesco Growth and Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 922.10 | $ | 4.01 | $ | 1,020.69 | $ | 4.22 | 0.84 | % | ||||||||||||
| B | 1,000.00 | 922.30 | 4.01 | 1,020.69 | 4.22 | 0.84 | ||||||||||||||||||
| C | 1,000.00 | 918.80 | 7.49 | 1,017.06 | 7.87 | 1.57 | ||||||||||||||||||
| R | 1,000.00 | 921.40 | 5.21 | 1,019.44 | 5.47 | 1.09 | ||||||||||||||||||
| Y | 1,000.00 | 923.40 | 2.82 | 1,021.93 | 2.97 | 0.59 | ||||||||||||||||||
| R5 | 1,000.00 | 924.10 | 2.30 | 1,022.48 | 2.41 | 0.48 | ||||||||||||||||||
| R6 | 1,000.00 | 924.50 | 1.82 | 1,022.97 | 1.91 | 0.38 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
19 Invesco Growth and Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 VK-GRI-SAR-1 Invesco Distributors, Inc.
|
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Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco Pennsylvania Tax Free Income Fund | ||||
|
Nasdaq: |
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| A: VKMPX ¡ B: VKPAX ¡ C: VKPCX ¡ Y: VKPYX | ||||
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2 |
Fund Performance | ||||
|
4 |
Letters to Shareholders | ||||
|
5 |
Schedule of Investments | ||||
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10 |
Financial Statements | ||||
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12 |
Notes to Financial Statements | ||||
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18 |
Financial Highlights | ||||
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19 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
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NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco Pennsylvania Tax Free Income Fund
3 Invesco Pennsylvania Tax Free Income Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco Pennsylvania Tax Free Income Fund
Schedule of Investments
February 29, 2016
(Unaudited)
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| Municipal Obligations–103.25% |
| |||||||||||||||
| Pennsylvania–98.03% | ||||||||||||||||
| Allegheny (County of) Higher Education Building Authority (Chatham University); Series 2012 A, University RB |
5.00 | % | 09/01/2035 | $ | 1,000 | $ | 1,080,550 | |||||||||
| Allegheny (County of) Higher Education Building Authority (Duquesne University); |
||||||||||||||||
| Series 1998, Ref. University RB (INS–AMBAC)(a) |
5.50 | % | 03/01/2020 | 1,750 | 1,943,060 | |||||||||||
| Series 2011 A, University RB |
5.50 | % | 03/01/2031 | 550 | 629,965 | |||||||||||
| Allegheny (County of) Higher Education Building Authority (Robert Morris University); Series 2008 A, University RB |
6.00 | % | 10/15/2038 | 1,000 | 1,078,800 | |||||||||||
| Allegheny (County of) Hospital Development Authority (Ohio Valley General Hospital); |
5.00 | % | 04/01/2025 | 1,510 | 1,510,393 | |||||||||||
| Allegheny (County of) Hospital Development Authority (University of Pittsburgh Medical Center); Series 2009, RB |
5.63 | % | 08/15/2039 | 1,250 | 1,408,825 | |||||||||||
| Allegheny (County of) Industrial Development Authority (Residential Resources, Inc.); Series 2006, Lease RB |
5.10 | % | 09/01/2026 | 980 | 986,635 | |||||||||||
| Allegheny (County of) Redevelopment Authority (Pittsburgh Mills); Series 2004, Tax Allocation RB |
5.60 | % | 07/01/2023 | 1,125 | 1,132,132 | |||||||||||
| Allegheny (County of) Sanitary Authority; Series 2015, Ref. RB(b) |
5.00 | % | 12/01/2045 | 2,120 | 2,399,522 | |||||||||||
| Allegheny (County of); Series 2008 C 61, Unlimited Tax GO Bonds (INS–AGC)(a) |
5.00 | % | 12/01/2033 | 500 | 547,585 | |||||||||||
| Beaver (County of) Industrial Development Authority (FirstEnergy Generation Corp.); Series 2008 A, Ref. PCR |
2.15 | % | 03/01/2017 | 700 | 701,638 | |||||||||||
| Beaver (County of) Industrial Development Authority; Series 2008 A, Ref. PCR(c) |
2.70 | % | 04/02/2018 | 230 | 230,835 | |||||||||||
| Beaver (County of); |
||||||||||||||||
| Series 2009, Unlimited Tax GO Notes(c)(d) |
5.55 | % | 11/15/2017 | 65 | 70,498 | |||||||||||
| Series 2009, Unlimited Tax GO Notes (INS–AGM)(a) |
5.55 | % | 11/15/2031 | 1,325 | 1,422,162 | |||||||||||
| Berks (County of) Industrial Development Authority (One Douglassville); Series 2007 A, Ref. RB(e) |
6.13 | % | 11/01/2034 | 430 | 436,983 | |||||||||||
| Berks (County of) Municipal Authority (Reading Hospital Medical Center); Series 2012 A, RB |
5.00 | % | 11/01/2040 | 1,000 | 1,102,990 | |||||||||||
| Bethlehem (City of); |
||||||||||||||||
| Series 2014, Gtd. Ref. Water RB |
5.00 | % | 11/15/2030 | 425 | 489,439 | |||||||||||
| Series 2014, Gtd. Ref. Water RB |
5.00 | % | 11/15/2031 | 425 | 487,428 | |||||||||||
| Bethlehem Area School District; Series 2010, Unlimited Tax GO Bonds (INS–AGM)(a) |
5.25 | % | 01/15/2026 | 1,000 | 1,137,390 | |||||||||||
| Bucks (County of) Industrial Development Authority (Lutheran Community Telford Center); Series 2007, RB |
5.75 | % | 01/01/2037 | 2,000 | 2,016,520 | |||||||||||
| Central Bradford Progress Authority (Guthrie Healthcare System); Series 2011, RB |
5.38 | % | 12/01/2041 | 1,100 | 1,251,437 | |||||||||||
| Centre (County of) Hospital Authority (Mt. Nittany Medical Center); Series 2011, RB |
6.25 | % | 11/15/2041 | 500 | 585,395 | |||||||||||
| Chartiers Valley Industrial & Commercial Development Authority (Asbury Health Center); Series 2006, Ref. First Mortgage RB |
5.75 | % | 12/01/2022 | 900 | 914,679 | |||||||||||
| Chester (County of) Industrial Development Authority (Renaissance Academy Charter School); Series 2014, RB |
5.00 | % | 10/01/2044 | 1,000 | 1,067,120 | |||||||||||
| Chester (County of) Industrial Development Authority (University Student Housing, LLC at West Chester University of Pennsylvania); Series 2013, Student Housing RB |
5.00 | % | 08/01/2045 | 750 | 787,298 | |||||||||||
| Cumberland (County of) Municipal Authority (Asbury Pennsylvania Obligated Group); Series 2010, RB |
6.00 | % | 01/01/2040 | 870 | 928,742 | |||||||||||
| Cumberland (County of) Municipal Authority (Association of Independent Colleges & Universities of Pennsylvania Financing Program-Dickinson College); Series 2009, RB |
5.00 | % | 11/01/2039 | 750 | 800,685 | |||||||||||
| Cumberland (County of) Municipal Authority (Diakon Lutheran Ministries); |
||||||||||||||||
| Series 2007, RB(c)(d) |
5.00 | % | 01/01/2017 | 1,000 | 1,036,880 | |||||||||||
| Series 2015, Ref. RB |
5.00 | % | 01/01/2038 | 1,270 | 1,390,942 | |||||||||||
| Cumberland (County of) Municipal Authority (Messiah Village); Series 2008 A, RB |
5.63 | % | 07/01/2028 | 1,000 | 1,064,420 | |||||||||||
| Dauphin (County of) General Authority (Pinnacle Health System); Series 2009 A, Health System RB |
6.00 | % | 06/01/2036 | 2,215 | 2,525,166 | |||||||||||
| Delaware (County of) Authority (Cabrini College); Series 1999, College RB (INS–AGC)(a) |
5.75 | % | 07/01/2023 | 220 | 220,664 | |||||||||||
| Delaware (County of) Authority (Neumann College); Series 2008, College RB(c)(d) |
6.25 | % | 10/01/2018 | 110 | 125,543 | |||||||||||
| Delaware (County of) Authority (Villanova University); Series 2015, RB |
5.00 | % | 08/01/2045 | 215 | 247,772 | |||||||||||
| Delaware (County of) Industrial Development Authority (Covanta); Series 2015, Ref. RB |
5.00 | % | 07/01/2043 | 425 | 430,508 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Pennsylvania Tax Free Income Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| Pennsylvania–(continued) | ||||||||||||||||
| Delaware River Port Authority (Port District); |
||||||||||||||||
| Series 2012, Ref. RB |
5.00 | % | 01/01/2025 | $ | 540 | $ | 616,702 | |||||||||
| Series 2012, Ref. RB |
5.00 | % | 01/01/2027 | 535 | 604,930 | |||||||||||
| Delaware River Port Authority; Series 2010 D, RB |
5.00 | % | 01/01/2040 | 1,000 | 1,113,830 | |||||||||||
| Delaware Valley Regional Financial Authority; |
||||||||||||||||
| Series 2002, RB |
5.75 | % | 07/01/2017 | 1,160 | 1,236,305 | |||||||||||
| Series 2002, RB |
5.75 | % | 07/01/2032 | 1,000 | 1,268,060 | |||||||||||
| Doylestown (City of) Hospital Authority; Series 2013 A, RB (INS–AGM)(a) |
5.00 | % | 07/01/2024 | 1,000 | 1,167,020 | |||||||||||
| East Hempfield (Township of) Industrial Development Authority (Student Services Inc. Student Housing); |
||||||||||||||||
| Series 2013, RB |
5.00 | % | 07/01/2035 | 500 | 532,420 | |||||||||||
| Series 2014, RB |
5.00 | % | 07/01/2039 | 250 | 262,945 | |||||||||||
| East Hempfield (Township of) Industrial Development Authority (Willow Valley Communities); |
||||||||||||||||
| Series 2016, Ref. RB |
5.00 | % | 12/01/2030 | 210 | 245,381 | |||||||||||
| Series 2016, Ref. RB |
5.00 | % | 12/01/2039 | 370 | 416,983 | |||||||||||
| Emmaus (City of) General Authority (Pennsylvania Loan Program); Series 2000 A, VRD RB (LOC–U.S. Bank, N.A.)(f)(g) |
0.02 | % | 03/01/2030 | 1,800 | 1,800,000 | |||||||||||
| Erie (City of) Higher Education Building Authority (Mercyhurst College); |
||||||||||||||||
| Series 2004 B, Ref. College RB |
5.00 | % | 03/15/2023 | 800 | 801,760 | |||||||||||
| Series 2008, College RB |
5.50 | % | 03/15/2038 | 500 | 523,150 | |||||||||||
| Fayette (County of) Hospital Authority (Fayette Regional Health System); Series 2007 B, VRD RB (LOC–PNC Bank, N.A.)(f)(g) |
0.01 | % | 06/01/2037 | 2,000 | 2,000,000 | |||||||||||
| Franklin (County of) Industrial Development Authority (Chambersburg Hospital); Series 2010, RB |
5.38 | % | 07/01/2042 | 1,000 | 1,099,110 | |||||||||||
| Geisinger Authority (Geisinger Health System); Series 2011 A-1, Health System RB |
5.13 | % | 06/01/2041 | 500 | 554,360 | |||||||||||
| Lancaster (County of) Hospital Authority (Brethren Village); Series 2008 A, RB |
6.50 | % | 07/01/2040 | 350 | 360,441 | |||||||||||
| Lancaster (County of) Hospital Authority (Landis Homes Retirement Community); Series 2015, Ref. Health Center RB |
5.00 | % | 07/01/2045 | 425 | 442,842 | |||||||||||
| Lancaster (County of) Hospital Authority (Masonic Villages); Series 2015, Ref. RB |
5.00 | % | 11/01/2035 | 210 | 240,280 | |||||||||||
| Lehigh (County of) Authority; Series 2013 A, Water & Sewer RB |
5.00 | % | 12/01/2038 | 930 | 1,059,186 | |||||||||||
| Lehigh (County of) General Purpose Authority (Bible Fellowship Church Homes, Inc.); Series 2013, RB |
5.25 | % | 07/01/2042 | 825 | 861,283 | |||||||||||
| Lehigh (County of) General Purpose Authority (Kidspeace Obligation Group); |
||||||||||||||||
| Series 2014 A, RB |
7.50 | % | 02/01/2044 | 676 | 671,869 | |||||||||||
| Series 2014 B, Conv. CAB RB(h) |
7.50 | % | 02/01/2044 | 172 | 45,300 | |||||||||||
| Series 2014 C, RB(i) |
0.00 | % | 02/01/2044 | 516 | 5 | |||||||||||
| Lycoming (County of) Authority (Pennsylvania College of Technology); Series 2011, RB |
5.00 | % | 07/01/2030 | 750 | 839,835 | |||||||||||
| Lycoming (County of) Authority (Susquehanna Health System); Series 2009 A, Heath System RB |
5.75 | % | 07/01/2039 | 1,250 | 1,379,950 | |||||||||||
| Monroe (County of) Hospital Authority (Pocono Medical Center); Series 2007, RB |
5.13 | % | 01/01/2037 | 1,500 | 1,541,685 | |||||||||||
| Montgomery (County of) Higher Education & Health Authority (Abington Memorial Hospital Obligated Group); Series 2012, RB |
5.00 | % | 06/01/2031 | 1,400 | 1,571,710 | |||||||||||
| Montgomery (County of) Higher Education & Health Authority (Holy Redeemer Health System); Series 2014, Ref. RB |
5.00 | % | 10/01/2027 | 390 | 437,596 | |||||||||||
| Montgomery (County of) Industrial Development Authority (ACTS Retirement-Life Communities, Inc.); |
||||||||||||||||
| Series 2009 A-1, RB |
6.25 | % | 11/15/2029 | 1,000 | 1,133,020 | |||||||||||
| Series 2012, Ref. RB |
5.00 | % | 11/15/2028 | 900 | 989,820 | |||||||||||
| Montgomery (County of) Industrial Development Authority (Albert Einstein Healthcare); Series 2015, Ref. Health System RB |
5.25 | % | 01/15/2045 | 850 | 935,034 | |||||||||||
| Montgomery (County of) Industrial Development Authority (Philadelphia Presbytery Homes, Inc.); Series 2010, RB |
6.63 | % | 12/01/2030 | 1,500 | 1,742,760 | |||||||||||
| Montgomery (County of) Industrial Development Authority (Whitemarsh Community); Series 2008, Mortgage RB(c)(d) |
7.00 | % | 02/01/2018 | 500 | 560,785 | |||||||||||
| Northampton (County of) General Purpose Authority (Lehigh University); Series 2009, Higher Education RB |
5.50 | % | 11/15/2033 | 1,000 | 1,121,700 | |||||||||||
| Northampton (County of) General Purpose Authority (St. Luke’s Hospital); |
||||||||||||||||
| Series 2008 A, Hospital RB |
5.50 | % | 08/15/2035 | 1,000 | 1,087,660 | |||||||||||
| Series 2010 C, Hospital RB(c) |
4.50 | % | 08/15/2016 | 1,000 | 1,015,800 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Pennsylvania Tax Free Income Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| Pennsylvania–(continued) | ||||||||||||||||
| Northampton (County of) Industrial Development Authority (Morningstar Senior Living, Inc.); Series 2012, RB |
5.00 | % | 07/01/2032 | $ | 920 | $ | 957,941 | |||||||||
| Pennsylvania (Commonwealth of); First Series 2014, Unlimited Tax GO Bonds(b) |
5.00 | % | 06/15/2034 | 3,000 | 3,456,600 | |||||||||||
| Pennsylvania (State of) Economic Development Financing Agency (Forum Place); Series 2012, Governmental Lease RB |
5.00 | % | 03/01/2034 | 500 | 552,270 | |||||||||||
| Pennsylvania (State of) Economic Development Financing Authority (Amtrak); Series 2012 A, Ref. Exempt Facilities RB(e) |
5.00 | % | 11/01/2041 | 1,200 | 1,298,064 | |||||||||||
| Pennsylvania (State of) Economic Development Financing Authority (National Gypson Co.); Series 2014, Ref. Exempt Facilities RB(e)(j) |
5.50 | % | 11/01/2044 | 635 | 660,787 | |||||||||||
| Pennsylvania (State of) Economic Development Financing Authority (PA Bridges Finco L.P.); |
5.00 | % | 06/30/2042 | 1,585 | 1,737,731 | |||||||||||
| Pennsylvania (State of) Economic Development Financing Authority (Philadelphia Biosolids Facility); Series 2009, Sewage Sludge Disposal RB |
6.25 | % | 01/01/2032 | 1,000 | 1,106,260 | |||||||||||
| Pennsylvania (State of) Economic Development Financing Authority (Shippingport); Series 2006 A, Exempt Facilities RB(c) |
2.55 | % | 12/03/2018 | 1,500 | 1,500,765 | |||||||||||
| Pennsylvania (State of) Economic Development Financing Authority (Waste Management, Inc.); |
||||||||||||||||
| Series 2004 A, Solid Waste Disposal RB(c) |
1.50 | % | 05/01/2018 | 1,500 | 1,510,800 | |||||||||||
| Series 2005 A, Solid Waste Disposal RB(e) |
5.10 | % | 10/01/2027 | 1,300 | 1,318,291 | |||||||||||
| Pennsylvania (State of) Higher Educational Facilities Authority (AICUP Financing Program-Del Valley College); Series 2012, RB |
5.00 | % | 11/01/2042 | 535 | 555,202 | |||||||||||
| Pennsylvania (State of) Higher Educational Facilities Authority (Edinboro University Foundation); |
||||||||||||||||
| Series 2008, RB |
5.88 | % | 07/01/2038 | 750 | 783,795 | |||||||||||
| Series 2010, RB |
6.00 | % | 07/01/2043 | 500 | 539,520 | |||||||||||
| Pennsylvania (State of) Higher Educational Facilities Authority (La Salle University); Series 2012, RB |
5.00 | % | 05/01/2042 | 1,180 | 1,248,912 | |||||||||||
| Pennsylvania (State of) Higher Educational Facilities Authority (Shippensburg University Student Services); Series 2012, RB |
5.00 | % | 10/01/2035 | 1,300 | 1,383,915 | |||||||||||
| Pennsylvania (State of) Higher Educational Facilities Authority (St. Joseph’s
University); |
5.00 | % | 11/01/2034 | 500 | 547,615 | |||||||||||
| Pennsylvania (State of) Higher Educational Facilities Authority (Temple University); |
5.00 | % | 04/01/2042 | 570 | 638,383 | |||||||||||
| Pennsylvania (State of) Higher Educational Facilities Authority (Thomas Jefferson
University); |
5.25 | % | 09/01/2050 | 845 | 956,286 | |||||||||||
| Pennsylvania (State of) Turnpike Commission; |
||||||||||||||||
| Series 2008 B-1, Sub. RB |
5.50 | % | 06/01/2033 | 1,000 | 1,085,860 | |||||||||||
| Series 2009 C, Sub. Conv. CAB RB (INS–AGM)(a)(h) |
6.25 | % | 06/01/2033 | 2,000 | 2,509,120 | |||||||||||
| Series 2009 E, Sub. Conv. CAB RB(h) |
6.38 | % | 12/01/2038 | 1,435 | 1,672,779 | |||||||||||
| Series 2010 A 1, Motor License Fund Special RB |
5.00 | % | 12/01/2038 | 500 | 557,160 | |||||||||||
| Series 2010 A-2, Motor License Fund Special RB |
5.50 | % | 12/01/2034 | 1,000 | 1,157,120 | |||||||||||
| Series 2010 B 2, RB |
5.00 | % | 12/01/2030 | 625 | 704,181 | |||||||||||
| Series 2010 B 2, RB |
5.13 | % | 12/01/2035 | 500 | 561,125 | |||||||||||
| Pennsylvania State University; Series 2015 A, RB |
5.00 | % | 09/01/2040 | 1,000 | 1,167,040 | |||||||||||
| Philadelphia (City of) Authority for Industrial Development (The Children’s Hospital of Philadelphia); Series 2014 A, Hospital RB(b) |
5.00 | % | 07/01/2042 | 1,500 | 1,717,440 | |||||||||||
| Philadelphia (City of) Hospitals & Higher Education Facilities Authority (Jefferson Health
System); |
5.00 | % | 05/15/2020 | 1,500 | 1,746,975 | |||||||||||
| Philadelphia (City of) Industrial Development Authority (Architecture & Design Charter High School); Series 2013, RB |
6.13 | % | 03/15/2043 | 585 | 635,948 | |||||||||||
| Philadelphia (City of) Industrial Development Authority (Discovery Charter School); Series 2012, RB |
6.25 | % | 04/01/2042 | 1,000 | 968,710 | |||||||||||
| Philadelphia (City of) Industrial Development Authority (First Philadelphia Preparatory Charter School); Series 2014 A, RB |
7.00 | % | 06/15/2033 | 875 | 1,027,609 | |||||||||||
| Philadelphia (City of) Industrial Development Authority (Independence Charter School); |
5.50 | % | 09/15/2037 | 1,235 | 1,255,044 | |||||||||||
| Philadelphia (City of) Industrial Development Authority (MaST Charter School); Series 2010, RB |
6.00 | % | 08/01/2035 | 700 | 775,334 | |||||||||||
| Philadelphia (City of) Industrial Development Authority (New Foundations Charter School); |
6.63 | % | 12/15/2041 | 750 | 841,995 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Pennsylvania Tax Free Income Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| Pennsylvania–(continued) | ||||||||||||||||
| Philadelphia (City of) Industrial Development Authority (Performing Arts Charter School); |
6.50 | % | 06/15/2033 | $ | 945 | $ | 1,008,627 | |||||||||
| Philadelphia (City of); |
||||||||||||||||
| Ninth Series 2010, Gas Works RB |
5.25 | % | 08/01/2040 | 1,000 | 1,122,450 | |||||||||||
| Series 2009 A, Ref. Unlimited Tax GO Bonds (INS–AGC)(a) |
5.50 | % | 08/01/2024 | 1,000 | 1,146,230 | |||||||||||
| Series 2010 C, Water & Wastewater RB (INS–AGM)(a) |
5.00 | % | 08/01/2035 | 1,250 | 1,408,075 | |||||||||||
| Series 2011, Unlimited Tax GO Bonds |
6.00 | % | 08/01/2036 | 500 | 579,275 | |||||||||||
| Philadelphia (State of) Authority for Industrial Development (Cultural and Commercials Corridors); Series 2016, Ref. City Agreement RB |
5.00 | % | 12/01/2031 | 840 | 974,971 | |||||||||||
| Philadelphia (State of) Authority for Industrial Development (Temple University); First Series 2015, Ref. RB |
5.00 | % | 04/01/2045 | 530 | 600,686 | |||||||||||
| Philadelphia School District; Series 2008 E, Limited Tax GO Bonds (INS–BHAC)(a) |
5.13 | % | 09/01/2023 | 1,500 | 1,650,735 | |||||||||||
| Pittsburgh (City of) & Allegheny (County of) Sports & Exhibition Authority (Regional Asset District); Series 2010, Ref. Sales Tax RB (INS–AGM)(a) |
5.00 | % | 02/01/2031 | 1,000 | 1,135,880 | |||||||||||
| Pittsburgh (City of) Water & Sewer Authority; Series 2013 A, Ref. First Lien RB |
5.00 | % | 09/01/2031 | 500 | 579,130 | |||||||||||
| Southcentral (Region of) General Authority (Wellspan Health Obligated Group); Series 2014, Ref. RB(b) |
5.00 | % | 06/01/2044 | 3,180 | 3,582,429 | |||||||||||
| State Public School Building Authority (Harrisburg School District); |
||||||||||||||||
| Series 2009, RB(c)(d) |
5.00 | % | 05/15/2019 | 165 | 186,996 | |||||||||||
| Series 2009, RB (INS–AGC)(a) |
5.00 | % | 11/15/2033 | 835 | 913,707 | |||||||||||
| Susquehanna Area Regional Airport Authority; Series 2012 A, Airport System RB(e) |
5.00 | % | 01/01/2027 | 1,185 | 1,310,432 | |||||||||||
| Union (County of) Hospital Authority (Evangelical Community Hospital); Series 2011, Ref. & Improvement RB |
7.00 | % | 08/01/2041 | 1,000 | 1,188,570 | |||||||||||
| Washington (County of) Industrial Development Authority (Washington Jefferson College); Series 2010, College RB |
5.25 | % | 11/01/2030 | 500 | 568,595 | |||||||||||
| Washington (County of) Redevelopment Authority (Victory Centre Tanger Outlet Development); Series 2006 A, Tax Allocation RB |
5.45 | % | 07/01/2035 | 1,355 | 1,373,536 | |||||||||||
| Westmoreland (County of) Municipal Authority; Series 2013, RB |
5.00 | % | 08/15/2031 | 750 | 868,050 | |||||||||||
| Wilkes-Barre (City of) Finance Authority (University of Scranton); Series 2010, RB |
5.00 | % | 11/01/2040 | 850 | 955,289 | |||||||||||
| 126,762,358 | ||||||||||||||||
| Guam–3.64% | ||||||||||||||||
| Guam (Territory of) (Section 30); Series 2009 A, Limited Obligation RB |
5.75 | % | 12/01/2034 | 1,250 | 1,390,437 | |||||||||||
| Guam (Territory of) Power Authority; |
||||||||||||||||
| Series 2010 A, RB |
5.50 | % | 10/01/2040 | 410 | 452,517 | |||||||||||
| Series 2012 A, Ref. RB |
5.00 | % | 10/01/2034 | 520 | 567,128 | |||||||||||
| Guam (Territory of) Waterworks Authority; |
||||||||||||||||
| Series 2010, Water & Wastewater System RB |
5.63 | % | 07/01/2040 | 1,000 | 1,105,580 | |||||||||||
| Series 2014 A, Ref. Water & Wastewater System RB |
5.00 | % | 07/01/2029 | 285 | 326,202 | |||||||||||
| Guam (Territory of); Series 2011 A, Business Privilege Tax RB |
5.13 | % | 01/01/2042 | 785 | 860,925 | |||||||||||
| 4,702,789 | ||||||||||||||||
| Virgin Islands–1.58% | ||||||||||||||||
| Virgin Islands (Government of) Port Authority; Series 2014 A, Ref. Marine RB(e) |
5.00 | % | 09/01/2029 | 575 | 657,208 | |||||||||||
| Virgin Islands (Government of) Public Finance Authority (Matching Fund Loan Note — Diageo); Series 2009 A, Sub. RB |
6.63 | % | 10/01/2029 | 750 | 838,440 | |||||||||||
| Virgin Islands (Government of) Public Finance Authority (Matching Fund Loan Note); Series 2010 A, Sr. Lien RB |
5.00 | % | 10/01/2029 | 500 | 544,350 | |||||||||||
| 2,039,998 | ||||||||||||||||
| TOTAL INVESTMENTS(k)–103.25% (Cost $124,199,216) |
133,505,145 | |||||||||||||||
| FLOATING RATE NOTE OBLIGATIONS–(5.05)% |
||||||||||||||||
| Notes with interest and fee rates ranging from 0.54% to 0.65% at 02/29/2016 and contractual maturities of collateral ranging from 06/15/2034 to 12/01/2045 (See Note 1J)(l) |
(6,530,000 | ) | ||||||||||||||
| OTHER ASSETS LESS LIABILITIES–1.80% |
2,330,583 | |||||||||||||||
| NET ASSETS–100.00% |
$ | 129,305,728 | ||||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Pennsylvania Tax Free Income Fund
Investment Abbreviations:
Notes to Schedule of Investments:
| (a) | Principal and/or interest payments are secured by the bond insurance company listed. |
| (b) | Underlying security related to TOB Trusts entered into by the Fund. See Note 1J. |
| (c) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
| (d) | Advance refunded; secured by an escrow fund of U.S. Government obligations or other highly rated collateral. |
| (e) | Security subject to the alternative minimum tax. |
| (f) | Demand security payable upon demand by the Fund at specified time intervals no greater than thirteen months. Interest rate is redetermined periodically. Rate shown is the rate in effect on February 29, 2016. |
| (g) | Principal and interest payments are fully enhanced by a letter of credit from the bank listed or a predecessor bank, branch or subsidiary. |
| (h) | Convertible CAB. The interest rate shown represents the coupon rate at which the bond will accrue at a specified future date. |
| (i) | Zero coupon bond issued at a discount. |
| (j) | 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 February 29, 2016 was $1,669,414, which represented 1.29% of the Fund’s Net Assets. |
| (k) | This table provides a listing of those entities that have either issued, guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the securities held in the portfolio. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the issuer’s obligations but may be called upon to satisfy the issuer’s obligations. |
| Entity | Percentage | |||
| Assured Guaranty Municipal Corp. |
6.6 | % | ||
| (l) | Floating rate note obligations related to securities held. The interest and fee rates shown reflect the rates in effect at February 29, 2016. At February 29, 2016, the Fund’s investments with a value of $11,155,991 are held by TOB Trusts and serve as collateral for the $6,530,000 in the floating rate note obligations outstanding at that date. |
Portfolio Composition
By credit sector, based on Total Investments
as of February 29, 2016
| Revenue Bonds |
86.9 | % | ||
| GO Bonds |
7.5 | |||
| Prerefunded Bonds |
2.8 | |||
| Others |
2.8 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Pennsylvania Tax Free Income Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Pennsylvania Tax Free Income Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Interest |
$ | 2,892,329 | ||
| Expenses: |
| |||
| Advisory fees |
315,405 | |||
| Administrative services fees |
24,863 | |||
| Custodian fees |
1,625 | |||
| Distribution fees: |
||||
| Class A |
139,676 | |||
| Class B |
1,520 | |||
| Class C |
47,625 | |||
| Interest, facilities and maintenance fees |
25,975 | |||
| Transfer agent fees |
51,715 | |||
| Trustees’ and officers’ fees and benefits |
10,366 | |||
| Professional services fees |
35,590 | |||
| Other |
56,237 | |||
| Total expenses |
710,597 | |||
| Net investment income |
2,181,732 | |||
| Realized and unrealized gain (loss) from: |
| |||
| Net realized gain (loss) from investment securities |
(33,487 | ) | ||
| Change in net unrealized appreciation of investment securities |
1,613,040 | |||
| Net realized and unrealized gain |
1,579,553 | |||
| Net increase in net assets resulting from operations |
$ | 3,761,285 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Pennsylvania Tax Free Income Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
|
|||||||
| Net investment income |
$ | 2,181,732 | $ | 4,525,939 | ||||
| Net realized gain (loss) |
(33,487 | ) | (792,529 | ) | ||||
| Change in net unrealized appreciation |
1,613,040 | 140,483 | ||||||
| Net increase in net assets resulting from operations |
3,761,285 | 3,873,893 | ||||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(2,016,679 | ) | (3,880,981 | ) | ||||
| Class B |
(22,003 | ) | (49,222 | ) | ||||
| Class C |
(136,819 | ) | (264,372 | ) | ||||
| Class Y |
(67,792 | ) | (115,097 | ) | ||||
| Total distributions from net investment income |
(2,243,293 | ) | (4,309,672 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
630,643 | (1,083,200 | ) | |||||
| Class B |
(64,016 | ) | (293,384 | ) | ||||
| Class C |
343,835 | (281,205 | ) | |||||
| Class Y |
409,341 | 627,640 | ||||||
| Net increase (decrease) in net assets resulting from share transactions |
1,319,803 | (1,030,149 | ) | |||||
| Net increase (decrease) in net assets |
2,837,795 | (1,465,928 | ) | |||||
| Net assets: |
||||||||
| Beginning of period |
126,467,933 | 127,933,861 | ||||||
| End of period (includes undistributed net investment income of $503,893 and $565,454, respectively) |
$ | 129,305,728 | $ | 126,467,933 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Pennsylvania Tax Free Income Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is to provide only Pennsylvania investors with a high level of current income exempt from federal and Pennsylvania state income taxes and, where possible under local law, local income and personal property taxes, through investment in a varied portfolio of medium- and lower-grade municipal securities.
The Fund currently consists of four different classes of shares: Class A, Class B, Class C and Class Y. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
Securities are fair valued using an evaluated quote provided by an independent pricing service approved by the Board of Trustees. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, 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. 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.
12 Invesco Pennsylvania Tax Free Income Fund
Securities for which market quotations either are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Some of the factors which may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on transferability or disposition; trading in similar securities by the same issuer or comparable companies; relevant political, economic or issuer specific news; and other relevant factors under the circumstances.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
| C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable and tax-exempt 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.
In addition, the Fund intends to invest in such municipal securities to allow it to qualify to pay shareholders “exempt-interest dividends”, as defined in the Internal Revenue Code.
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. | Interest, Facilities and Maintenance Fees — Interest, Facilities and Maintenance Fees include interest and related borrowing costs such as commitment fees and other expenses associated with lines of credit and interest and administrative expenses related to establishing and maintaining floating rate note obligations, if any. |
| 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. |
13 Invesco Pennsylvania Tax Free Income Fund
| 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. | Floating Rate Note Obligations — The Fund invests in inverse floating rate securities, such as Tender Option Bonds (“TOBs”), for investment purposes and to enhance the yield of the Fund. Such securities may be purchased in the secondary market without first owning an underlying bond but generally are created through the sale of fixed rate bonds by the Fund to special purpose trusts established by a broker dealer or by the Fund (“TOB Trusts”) in exchange for cash and residual interests in the TOB Trusts’ assets and cash flows, which are in the form of inverse floating rate securities. The TOB Trusts finance the purchases of the fixed rate bonds by issuing floating rate notes to third parties and allowing the Fund to retain residual interests in the bonds. The floating rate notes issued by the TOB Trusts have interest rates that reset weekly and the floating rate note holders have the option to tender their notes to the TOB Trusts for redemption at par at each reset date. The residual interests held by the Fund (inverse floating rate securities) include the right of the Fund (1) to cause the holders of the floating rate notes to tender their notes at par at the next interest rate reset date, and (2) to transfer the municipal bond from the TOB Trust to the Fund, thereby collapsing the TOB Trust. Inverse floating rate securities tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. |
The Fund generally invests in inverse floating rate securities that include embedded leverage, thus exposing the Fund to greater risks and increased costs. The primary risks associated with inverse floating rate securities are varying degrees of liquidity and decreases in the value of such securities in response to changes in interest rates to a greater extent than fixed rate securities having similar credit quality, redemption provisions and maturity, which may cause the Fund’s net asset value to be more volatile than if it had not invested in inverse floating rate securities. In certain instances, the short-term floating rate notes created by the TOB Trust may not be able to be sold to third parties or, in the case of holders tendering (or putting) such notes for repayment of principal, may not be able to be remarketed to third parties. In such cases, the TOB Trust holding the fixed rate bonds may be collapsed with the entity that contributed the fixed rate bonds to the TOB Trust. In the case where a TOB Trust is collapsed with the Fund, the Fund will be required to repay the principal amount of the tendered securities, which may require the Fund to sell other portfolio holdings to raise cash to meet that obligation. The Fund could therefore be required to sell other portfolio holdings at a disadvantageous time or price to raise cash to meet this obligation, which risk will be heightened during times of market volatility, illiquidity or uncertainty. The embedded leverage in the TOB Trust could cause the Fund to lose more money than the value of the asset it has contributed to the TOB Trust and greater levels of leverage create the potential for greater losses. In addition, a Fund may enter into reimbursement agreements with the liquidity provider of certain TOB transactions in connection with certain residuals held by the Fund. These agreements commit a Fund to reimburse the liquidity provider to the extent that the liquidity provider must provide cash to a TOB Trust, including following the termination of a TOB Trust resulting from a mandatory tender event (“liquidity shortfall”). The reimbursement agreement will effectively make the Fund liable for the amount of the negative difference, if any, between the liquidation value of the underlying security and the purchase price of the floating rate notes issued by the TOB Trust.
The Fund accounts for the transfer of fixed rate bonds to the TOB Trusts as secured borrowings, with the securities transferred remaining in the Fund’s investment assets, and the related floating rate notes reflected as Fund liabilities under the caption Floating rate note obligations on the Statement of Assets and Liabilities. The Fund records the interest income from the fixed rate bonds under the caption Interest and records the expenses related to floating rate obligations and any administrative expenses of the TOB Trusts as a component of Interest, facilities and maintenance fees on the Statement of Operations.
Final rules implementing section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”) prohibit banking entities from engaging in proprietary trading of certain instruments and limit such entities’ investments in, and relationships with, “covered funds”, as defined in the rules. These rules preclude banking entities and their affiliates from sponsoring and/or providing services for existing TOB Trusts. A new TOB structure is being utilized by the Fund wherein the Fund, as holder of the residuals, will perform certain duties previously performed by banking entities as “sponsors” of TOB Trusts. These duties may be performed by a third-party service provider. The Fund’s expanded role under the new TOB structure may increase its operational and regulatory risk. The new structure is substantially similar to the previous structure; however, pursuant to the Volcker Rule, the remarketing agent would not be able to repurchase tendered floaters for its own account upon a failed remarketing. In the event of a failed remarketing, a banking entity serving as liquidity provider may loan the necessary funds to the TOB Trust to purchase the tendered floaters. The TOB Trust, not the Fund, would be the borrower and the loan from the liquidity provider will be secured by the purchased floaters now held by the TOB Trust. However, as previously described, the Fund would bear the risk of loss with respect to any liquidity shortfall to the extent it entered into a reimbursement agreement with the liquidity provider.
There can be no assurances that the new TOB structure will continue to be a viable form of leverage. Further, there can be no assurances that alternative forms of leverage will be available to the Fund in order to maintain current levels of leverage. Any alternative forms of leverage may be less advantageous to the Fund, and may adversely affect the Fund’s net asset value, distribution rate and ability to achieve its investment objective.
TOBs are presently classified as private placement securities. Private placement securities are subject to restrictions on resale because they have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), or are otherwise not readily marketable. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. Although atypical, these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Fund or less than what may be considered the fair value of such securities.
| K. | Other Risks — The value of, payment of interest on, repayment of principal for and the ability to sell a municipal security may be affected by constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives and the economics of the regions in which the issuers are located. |
Since many municipal securities are issued to finance similar projects, especially those relating to education, health care, transportation and utilities, conditions in those sectors can affect the overall municipal securities market and the Fund’s investments in municipal securities.
There is some risk that a portion or all of the interest received from certain tax-free municipal securities could become taxable as a result of determinations by the Internal Revenue Service.
14 Invesco Pennsylvania Tax Free Income Fund
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||
| First $500 million |
0.50% | |||
| Over $500 million |
0.40% | |||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.50%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C and Class Y shares to 1.50%, 2.25%, 2.25% and 1.25%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest, facilities and maintenance fees; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, the expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A shares, Class B shares and Class C shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets and up to 1.00% each of Class B and Class C average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the six months ended February 29, 2016, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $6,520 in front-end sales commissions from the sale of Class A shares and $3,677, $0 and $258 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. |
15 Invesco Pennsylvania Tax Free Income Fund
| Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of February 29, 2016, 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—Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the six months ended February 29, 2016, the Fund engaged in securities purchases of $3,800,016, which did not result in any realized gain (loss).
NOTE 5—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6—Cash Balances and Borrowings
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company (“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.
Inverse floating rate obligations resulting from the transfer of bonds to TOB Trusts are accounted for as secured borrowings. The average floating rate notes outstanding and average annual interest and fee rate related to inverse floating rate note obligations during the six months ended February 29, 2016 were $6,530,000 and 0.80%, respectively.
NOTE 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of August 31, 2015, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| August 31, 2017 |
$ | 5,564,499 | $ | — | $ | 5,564,499 | ||||||
| August 31, 2018 |
1,085,533 | — | 1,085,533 | |||||||||
| Not subject to expiration |
426,981 | 3,200,175 | 3,627,156 | |||||||||
| $ | 7,077,013 | $ | 3,200,175 | $ | 10,277,188 | |||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
16 Invesco Pennsylvania Tax Free Income Fund
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $4,921,581 and $8,715,075, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 10,861,975 | ||
| Aggregate unrealized (depreciation) of investment securities |
(1,383,176 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 9,478,799 | ||
Cost of investments for tax purposes is $124,026,346.
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
284,323 | $ | 4,711,957 | 464,914 | $ | 7,705,345 | ||||||||||
| Class B |
— | — | 529 | 8,818 | ||||||||||||
| Class C |
36,355 | 604,837 | 56,650 | 939,389 | ||||||||||||
| Class Y |
24,412 | 405,050 | 48,185 | 801,208 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
80,020 | 1,326,322 | 150,694 | 2,495,101 | ||||||||||||
| Class B |
482 | 8,030 | 1,125 | 18,669 | ||||||||||||
| Class C |
4,961 | 82,340 | 9,544 | 158,254 | ||||||||||||
| Class Y |
1,952 | 32,412 | 3,529 | 58,463 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
1,380 | 22,740 | 10,583 | 175,149 | ||||||||||||
| Class B |
(1,377 | ) | (22,740 | ) | (10,560 | ) | (175,149 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(328,382 | ) | (5,430,376 | ) | (691,815 | ) | (11,458,795 | ) | ||||||||
| Class B |
(2,968 | ) | (49,306 | ) | (8,776 | ) | (145,722 | ) | ||||||||
| Class C |
(20,747 | ) | (343,342 | ) | (82,985 | ) | (1,378,848 | ) | ||||||||
| Class Y |
(1,695 | ) | (28,121 | ) | (14,088 | ) | (232,031 | ) | ||||||||
| Net increase (decrease) in share activity |
78,716 | $ | 1,319,803 | (62,471 | ) | $ | (1,030,149 | ) | ||||||||
| (a) | 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. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
17 Invesco Pennsylvania Tax Free Income Fund
NOTE 10—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Net asset value, end |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Supplemental Ratio: Ratio of expenses to average net assets (excluding interest, facilities and maintenance fees) |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||
| Class A |
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 16.44 | $ | 0.29 | $ | 0.21 | $ | 0.50 | $ | (0.30 | ) | $ | 16.64 | 3.04 | % | $ | 114,389 | 1.08 | %(d) | 1.04 | %(d) | 3.51 | %(d) | 4 | % | |||||||||||||||||||||||
| Year ended 08/31/15 |
16.50 | 0.59 | (0.09 | ) | 0.50 | (0.56 | ) | 16.44 | 3.09 | 112,409 | 1.12 | 1.09 | 3.59 | 13 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
15.39 | 0.62 | 1.09 | 1.71 | (0.60 | ) | 16.50 | 11.33 | 113,872 | 1.09 | 1.07 | 3.93 | 10 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
17.05 | 0.63 | (1.65 | ) | (1.02 | ) | (0.64 | ) | 15.39 | (6.24 | ) | 118,936 | 1.03 | 1.01 | 3.72 | 17 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
15.85 | 0.68 | 1.19 | 1.87 | (0.67 | ) | 17.05 | 12.04 | 137,146 | 1.03 | 1.01 | 4.13 | 11 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
16.29 | 0.70 | (0.47 | ) | 0.23 | (0.67 | ) | 15.85 | 1.58 | 130,344 | 1.02 | 1.00 | 4.47 | 13 | ||||||||||||||||||||||||||||||||||
| Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
16.48 | 0.29 | 0.20 | 0.49 | (0.30 | ) | 16.67 | 2.99 | (e) | 1,198 | 1.08 | (d)(e) | 1.04 | (d)(e) | 3.51 | (d)(e) | 4 | |||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
16.53 | 0.60 | (0.09 | ) | 0.51 | (0.56 | ) | 16.48 | 3.15 | (e) | 1,247 | 1.12 | (e) | 1.09 | (e) | 3.59 | (e) | 13 | ||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
15.42 | 0.63 | 1.08 | 1.71 | (0.60 | ) | 16.53 | 11.32 | (e) | 1,544 | 1.09 | (e) | 1.07 | (e) | 3.93 | (e) | 10 | |||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
17.09 | 0.63 | (1.66 | ) | (1.03 | ) | (0.64 | ) | 15.42 | (6.28 | )(e) | 1,717 | 1.03 | (e) | 1.01 | (e) | 3.72 | (e) | 17 | |||||||||||||||||||||||||||||
| Year ended 08/31/12 |
15.86 | 0.71 | 1.19 | 1.90 | (0.67 | ) | 17.09 | 12.22 | 2,430 | 0.86 | 0.84 | 4.30 | 11 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
16.23 | 0.70 | (0.45 | ) | 0.25 | (0.62 | ) | 15.86 | 1.68 | (e) | 3,062 | 1.02 | (e) | 1.00 | (e) | 4.47 | (e) | 13 | ||||||||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
16.46 | 0.23 | 0.21 | 0.44 | (0.24 | ) | 16.66 | 2.67 | 9,944 | 1.83 | (d) | 1.79 | (d) | 2.76 | (d) | 4 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
16.53 | 0.47 | (0.09 | ) | 0.38 | (0.45 | ) | 16.46 | 2.33 | 9,488 | 1.87 | 1.84 | 2.84 | 13 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
15.41 | 0.51 | 1.09 | 1.60 | (0.48 | ) | 16.53 | 10.56 | (f) | 9,804 | 1.81 | (f) | 1.79 | (f) | 3.21 | (f) | 10 | |||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
17.08 | 0.50 | (1.66 | ) | (1.16 | ) | (0.51 | ) | 15.41 | (7.00 | ) | 10,838 | 1.78 | 1.76 | 2.97 | 17 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
15.88 | 0.56 | 1.19 | 1.75 | (0.55 | ) | 17.08 | 11.19 | 11,020 | 1.78 | 1.76 | 3.38 | 11 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
16.31 | 0.58 | (0.45 | ) | 0.13 | (0.56 | ) | 15.88 | 0.89 | 9,670 | 1.77 | 1.75 | 3.72 | 13 | ||||||||||||||||||||||||||||||||||
| Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
16.46 | 0.31 | 0.21 | 0.52 | (0.32 | ) | 16.66 | 3.18 | 3,774 | 0.83 | (d) | 0.79 | (d) | 3.76 | (d) | 4 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/15 |
16.51 | 0.64 | (0.08 | ) | 0.56 | (0.61 | ) | 16.46 | 3.41 | 3,323 | 0.87 | 0.84 | 3.84 | 13 | ||||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
15.40 | 0.66 | 1.09 | 1.75 | (0.64 | ) | 16.51 | 11.60 | 2,713 | 0.84 | 0.82 | 4.18 | 10 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
17.06 | 0.67 | (1.65 | ) | (0.98 | ) | (0.68 | ) | 15.40 | (6.00 | ) | 2,562 | 0.78 | 0.76 | 3.97 | 17 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
15.86 | 0.73 | 1.18 | 1.91 | (0.71 | ) | 17.06 | 12.31 | 1,298 | 0.78 | 0.76 | 4.38 | 11 | |||||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
16.30 | 0.74 | (0.47 | ) | 0.27 | (0.71 | ) | 15.86 | 1.84 | 179 | 0.77 | 0.75 | 4.72 | 13 | ||||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $112,534, $1,223, $9,577 and $3,521 for Class A, Class B, Class C and Class Y shares, respectively. |
| (e) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.25%, 0.25%, 0.25%, 0.25% and 0.25% for the six months ended February 29, 2016 and the years ended August 31, 2015, August 31, 2014, August 31, 2013 and August 31, 2011, respectively. |
| (f) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.97% for the year ended August 31, 2014. |
18 Invesco Pennsylvania Tax Free Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 1,030.40 | $ | 5.45 | $ | 1,019.49 | $ | 5.42 | 1.08 | % | ||||||||||||
| B | 1,000.00 | 1,029.90 | 5.45 | 1,019.49 | 5.42 | 1.08 | ||||||||||||||||||
| C | 1,000.00 | 1,026.70 | 9.22 | 1,015.76 | 9.17 | 1.83 | ||||||||||||||||||
| Y | 1,000.00 | 1,031.80 | 4.19 | 1,020.74 | 4.17 | 0.83 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
19 Invesco Pennsylvania Tax Free Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 VK-PTFI-SAR-1 Invesco Distributors, Inc.
|
| ||||
|
|
Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco Short Duration High Yield Municipal Fund | ||||
|
Nasdaq: |
||||
| A: ISHAX ¡ C: ISHCX ¡ Y: ISHYX ¡ R5: ISHFX | ||||
|
| |||||
|
2 |
Fund Performance | ||||
| 3
|
Letters to Shareholders | ||||
| 4
|
Schedule of Investments | ||||
|
8 |
Financial Statements | ||||
|
10 |
Notes to Financial Statements | ||||
| 14
|
Financial Highlights | ||||
| 15
|
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 9/30/15 to 2/29/16, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
| Class A Shares | 3.05 | % | |||
| Class C Shares | 2.66 | ||||
| Class Y Shares | 3.11 | ||||
| Class R5 Shares | 3.11 | ||||
| S&P Municipal Bond High Yield Index▼ (Broad Market Index) | 2.80 | ||||
| Custom Invesco Short Duration High Yield Municipal Index¡ (Style-Specific Index) | 2.22 | ||||
| Lipper High Yield Municipal Debt Funds Index¿ (Peer Group Index) | 3.44 |
Source(s): ▼FactSet Research Systems Inc.; ¡Invesco, FactSet Research Systems Inc.; ¿Lipper Inc.
The S&P Municipal Bond High Yield Index consists of bonds in the S&P Municipal Bond Index that are not rated or are rated below investment grade.
The Custom Invesco Short Duration High Yield Municipal Index consists of 60% S&P Municipal Bond High Yield Index and 40% S&P Municipal Bond Short Index.
The Lipper High Yield Municipal Debt Funds Index is an unmanaged index considered representative of high-yield municipal debt funds tracked by Lipper.
The S&P Municipal Bond Index is a broad, market value-weighted index that seeks to measure the performance of the US municipal bond market.
The S&P Municipal Bond Short Index consists of bonds in the S&P Municipal Bond Index with a minimum maturity of six months and a maximum maturity of four years.
The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es).
A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.
2 Invesco Short Duration High Yield Municipal Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
3 Invesco Short Duration High Yield Municipal Fund
Schedule of Investments
February 29, 2016
(Unaudited)
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| Municipal Obligations–99.88% |
|
|||||||||||||||
| Alabama–1.80% | ||||||||||||||||
| Birmingham (City of) Special Care Facilities Financing Authority (Methodist Home for the Aging); Series 2016, RB |
5.25 | % | 06/01/2025 | $ | 500 | $ | 508,760 | |||||||||
| Huntsville (City of) Special Care Facilities Financing Authority (Redstone Village); Series 2007, RB |
5.50 | % | 01/01/2028 | 100 | 100,685 | |||||||||||
| 609,445 | ||||||||||||||||
| Arizona–1.50% | ||||||||||||||||
| Pima (County of) Industrial Development Authority (Americal Leadership); Series 2015, Ref. Education Facility RB(a) |
4.60 | % | 06/15/2025 | 500 | 506,995 | |||||||||||
| California–6.33% | ||||||||||||||||
| California (State of) Pollution Control Financing Authority (Aemerge Redpack Services LLC); Series 2016, Solid Waste Disposal RB(a)(b) |
7.00 | % | 12/01/2027 | 500 | 500,835 | |||||||||||
| California (State of) Statewide Communities Development Authority (Creative Child Care & Team Charter); Series 2015, School Facilities RB (Acquired 11/03/2015; Cost $545,000)(a) |
5.00 | % | 06/01/2022 | 545 | 552,592 | |||||||||||
| California County Tobacco Securitization Agency (The) (Sonoma County Securitization Corp.); Series 2005, Ref. Tobacco Settlement Asset-Backed RB |
5.13 | % | 06/01/2038 | 90 | 88,654 | |||||||||||
| Golden State Tobacco Securitization Corp.; Series 2007 A-1, Sr. Tobacco Settlement Asset-Backed RB |
4.50 | % | 06/01/2027 | 655 | 657,423 | |||||||||||
| Inland Empire Tobacco Securitization Authority; Series 2007 A, Tobacco Settlement RB |
4.63 | % | 06/01/2021 | 345 | 346,349 | |||||||||||
| 2,145,853 | ||||||||||||||||
| Colorado–1.99% | ||||||||||||||||
| Colorado (State of) Health Facilities Authority (Sunny Vista Living Center); Series 2015 A, Ref. RB |
5.00 | % | 12/01/2025 | 150 | 151,720 | |||||||||||
| Copperleaf Metropolitan District No. 2; Series 2015, Ref. Unlimited Tax GO Bonds |
5.25 | % | 12/01/2030 | 500 | 524,180 | |||||||||||
| 675,900 | ||||||||||||||||
| Florida–4.79% | ||||||||||||||||
| Alachua (County of) (North Florida Retirement Village, Inc.); Series 2007, IDR |
5.63 | % | 11/15/2022 | 150 | 154,434 | |||||||||||
| Cape Coral (City of) Health Facilities Authority (Gulf Care Inc.); Series 2015, Ref. Senior Housing RB(a) |
3.75 | % | 07/01/2019 | 495 | 499,861 | |||||||||||
| Lee (County of) Industrial Development Authority (Cypress Cove Healthpark); Series 2012, Ref. RB |
4.75 | % | 10/01/2022 | 315 | 341,454 | |||||||||||
| Palm Beach (County of) Health Facilities Authority (Sinai Residences of Boca Raton); Series 2014, RB |
6.00 | % | 06/01/2021 | 600 | 627,378 | |||||||||||
| 1,623,127 | ||||||||||||||||
| Illinois–9.72% | ||||||||||||||||
| Chicago (City of); |
||||||||||||||||
| Series 2008 C, Ref. Second Lien Wastewater Transmission RB |
5.00 | % | 01/01/2020 | 200 | 222,608 | |||||||||||
| Series 2009 D, Unlimited Tax GO Bonds |
5.00 | % | 01/01/2020 | 100 | 103,687 | |||||||||||
| Series 2010 A, Ref. Unlimited Tax GO Bonds |
4.00 | % | 01/01/2022 | 110 | 109,260 | |||||||||||
| Series 2010 A, Ref. Unlimited Tax GO Bonds (INS–AGM)(c) |
5.00 | % | 01/01/2029 | 500 | 529,835 | |||||||||||
| Series 2014 A, Ref. Unlimited Tax GO Bonds |
5.25 | % | 01/01/2028 | 100 | 102,053 | |||||||||||
| Illinois (State of) Finance Authority (Greenfields of Geneva); Series 2010 C-1, TEMPS-75SM RB |
7.00 | % | 02/15/2017 | 100 | 94,175 | |||||||||||
| Illinois (State of) Finance Authority (Intrinsic Schools — Belmont School); Series 2015, Charter School RB(a) |
5.25 | % | 12/01/2025 | 400 | 405,784 | |||||||||||
| Illinois (State of) Finance Authority (Lutheran Home & Services); Series 2012, Ref. RB |
5.00 | % | 05/15/2022 | 480 | 511,027 | |||||||||||
| Illinois (State of) Finance Authority (Plymouth Place); |
||||||||||||||||
| Series 2015, Ref. RB |
2.75 | % | 05/15/2019 | 395 | 397,654 | |||||||||||
| Series 2015, Ref. RB |
5.00 | % | 05/15/2025 | 250 | 271,498 | |||||||||||
| Manhattan (Village of) Special Service Area No. 2004-1 (Brookstone Springs); Series 2015, Ref. Sr. Lien Special Tax RB |
4.25 | % | 03/01/2024 | 538 | 548,098 | |||||||||||
| 3,295,679 | ||||||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 Invesco Short Duration High Yield Municipal Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| Iowa–3.38% | ||||||||||||||||
| Iowa (State of) Finance Authority (Iowa Fertilizer Co.); Series 2013, Midwestern Disaster Area RB |
5.00 | % | 12/01/2019 | $ | 1,100 | $ | 1,146,321 | |||||||||
| Kansas–0.77% | ||||||||||||||||
| Olathe (City of) (West Village Center); Series 2007, Special Obligation Tax Increment Allocation RB |
5.30 | % | 09/01/2017 | 265 | 260,360 | |||||||||||
| Kentucky–1.83% | ||||||||||||||||
| Kentucky (State of) Economic Development Finance Authority (Rosedale Green); Series 2015, Ref. Health Care Facilities RB |
5.00 | % | 11/15/2025 | 600 | 621,438 | |||||||||||
| Massachusetts–1.72% | ||||||||||||||||
| Massachusetts (State of) Development Finance Agency (Evergreen Center Inc.); Series 2005, RB |
5.00 | % | 01/01/2024 | 250 | 250,357 | |||||||||||
| Massachusetts (State of) Port Authority (Delta Airlines Inc.); |
||||||||||||||||
| Series 2001 A, Facilities RB (INS–AMBAC)(b)(c) |
5.50 | % | 01/01/2019 | 135 | 135,354 | |||||||||||
| Series 2001 A, Facilities RB (INS–AMBAC)(b)(c) |
5.20 | % | 01/01/2020 | 195 | 195,511 | |||||||||||
| 581,222 | ||||||||||||||||
| Minnesota–3.09% | ||||||||||||||||
| Brooklyn Park (City of) (Athlos Leadership Academy); Series 2015, Charter School Lease RB |
4.00 | % | 07/01/2020 | 225 | 227,763 | |||||||||||
| Rochester (City of) (Homestead at Rochester, Inc.); Series 2015, Health Care & Housing RB |
5.00 | % | 12/01/2021 | 470 | 514,387 | |||||||||||
| St. Paul (City of) Housing & Redevelopment Authority (High School for Recording Arts); Series 2015, Charter School Lease RB |
5.13 | % | 10/01/2023 | 300 | 305,598 | |||||||||||
| 1,047,748 | ||||||||||||||||
| Missouri–1.08% | ||||||||||||||||
| Branson Hills Infrastructure Facilities Community Improvement District; Series 2007 A, Special Assessment RB |
5.00 | % | 04/01/2016 | 500 | 366,250 | |||||||||||
| Multiple States–11.05% | ||||||||||||||||
| Non-Profit Preferred Funding Trust I; |
||||||||||||||||
| Series 2006 A-2A, RB(a) |
4.38 | % | 09/15/2037 | 3,300 | 733,263 | |||||||||||
| Series 2007 A-2T, RB (Acquired 02/08/2016; Cost $3,015,064)(a) |
4.37 | % | 09/15/2037 | 13,470 | 3,013,564 | |||||||||||
| 3,746,827 | ||||||||||||||||
| New Jersey–12.87% | ||||||||||||||||
| New Jersey (State of) Economic Development Authority (Continental Airlines, Inc.); |
||||||||||||||||
| Series 1999, Special Facility RB(b) |
5.25 | % | 09/15/2029 | 800 | 878,576 | |||||||||||
| Series 2012, Special Facility RB(b) |
5.75 | % | 09/15/2027 | 200 | 221,648 | |||||||||||
| New Jersey (State of) Economic Development Authority; |
||||||||||||||||
| Series 2012, Ref. RB |
5.00 | % | 06/15/2019 | 400 | 434,100 | |||||||||||
| Series 2012, Ref. RB |
5.00 | % | 06/15/2025 | 600 | 651,288 | |||||||||||
| New Jersey (State of) Transportation Trust Fund Authority; |
||||||||||||||||
| Series 2006 A, Transportation System RB |
5.50 | % | 12/15/2023 | 595 | 684,577 | |||||||||||
| Series 2010 D, Transportation System RB |
5.25 | % | 12/15/2023 | 750 | 850,118 | |||||||||||
| Tobacco Settlement Financing Corp.; |
||||||||||||||||
| Series 2007 1-A, Asset-Backed RB |
4.50 | % | 06/01/2023 | 40 | 40,579 | |||||||||||
| Series 2007 1A, Asset-Backed RB |
4.63 | % | 06/01/2026 | 600 | 600,258 | |||||||||||
| 4,361,144 | ||||||||||||||||
| New York–4.51% | ||||||||||||||||
| Build NYC Resource Corp. (Pratt Paper Inc.); Series 2014, Ref. Waste Disposal RB(a)(b) |
3.75 | % | 01/01/2020 | 545 | 567,786 | |||||||||||
| Nassau (County of) Industrial Development Agency (Amsterdam at Harborside); Series 2014 B, Continuing Care Retirement Community RB |
5.50 | % | 07/01/2020 | 960 | 962,122 | |||||||||||
| 1,529,908 | ||||||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Short Duration High Yield Municipal Fund
| Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
| Ohio–5.77% | ||||||||||||||||
| Buckeye Tobacco Settlement Financing Authority; Series 2007 A-2, Sr. Asset-Backed Turbo RB |
5.13 | % | 06/01/2024 | $ | 800 | $ | 738,040 | |||||||||
| Muskingum (County of) (Genesis Healthcare System); Series 2013, Hospital Facilities RB |
5.00 | % | 02/15/2021 | 365 | 401,770 | |||||||||||
| Ohio (State of) (Portsmouth Bypass); Series 2015, Private Activity RB(b) |
5.00 | % | 12/31/2025 | 340 | 402,601 | |||||||||||
| Ohio (State of) Air Quality Development Authority (FirstEnergy Generation Corp.); Series 2008, Ref. PCR(b)(d) |
3.95 | % | 05/01/2020 | 400 | 414,596 | |||||||||||
| 1,957,007 | ||||||||||||||||
| Oklahoma–4.40% | ||||||||||||||||
| Comanche (County of) Hospital Authority; Series 2015, Ref. RB |
5.00 | % | 07/01/2023 | 1,000 | 1,105,150 | |||||||||||
| Tulsa (City of) Municipal Airport Trust (American Airlines Group, Inc.); Series 2015, Ref. RB(b)(d) |
5.00 | % | 06/01/2025 | 340 | 387,505 | |||||||||||
| 1,492,655 | ||||||||||||||||
| Pennsylvania–0.89% | ||||||||||||||||
| Pennsylvania (State of) Economic Development Financing Authority (Shippingport); Series 2006 A, Exempt Facilities RB(d) |
2.55 | % | 12/03/2018 | 300 | 300,153 | |||||||||||
| Rhode Island–1.72% | ||||||||||||||||
| Tobacco Settlement Financing Corp.; Series 2015 A, Ref. RB |
5.00 | % | 06/01/2026 | 500 | 582,695 | |||||||||||
| Tennessee–0.43% | ||||||||||||||||
| Tennessee Energy Acquisition Corp.; Series 2006 C, Gas RB |
5.00 | % | 02/01/2027 | 125 | 147,227 | |||||||||||
| Texas–13.95% | ||||||||||||||||
| Guadalupe (County of) & Seguin (City of) Hospital Board of Managers; |
||||||||||||||||
| Series 2015, Ref. Hospital Mortgage RB |
5.00 | % | 12/01/2021 | 450 | 501,764 | |||||||||||
| Series 2015, Ref. Hospital Mortgage RB |
5.00 | % | 12/01/2023 | 280 | 314,728 | |||||||||||
| Houston (City of) (United Airlines, Inc. Terminal E); Series 2014, Ref. Airport System RB(b) |
4.75 | % | 07/01/2024 | 200 | 223,922 | |||||||||||
| New Hope Cultural Education Facilities Corp. (Wesleyan Homes Inc.); Series 2014, Retirement Facilities RB |
4.00 | % | 01/01/2018 | 435 | 443,574 | |||||||||||
| Port Beaumont Navigation District (Jefferson Energy Companies); Series 2016, Dock and Wharf Facility RB(a)(b)(d) |
7.25 | % | 02/13/2020 | 1,500 | 1,499,235 | |||||||||||
| Red River Health Facilities Development Corp. (MRC Crossing); Series 2014 A, Retirement Facility RB |
6.75 | % | 11/15/2024 | 200 | 232,586 | |||||||||||
| Texas Municipal Gas Acquisition & Supply Corp. I; Series 2008 D, Sr. Lien Gas Supply RB |
6.25 | % | 12/15/2026 | 1,000 | 1,220,180 | |||||||||||
| Texas Municipal Gas Acquisition & Supply Corp. III; Series 2012, Gas Supply RB |
5.00 | % | 12/15/2021 | 250 | 290,850 | |||||||||||
| 4,726,839 | ||||||||||||||||
| West Virginia–5.96% | ||||||||||||||||
| Harrison (County of) Commission (Charles Pointe No. 2); Series 2008 A, Ref. Tax Increment Allocation RB |
6.50 | % | 06/01/2023 | 1,025 | 1,021,904 | |||||||||||
| West Virginia (State of) Economic Development Authority (Entsorga West Virginia LLC); Series 2016, Solid Waste Disposal Facilities RB(a)(b) |
6.75 | % | 02/01/2026 | 1,000 | 997,840 | |||||||||||
| 2,019,744 | ||||||||||||||||
| Wisconsin–0.33% | ||||||||||||||||
| Wisconsin (State of) Public Finance Authority (Glenridge Palmer Ranch); Series 2011 A, Continuing Care Retirement Community RB |
7.00 | % | 06/01/2020 | 100 | 113,002 | |||||||||||
| TOTAL INVESTMENTS(e)–99.88% (Cost $33,586,214) |
|
33,857,539 | ||||||||||||||
| OTHER ASSETS LESS LIABILITIES–0.12% |
|
39,614 | ||||||||||||||
| NET ASSETS–100.00% |
|
$ | 33,897,153 | |||||||||||||
Investment Abbreviations:
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Short Duration High Yield Municipal Fund
Notes to Schedule of Investments:
| (a) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at February 29, 2016 was $9,277,755, which represented 27.37% of the Fund’s Net Assets. |
| (b) | Security subject to the alternative minimum tax. |
| (c) | Principal and/or interest payments are secured by the bond insurance company listed. |
| (d) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
| (e) | Entities may either issue, guarantee, back or otherwise enhance the credit quality of a security. The entities are not primarily responsible for the issuer’s obligation but may be called upon to satisfy issuers obligations. No concentration of any single entity was greater than 5% each. |
The Fund is limited to investing 15% of net assets in illiquid securities at the time of purchase. The aggregate value of securities considered illiquid at February 29, 2016 was $3,920,691, which represented 11.57% of the Fund’s Net Assets.
Portfolio Composition
By credit sector, based on Total Investments
as of February 29, 2016
| Revenue Bonds |
96.0 | % | ||
| General Obligation Bonds |
4.0 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Short Duration High Yield Municipal Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Short Duration High Yield Municipal Fund
Statement of Operations
For the period September 30, 2015 (commencement date) through February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Interest |
$ | 369,182 | ||
| Expenses: |
||||
| Advisory fees |
44,479 | |||
| Administrative services fees |
20,902 | |||
| Custodian fees |
2,055 | |||
| Distribution fees: |
||||
| Class A |
11,813 | |||
| Class C |
7,160 | |||
| Transfer agent fees — A, C and Y |
3,925 | |||
| Transfer agent fees — R5 |
78 | |||
| Trustees’ and officers’ fees and benefits |
6,333 | |||
| Registration and filing fees |
27,662 | |||
| Professional services fees |
45,257 | |||
| Other |
14,078 | |||
| Total expenses |
183,742 | |||
| Less: Fees waived and expenses reimbursed |
(116,556 | ) | ||
| Net expenses |
67,186 | |||
| Net investment income |
301,996 | |||
| Realized and unrealized gain from: |
||||
| Net realized gain from investment securities |
3,148 | |||
| Change in net unrealized appreciation of investment securities |
271,325 | |||
| Net realized and unrealized gain |
274,473 | |||
| Net increase in net assets resulting from operations |
$ | 576,469 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Short Duration High Yield Municipal Fund
Statement of Changes in Net Assets
For the period September 30, 2015 (commencement date) through February 29, 2016
(Unaudited)
|
September 30, 2015 February 29, 2016 |
||||
| Operations: |
||||
| Net investment income |
$ | 301,996 | ||
| Net realized gain |
3,148 | |||
| Change in net unrealized appreciation |
271,325 | |||
| Net increase in net assets resulting from operations |
576,469 | |||
| Distributions to shareholders from net investment income: |
||||
| Class A |
(111,740 | ) | ||
| Class C |
(17,280 | ) | ||
| Class Y |
(74,567 | ) | ||
| Class R5 |
(2,453 | ) | ||
| Total distributions from net investment income |
(206,040 | ) | ||
| Share transactions–net: |
||||
| Class A |
17,975,672 | |||
| Class C |
5,036,014 | |||
| Class Y |
9,903,023 | |||
| Class R5 |
612,015 | |||
| Net increase in net assets resulting from share transactions |
33,526,724 | |||
| Net increase in net assets |
33,897,153 | |||
| Net assets: |
||||
| Beginning of period |
— | |||
| End of period (includes undistributed net investment income of $95,956) |
$ | 33,897,153 | ||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Short Duration High Yield Municipal Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund commenced operations on September 30, 2015.
The Fund’s investment objective is to seek federal tax-exempt current income and taxable capital appreciation.
The Fund currently consists of four different classes of shares: Class A, Class C, Class Y and Class R5. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y and Class R5 shares are sold at net asset value.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
Securities are fair valued using an evaluated quote provided by an independent pricing service approved by the Board of Trustees. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, 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. 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.
Securities for which market quotations either are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Some of the factors which may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on
10 Invesco Short Duration High Yield Municipal Fund
transferability or disposition; trading in similar securities by the same issuer or comparable companies; relevant political, economic or issuer specific news; and other relevant factors under the circumstances.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
| C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income, if any, are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable and tax-exempt 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.
In addition, the Fund intends to invest in such municipal securities to allow it to qualify to pay shareholders “exempt-interest dividends”, as defined in the Internal Revenue Code.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual 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. |
11 Invesco Short Duration High Yield Municipal Fund
| I. | Other Risks — The value of, payment of interest on, repayment of principal for and the ability to sell a municipal security may be affected by constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives and the economics of the regions in which the issuers are located. |
Since many municipal securities are issued to finance similar projects, especially those relating to education, health care, transportation and utilities, conditions in those sectors can affect the overall municipal securities market and the Fund’s investments in municipal securities.
There is some risk that a portion or all of the interest received from certain tax-free municipal securities could become taxable as a result of determinations by the Internal Revenue Service.
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.
The Fund may hold illiquid securities that is unable to sell at the preferred time or price and could lose its entire investment in such securities.
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||
| First $300 million |
0.50% | |||
| Next $300 million |
0.46% | |||
| Over $600 million |
0.42% | |||
For the period September 30, 2015 (commencement date) through February 29, 2016, the effective advisory fees incurred by the Fund was 0.50%.
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., Invesco Canada Ltd. and Invesco PowerShares Capital Management LLC (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may 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 December 31, 2016, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class Y and Class R5 shares to 0.79%, 1.54%, 0.54% and 0.54%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest, facilities and maintenance fees; (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 December 31, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without the approval of the Board of Trustees. To the extent that the annualized expense ratio does not exceed these expense limits, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
For the period September 30, 2015 (commencement date) through February 29, 2016, the Adviser waived advisory fees and reimbursed fund level expenses of $112,553 and reimbursed class level expenses of $2,103, $319, $1,503 and $78 of Class A, Class C, Class Y and Class R5 shares, respectively.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the period September 30, 2015 (commencement date) through February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the period September 30, 2015 (commencement date) through February 29, 2016, the expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class Y and Class R5 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A and Class C shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the period September 30, 2015 (commencement date) through February 29, 2016, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the period September 30, 2015 (commencement date) through February 29, 2016, IDI advised the Fund that IDI did not retain any front-end sales commissions from the sale of Class A shares or any CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
12 Invesco Short Duration High Yield Municipal Fund
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of February 29, 2016, 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—Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the period September 30, 2015 (commencement date) through February 29, 2016, the Fund engaged in securities purchases of $12,586,146 and securities sales of $10,000,099, which did not result in any realized gain (loss).
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.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the period September 30, 2015 (commencement date) through February 29, 2016 was $51,748,335 and $18,539,467, respectively. In a fund’s initial year of operations, the cost of investments for tax purposes will not reflect any tax adjustments until its fiscal year-end reporting period.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 402,740 | ||
| Aggregate unrealized (depreciation) of investment securities |
(131,415 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 271,325 | ||
Cost of investments is the same for tax and financial reporting purposes.
13 Invesco Short Duration High Yield Municipal Fund
NOTE 9—Share Information
| Summary of Share Activity | ||||||||
| September 30, 2015 (commencement date) through February 29, 2016(a) |
||||||||
| Shares | Amount | |||||||
| Sold: |
||||||||
| Class A |
1,861,603 | $ | 18,828,140 | |||||
| Class C |
515,261 | 5,245,376 | ||||||
| Class Y |
984,436 | 9,901,040 | ||||||
| Class R5 |
60,085 | 614,398 | ||||||
| Issued as reinvestment of dividends: |
||||||||
| Class A |
4,399 | 44,931 | ||||||
| Class C |
1,591 | 16,225 | ||||||
| Class Y |
584 | 5,966 | ||||||
| Class R5 |
231 | 2,362 | ||||||
| Reacquired: |
||||||||
| Class A |
(88,067 | ) | (897,399 | ) | ||||
| Class C |
(22,060 | ) | (225,587 | ) | ||||
| Class Y |
(389 | ) | (3,983 | ) | ||||
| Class R5 |
(463 | ) | (4,745 | ) | ||||
| Net increase in share activity |
3,317,211 | $ | 33,526,724 | |||||
| (a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 42% of the outstanding shares of the Fund. IDI has an agreement with this entity to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to this entity, which is considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by this entity are also owned beneficially. |
| In addition, 45% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are mutual funds that are advised by Invesco. |
NOTE 10—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 investment income(a) |
Net gains (both |
Total from operations |
Dividends income |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio of to average net
assets absorbed |
Ratio of assets without |
Ratio of net to average |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||||||||||||||||||||||
| Period ended 02/29/16(d) |
$ | 10.00 | $ | 0.14 | $ | 0.16 | $ | 0.30 | $ | (0.08 | ) | $ | 10.22 | 3.05 | % | $ | 18,170 | 0.79 | %(e) | 2.10 | %(e) | 3.36 | %(e) | 88 | % | |||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||
| Period ended 02/29/16(d) |
10.00 | 0.11 | 0.16 | 0.27 | (0.07 | ) | 10.20 | 2.66 | 5,049 | 1.54 | (e) | 2.85 | (e) | 2.61 | (e) | 88 | ||||||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||
| Period ended 02/29/16(d) |
10.00 | 0.15 | 0.16 | 0.31 | (0.09 | ) | 10.22 | 3.11 | 10,067 | 0.54 | (e) | 1.85 | (e) | 3.61 | (e) | 88 | ||||||||||||||||||||||||||||||||
| Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Period ended 02/29/16(d) |
10.00 | 0.15 | 0.16 | 0.31 | (0.09 | ) | 10.22 | 3.11 | 612 | 0.54 | (e) | 1.91 | (e) | 3.61 | (e) | 88 | ||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Commencement date of September 30, 2015. |
| (e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $11,303, $1,713, $8,076 and $188 for Class A, Class C, Class Y and Class R5 shares, respectively. |
14 Invesco Short Duration High Yield Municipal Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested as of close of business on September 30, 2015 (commencement date) and held through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period, as of close of business September 30, 2015 (commencement date) through February 29, 2016).
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending (02/29/16)1 |
Expenses Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period3 |
|||||||||||||||||||||
|
A |
$ | 1,000.00 | $ | 1,030.50 | $ | 3.35 | $ | 1,017.60 | $ | 3.33 | 0.79 | % | ||||||||||||
|
C |
1,000.00 | 1,026.60 | 6.52 | 1,014.46 | 6.48 | 1.54 | ||||||||||||||||||
|
Y |
1,000.00 | 1,031.10 | 2.29 | 1,018.64 | 2.28 | 0.54 | ||||||||||||||||||
|
R5 |
1,000.00 | 1,031.10 | 2.29 | 1,018.64 | 2.28 | 0.54 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 30, 2015 (commencement date) through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Actual expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 153 (as of close of business September 30, 2015 (commencement date) through February 29, 2016 )/366. Because the Fund has not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. |
| 3 | Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in the Fund and other funds because such data is based on a full six month period. |
15 Invesco Short Duration High Yield Municipal Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 SDHYM-SAR-1 Invesco Distributors, Inc.
|
| ||||
|
|
Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco Small Cap Discovery Fund
| ||||
| Nasdaq: | ||||
| A:VASCX ¡ B: VBSCX ¡ C: VCSCX ¡ Y: VISCX ¡ R5: VESCX ¡ R6: VFSCX | ||||
|
| ||||
|
2
|
Fund Performance
| |||
| 4
|
Letters to Shareholders | |||
| 5
|
Schedule of Investments
| |||
| 8
|
Financial Statements
| |||
| 10
|
Notes to Financial Statements
| |||
| 16
|
Financial Highlights
| |||
| 17 | Fund Expenses | |||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| ||||
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | ||||
Fund Performance
2 Invesco Small Cap Discovery Fund
3 Invesco Small Cap Discovery Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. |
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco Small Cap Discovery Fund
Schedule of Investments(a)
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Small Cap Discovery Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Small Cap Discovery Fund
Investment Abbreviations:
| ADR | – American Depositary Receipt |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at February 29, 2016. |
| (d) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
| (e) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
Portfolio Composition
By sector, based on Net Assets
as of February 29, 2016
| Information Technology |
23.1 | % | ||
| Health Care |
22.4 | |||
| Consumer Discretionary |
18.3 | |||
| Industrials |
15.6 | |||
| Financials |
7.5 | |||
| Materials |
2.5 | |||
| Consumer Staples |
1.7 | |||
| Energy |
1.6 | |||
| Money Market Funds Plus Other Assets Less Liabilities |
7.3 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Small Cap Discovery Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Small Cap Discovery Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $10,710) |
$ | 1,387,276 | ||
| Dividends from affiliated money market funds (includes securities lending income of $239,957) |
272,603 | |||
| Total investment income |
1,659,879 | |||
| Expenses: |
||||
| Advisory fees |
2,728,736 | |||
| Administrative services fees |
92,300 | |||
| Custodian fees |
7,261 | |||
| Distribution fees: |
||||
| Class A |
603,333 | |||
| Class B |
8,292 | |||
| Class C |
282,558 | |||
| Transfer agent fees — A, B, C and Y |
789,333 | |||
| Transfer agent fees — R5 |
2,352 | |||
| Transfer agent fees — R6 |
2,181 | |||
| Trustees’ and officers’ fees and benefits |
18,880 | |||
| Other |
112,195 | |||
| Total expenses |
4,647,421 | |||
| Less: Fees waived and expense offset arrangement(s) |
(21,513 | ) | ||
| Net expenses |
4,625,908 | |||
| Net investment income (loss) |
(2,966,029 | ) | ||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from investment securities |
(9,894,091 | ) | ||
| Change in net unrealized appreciation (depreciation) of investment securities |
(89,212,409 | ) | ||
| Net realized and unrealized gain (loss) |
(99,106,500 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (102,072,529 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Small Cap Discovery Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
|
|||||||
| Net investment income (loss) |
$ | (2,966,029 | ) | $ | (6,502,825 | ) | ||
| Net realized gain (loss) |
(9,894,091 | ) | 102,187,981 | |||||
| Change in net unrealized appreciation (depreciation) |
(89,212,409 | ) | (53,678,797 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(102,072,529 | ) | 42,006,359 | |||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
(70,507,205 | ) | (73,267,917 | ) | ||||
| Class B |
(1,062,060 | ) | (1,515,016 | ) | ||||
| Class C |
(10,017,635 | ) | (9,251,581 | ) | ||||
| Class Y |
(9,673,736 | ) | (15,070,292 | ) | ||||
| Class R5 |
(527,087 | ) | (6,371,266 | ) | ||||
| Class R6 |
(9,777,575 | ) | (15,078,987 | ) | ||||
| Total distributions from net realized gains |
(101,565,298 | ) | (120,555,059 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
58,237,214 | 35,689,215 | ||||||
| Class B |
(554,786 | ) | (1,525,306 | ) | ||||
| Class C |
3,341,847 | 14,340,675 | ||||||
| Class Y |
(15,642,464 | ) | (8,219,671 | ) | ||||
| Class R5 |
(1,532,240 | ) | (36,289,288 | ) | ||||
| Class R6 |
5,375,079 | (24,408,949 | ) | |||||
| Net increase (decrease) in net assets resulting from share transactions |
49,224,650 | (20,413,324 | ) | |||||
| Net increase (decrease) in net assets |
(154,413,177 | ) | (98,962,024 | ) | ||||
| Net assets: |
||||||||
| Beginning of period |
764,218,926 | 863,180,950 | ||||||
| End of period (includes undistributed net investment income (loss) of $(7,464,606) and $(4,498,577), respectively) |
$ | 609,805,749 | $ | 764,218,926 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Small Cap Discovery Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based
10 Invesco Small Cap Discovery Fund
on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from 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 and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, |
11 Invesco Small Cap Discovery Fund
| 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 annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||
| First $500 million |
0.80% | |||
| Next $500 million |
0.75% | |||
| Over $1 billion |
0.70% | |||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.79%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such
12 Invesco Small Cap Discovery Fund
Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2016, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.75%, 1.75%, 1.75% and 1.75%, respectively, of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2016. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $20,330.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, the expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A shares, Class B shares and Class C shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets and up to 1.00% each of Class B and Class C average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the six months ended February 29, 2016, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $57,940 in front-end sales commissions from the sale of Class A shares and $1,427, $223 and $2,510 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the six months ended February 29, 2016, the Fund incurred $1,272 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 or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of February 29, 2016, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
13 Invesco Small Cap Discovery Fund
NOTE 4—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended February 29, 2016, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,183.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of August 31, 2015.
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $113,917,674 and $192,848,989, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 108,046,957 | ||
| Aggregate unrealized (depreciation) of investment securities |
(58,948,296 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 49,098,661 | ||
Cost of investments for tax purposes is $586,917,033.
14 Invesco Small Cap Discovery Fund
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
7,265,774 | $ | 68,477,808 | 13,575,929 | $ | 153,093,532 | ||||||||||
| Class B |
11,827 | 100,280 | 39,831 | 403,879 | ||||||||||||
| Class C |
731,801 | 5,574,973 | 1,891,145 | 17,770,645 | ||||||||||||
| Class Y |
1,258,473 | 12,226,257 | 3,272,479 | 38,406,104 | ||||||||||||
| Class R5 |
310,245 | 2,947,617 | 357,167 | 4,193,167 | ||||||||||||
| Class R6 |
911,382 | 8,874,183 | 4,726,056 | 55,761,349 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
7,611,829 | 67,364,686 | 7,017,483 | 70,245,010 | ||||||||||||
| Class B |
132,016 | 1,021,804 | 160,889 | 1,438,345 | ||||||||||||
| Class C |
1,347,347 | 9,552,693 | 1,051,442 | 8,800,570 | ||||||||||||
| Class Y |
963,727 | 8,933,748 | 1,411,862 | 14,669,253 | ||||||||||||
| Class R5 |
18,772 | 175,147 | 610,714 | 6,369,745 | ||||||||||||
| Class R6 |
1,046,714 | 9,776,309 | 1,442,820 | 15,077,466 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
99,662 | 906,167 | 150,402 | 1,687,700 | ||||||||||||
| Class B |
(112,962 | ) | (906,167 | ) | (167,885 | ) | (1,687,700 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(8,528,511 | ) | (78,511,447 | ) | (16,981,379 | ) | (189,337,027 | ) | ||||||||
| Class B |
(94,608 | ) | (770,703 | ) | (168,071 | ) | (1,679,830 | ) | ||||||||
| Class C |
(1,579,592 | ) | (11,785,819 | ) | (1,306,193 | ) | (12,230,540 | ) | ||||||||
| Class Y |
(3,666,723 | ) | (36,802,469 | ) | (5,260,213 | ) | (61,295,028 | ) | ||||||||
| Class R5 |
(435,669 | ) | (4,655,004 | ) | (4,043,733 | ) | (46,852,200 | ) | ||||||||
| Class R6 |
(1,370,566 | ) | (13,275,413 | ) | (8,164,378 | ) | (95,247,764 | ) | ||||||||
| Net increase (decrease) in share activity |
5,920,938 | $ | 49,224,650 | (383,633 | ) | $ | (20,413,324 | ) | ||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 37% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
15 Invesco Small Cap Discovery Fund
NOTE 10—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 investment income (loss)(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Distributions from net realized gains |
Net asset value, end of period(b) |
Total return(c) |
Net assets, end of period (000’s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income (loss) to average net assets |
Portfolio turnover(d) |
|||||||||||||||||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 10.60 | $ | (0.04 | ) | $ | (1.27 | ) | $ | (1.31 | ) | $ | (1.45 | ) | $ | 7.84 | (13.90 | )% | $ | 429,722 | 1.35 | %(e) | 1.36 | %(e) | (0.87 | )%(e) | 17 | % | ||||||||||||||||||||
| Year ended 08/31/15 |
11.83 | (0.09 | ) | 0.61 | 0.52 | (1.75 | ) | 10.60 | 5.24 | 512,763 | 1.32 | 1.32 | (0.85 | ) | 63 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
12.20 | (0.10 | ) | 1.62 | 1.52 | (1.89 | ) | 11.83 | 13.15 | 527,759 | 1.32 | 1.32 | (0.85 | ) | 79 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
10.85 | (0.08 | ) | 2.56 | 2.48 | (1.13 | ) | 12.20 | 25.31 | 540,979 | 1.32 | 1.33 | (0.72 | ) | 70 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
10.56 | (0.08 | ) | 1.47 | 1.39 | (1.10 | ) | 10.85 | 14.33 | 607,073 | 1.38 | 1.43 | (0.80 | ) | 78 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
8.74 | (0.11 | ) | 1.93 | 1.82 | — | 10.56 | 20.82 | 820,988 | 1.38 | 1.42 | (1.01 | ) | 114 | ||||||||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.46 | (0.04 | ) | (1.11 | ) | (1.15 | ) | (1.45 | ) | 6.86 | (13.87 | )(f) | 5,155 | 1.35 | (e)(f) | 1.36 | (e)(f) | (0.87 | )(e)(f) | 17 | ||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.75 | (0.08 | ) | 0.54 | 0.46 | (1.75 | ) | 9.46 | 5.19 | (f) | 7,715 | 1.32 | (f) | 1.32 | (f) | (0.85 | )(f) | 63 | ||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
11.25 | (0.09 | ) | 1.48 | 1.39 | (1.89 | ) | 10.75 | 13.11 | (f) | 10,216 | 1.32 | (f) | 1.32 | (f) | (0.85 | )(f) | 79 | ||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
10.09 | (0.07 | ) | 2.36 | 2.29 | (1.13 | ) | 11.25 | 25.34 | (f) | 12,554 | 1.32 | (f) | 1.33 | (f) | (0.72 | )(f) | 70 | ||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
9.89 | (0.08 | ) | 1.38 | 1.30 | (1.10 | ) | 10.09 | 14.40 | (f) | 13,754 | 1.38 | (f) | 1.43 | (f) | (0.80 | )(f) | 78 | ||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
8.18 | (0.11 | ) | 1.82 | 1.71 | — | 9.89 | 20.90 | (f) | 16,910 | 1.40 | (f) | 1.44 | (f) | (1.03 | )(f) | 114 | |||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
8.81 | (0.06 | ) | (1.03 | ) | (1.09 | ) | (1.45 | ) | 6.27 | (14.25 | ) | 47,814 | 2.10 | (e) | 2.11 | (e) | (1.62 | )(e) | 17 | ||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.19 | (0.15 | ) | 0.52 | 0.37 | (1.75 | ) | 8.81 | 4.50 | 62,773 | 2.07 | 2.07 | (1.60 | ) | 63 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
10.83 | (0.17 | ) | 1.42 | 1.25 | (1.89 | ) | 10.19 | 12.21 | 55,961 | 2.07 | 2.07 | (1.60 | ) | 79 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
9.82 | (0.15 | ) | 2.29 | 2.14 | (1.13 | ) | 10.83 | 24.43 | 53,560 | 2.07 | 2.08 | (1.47 | ) | 70 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
9.73 | (0.15 | ) | 1.34 | 1.19 | (1.10 | ) | 9.82 | 13.43 | 48,486 | 2.13 | 2.18 | (1.55 | ) | 78 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
8.10 | (0.17 | ) | 1.80 | 1.63 | — | 9.73 | 20.12 | (g) | 51,212 | 2.06 | (g) | 2.10 | (g) | (1.69 | )(g) | 114 | |||||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
11.02 | (0.03 | ) | (1.33 | ) | (1.36 | ) | (1.45 | ) | 8.21 | (13.82 | ) | 60,793 | 1.10 | (e) | 1.11 | (e) | (0.62 | )(e) | 17 | ||||||||||||||||||||||||||||
| Year ended 08/31/15 |
12.20 | (0.07 | ) | 0.64 | 0.57 | (1.75 | ) | 11.02 | 5.51 | 97,497 | 1.07 | 1.07 | (0.60 | ) | 63 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
12.50 | (0.07 | ) | 1.66 | 1.59 | (1.89 | ) | 12.20 | 13.42 | 114,973 | 1.07 | 1.07 | (0.60 | ) | 79 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13 |
11.06 | (0.05 | ) | 2.62 | 2.57 | (1.13 | ) | 12.50 | 25.67 | 163,072 | 1.07 | 1.08 | (0.47 | ) | 70 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/12 |
10.72 | (0.06 | ) | 1.50 | 1.44 | (1.10 | ) | 11.06 | 14.60 | 206,367 | 1.13 | 1.18 | (0.55 | ) | 78 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/11 |
8.84 | (0.09 | ) | 1.97 | 1.88 | — | 10.72 | 21.27 | 233,467 | 1.13 | 1.17 | (0.76 | ) | 114 | ||||||||||||||||||||||||||||||||||
| Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
11.08 | (0.02 | ) | (1.34 | ) | (1.36 | ) | (1.45 | ) | 8.27 | (13.74 | ) | 4,182 | 0.94 | (e) | 0.95 | (e) | (0.46 | )(e) | 17 | ||||||||||||||||||||||||||||
| Year ended 08/31/15 |
12.23 | (0.05 | ) | 0.65 | 0.60 | (1.75 | ) | 11.08 | 5.77 | 6,784 | 0.94 | 0.94 | (0.47 | ) | 63 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
12.52 | (0.05 | ) | 1.65 | 1.60 | (1.89 | ) | 12.23 | 13.49 | 45,126 | 0.94 | 0.94 | (0.47 | ) | 79 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13(h) |
11.48 | (0.04 | ) | 2.21 | 2.17 | (1.13 | ) | 12.52 | 21.25 | 44,037 | 0.93 | (i) | 0.94 | (i) | (0.33 | )(i) | 70 | |||||||||||||||||||||||||||||||
| Class R6 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
11.09 | (0.02 | ) | (1.34 | ) | (1.36 | ) | (1.45 | ) | 8.28 | (13.73 | ) | 62,139 | 0.85 | (e) | 0.86 | (e) | (0.37 | )(e) | 17 | ||||||||||||||||||||||||||||
| Year ended 08/31/15 |
12.25 | (0.04 | ) | 0.63 | 0.59 | (1.75 | ) | 11.09 | 5.66 | 76,687 | 0.85 | 0.85 | (0.38 | ) | 63 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/14 |
12.52 | (0.04 | ) | 1.66 | 1.62 | (1.89 | ) | 12.25 | 13.67 | 109,145 | 0.84 | 0.84 | (0.37 | ) | 79 | |||||||||||||||||||||||||||||||||
| Year ended 08/31/13(h) |
11.48 | (0.03 | ) | 2.20 | 2.17 | (1.13 | ) | 12.52 | 21.25 | 68,425 | 0.83 | (i) | 0.84 | (i) | (0.23 | )(i) | 70 | |||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share for fiscal years ended prior to August 31, 2013. |
| (c) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $485,318, $6,670, $56,822, $73,312, $4,730 and $71,476 for Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares, respectively. |
| (f) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.25%, 0.25%, 0.25%, 0.25%, 0.25% and 0.27% for the six months ended February 29, 2016 and the years ended August 31, 2015, 2014, 2013, 2012 and 2011, respectively. |
| (g) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.93% for the year ended August 31, 2011. |
| (h) | Commencement date of September 24, 2012 for Class R5 and Class R6 shares, respectively. |
| (i) | Annualized. |
16 Invesco Small Cap Discovery Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
|
A |
$ | 1,000.00 | $ | 861.00 | $ | 6.25 | $ | 1,018.15 | $ | 6.77 | 1.35 | % | ||||||||||||
| B |
1,000.00 | 861.30 | 6.25 | 1,018.15 | 6.77 | 1.35 | ||||||||||||||||||
| C |
1,000.00 | 857.50 | 9.70 | 1,014.42 | 10.52 | 2.10 | ||||||||||||||||||
| Y |
1,000.00 | 861.80 | 5.09 | 1,019.39 | 5.52 | 1.10 | ||||||||||||||||||
| R5 |
1,000.00 | 862.60 | 4.35 | 1,020.19 | 4.72 | 0.94 | ||||||||||||||||||
| R6 |
1,000.00 | 862.70 | 3.94 | 1,020.64 | 4.27 | 0.85 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
17 Invesco Small Cap Discovery Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 VK-SCD-SAR-1 Invesco Distributors, Inc.
|
| ||||
|
|
Semiannual Report to Shareholders
|
February 29, 2016 | ||
|
Invesco Strategic Real Return Fund | ||||
|
Nasdaq: |
||||
| A: SRRAX ¡ C: SRRCX ¡ R: SRRQX ¡ Y: SRRYX ¡ R5: SRRFX ¡ R6: SRRSX | ||||
|
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|
2 |
Fund Performance | ||||
|
4 |
Letters to Shareholders | ||||
|
5 |
Schedule of Investments | ||||
|
11 |
Financial Statements | ||||
|
13 |
Notes to Financial Statements | ||||
|
20 |
Financial Highlights | ||||
|
21 |
Fund Expenses | ||||
| For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
| |||||
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | |||||
Fund Performance
2 Invesco Strategic Real Return Fund
3 Invesco Strategic Real Return Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. | ||||||||
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
|
Philip Taylor |
Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction and a long-term perspective. At Invesco, investing with high conviction means offering a wide range of strategies designed to go beyond market benchmarks. We trust our research-driven insights, have confidence in our investment processes and build portfolios that reflect our beliefs. Our goal is to look past market noise in an effort to find attractive opportunities at attractive prices – consistent with the investment strategies spelled out in each fund’s prospectus. Of course, investing with high conviction can’t guarantee a profit or ensure investment success; no investment strategy or risk analysis can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. |
On our website, invesco.com/us, you can access timely information about your Fund, as well as access your account. Invesco’s mobile apps for iPhone® and iPad® (both available free from the App StoreSM) allow you to obtain the same detailed information.
In addition to the resources accessible on our website and through our mobile app, you can obtain timely updates to help you stay informed about the markets, the economy and investing by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you the information you want, when and where you want it.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Invesco Distributors, Inc. is not affiliated with Apple Inc.
4 Invesco Strategic Real Return Fund
Schedule of Investments(a)
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Strategic Real Return Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Strategic Real Return Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Strategic Real Return Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Strategic Real Return Fund
Investment Abbreviations:
| Gtd. | – Guaranteed | |
| PIK | – Payment in Kind | |
| REGS | – Regulation S | |
| REIT | – Real Estate Investment Trust | |
| Sec. | – Secured | |
| Sr. | – Senior | |
| Sub. | – Subordinated | |
| Unsec. | – Unsecured |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Strategic Real Return Fund
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (c) | Principal amount of security and interest payments are adjusted for inflation. See Note 1I. |
| (d) | Invesco Floating Rate Fund and the Fund are affiliated by either having the same investment adviser or an investment adviser under common control with the Fund’s investment adviser. The value of this security as of February 29, 2016 represented 29.37% of the Fund’s Net Assets. See Note 5. |
| (e) | 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 February 29, 2016 was $1,053,317, which represented 6.41% of the Fund’s Net Assets. |
| (f) | All or a portion of this security is Payment-in-Kind. |
| Issuer | Cash Rate | PIK Rate | ||||||
| Alphabet Holding Co., Inc., Sr. Unsec. Global PIK Notes |
7.75 | % | 8.50 | % | ||||
| (g) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of February 29, 2016. |
Portfolio Composition
By security type, based on Net Assets
as of February 29, 2016
| U.S. Treasury Securities |
44.6 | % | ||
| Common Stocks |
29.4 | |||
| Bonds and Notes |
22.8 | |||
| Money Market Funds Plus Other Assets Less Liabilities |
3.2 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Strategic Real Return Fund
Statement of Assets and Liabilities
February 29, 2016
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Strategic Real Return Fund
Statement of Operations
For the six months ended February 29, 2016
(Unaudited)
| Investment income: |
| |||
| Dividends from affiliated funds |
$ | 139,680 | ||
| Interest |
83,901 | |||
| Total investment income |
223,581 | |||
| Expenses: |
| |||
| Advisory fees |
33,047 | |||
| Administrative services fees |
24,863 | |||
| Custodian fees |
4,131 | |||
| Distribution fees: |
||||
| Class A |
11,372 | |||
| Class C |
1,907 | |||
| Class R |
117 | |||
| Transfer agent fees — A, C, R and Y |
3,355 | |||
| Transfer agent fees — R5 |
5 | |||
| Transfer agent fees — R6 |
5 | |||
| Trustees’ and officers’ fees and benefits |
8,422 | |||
| Registration and filing fees |
44,964 | |||
| Reports to shareholders |
10,032 | |||
| Professional services fees |
61,833 | |||
| Other |
6,613 | |||
| Total expenses |
210,666 | |||
| Less: Fees waived and expenses reimbursed |
(167,805 | ) | ||
| Net expenses |
42,861 | |||
| Net investment income |
180,720 | |||
| Realized and unrealized gain (loss) from: |
| |||
| Net realized gain (loss) from: |
||||
| Investment securities |
(220,239 | ) | ||
| Futures contracts |
(9,818 | ) | ||
| (230,057 | ) | |||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(328,809 | ) | ||
| Futures contracts |
(13 | ) | ||
| (328,822 | ) | |||
| Net realized and unrealized gain (loss) |
(558,879 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (378,159 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Strategic Real Return Fund
Statement of Changes in Net Assets
For the six months ended February 29, 2016 and the year ended August 31, 2015
(Unaudited)
| February 29, 2016 |
August 31, 2015 |
|||||||
| Operations: |
|
|||||||
| Net investment income |
$ | 180,720 | $ | 452,953 | ||||
| Net realized gain (loss) |
(230,057 | ) | (169,074 | ) | ||||
| Change in net unrealized appreciation (depreciation) |
(328,822 | ) | (633,008 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(378,159 | ) | (349,129 | ) | ||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(186,789 | ) | (219,582 | ) | ||||
| Class C |
(6,031 | ) | (6,386 | ) | ||||
| Class R |
(905 | ) | (387 | ) | ||||
| Class Y |
(149,550 | ) | (215,309 | ) | ||||
| Class R5 |
(200 | ) | (288 | ) | ||||
| Class R6 |
(200 | ) | (288 | ) | ||||
| Total distributions from net investment income |
(343,675 | ) | (442,240 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
581,065 | 1,466,432 | ||||||
| Class C |
(109,222 | ) | 418,097 | |||||
| Class R |
17,252 | 25,789 | ||||||
| Class Y |
268 | 12,090 | ||||||
| Net increase in net assets resulting from share transactions |
489,363 | 1,922,408 | ||||||
| Net increase (decrease) in net assets |
(232,471 | ) | 1,131,039 | |||||
| Net assets: |
||||||||
| Beginning of period |
16,657,424 | 15,526,385 | ||||||
| End of period (includes undistributed net investment income of $(94,854) and $68,101, respectively) |
$ | 16,424,953 | $ | 16,657,424 | ||||
Notes to Financial Statements
February 29, 2016
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Strategic Real Return Fund (the “Fund”) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (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 consisting of fourteen separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is to seek to mitigate the effects of unanticipated inflation and to provide current income.
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they
13 Invesco Strategic Real Return Fund
may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
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 and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from net investment income, if any, are declared and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s |
14 Invesco Strategic Real Return Fund
| taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | 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 included as interest income in the Statement of Operations, even though investors do not receive their principal until maturity. |
| 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 date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| L. | Futures Contracts — The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between Counterparties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or |
15 Invesco Strategic Real Return Fund
| 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. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||
| First $1 billion |
0.40% | |||
| Next $2.5 billion |
0.35% | |||
| Over $3.5 billion |
0.33% | |||
For the six months ended February 29, 2016, the effective advisory fees incurred by the Fund was 0.40%.
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., Invesco Canada Ltd. and Invesco PowerShares Capital Management LLC (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may 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 December 31, 2016 to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 0.79%, 1.54%, 1.04%, 0.54%, 0.54% and 0.54%, respectively, of average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual 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 December 31, 2016. The fee waiver agreement cannot be terminated during its term. To the extent that the annualized expense ratio does not exceed the expense limits, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
Further, the Adviser has contractually agreed, through at least June 30, 2017, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives on the Fund’s investments in certain affiliated funds.
For the six months ended February 29, 2016, the Adviser waived advisory fees of $33,047 and reimbursed fund level expenses of $131,394, and class level expenses of $1,849, $78, $10, $1,419, $7 and $7 of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended February 29, 2016, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended February 29, 2016, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption
16 Invesco Strategic Real Return Fund
proceeds prior to remittance to the shareholder. During the six months ended February 29, 2016, IDI advised the Fund that IDI retained $211 in front-end sales commissions from the sale of Class A shares for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of February 29, 2016. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Equity Securities |
$ | 5,320,139 | $ | — | $ | — | $ | 5,320,139 | ||||||||
| U.S. Treasury Securities |
— | 7,330,126 | — | 7,330,126 | ||||||||||||
| Corporate Debt Securities |
— | 3,752,302 | — | 3,752,302 | ||||||||||||
| Total Investments |
$ | 5,320,139 | $ | 11,082,428 | $ | — | $ | 16,402,567 | ||||||||
NOTE 4—Derivative Investments
Effect of Derivative Investments for the six months ended February 29, 2016
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 |
||||
| Futures Contracts | ||||
| Realized Gain (Loss): |
||||
| Interest rate risk |
$ | (9,818 | ) | |
| Change in Net Unrealized Appreciation (Depreciation): |
||||
| Interest rate risk |
(13 | ) | ||
| Total |
$ | (9,831 | ) | |
The table below summarizes the average notional value of futures contracts outstanding during the period.
| Futures Contracts | ||||
| Average notional value |
$ | 213,974 | ||
NOTE 5—Investments in Affiliates
The Fund’s Adviser and the adviser for Invesco Floating Rate Fund are subsidiaries of Invesco Ltd. and therefore, Invesco Floating Rate Fund is considered to be affiliated with the Fund. The following is a summary of the transactions in, and earnings from, investments in Invesco Floating Rate Fund for the six months ended February 29, 2016.
| Value 08/31/15 |
Purchases at Cost |
Proceeds from Sales |
Change in Unrealized Appreciation (Depreciation) |
Realized Gain (Loss) |
Value 02/29/16 |
Dividend Income |
||||||||||||||||||||||
| Invesco Floating Rate Fund |
$ | 4,979,425 | $ | 331,221 | $ | (42,300 | ) | $ | (441,715 | ) | $ | (3,160 | ) | $ | 4,823,471 | $ | 139,244 | |||||||||||
17 Invesco Strategic Real Return Fund
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund’s total assets.
NOTE 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund had a capital loss carryforward as of August 31, 2015, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| Not Subject to Expiration |
$ | 112,120 | $ | 51,520 | $ | 163,640 | ||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 9—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended February 29, 2016 was $2,013,225 and $2,528,243, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $876,157 and $103,599, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
| Aggregate unrealized appreciation of investment securities |
$ | 83,819 | ||
| Aggregate unrealized (depreciation) of investment securities |
(976,286 | ) | ||
| Net unrealized appreciation (depreciation) of investment securities |
$ | (892,467 | ) | |
Cost of investments for tax purposes is $17,295,034.
18 Invesco Strategic Real Return Fund
NOTE 10—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended February 29, 2016(a) |
Year ended August 31, 2015 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
158,014 | $ | 1,492,215 | 174,539 | $ | 1,714,799 | ||||||||||
| Class C |
11,147 | 103,619 | 49,594 | 488,421 | ||||||||||||
| Class R |
1,741 | 16,523 | 2,588 | 25,640 | ||||||||||||
| Class Y |
2 | 19 | 1,227 | 12,010 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
4,719 | 43,941 | 2,237 | 21,862 | ||||||||||||
| Class C |
618 | 5,763 | 632 | 6,170 | ||||||||||||
| Class R |
78 | 729 | 15 | 149 | ||||||||||||
| Class Y |
27 | 249 | 11 | 109 | ||||||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(102,974 | ) | (955,091 | ) | (27,409 | ) | (270,229 | ) | ||||||||
| Class C |
(23,288 | ) | (218,604 | ) | (7,830 | ) | (76,494 | ) | ||||||||
| Class Y |
— | — | (3 | ) | (29 | ) | ||||||||||
| Net increase in share activity |
50,084 | $ | 489,363 | 195,601 | $ | 1,922,408 | ||||||||||
| (a) | 84% of the outstanding shares of the Fund are owned by the Adviser. |
19 Invesco Strategic Real Return Fund
NOTE 11—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 investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000’s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed(c) |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(d) |
|||||||||||||||||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
$ | 9.62 | $ | 0.10 | $ | (0.31 | ) | $ | (0.21 | ) | $ | (0.19 | ) | $ | 9.22 | (2.21 | )% | $ | 9,114 | 0.61 | %(e) | 2.64 | %(e) | 2.10 | %(e) | 16 | % | |||||||||||||||||||||
| Year ended 08/31/15 |
10.11 | 0.26 | (0.49 | ) | (0.23 | ) | (0.26 | ) | 9.62 | (2.26 | ) | 8,936 | 0.60 | 2.25 | 2.71 | 25 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14(f) |
10.00 | 0.14 | 0.10 | 0.24 | (0.13 | ) | 10.11 | 2.44 | 7,880 | 0.59 | (g) | 2.87 | (g) | 4.21 | (g) | 13 | ||||||||||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.61 | 0.06 | (0.31 | ) | (0.25 | ) | (0.15 | ) | 9.21 | (2.58 | ) | 334 | 1.36 | (e) | 3.39 | (e) | 1.35 | (e) | 16 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.10 | 0.19 | (0.49 | ) | (0.30 | ) | (0.19 | ) | 9.61 | (3.00 | ) | 459 | 1.35 | 3.00 | 1.96 | 25 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14(f) |
10.00 | 0.12 | 0.09 | 0.21 | (0.11 | ) | 10.10 | 2.14 | 54 | 1.34 | (g) | 3.62 | (g) | 3.46 | (g) | 13 | ||||||||||||||||||||||||||||||||
| Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.62 | 0.09 | (0.31 | ) | (0.22 | ) | (0.18 | ) | 9.22 | (2.33 | ) | 50 | 0.86 | (e) | 2.89 | (e) | 1.85 | (e) | 16 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.11 | 0.24 | (0.49 | ) | (0.25 | ) | (0.24 | ) | 9.62 | (2.51 | ) | 35 | 0.85 | 2.50 | 2.46 | 25 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14(f) |
10.00 | 0.14 | 0.10 | 0.24 | (0.13 | ) | 10.11 | 2.37 | 10 | 0.84 | (g) | 3.12 | (g) | 3.96 | (g) | 13 | ||||||||||||||||||||||||||||||||
| Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.62 | 0.11 | (0.31 | ) | (0.20 | ) | (0.20 | ) | 9.22 | (2.09 | ) | 6,909 | 0.36 | (e) | 2.39 | (e) | 2.35 | (e) | 16 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.11 | 0.29 | (0.49 | ) | (0.20 | ) | (0.29 | ) | 9.62 | (2.02 | ) | 7,209 | 0.35 | 2.00 | 2.96 | 25 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14(f) |
10.00 | 0.15 | 0.10 | 0.25 | (0.14 | ) | 10.11 | 2.50 | 7,563 | 0.34 | (g) | 2.62 | (g) | 4.46 | (g) | 13 | ||||||||||||||||||||||||||||||||
| Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.62 | 0.11 | (0.31 | ) | (0.20 | ) | (0.20 | ) | 9.22 | (2.09 | ) | 9 | 0.36 | (e) | 2.45 | (e) | 2.35 | (e) | 16 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.11 | 0.29 | (0.49 | ) | (0.20 | ) | (0.29 | ) | 9.62 | (2.02 | ) | 10 | 0.35 | 2.07 | 2.96 | 25 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14(f) |
10.00 | 0.15 | 0.10 | 0.25 | (0.14 | ) | 10.11 | 2.50 | 10 | 0.34 | (g) | 2.68 | (g) | 4.46 | (g) | 13 | ||||||||||||||||||||||||||||||||
| Class R6 |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 02/29/16 |
9.62 | 0.11 | (0.31 | ) | (0.20 | ) | (0.20 | ) | 9.22 | (2.09 | ) | 9 | 0.36 | (e) | 2.45 | (e) | 2.35 | (e) | 16 | |||||||||||||||||||||||||||||
| Year ended 08/31/15 |
10.11 | 0.29 | (0.49 | ) | (0.20 | ) | (0.29 | ) | 9.62 | (2.02 | ) | 10 | 0.35 | 2.07 | 2.96 | 25 | ||||||||||||||||||||||||||||||||
| Year ended 08/31/14(f) |
10.00 | 0.15 | 0.10 | 0.25 | (0.14 | ) | 10.11 | 2.50 | 10 | 0.34 | (g) | 2.68 | (g) | 4.46 | (g) | 13 | ||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | 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 Fund bears indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.22% for the six months ended February 29, 2016 and the year ended August 31, 2015 and 0.21% for the period April 30, 2014 (commencement date) through August 31, 2014. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $9,147, $384, $47, $7,018, $9 and $9 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
| (f) | Commencement date of April 30, 2014. |
| (g) | Annualized |
20 Invesco Strategic Real Return Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2015 through February 29, 2016.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (09/01/15) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (02/29/16)1 |
Expenses Paid During Period2 |
Ending Account Value (02/29/16) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 977.90 | $ | 3.00 | $ | 1,021.83 | $ | 3.07 | 0.61 | % | ||||||||||||
| C | 1,000.00 | 974.20 | 6.68 | 1,018.10 | 6.82 | 1.36 | ||||||||||||||||||
| R | 1,000.00 | 976.70 | 4.23 | 1,020.59 | 4.32 | 0.86 | ||||||||||||||||||
| Y | 1,000.00 | 979.10 | 1.77 | 1,023.07 | 1.81 | 0.36 | ||||||||||||||||||
| R5 | 1,000.00 | 979.10 | 1.77 | 1,023.07 | 1.81 | 0.36 | ||||||||||||||||||
| R6 | 1,000.00 | 979.10 | 1.77 | 1,023.07 | 1.81 | 0.36 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 1, 2015 through February 29, 2016, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect the most recent fiscal half year. |
21 Invesco Strategic Real Return Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-09913 and 333-36074 SRR-SAR-1 Invesco Distributors, Inc.
| ITEM 2. | CODE OF ETHICS. |
There were no amendments to the Code of Ethics (the “Code”) that applies to the Registrant’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”) during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not applicable.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
PricewaterhouseCoopers LLP (“PwC”), the Independent Accountant to the series portfolios of the Registrant (“Funds”), has advised the Audit Committee of the Board of Trustees of the Funds (“Audit Committee”) that, as of the date of the filing of this Semi-Annual Report on Form N-CSR, it is in discussions with the Staff of the Securities and Exchange Commission, or the SEC, regarding a difference in the interpretation and application of Rule 2-01(c)(1)(ii)(A) of Regulation S-X, or the Loan Rule.
The Loan Rule prohibits accounting firms, such as PwC, from having certain financial relationships with their audit clients and affiliated entities. Specifically, the Loan Rule provides, in relevant part, that an accounting firm is not independent if it receives a loan from an audit client or it receives a loan from a lender that is a “record or beneficial owner of more than ten percent of the audit client’s equity securities.” Pursuant to the SEC’s interpretation of the Loan Rule, some of PwC’s relationships with lenders who also own shares of one or more funds within the Invesco investment company complex may run afoul of the Loan Rule, calling into question PwC’s independence with respect to the Funds. However, PwC’s interpretation of the Loan Rule, in light of the facts of these lending relationships, leads it to conclude that there is no violation of the Loan Rule.
The Audit Committee has considered the lending relationships described by PwC and has concluded that (1) the lending relationships did not impact PwC’s application of objective judgment with respect to conducting its audits and issuing reports on the Funds’ financial statements; and (2) a reasonable investor with knowledge of all relevant facts and circumstances would reach the same conclusion. In making this determination, the Audit Committee considered, among other things, PwC’s description of the relevant lending relationships, PwC’s interpretation of the Rule 2-01(c)(1)(ii)(A) and PwC’s representation that its independence was not impaired in conducting its audit of the Funds’ financial statements.
PwC advised the Audit Committee that it believes it is independent and it continues to have discussions with the SEC’s Staff to resolve this interpretive matter. PwC further advised the Audit Committee that this matter did not compromise or impair its objectivity in connection with its audits of the Funds’ financial statements. These discussions with the Staff remain ongoing and, while PwC represented to the Audit Committee that it feels confident that PwC’s interpretation of the Loan Rule is correct, neither PwC nor the Audit Committee can be certain of the final outcome.
If the SEC were ultimately to determine that PwC was not independent with respect to the Funds for certain periods, the Funds’ filings with the SEC which contain the Funds’ financial statements for such periods would be non-compliant with the applicable securities laws. If the SEC determines that PwC was not independent, among other
things, the Funds may be required to have independent audits conducted on the Funds’ previously audited financial statements by another independent registered public accounting firm for the affected periods. The time involved to conduct such independent audits may impair the Funds’ ability to issue shares. Any of the foregoing potentially could have a material adverse effect on the Funds.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
| ITEM 6. | SCHEDULE OF INVESTMENTS. |
Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form.
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None.
| ITEM 11. | CONTROLS AND PROCEDURES. |
| (a) | As of February 12, 2016, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the PEO and PFO, to assess the effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of February 12, 2016 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 second fiscal quarter of the period covered by the report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
| ITEM 12. | EXHIBITS. |
| 12(a) (1) | Not applicable. |
| 12(a) (2) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. |
| 12(a) (3) | Not applicable. |
| 12(b) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. |
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 Counselor Series Trust (Invesco Counselor Series Trust)
| By: | /s/ Sheri Morris | |
| Sheri Morris | ||
| Principal Executive Officer | ||
| Date: | May 12, 2016 | |
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| By: | /s/ Sheri Morris | |
| Sheri Morris | ||
| Principal Executive Officer | ||
| Date: | May 12, 2016 | |
| By: | /s/ Kelli Gallegos | |
| Kelli Gallegos | ||
| Principal Financial Officer | ||
| Date: | May 12, 2016 | |
EXHIBIT INDEX
| 12(a) (1) | Not applicable. | |
| 12(a) (2) | Certifications of principal executive officer and Principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. | |
| 12(a) (3) | Not applicable. | |
| 12(b) | Certifications of principal executive officer and Principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. | |